While core banking system technology has remained more or less in its current form for at least 20 years, predictions regarding the widespread replacement of these legacy systems have for the most part remained unfulfilled for more than 10 years. This report retraces the steps of a 2011 report that supported the case for an impending wave of bank system transformation, concluding that core banking modernization is more accurately described as an ongoing and iterative process rather than a one-time event.

In the report, Why Change Cores? Reassessing the Drivers of Core System Renewal, Celent studies the practical drivers of core system renewal and reflects on the circumstances that have led decade-old predictions of wholesale replacement of these large and complex systems to remain unfulfilled.

As Mark Twain once famously wrote from London in 1897, “the report of my death was an exaggeration,” and so it appears to be with the many reports regarding the impending death of the legacy core banking system. To better understand this paradox, this new report retraces the steps of the original report and updates the thought process regarding the business, technical, and integration issues that were cited as drivers of core transformation in 2011.

“In considering the issue of core system modernization, it may be that we’re asking the wrong question,” says James O’Neill, a senior analyst with Celent’s Banking practice and author of the report. “Since very few major bank core modernization projects are performed in a ‘Big Bang’ fashion, it’s less about ‘when’ core system transformation will arrive, and more about what form core modernization will take.”

This report examines the ways core banking systems have adapted to ever-changing business, technology, and integration challenges and opportunities and concludes with an examination of what circumstances could someday turn the current trickle of modernization into a wave of core system migration and transformation.