The Switzerland-based financial technology firm has won a contract from the Israel-headquartered bank to renovate its core systems at a time when maintaining old systems are thought to soak up heavy IT spending.

One of the oldest banking groups from Israel, Bank Leumi, has awarded a contract to Switzerland-listed fintech house Temenos to renovate its systems with Temenos’s T24 core banking software. The bank is also to use Temenos Connect, the firm’s solution for digital channels.

The bank will renovate its technology over a number of years, starting with a one-year project to launch a digital bank in Israel.  The project is expected to result in several million dollars a year in IT maintenance cost savings.

“Our existing banking technology is built on multiple, complex outdated systems and is very expensive to operate. The move to T24 will give us a simple, flexible solution that will allow us to launch new services faster and at lower cost across our entire portfolio. Starting with the digital bank project in Israel gains us competitive edge in a greenfield market, while at the same time prepares us to roll out a global solution across all business lines,” Dan Yerushalmi, chief operating officer, Bank Leumi, said.

David Arnott, Temenos chief executive, said that the cost of maintaining legacy systems at banks soaks up 76 per cent of banks’ budgets, explaining the economic rationale for renovation projects. (Source for figure is from Celent, 2015, IT Spending in Banking: a global perspective.)