Core Systems

11:19 AM
Art Gillis
Art Gillis
Commentary
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3 Reasons Why Bank Core Systems Are Like Gorilla Glue

Historically, bankers have needed very good reasons to convince them to change their core systems.

For the past 25 years bankers have been switching to better core systems, and those who chose wisely are in no mood to replace a very valuable resource -- more valuable than the day it was installed -- for three reasons:

1. Increased use competency of their core system by every bank employee in the chain.

2. Ongoing completeness and modernization by top vendors of core systems.

3. Integration, thanks to product infrastructures that can accommodate new apps.

Here are some of the dynamics of this business:

Prior to let's say 1980, core processing was a sloppy business. Uncommitted vendors (namely all the large correspondent banks), weak products, and technology that in the bank management suite looked more like a stepchild than a to-become-savior replacing labor-intensive operations activities.

Practical reasons why bankers switched in the past:

  • The major providers were banks that wisely withdrew from the business, thus forcing community banks to enter the marketplace.
  • NCR, a major provider of both in-house and outsourced solutions, withdrew from the business.
  • Introduction of mini-computers allowing small banks to do their own processing. Jack Henry and Don Dillon provided software for the turnkey solutions.
  • Independent companies wisely cranked up their capabilities and made good acquisitions to add significant measures of reliability to the provider sector.
  • The buying spree continued right up to about Y2K.
  • Reasons why 98 percent of U.S. bankers aren't switching to new core systems now: If it ain't broke …

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