Will Large Banks be Undone by Core Banking Systems?


If technology drives the business of banking, why are the banks’ core banking systems STILL so creaky? And are the large established banks which don’t address this most at risk from the regulators, emerging markets or smaller local institutions?

Over the summer, London and New York saw system failures at top retail banks and capital markets business, which are highly dependent on innovative technology.  This led to Intellect, the trade association for the UK technology sector, to call for regulators to address the issue and “mandate change by requiring banks to ensure that their critical infrastructure is fit for purpose”.

Core Banking Systems
Core Banking Systems

Added to this, financial institutions in emerging markets are building core banking systems from scratch. Smaller, more agile organisations, such as Building Societies and online banks, are able to adapt their systems with less upheaval.

Banks can no longer ignore the issue of creaking core banking systems and the importance of expert advice is growing fast. GFT and Asymo partnered last year in order to meet this demand and have since then established an Avaloq Competence Centre in Switzerland, to help our clients work through the updating process. It’s time that banks grasped this particular nettle. Starting with assessing the risk involved in migrating to a new system by ­establishing a detailed knowledge of the underlying business processes and technology.

Wherever the threat comes from, a lack of investment in underlying systems will leave many banks encumbered by aging and complex technology, which reduces their ability to offer customers innovative products. The entire technology portfolio should be driving the business of banking, not being held back by outdated systems.

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  1. Robert Waters21/02/2013

    I don’t understand why people are suddenly waking up to this and suggesting that regulators do something, as though they could not have done in the past. The UK 1987 Banking Act allowed for reviews of the adequacy of IT systems under a section 39 review. This was not the primary use of the section 39 review, but it was one possible use. At any point in time it would be possible to force a UK-regulated bank to have its core baking system reviewed.

  2. Robert Waters21/02/2013

    I don’t understand why people are suddenly waking up to this and suggesting that regulators do something, as though they could not have done in the past. The UK 1987 Banking Act allowed for reviews of the adequacy of IT systems under a section 39 review. This was not the primary use of the section 39 review, but it was one possible use. At any point in time it would be possible to force a UK-regulated bank to have its core baking system reviewed.

  3. Aron Swamm31/05/2013

    Banking in its modern sense evolved in the 14th century in the rich cities of Renaissance Italy but in many ways was a continuation of ideas and concepts of credit and lending that had its roots in the ancient world. In the history of banking, a number of banking dynasties have played a central role over many centuries. *:.-

    My web site
    <http://healthmedicine.co/

  4. Aron Swamm31/05/2013

    Banking in its modern sense evolved in the 14th century in the rich cities of Renaissance Italy but in many ways was a continuation of ideas and concepts of credit and lending that had its roots in the ancient world. In the history of banking, a number of banking dynasties have played a central role over many centuries. *:.-

    My web site
    <http://healthmedicine.co/

  5. Encore Theme19/10/2016

    Thanks for such a Valuable Post. Core banking is a platform that uniquely designed with a customer centric approach. Nice perspective content and very true suggestion of core banking.