Banks worldwide are growing increasingly dissatisfied with their aging core banking systems and plan to update their core technology architecture to remain competitive, according to a global survey, “Redefining Core Banking,” sponsored by Accenture and SAP AG.

Seventy percent of bank executives surveyed said flexibility was the biggest problem hindering the success of their core banking systems. Almost half of the bank executives surveyed also cited high maintenance costs and lack of system integration as areas that would impede their ability to remain competitive. To address these concerns, a significant number of banks surveyed are planning core banking system replacements within the next five years — 30 percent in Europe, more than 35 percent in Asia Pacific and more than 20 percent in North America.

For the purposes of the study, core banking was defined as the sum of all IT components allowing banks to manage basic financial products and services, including data on clients, deposit accounts, loans, mortgages, payment transactions and credit cards. The comprehensive global study is one of the first to gather the views of high-level bank business and information technology executives, as well as branch-level employees, who are the primary users of core banking systems.

Core system issues resonate with branch employees. Throughout the branch survey, this group identified the day-to-day issues they face using old systems that affect their customer interactions. These include:

• Branch employees said they spend nearly 40 percent of their days working on customer-related back-office activities rather than on customer-facing activities.

• Branch employees agreed that response time (38 percent) and integration of different applications (38 percent) ranked highest on the list of areas needing improvement.

• Fifty percent of branch employees agreed that frequent and unwanted delays were the most common processing issues. Other processing issues included inconsistent customer data and not understanding customer needs.

Executives surveyed indicated two major reasons their systems are inflexible: Old systems built on what they considered to be the wrong technology for future growth and systems that have been customized over time, resulting in complex systems resistant to change and expensive to maintain.

Another significant finding of the survey was that business executives and IT executives differed in their expectations of the value a core banking system needs to bring to a bank. Thirty-nine percent of business executives want a system focused on product innovation, while IT respondents primarily want a system that reduces expenses (40 percent).