Core Banking Technology PlatformReplacing legacy banking systems |
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In the U.S., new laws and market requirements are forcing banks to modernize their core systems. Regulators and investors are demanding improved data and transparency. Customers are looking for integrated service across a growing range of channels. And competitive pressure is driving a constant stream of new products and services.
Banks have invested a lot of time and money in their core technology platforms and those systems have served them well. But now, after decades of quick fixes and workarounds, those same systems are holding them back.
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Time for a change
Most of today’s core banking systems were originally built in the 1970s and 1980s and after countless modifications and add-ons have become so complex and convoluted that it may be difficult to fully understand them. This can make it hard for banks to comply with regulations and determine adequate controls. It can also make the systems difficult and expensive to support and improve.
Many banks spend half of their IT budget simply maintaining their core systems. And whenever they need to modify their systems to handle a new product, channel or market, they run into a brick wall. To make matters worse, it is increasingly difficult to find IT staff with the skills to support the legacy technology.
The good news is that viable and demonstrated solutions to these challenges have started to emerge. Many modern core banking platforms are flexible and scalable – designed to adapt to a bank’s changing needs. Also, many of these platforms are designed to provide real-time capabilities to improve the customer experience and help banks manage risk more effectively. These solutions are already being adopted in Europe and Asia and are gaining traction in Canada. Now, major banks in the U.S. are giving them a look as well..
How we can help
Deloitte has demonstrated skills and experience with core banking systems, both in the U.S. and around the world. We are working closely with software vendors and financial institutions to adapt the leading packages to the complexities of the U.S. market.
We treat core systems replacement as a business-led transformation, not just an IT project. Our teams provide a broad range of specialized skills in providing services from business strategy and operations to tax, audit, finance and IT. Our people have extensive training in the leading core systems applications. Specific service offerings include:
- Feasibility studies
- Business case development
- Requirements definition
- Product rationalization
- Integration and architecture
- Testing
- Deployment
- We also have deep experience helping organizations overcome resistance to change, which is often the single biggest obstacle in a core systems replacement.
Bottom-line benefits
Our services are designed to help our clients achieve measurable benefits. For example, we have assisted our clients to:
- Boost growth and profitability by supporting new products, services, geographic markets and channels.
- Reduce risk by eliminating complexity and providing real-time data.
- Improves the customer experience and enables seamless integration across channels.
- Reduce support and development costs by using modern technologies that are more efficient and better aligned with today’s IT talent.
Four ways to create more value now
Replacing a core banking system can seem overwhelming. Here are some ways to overcome inertia and manage risk.
Redesign processes. Be prepared to replace the processes and workflows associated with your core banking systems. Most solutions come with state-of-the-art processes that are highly recommended.
Choose vanilla. Differentiate your business by developing new products and services – not by modifying the application code. Customized code can make it hard to maintain and upgrade the system, which can be disastrous in an environment where regulations and market requirements are constantly changing. If customization is unavoidable, design it as a bolt-on that doesn’t interfere with the standard platform.
Manage change. A major systems replacement is not just a technology change, but a fundamental transformation of the business. Actively preparing for the shift and addressing organizational resistance is essential.
Commit to the journey. Core systems replacement should be handled as a series of coordinated improvements, rather than a big bang. Reaching the destination can require a sustained commitment over many years.
Banking core technology platform in action
A leading US bank wanted to reduce costs and improve the customer experience for the acquisition and servicing of their installment lending portfolio. We assisted in the selection and deployment of an outsourced environment that included core process areas, as well as the technology platform.
Case studies
Related insights
- Bank CIOs Must Continue to Innovate While Cutting Costs
- When Legacy is Not Enough
- Making the Case for Change
Related offerings
Meet our people
- Greg Kelly, Principal, Deloitte Consulting LLP
- Amit Chaudhary, Principal, Deloitte Consulting LLP
- Richard Walker, Principal, Deloitte Consulting LLP
As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.
