Transaction Processing in the US: Are The Big Guys Ready For Open Systems?
By 2005, Celent anticipates that vendors of switch software will generate US$393 million in revenues globally. In the U.S., banks will spend US$94 million by 2005 on third-party vendors. Celent anticipates that payment systems integration will be the next big thing in transaction processing.
In a new report, "Transaction Processing in The U.S.: Are The Big Guys Ready For Open Systems?"Celent examines the appetite among top-tier U.S. banks and processors for replacing their legacy switch infrastructure with systems built using open platforms such as Unix, Windows, and Linux.
A switch infrastructure is a system that allows banks to acquire, authorize, and switch a transaction, as well as to drive an ATM or point-of-sale terminal. The report also reviews the vendor marketplace for these systems.
The report shows that, thanks to the 10-40% cost savings promised by open systems, processors and banks could greatly benefit from shifting their systems to open technologies (Windows, Linux, Unix). Concerns with the reliability and availability of open systems, but especially with the high cost of replacing a processing infrastructure—between US$30-100 million for a large organization—remain key impediments to legacy infrastructure replacement. Despite such constraints, Celent believes that the need to reduce costs in processing as well as new risk-sharing agreements with software makers and integrators may well drive a handful of US organizations to switch to open systems in the next two to three years.
Beyond basic replacement, "the next big thing in transaction processing will be payment systems integration, and open systems will be critical to it," comments Gwenn Bézard report had already established a business case or a budget, there is a great deal of interest in integrating disparate payment systems into a single payment hub.
"A number of banks and processors will start working on the business case for a payment hub, and they’ll begin evaluating relevant vendors in the next two to three years," adds Bézard.
The 38-pages report contains 34 figures and 1 table.
Switch vendors mentioned in this report include ACI Worldwide (Transaction Systems Architects; NASDAQ:TSAI), eFunds (NASDAQ:EFDS), S2 Systems, Mosaic Software, Oasis Technology, SLMSoft, CV Systems, and Nomad Software.