Banks Worldwide Plan to Overhaul Aging Core Banking SystemsTo Gain Competitive Advantage, According to Global Survey

Survey by Accenture and SAP Showcases Widespread Challenges Facing the Global Banking Industry and Demonstrates the Need for Banks to Rethink Their Core Systems and Architecture Strategies

COPENHAGEN, Denmark; Sept. 6, 2005 – 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 sponsored by Accenture (NYSE: ACN) and SAP AG (NYSE: SAP). The results of the study were released today at Sibos 2005, the financial industry’s leading annual forum held in Copenhagen, Denmark.

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.

"Regardless of geography, core banking system maintenance is the albatross in banks’ IT departments," said Octavio Marenzi, CEO, Celent. "Fierce competitive dynamics and the necessity to keep pace with new products and to strengthen customer relationships will motivate banks to significantly rethink and revamp their IT architecture over the next decade."

SAP and Accenture entered into an alliance in the Financial Services industry in 2003 and recently co-sponsored the study, titled "Redefining Core Banking," to examine the current status, impact and plans for transformation of core banking systems. The comprehensive global study is one of the first to gather the views of high-level bank business and information technology (IT) executives, as well as branch-level employees, who are the primary users of core banking systems.

Nearly 1,500 bankers around the world participated in the study, with 43 of the top 100 banks represented. The survey included banks of all sizes in Europe (40 percent), Asia Pacific (30 percent) and North America (30 percent). 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.

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:

Global Need for Flexibility and Desire for Integration
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. With branch employees worldwide spending more than 40 percent of their time on back-office activities, the survey identified not only problems of banking executives, but also the challenges faced during the day-to-day activities of branch employees.

"This survey points to the need for leading banks to simplify their internal operations, equipping themselves with core systems that use flexible, robust, future-oriented IT architecture that is service-oriented," said Jean-Marc Ollagnier, global managing partner of Accenture’s Financial Services Solutions group. "This component approach, replacing unnecessarily complex IT systems, can allow for more optimal IT alignment with the business-operating model and can allow for future flexibility in sourcing decisions."

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).

Cost Issues
Not surprisingly, virtually half of the executive respondents cited cost as a major concern with their core banking systems. The survey found that banks spend half of their entire IT budgets on core systems. A large portion of this spending is for development work to write new product functionality or system features into the core systems. In the Asia-Pacific region, banks typically spend 70 percent of core systems budgets on maintaining their core systems.

"Banks worldwide need to ’future proof’ their core systems to with a flexible environment that can help them adapt and respond to unseen future changes and advancements in the industry," said Thomas Balgheim, senior vice president of financial services, SAP AG. "The banking industry has entered the age of industrialization, similar to the shift manufacturers have made in years past. The benefits gained by modern core banking systems can help banks to save money, re-focus their employees back on their customers and provide customers with the products and pricing that meet their needs."

Achieving System Renewal
A very high proportion of IT executives surveyed said they considered a componentized, service-oriented architecture to be a key feature of their target IT states.

Although respondents provided a range of responses about their intended target architecture, few have technology road maps in place. However, the majority of banks surveyed have strong opinions about how they would move toward their target core banking systems. Forty-nine percent of IT executives and 50 percent of business executives said they would move to their target systems by product line; the second choice of IT and business executives was by functional area (28 percent and 29 percent respectively).

Survey Methodology
The survey was conducted by Celent, a research and consulting firm focusing on the financial services industry, for executive interviews in North America and Asia Pacific, and Novametrie, a European a research company specializing in financial services surveys, which conducted the executive interviews in Europe and the branch interviews in all regions. Accenture and SAP co-sponsored these two parallel worldwide surveys between March and July 2005 that examined the current status, impact and transformation of core banking systems in 17 countries. The European Financial Management and Marketing Association (EFMA) also served as an operating sponsor. The executive survey targeted 147 senior bank executives from 70 banks. Of these, 45 percent were information technology executives and 55 percent were line-of-business executives. The branch survey polled 1,300 branch managers and employees. The majority of the survey responses came from the top 100 banks worldwide.

Accenture and SAP Alliance
In September 2003, SAP and Accenture entered into an alliance for the Financial Services industry, offering banks and insurance providers a more effective and lower risk way to help them transform and grow their business, through a dedicated joint development team and sales channel, integrated solutions and services, innovative delivery, and highly efficient implementation. With a 30-year history and experience delivering innovative business solutions for more than 1000 leading financial services institutions, Accenture and SAP work together to help insurers and banks achieve the vision of an open standards-based architecture.

About Accenture
Accenture is a global management consulting, technology services and outsourcing company. Committed to delivering innovation, Accenture collaborates with its clients to help them become high-performance businesses and governments. With deep industry and business process expertise, broad global resources and a proven track record, Accenture can mobilize the right people, skills and technologies to help clients improve their performance. With more than 115,000 people in 48 countries, the company generated net revenues of US$13.67 billion for the fiscal year ended Aug. 31, 2004. Its home page is

SAP for Banking
SAP for Banking provides an integrated solution set to manage every aspect of the front- and back-office banking environment--from core banking processes, high-volume transaction banking processes and customer relationship management to financial accounting, cost controlling and profitability and risk analysis. With more than 550 customers in 60 countries worldwide, SAP for Banking helps financial institutions expertly manage transactions and relationships, quickly exploit market opportunities and easily tailor new products to the specific needs of individual customers. (Additional information at

About SAP
SAP is the world’s leading provider of business software solutions*. Today, more than 28,200 customers in over 120 countries run more than 96,400 installations of SAP(R) software--from distinct solutions addressing the needs of small and midsize enterprises to suite solutions for global organizations. Powered by the SAP NetWeaver(R) platform to drive innovation and enable business change, mySAP(TM) Business Suite solutions are helping enterprises around the world improve customer relationships, enhance partner collaboration and create efficiencies across their supply chains and business operations. SAP industry solutions support the unique business processes of more than 25 industry segments, including high tech, retail, public sector and financial services. With subsidiaries in more than 50 countries, the company is listed on several exchanges, including the Frankfurt stock exchange and NYSE under the symbol "SAP." (Additional information at

(*) SAP defines business software solutions as comprising enterprise resource planning and related software solutions such as supply chain management, customer relationship management, product life-cycle management and supplier relationship management.

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