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Overview Core banking systems & suppliers | Evolution over the years


For those that like history, back at the start, the Sales League


Table was a basic affair centred on only a relatively small range of systems. Kindle’s Bank master led the way, followed by Midas- Kapiti International’s Equation and Midas, then the third of the IBM AS/400-based offerings, IBIS. This clutch of systems still sold in reasonable numbers during the 1990s. In 1995, four years into the analysis, eight systems recorded double figure sales, of which the only non- universal offering was Frustum’s Opics (Midas in those days was still sold as a universal solution).


Then there was the pre-Y2K dip for everyone in 1999 and it


marked a watershed for a fair few offerings. While their newer counterparts revived once the panic was over and carried on their way as before, some older systems failed to bounce back. For smaller suppliers, it has been a particularly tough period, contributing to yet more consolidation, with this often accelerating the decline of the acquired systems, whether intentionally or not.


Despite the relatively small base, there were proportionally


more universal banking systems recording sales in double figures than is now the case and the field was more widely spread. The performance of suppliers has seen an interesting pattern over the last 5 years. 11 vendors had clocked double digit sales in 2016, as compared to 10 last year. By comparison, only seven vendors had new wins in double figures in 2012. So more of the business is ending up in the hands of fewer suppliers.


Many of the systems that were featured at the outset of the


Sales League Table have tailed off or disappeared completely. Several mainframe based systems were among the first to go, under-cut by their rivals and finding that – as is still the case – there was little demand for core packages from the tier one banks for their main domestic operations. Among the suppliers to struggle have been large companies for which application software is not a core business – the likes of Unisys, All tel, Digital Equipment and EDS.


Another issue that has become clear over time is that


established suppliers are seldom the source of new systems. They seem unable to rewrite their core offerings. Innovation has tended to come from smaller players, often set up by ex-staff of larger suppliers. Examples are Frustum (ex-IMMS), Calypso (ex-Infinity), and, more recently, Trapedza (ex-Kindle) and Two Four Systems (ex-Frustum/Misys). The incumbent suppliers do not seem to have the culture for innovation – BIS, for instance, tried to do a rewrite in the late 1980s of Midas; IBIS tried to rewrite its system in the second half of the 1990s. They also have the complication of existing user bases, from both the perspective of having to satisfy the demands of current customers as well as the challenge of positioning their new


6


developments in such a way as to not jeo pardise sales of their existing applications.


The latest to try a rewrite, intriguingly, is Oracle FSS, within


the ‘Next Generation Banking’ system project that was revealed by IBS in March 2012 and saw a launch later in the year of the Oracle Banking Platform (OBP), with Australia- based NAB and Sun corp as the first takers. At least Oracle has scale on its side but history says it will still be difficult to achieve. Two vendors that have tried and succeeded are Lebanon-based BML Is tishar at, which rewrote its ICBS system and has a relatively flexible, modern solution as a result, and Norway-based CBA, which has done the same with its IBAS offering, resulting in a Java-based, object- oriented solution. The trend is not only limited to increased functional offering, but also significantly to do with the digital adoption by banks and the resultant channel consolidation, and also with regional requirements driven by needs in expanding offerings – Islamic banking is a classic case in point.


The classic case of a supplier shooting it self in the foot with a


new development was Internet, at one time an important player in the market, which announced its ultimately canned Open Atlas rewrite of Atlas at an early stage and therefore consigned its existing offering to the category of legacy system due for replacement arguably far earlier than was necessary (Atlas, today in the hands of Wall Street Systems, is still an important part of a number of banks’ operations).


It is always worth considering history when setting strategy, as there is much to learn from the mistakes and masterstrokes of the past. But here, as elsewhere, suppliers do sometimes plod into the same traps, so too banks on occasions with their selections.


Of course, even with experienced founders, there is no


guarantee of success for start-ups, with all facing an uphill struggle at the outset but also often over time as well, in no small part due to having to compete with the massed sales and R&D staff of the heavyweights. Banks have tended to be conservative and, indeed, the current turbulent times have made them even more so when considering vendors. There is a fair degree of irony here. In many cases, small suppliers outlive the banks – there is risk on both sides.


Those suppliers that have stayed immune from consolidation are ever fewer, with examples being ERI, Murex, CBA in Norway, and two universal banking system suppliers focused on the French speaking markets, Capital Banking Solutions and SAB. The list was longer even just a few years ago but FNS, FNX, System Access, Wall Street Systems and Trema have all succumbed (the latter two coming together). System


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