September 29, 2010 - You heard it here first: after years of mostly laments about aging systems, there's some good anecdotal evidence of banks forging plans to migrate from their 30-year-old (or older) core systems to more modern and flexible architecture, or to find new ways to inject flexibility into the legacy core. The big surprise is which vendors are getting closer looks.

The latest public news in this department comes from Silicon Valley Bank, which announced last month that it had deployed Oracle's Flexcube core banking system, and touted the bank's multi-currency capabilities as one of the motivating factors. On the other end of the spectrum was Carter Bank & Trust, which took a lonely road with its imaging vendor VSoft and worked for years to help design and build a real-time, Internet-based core system from scratch. And then there's BBVA Compass and Union Bank, both working diligently on, but likely years away from, launching core upgrades from Infosys. And outside the country, but still interesting, is the launch of Misys's new BankFusion core by CRDB bank in Tanzania, and news that somewhat closer to home Bermuda Commercial Bank would also deploy BankFusion.

And then there's the rumors department. Word has it that at least one other small Midwest bank has VSoft on its short list for a new core vendor to replace a Metavante/FIS core. Also tumbling through the rumor mill is that FSI of New Jersey, which years ago forged a partnership to resell Flexcube to community banks, is working on an implementation. "I think it's because the U.S. finance applications are 20-30 years old, they just keep trying to put more lipstick on the pig instead of rebuilding them," said one bank technologist whose institution is looking beyond the usual domestic vendors.

This is all anecdotal evidence. A recent Celent polling of North American bankers found a majority (58 percent) with no plans to upgrade despite their systems' antiquity. And legacy vendors FIS, Fiserv, Harland, Jack Henry and OSI all surely have had client wins to report over the same time period. But the buzz is unmistakeable.

Vendors that couldn't get a second look a couple of years ago because of their "foreign" designation are now on the short lists. "We've seen more action in the last one year than we did in the last five years," says Shaji Farooq, head of banking and capital markets for Infosys in the U.S.

Outsourcers Tata Consultancy Services and Infosys each say they're doing brisk work with U.S. banks to plug modern components into core systems. Not exactly putting lipstick on a pig, more like plastic surgery for the pig.

"We are working on certain opportunities ... to replace some components," says Sri Sunder, Head of Banking Sales, TCS NA. "An absolute replacement is unthinkable. Why not chip away at it, make the core banking system just a data repository at some point?"

This originally appeared on Bank Technology News.

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