Most Banks in Asia are Running on Outdated Core Banking Technology

Thought Machine, the cloud native core banking technology firm with its APAC headquarters in Singapore, continues to make investments to help address an innovation gap in the Asian banking market and is one that needs to be filled, if banks which have not upgraded to the latest core banking systems are to remain competitive. Approximately 95% of banks in Asia are using second and third generation banking technology, severely limiting their ability to innovate, while increasing their costs, according to an IDC sponsored report by Thought Machine entitled, Digital Core — Now Is the Time.

With the average age of core banking technology in Asia at 20 or more years, the imposed technology gap for infrastructure is increasing banks Cost-to-Income (C/I) ratios by 3% – 5%. Limited ability to automate processes and decisioning adds another 4% – 7% to the C/I ratio. The major reasons banks are hesitant to replace and upgrade their core banking infrastructure to the fourth generation includes newly replaced core systems, resource constraints, and an (incorrect) assumption that digitalisation is fulfilled by the adoption of internet and mobile banking.

And while many banks are hesitating, the report highlights that several dynamic mid-sized banks are moving quickly in adopting fourth generation core banking systems. These banks will experience true digital transformation, increased business productivity, adaptation without disruption and easy integration to external and internal systems. Acceleration in digital transformation, opportunities to monetise IT assets, partnerships with challenger banks and fintechs, cost effectiveness of migrating to organic digital core platforms and risk of acquisition are the key drivers for banks across the region to replace their core banking today.

Cloud Native Core Banking

Thought Machine’s Vault is a next generation, cloud native, core banking platform. It does not contain a single line of legacy or pre-cloud code, enabling traditional banks to transform and adopt modern, cloud native systems. Its scalable, secure, and flexible API-driven solution unlocks the banking industry’s ability to innovate and offer customised products and personalised customer experiences, while ensuring security, cost effectiveness and virtually zero downtime. With Vault, Thought Machine gives innovation back to its customers. Banks can now implement core banking on their own terms and configure any type of retail banking product easily and quickly, without relying on external vendors for those changes.

Empowering bank-based product innovation

Thought Machine plans to expand to Australia, Japan, and North America in 2020. Providing limitless core banking, the in-house developed Vault recently expanded its product compatibility to include all four leading cloud platforms – Google Cloud Platform, Amazon Web Services, Microsoft Azure, and IBM Cloud. It is compatible to run on multiple infrastructure options: SaaS, Private or Public Cloud, Hybrid Cloud and even on premise. The new SaaS offering brings further flexibility for banks wishing to operate single or multiple products on Vault’s secure microservices architecture, without the overhead of software management and updates.

(This content is surmised from a press release)