Old systems, older systems, even older systems

Zions HQ, Salt Lake City © Ricardo630

I’ve been immersed in the US core banking systems market for the last few weeks as we are working on a new report, to help banks to navigate the many offerings that are available here. The task has taken me around the three mainstream heavyweights (FIS, Fiserv, Jack Henry & Associates), the few mid-tier players that remain (CSI, D+H, IBT), and the smaller players, including the couple of would-be new entrants. A key consideration, of course, is the extent to which these might finally be challenged by the non-US core system vendors.


The market has some interesting dynamics. For one thing, to put it politely, some of the systems that still sell are ancient. Jack Henry’s CIF 20/20, anyone? Its roots go back to the IBM System/32, so it even predates Misys’ international offerings, Midas and Equation (all of these run on the IBM proprietary midrange, which gives a big clue to their long roots). Many of the other systems have been out there for 25-30 years as well.

The suppliers have been investing in these systems over the years, of course, and have developed or acquired many other systems to sell alongside them (in this, they seem to have been more successful than their non-US counterparts, making a good business from selling add-on components into their existing user bases and as standalone offerings). Nevertheless, as another US bank opts to move from one old system to another (often with other banks coincidentally moving in the opposite direction at the same time), surely the business case is questionable?

Moreover, the larger US vendors don’t half like to collect core banking systems. It would take a core banking system geek to name every Fiserv core system, for instance (13 for credit unions alone). We could do a report helping banks to navigate this supplier’s systems alone. A few of the systems, particularly the mainframe-based ones, such as Fiserv’s TotalPlus (gained by way of Open Solutions and derived from Bisys) and its Single Source, have been gracefully retired (since when did ‘sunset’ become a verb?). Nevertheless, there is a huge amount of duplicate R&D to keep so many core systems in play, even if there are attempts at common components on the front end.

Where are the challengers? Temenos, via the acquisition route (Trinovus), is trying again. Accenture has BBVA Compass as a US flagship for Alnova but has not moved beyond here. Oracle FSS has not made progress beyond Silicon Valley Bank. Everyone (particularly other TriSyn users) is waiting to see if Zions Bancorporation can succeed with TCS’s Bancs where other US banks have failed with international systems. Meanwhile, Discover Bank was planning to finally go live with Infosy’ Finacle in February this year but has been very quiet about the outcome so far. And that’s about it at present.

One attribute that the US core systems market seems to share with the rest of the world is that existing suppliers tend not to come up with new systems (Fiserv tried and failed with Acumen). As such, the focus is on Vsoft and Corelation (the latter the creation of a number of former Jack Henry Symitar staff), albeit purely in the credit union space. One system that flickered briefly was Single Source from 2004 start-up, New Core Banking Systems, but it failed amidst lawsuits, albeit with its main creator, John Aaranowicz, still seemingly keen to revive it.

In conclusion, there is nothing to really suggest that the ancient systems will not continue in their tried, tested but unexciting way for plenty of years to come unless the allure of the non-US systems (often with very long roots themselves) finally persuade US banks that the grass is greener on the other side of the fence. Alternatively, other new systems could start to pop out of the woodwork, in which case history suggests that groups of ex-employees of the incumbent suppliers are probably the best place to look.

For now, there are plenty of US systems to keep us busy as we compile the new report, but having a few challengers would be welcomed, for us as well as for the US banks and credit unions.

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