Temenos, the wealth management technology firm, has published a white paper with the title Progressive renovation for core banking system modernisation, explaining that the banking industry faces a “perfect storm” of change.

“Regulation is being tightened, customer loyalty is diminished, competition is becoming more intense and there is a revolution in mobile technology. Large retail banks stuck on branch accounting are operating at high cost, high complexity and low flexibility and this is unsustainable in the light of these structural headwinds,” Temenos said in its report.

As a result of developments, banks must renovate branch accounting systems but a “Big Bang” replacement is often too risky for the largest retail banks, the report said, and very few firms have successfully carried out such changes.

“The solution is a build and migrate approach,” Temenos said. A bank can build a new line of business and migrate accounts in a risk-controlled way.

“Traditional retail banks are running on old, costly and increasingly redundant batch technology which is hindering competition and allowing new entrants with customer orientated service models to edge in on retail banking customers. The build and migrate approach allows a large retail bank to enjoy the advantages of enterprise-ready components quickly, with acceptable technical and business risk,” John Schlesinger, Temenos chief enterprise architect, said.