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This is the Best Time to Assess a Bank's IT Systems

FACT: Eight bank tech companies account for more than 79% of the core systems used in the U.S.

FACT: Eight bank tech companies account for more than 79% of the core systems used in the U.S.FACT: In 2008, 96% of new core sales represented switches from one top eight company to another.

CONCLUSION: You tell me.

MY OPINION: Just because a core system ranks among the top eight, doesn't mean it is the best one for any given bank.

In the past 30 years, thousands of banks acquired new core systems. Not all of them made the selection correctly. The biggest single reason for the mistakes was the idea that if a well-respected peer acquired Brand A core system, then it would be right for any other bank. With a lot of experience behind them now, bankers are realizing two things: 1) all banks are not alike, and 2) all core systems are not alike. The right fit is the key to selection.

Also in the past 30 years, there have been significant changes in the dynamics of banking. In the conduct of core selection projects, my first task is to define the bank and its mode of operations. In other words, what is the bank's strategy? I doubt if the banks I worked for would produce the same strategic plan today that they had when I conducted the original assignment. For example, how many banks would be aggressive about mortgage lending? How important is online banking? What changed in item processing and the reduction in check volumes? How important are "what-if" systems in today's turmoil?

I believe it's appropriate for banks to conduct a check-up of their requirements versus the responsiveness of their current systems. Many would find that the correlation is adequate. The above statistics indicate even the best of systems aren't the right systems for some banks.

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