Despite the global economic slowdown of the past few years, consumer banking services have kept pace in terms of total revenues and profits compared with banks’ other lines of business. A sample of large US and international banks with diversified business shows that retail banking products and services profits accounted for $184bn, representing an average of 54% of the total for 2003.

While most banks know their core systems are overdue for replacement, the dual obstacles of high cost and high risk are preventing them from taking the plunge. 

The demands of competition and regulation mean banks need to be poised for action. Their core systems must be able to evolve with industry changes, says CSC’s Anita Bradshaw.

Until now, reducing costs and improving flexibility have driven the development and change of core banking systems. However, the burden of new regulations is also putting pressure on banks to unify their customer and product data.

Core banking system replacement is risky and complex but is an increasingly likely scenario for banks. Like their smaller peers, larger institutions may need to opt for packaged solutions to keep costs and time-to-market down.

Much has been said about the need for greater consolidation in the securities industry, especially to bring together the fragmented clearing and settlement infrastructure in Europe but, as Frances Maguire finds, consolidation is not always what it is cracked up to be.