Over the past decades, financial institutions have built up monolithic piles of technology. These legacy systems are still an integral part of the architecture platform of banks. For example, 3 trillion dollars pass through COBOL systems every day.* Banks have successfully managed to integrate customer-facing and web-based solutions while making sure they fulfill regulatory compliance requirements. This has been done at a huge cost. It is estimated that banks spend around 80% of their IT budget on legacy technology maintenance.**
The cost of running the business is putting pressure on an industry with a low return on equity (ROE). Moreover, new players like neobanks, fintechs and big tech companies are challenging traditional banking value chains at different levels. Such enterprises grow their business with the help of modern technology architecture which allows them to operate more efficiently at lower costs and implement innovations faster than traditional banks.
All this is putting increased pressure on banks to review their core banking platforms. Over the past years, a myriad of banking platform solutions have emerged to cater to the changes required in the industry. Some of these platforms are created by established providers, basing their solutions on existing, legacy type origins. Others have emerged from new entrants and more recently from niche players with cloud-native platform propositions.
As the financial industry changed from a clear landscape with established institutions to a varied, more complex ecosystem of banking services (including fintechs, start-ups and neobanks), so did the market for banking platforms.
To help set the scene and provide insight into the marketplace, Quint supports banks and other financial service providers through a whitepaper that explores the market for banking platforms. Key takeaways include:
Quint, as an independent sourcing advisory firm, helps financial institutions to decide on the best options for a roadmap to becoming a bank of the future.