Industry pressures & drivers around core systems (Market 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
The wider macroeconomic environment is placing increasing pressure on banks. Rising interest rates, inflation and stock market shocks are all contributing to a more complex market for financial institutions. Banks that have efficient back office operations will triumph in the long term. Banks are trying to protect their margins and differentiate themselves as best they can in a market which is becoming both increasingly competitive as well as commoditized. As these dynamics intensify, particularly within more mature geographies, being responsive to market demands is increasingly important. Depending on a bank's global footprint, it will face a multitude of regulations, many of which will impact their core systems strategies, either directly or indirectly. As a result, multinational banks in particular can no longer address separate regulations on an ad hoc basis as the volume and complexity of the requirements are prohibitive.
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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
A challenging macroeconomic environment is putting pressure on margins 2
Margin pressure is being driven up as markets mature 2
Interest rate rises are having a mixed impact 2
The US sub-prime crisis will have a lasting impact 3
Industry consolidation and competitive pressures require business agility 3
New entrants are highlighting the shortcomings of legacy systems of incumbent banks 3
A core systems strategy is key for banks with acquisitive appetites 4
Flexibility is a key success factor in an increasingly demanding market 4
Product time to market is increasingly important as competition grows 4
Customer relationship management can be an important differentiator in an commoditizing market 5
Regulations are acting as a catalyst for core systems investment 6
Banks are struggling to meet the increasing regulatory burden with legacy core systems 6
Regulatory compliance can bring business benefits 6
SEPA is set to drive pan-European banking 6
APPENDIX 7
Further reading 7
Ask the analyst 7
Datamonitor consulting 7
Disclaimer 7
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Figure 1: European banks technology priorities 2
Figure 2: European banks business priorities 5
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