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Wednesday May 19, 05:56
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Core Systems A New Priority For European Banks
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Banks in Europe are expected to prioritize core systems replacement as a near-term project, in light of past mergers, and the imminent entry of EU accession countries to the pan-European banking system. With overlapping core systems taking as much as 80 per cent of a bank’s annual IT operational costs, the business case for integration or outright replacement is strong. Adopting a service-oriented architecture (SOA) is advocated as the best way for banks to leverage past technology investments while interfacing applications to updated workflow and business process operations and meeting new customer demands.
Antiquated legacy banking systems, bottom-line concerns and efficiency drives are prompting banks in all world regions to upgrade their core systems to optimize their transactions and offer greater functionality. European banks, in particular, are likely to look to next-generation vendor solutions for the enhanced productivity required by the enlargement of the EU and the extension of the euro to additional countries. In this context, Celent Communications predicts European banks, currently the most aggressive replacers of core systems, to spend USD 24 billion on core systems enhancement or replacement by 2005.
Business efficiency and not IT cost reduction is the main driver of core systems replacement by European banks, and although large banks taking this step are rare, Celent notes the few institutions doing so, to potentially save five to eight per cent of their total operating budget. Bulgaria’s Hebros Bank is upgrading its core systems as an antecedent to EU entry, while Spain’s Santander stands to save an annual USD 250 million by shifting its group core systems to one platform. Germany’s Postbank is also investing EU 300 million in a new core system, in the expectation of achieving annual savings of EU 50 million.
(Bank Systems Online)
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