Core systems strategies in retail banking (Strategy Focus)

Core system replacement/ transformation has become a growing strategy for tier 1 & 2 institutions in Europe and ,increasingly, North America as compliance pressures, need to faster time-to-market and organization agility create a need to re-vamp the back office. This creates a number of challenges as to how best tackle the scale and provide future-proof solutions.

Report Highlights

That core systems are so entrenched in a bank’s operations has prevented many from making attempts at renewal projects in the past; however their lack of flexibility and responsiveness is one of the key business drivers forcing banks to readdress this viewpoint. Over recent years banks have become increasingly acquisitive in order to sustain growth, driving both consolidation in domestic markets as well as cross-border activity, particularly in high-growth markets. As a result, many banks have begun to address the core systems implications of their M&A activities. The rationale for having a consistent platform across multiple countries will be further compounded as SEPA becomes a reality. As the ultimate result of SEPA will be an open retail financial services market across Europe, so banks that have already moved to a consistent platform across their operations will be at an advantage to their peers.
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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
A customer-centric approach will be a strategic priority for retail banks going forward 2
Customer service underpins customer retention and cross-sales 2
Product origination should be consistent across channels 3
Flexibility will be key for banks seeking to move to a future proof platform 3
Product development and time to market to support a customer-centric focus 4
Scalability and breadth to support future growth opportunities 4
Acquisitive banks should develop a framework for incorporating new institutions 4
Expanding into new geographies offers the opportunity to leverage synergies across borders 5
Core systems investments should support future regulatory developments 5
Cost control and operational efficiency will be the foundations of core renewal investments 6
Total cost of ownership remains a key issue on the IT side 6
Improving operational efficiency will improve organizational flexibility 6
Banks will start to consider alternative sourcing strategies to further improve flexibility 6
Information management and internal controls need to be built into core systems platforms 7
Information management is essential to support and improve both the back and front office operations 7
Audit and control should be addressed from an enterprise-wide perspective, and rooted in the core system 8
APPENDIX 9
Further reading 9
Ask the analyst 9
Datamonitor consulting 9
Disclaimer 9
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Figure 1: European banks' priorities for enhancing business growth through technology 2
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