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April 25, 2013


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More and more banks are indeed considering replacing core banking systems - agree. In fact, the more ambitious the cost reduction and business integration plan, the more seriousness there is in these plans. For ex in a few organisations/ financial services orgs, they are really consider something called aplication right platforming, in which they would farm out the entire core infrastructure to an outside consortium and then receive back the service from this partner in a pay per use basis. If this is done, te extension to the applcations (aka the core banking appliation for instance) is just a step away. In countries like India, the Reserve Bank of India (Central bank) has come out with a directive to all the urban cooperative banks that unless they invest in (new) core banking systems, they will not receive approvals for branch expansion or new branch openings. Still old world way of talking branche, but the message is clear. And these banks are doing well thank you. Most of them are going the cloud way. With this mode, the vendor is able o 'switch on'a basic core banking functionality for a branch in a week.

Sam Hartwell

Completely agree Chris! Banks are facing increasing pressure to renew the infrastructure their operations are based upon, so they can gain a more accurate picture of their own operations and better know their customers in order to regain a foothold on the end-to-end customer process where new digital disruptors are stealing a march - and again meet the financial needs of their customers and the wider economy.

Customers expect the same level of service from their banks as they do from their daily interactions with online retailers, supermarkets and mobile operators. The complex nature of banking services and the financial infrastructure that underpins banks’ operations, makes this an especially difficult challenge. As you mention, Banks must reorganise themselves around the customers data and more effectively leverage this data. To achieve this, there is a need to address the infrastructure – or plumbing – that allows this data to flow horizontally within and between financial institutions; infrastructure that is widely not fit for purpose.

However, as you outline, the immediate rip and replace of this infrastructure carries with it a huge level of operational risk, along with a huge cost at a time of economic and regulatory uncertainty. There is a need to look at how the limitations of current infrastructure can be addressed on a longer term basis, the benefits of doing so and how both banks and the new regulators can better factor this into their longer term planning – for their mutual benefit and that of the economy.

This is something Intellect is working to address through its Financial Infrastructure Programme (www.intellectuk.org/programmes/financial-services); which provides a neutral forum for all relevant parties – from banks, regulators, policy makers, academia and technology innovators - to discuss the ‘technological art of the possible’ in financial services, and provide the foundation for tangible outputs to drive the mutually beneficial evolution of the financial system.

neil burton

Spot on Chris. Possibly the biggest toughest change programme in the world though?
There are a few initiatives about which may help....EACHA http://www.eacha.org/ just kicked off an initaitive to figure out how the 22 ACH/CSMs in the Eurozone can collaborate to enable better banking services. IPFA http://www.ipf-a.org/ has been working to interlink ACHs globally. The Fed's Remittances Coalition http://www.minneapolisfed.org/about/whatwedo/payments/Remittance_Coalition_Project_Overview.pdf has proposed new ISO20022 messages to support remittance information to be carried together with a payment. SEPA helps in the Eurozone, by forcing adoption of 20022. And, of course, new entrants are more readily able to build services which cut horizontally across traditional country-based silos. Of course today these are largely backoffice rather than customer-facing, but if the plumbing's there, why not use it for other purposes?

Kyle Thom

Thanks, Chris. I doubt many would disagree with you. But what if banks could realize the benefits of a customer-centric approach WITHOUT replacing core systems?

Zafin Labs' miRevenue is transforming the way banks manage product, pricing and billing across product silos and lines of business. By acting as an innovation layer that wraps around and connects legacy systems, miRevenue empowers banks with the ability to bundle products and services based on a complete, 360-degree view of the customer relationship.


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