Most
banks will still use the
same legacy systems for at least another five years despite the
fact that they increase costs and decrease flexibility.
A survey carried out by research firm Spectrum Consulting
revealed 76% of banking professionals believe legacy IT systems,
used to process banking products for up to 40 years, will still be
used in 2013.
Three quarters of the banking professionals interviewed said
legacy systems increase costs and
reduce flexibility.
Over 90% of IT professionals, across 35 banks, said legacy IT
systems are becoming more expensive to update and maintain.
Regulatory requirements are putting strain on IT in banks.
Chris Skinner, CEO at
financial services think tank Balatro, said replacing legacy
systems is a massive undertaking because the systems are essential
to the business.
"Most systems are running in real-time 24 hours a day. To take
them and do anything to them is challenging because they are
business-critical," he added.
Developments to banking IT infrastructures over the years make
ripping and replacing legacy systems more difficult, he said. "They
find it challenging because the very heart of the bank, the core
account systems are the most customer visible and complex because
of their interdependencies and years of
being developed upon."
The research said 88% of respondents would consider switching
core IT systems to a hosting partner, according to the survey. It
revealed 67% think the advantage of using a hosting provider is
access to the best technology without the capital investment. A
total of 42% said a hosted model would help them respond to changes
in the market quicker.
Read more about banks' legacy systems:
Banks consider off-the-shelf software to remain
competitive>>
Barclays uses web services to integrate legacy
systems>>
Banks refresh legacy systems with SOA in readiness for Faster
Payments System>>