Temenos, the wealth management technology firm, has
published a white paper with the title Progressive
renovation for core banking system modernization, 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.