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practices used routinely in such programmes today. Banks that have replaced their core banking
The more visionary banking leaders have realized systems with third party software have been found
that IT is not a core part of their business, therefore to have 17% better returns on equity and 6%
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outsourcing and collaborating with technology improvement on their cost-income ratios . This
partners is the best way to achieve success. data can help boards of leading banks to gain
confidence that core banking transformations are
Business justification not only eminently do-able, but also yield proven
Traditional waterfall models of development meant financial benefits, if done right.
multi-year core banking transformations, structured
around few and infrequent milestones, with long
payback times. Often, business and IT benefits
could not be realized for many years, while initial
investment was heavy and often exceeded original
estimates. Justifying the business case in the face
of more immediate non-discretionary regulatory or
customer-facing digitization projects often proved
to be too big a barrier. The average tenure of CIOs
at just four years meant that for a CIO, taking on
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a multi-year programme was considered too risky
from a professional standpoint.

Replacing core banking
Today, implementation methodologies have rd
evolved. Agile approaches and cloud technology systems with 3 party
options to mitigate risk through frequent, software:
incremental delivery and quicker time to value
cause the business case to be more justifiable,
while also making it easier to maintain momentum 6%
around a ‘change the bank’ mindset, rather than
a ‘run the bank’ culture. Most banks complete
a ‘pilot’ project to prove the concept before lower cost
embarking on a full-blown transformation. income
Many follow well-tested phasing and migration ratio
approaches, aimed at minimizing business risk and
accelerating decommissioning of legacy systems,
using state-of-the-art automated design and
testing tools.

18) Gartner estimate
19) Temenos research using data from The Banker and IBS Intelligence (2008-2015)

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