CORE BANKING APPLICATION ACQUISITION: KEY CONSIDERATIONS

In other to remain highly competitive, banks generally upgrade or acquire banking core applications. These core processing platform are the heart and lifeblood of any financial institution, and the core solutions deployed is as unique as the acquiring institution.

According to a recent survey by IDC Financial Insights, it is important for financial institutions to consider vigorously global trend in implementing such capital intensive acquisitions.  It is strategically important to review such acquisitions against cost reduction, improved speed to market, and enhanced customer experience among other metrics. 

It is also pertinent for these institutions to understand the performance of its Core application vendor in the areas of knowledge and implementation of compliance requirements in all regions in which the institution operates, and a clear understanding of roles and responsibilities for both the vendor and the institution in meeting compliance mandates across the institution's network.

The institution should have a full understanding of the vendor's existing integration capabilities and resources available to handle the integration challenge, including skills, locations, and costs. When implementing changes within the core, strategically evaluate people and processes connected with the core and allow for (and encourage) changes to those processes before technology is implemented.

"More and more banks are committing to transformational IT initiatives that will take them into tomorrow’s world of financial services.  The IDC Financial Insight report on traditional and new providers can help with that transformation," concluded Jerry Silva, research director, Global Retail Banking, IDC Financial Insights.

The report tagged Worldwide Core Banking Solutions 2015 Vendor Assessment of Global Providers provides valuable guidance when examining existing core banking solutions and/or planning for future investment opportunities.

IDC provides an assessment of 19 global core banking solutions, in terms of how the major vendors compare with each other, and what criteria are most important for financial institutions to consider when making core banking investment decisions. 

Vendors featured in the report include: ERI Bancaire – OLYMPIC Banking System, FIS – Profile, FIS – Systematics, Fiserv Signature, Infosys Finacle, Oracle FLEXCUBE, SAP Transaction Banking, Sopra Banking Software – Sopra Banking Amplitude, Sopra Banking Software – Sopra Banking Platform, Tata Consultancy Services (TCS) BaNCS, and Temenos T24.

Ten solutions with Global reach are closely grouped within the top 2 categories, Leaders and Major Players.  All solutions ranked within those categories are very close together with regard to the strategic focus of the vendor and the capabilities of the provider based on reference account feedback – we found no significant outliers within those two categories.

The providers in the Major Players categories tended to be more traditional providers and solutions in North America.  All were deemed as having capable solutions for core transformation for North American institutions.

According to Karen Massey, senior analyst, banking, IDC Financial Insights, "We are seeing a significant increase in core banking modernization globally and expect North American institutions to closely follow with strategies to take out costs and complexity, address risk and compliance issues, and  improve competitive posture against both U.S. and non-U.S. based institutions."