So, you’re planning to migrate to a new core in the next couple of years?
You’re not alone.
More than 6 in 10 banks are in the process or planning stages of moving to a new cloud-based core banking system.
Several factors are driving this urgency after many banks and credit unions deferred their infrastructure modernization projects for years or even decades.
One factor is the rising rate environment, which is driving up margins and helping to restore one of banks’ most important revenue streams. This, in turn, will help financial institutions achieve profitability, giving them the necessary financial flexibility to commit to costly re-platforming projects.
Another consideration is that legacy, on-premises systems are rapidly aging and are not up to the task of meeting the needs of today’s consumer. A majority of legacy mainframes are between five and 20 years old, with many approaching three or even four decades. Incumbent banks and credit unions need to speed up the pace of innovation to keep up with upstart competitors and consumers’ demands to have access to their financial picture anywhere, anytime within the palm of their hands.
Unfortunately, banking institutions are facing a massive exodus of institutional knowledge over the next few years as the Boomer generation retires, leaving IT departments bereft of decades of mainframe expertise. Coupled with the shortage of high-level technical talent on the market today, the situation will become dire.
Lastly, compliance pressures are increasing, and industry regulators are demanding that institutions employ the latest security and privacy protocols. In many cases, legacy systems are not prepared to keep up with these requirements.
According to Accenture, “2023 will be the watershed for the start of core modernization.”