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.
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