Wait three years before you act on the claims of research firms

Implications: - Two and a half years ago an article in the American Banker quoted a bank tech research firm as predicting that major banks were going to convert to new core systems within the next two years. - Not one single large bank in the U.S. has converted their legacy core system to a platform based on new architecture since that article appeared.

Analysis:  Two and a half years ago an article in the American Banker quoted a bank tech research firm as predicting that major banks were going to convert to new core systems within the next two years. The case was based on pretty good evidence. Large banks are using 40-year-old legacy systems, and everyone knows that in a world of throw-away technology after three years, this event is way over due. What the research eggheads didn’t take into account was the practicality of how this monumental conversion would occur. Plug-in technology is doable in a matter of months or years. But core systems in large banks are like 300-year-old oak trees. They don’t move easily. Two and a half years have passed since the American Banker article appeared and not one single large bank in the U.S. has converted their legacy core system to a platform based on new architecture. If you track companies such as Fiserv, Fidelity National Information Services, Inc., Metavante, Jack Henry, Open Solutions and Harland Financial Solutions you will discover that research reports do not drive their revenues. Reality does. The average revenue increase from 2005 to 2006 for these companies was 9.77%. Not like the good old days of five years ago, and that’s because core system sales are not the main event anymore.