Intel Report Core Replacement - Flipbook - Page 5
That catalog of data and increase in online and mobile banking
due to the Covid-19 pandemic results in some deep concerns for
banks. A financial institution must have a clear view of its data
to protect the data, analyze it, better serve customers and allow
for open banking, enabling the firm to provide more robust services, such as faster loans, payments, treasury management and
embedding budget details within a customer’s account. If they
don’t have such options, other banks and fintechs will. (For a
Which of the following technologies
are currently used by your financial
institution?
Currently used
Not used
Unsure
Cloud
definition of terms, see the glossary on page 23 of this report.)
But what’s holding many banks back? They’re locked out of
94%
the data housed in their cores, which a bank uses to run its IT
operations. These systems can be outdated and unable to quickly
4% 2%
Application programming interfaces (APIs)
upgrade with application programming interfaces (APIs). They
also can’t access the data needed to build a full picture of customers — data that is also trapped in the core.
63%
28%
9%
Biometrics
It’s a story that spans more than two decades: Banks’ infrastructure has aged beyond the point of no return. To ensure
modern capabilities, financial institutions must consider updat-
30%
ing their core. Yet, for years banks have hesitated for a variety
of reasons, including complexity, cost, risk of a potential mistake
63%
7%
Artificial intelligence (AI)/machine learning
or lack of will from leadership.
A shift, however, has occurred. Bank Director’s 2021
27%
Technology Survey finds that 94% of financial institutions use
69%
4%
Robotic process automation (RPA)
cloud — or the storing, analyzing and computing of data and
technology tools over the internet. And in a 2021 global survey
of senior banking executives, Deloitte found that 60% planned
26%
to increase spending in cloud computing and storage, and the
same number will increase spending on data privacy. About
64%
10%
Blockchain
half (51%) also said they would increase spending in data
analytics. Effectively leveraging data requires either updating
the core to better access the data or using third-party APIs to
5%
93%
achieve similar results. If an organization’s legacy core lacks
the functionality it needs to analyze data or easily connect with
third-party APIs, then updating or replacing the core becomes
Source: Bank Director’s 2021 Technology Survey
a greater possibility.
But there’s another reason to upgrade the core: mergers. Last
year, the number of bank M&A transactions declined by 33%
compared to 2019, due to the pandemic, according to data
CORE REPLACEMENT: HOW BANKS ARE REPLACING THEIR CORES | 3
2%