he $8.5 billion banks invest in core systems will by 2013 have substantially shifted into new, possibly foreign-owned technology, Financial Insights says.
By Orla O'Sullivan
Bank Systems & Technology
July 02, 2008

The $8.5 billion banks invest in core systems will by 2013 have substantially shifted into new, possibly foreign-owned technology, analysts from Financial Insights said in a teleconference just before the July 4 holiday weekend.

"Once T24 or somebody comes into the U.S. market and has good success, it could really change the field in the next five years," said Karen Massey, senior research analyst at Financial Insights, referring to the T24 core processing system from Chennai, India-based vendor Thesys Technologies.

U.S. banks are afraid of platforms considered unproven, so they only change their core system when "feeling real business pain," added Patricia McGinnis, research director, corporate banking, for Financial Insights. "So, we're probably not going to see a lot of deals in the next 12 to 18 months."

Massey, a consumer banking and credit analyst, agreed. Although many European and Asian banks have moved to more nimble technology, she said, Tier 1 banks -- which spend $6.5 billion on core processing annually -- are "looking but not buying right now."