The banking industry in the Asia-Pacific is poised to implement major core banking system projects in the next three years, ushering in a new wave of significant financial technology spending especially among top tier institutions.
The findings were revealed in a recently published report by IDC Financial Insights that examined the core banking modernisation plans of the 10 largest banks in 12 major markets across Asia-Pacific.
"We expect at least 32 of the top 120 Asia-Pacific ex-Japan banks to undertake significant changes to their current core banking systems from now to 2015," says Michael Araneta, Associate Consulting and Research Director for IDC Asia-Pacific.
Araneta notes that these projects include not just whole-of-core transitions but also significant changes to key components of core systems such as chart of accounts, GLs, and loans and deposit systems — reflecting the growing preference for iterative creation of core banking platforms for many banks worldwide.
Several business imperatives have proven to be constant justifications for greenlighting core banking projects and they include cost management, time-to-market, and scalability.
However, there are a few relatively new goals that are driving banks to shift to new or modernised core platforms. These "new" drivers include improvements in data management, enhancement of risk analytics, and super-regionalisation, reveals IDC Financial Insights.
According to Araneta, risk management and regulatory compliance requirements are driving demand. More than ever, banks would like to see their core banking systems help them cope with the onslaught of new regulations and the new reporting requirements that come along with the new rules.
"This requires better information management, common data models, and integration with core analytics and reporting systems," notes Araneta.
Furthermore, as banks vigorously pursue single customer views and other enterprise-wide consolidated views, they discover that data structures in and around the core banking systems are far from ideal — multiple silos exist, the same customers have multiple customer information files (CIFs), and product systems cannot be reconciled, among many other issues.
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