Core Banking System Trends Overview gration, which boosts efficiency and performance.
There are some common themes when looking at what banks state as their main drivers and goals for changing a core banking system. There is plenty of chopping and changing and some of the common themes that prompt banks to change their core systems include:
• Vendor Dissatisfaction. vice
levels, include inadequate Casey integration
Unsatisfactory ser- support
and
poor user-friendliness have led many banks to change their core banking systems. Typical exam- ples
•
Outsourcing. Creating cost efficiencies, decreas- ing
overheads and reducing periodic State Bank and Busey Bank. hardware
and software capital expense have driven banks to move to a hosted model. Typical examples here include Oak Bank and Hawaii National Bank.
•
Improved Channel Delivery. Banks looking for greater channel integration, flexibility and consistency across channels have opted to mi- grate to a different, more modern core system. The modern core
interfaces with new channel prod- uct offerings and provides a greater level of inte- • •
Broader Product Range. Legacy systems do not al- ways support the expansion of a bank’s product range. Success with one product often opens up new avenues for a bank. More often than not, the legacy core system is not flexible enough to be customized to accommodate
this growth, prompting the
bank
to change the core banking system. A case in point would be Barclays US, whose success with credit card services opened the doors to the possibility of new revenue streams like online retail and consumer deposits. Barclays US was forced into changing its core, as deposit products couldn’t be accommodated in the bank’s existing system.
Technical Improvement. The need for greater automation, efficiency and scalability has driven banks to consider the adoption of a new core system. Fur- thermore, many legacy platforms are coded in now un- supported languages, which makes improvement and overhaul impossible. Notable examples of such migra- tion include Peoples Independent Bank and Libertyville Savings Bank.
Channel Trends Overview
The US market has seen a greater degree of innovation in banking channels as compared to that in core banking systems. In some areas, the US banks have even moved beyond many of their non-US counterparts.
•
Branch. The branch has been the focus of many US banks in the past. However, with the advent of online banking, branches have seen a steep drop in customer transac- tions. The fall in branch footfall in US banks over the last 5 years has been around 50 per cent with a similar per- centage drop in revenue per member of staff. Neverthe- less, owing to the importance of customer relationship in banking, branches are still seen as being an important channel. However, there is a need to make them more
6
efficient and improve the ability of the staff to serve and cross-sell to customers.
•
Interactive Tellers. One of the technology enablers is the interactive teller, which incorporates the use of video. Video-enabled ATMs make use of a remote teller who can interact with the customer over vid- eo, take control of the machine and guide custom- ers through most branch transactions. Another en- abler is the tablet, which gives mobility to in-branch staff, allowing them to interact with customers, and provide
better • service and cross-market products.
Specialist Suppliers. Banks are increasingly moving to different, specialized vendors for different chan-
US Financial Services Technology Market Report |
www.ibsintelligence.com
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