Introduction

The North American core banking systems market is a highly mature market which will even at the best of years go through only relatively modest growth. Vendor opportunities however remain higher as smaller banks or credit unions are migrating to an outsourced model.

Scope

This report discusses the current state of the core systems outsourcing retail banking market dissected by tiers. This report also discusses the business and technology drivers/inhibitors for core systems outsourcing investment. This report gives an in-depth analysis of the market sizing and opportunities within. Lastly, this report gives an overview of the vendors offering outsourcing services within core system area in retail banking market.

Highlights

Landscape on banking revenues side is changing as we can observe slowdown in mortgage market, deposit growth decrease within top tier banks, upturn in corporate banking or slowdown on consumer credit. Revenue slowdown increases efficiency pressure, which translates into activity around core systems. Reducing application development time and cost are emerging as main drivers of transforming or replacing existing core system solutions into and outsourced model. The core system market will continue to grow relatively slowly at overall market level, but with more narrowly defined vendor opportunities in the space growing considerably faster. Outsourcing opportunities to the lower tier institutions for example continue to experience healthy growth and will accelerate within mid-tier banks.

Reasons to Purchase

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CHAPTER 1 EXECUTIVE SUMMARY 3
Key findings 3
CHAPTER 2 RETAIL BANKING MARKET OVERVIEW 10
Introduction into the retail banking marketspace 10
Current IT spending patterns in retail banking 11
CHAPTER 3 CORE SYSTEM MARKET OVERVIEW 13
The current state of the North American retail banking core systems outsourcing and in-house maintenance market - a tier specific story. 13
Largest banks 14
Mid tier banks 16
Lower tier banks 17
CHAPTER 4 DRIVERS BEHIND OUTSOURCING 20
Business drivers for core system transformation to an outsourced model. 20
Reduced application development time and costs are driving core systems into an outsourced model. 20
Pricing and cost 23
ASP delivery model 24
Motivators 24
Inhibitors 25
Issues 26
Hosted Model 27
Core system application development and application management outsourcing. 29
Application management outsourcing is a key upsell opportunity for packaged vendors 30
Data center management outsourcing 31
Technology drivers for core system transformation into an outsourced model 31
CHAPTER 5 MARKET OPPORTUNITY 35
Outsourcing wave accelerating amongst mid-tier community 35
The move away from internal spending continues. 35
CHAPTER 6 VENDOR DYNAMICS 38
Growing vendor opportunities within outsourcing and core system transformation 38
Competitive landscape 40
Vendor success criteria 42
Market leaders 44
Other important providers 48
CHAPTER 7 CONCLUSIONS FOR OUTSOURCERS 51
Alignment of offering with market requirements 51
Strenght of market presence in North American retail core system outsourcing market 53
CHAPTER 8 APPENDIX 54
Tier Definitions 54
Future readings 54
SPP writing team 54
List of Tables
Table 1: Overview of Top Core Processing Technology Service Outsourcers 50
List of Figures
Figure 1: Methodology 5
Figure 2: Top investment and IT budget growth areas for 2006 11
Figure 3: North American core system delivery model market overview. 13
Figure 4: Current situation amongst Tier 1 and 2 banks of willingness and plans to outsource (2006). 15
Figure 5: Which of the following best describes your core system environment? (2006) 17
Figure 6: Dynamics within ASP market. 18
Figure 7: Technological dependence. 19
Figure 8: Major differences between outsourcing, packaged software and proprietary systems. 21
Figure 9: Key Cost Implications 28
Figure 10: Key Risk Implications 29
Figure 11: Which are the most important technology drivers for your institution's core systems? 31
Figure 12: The future vision of banking technology 32
Figure 13: Process-centric service-oriented architecture 33
Figure 14: North American core system external vs. internal IT spend 35
Figure 15: Core system outsourcing growth in US market. 36
Figure 16: Vendor revenues from packaged vs. outsourced solutions, 2006 37
Figure 17: ASP model is highly significant share of core systems opportunity even in the top 100 US retail banks. 39
Figure 18: Overview of US core system market vendors in 2006. 40
Figure 19: Vendor market presence by revenues from core system outsourcing (estimated data) 2006. 41
Figure 20: Which are the most important qualities when seeking a vendor to transform your core processing systems? 42
Figure 21: Bank concerns and vendor success criteria 43