U.S. banks changing out core systems for real-time processing

They're spending more than $100M to replace aging systems

By , Computerworld |  Virtualization, banking, transaction processing

The bank's storage systems have grown by 200TB in the last year alone, mostly due to new production systems coming on board. Those new systems increased data retention demands in order to meet regulatory requirements.

"I'm always surprised that people don't talk about the significant effect of virtualization on the I/O characteristics of storage. When you're putting production SQL, Exchange and Web workloads on them..., those types of workloads have a much different demand on the back-end storage than a some archive volumes," he said.

The bank is using storage area networks (SANs) from Compellent, which gives it a pool of virtualized capacity that can automatically expand with increased use. The arrays also allow data to be tiered across serial SCSI (SAS) and serial ATA (SATA) drives, depending on performance needs.

Banks that do not upgrade their core systems face a competitive disadvantage, according to financial research and consulting firm Aite Group. Aite Group estimates that about 20% of U.S. financial institutions have reached a high level of urgency in replacing their core systems, meaning that by not replacing those systems they could lose business to more flexible competitors.

In addition to institutions in the "high urgency" category, 56% of U.S. banks and credit unions would benefit from a core system replacement or transformation, Aite said.

"To capitalize on the new business opportunities coming to market, it is essential that core vendors not only offer a broad portfolio of tightly integrated solutions, but that they implement a unified go-to-market strategy across their organization," Christine Barry, research director with Aite Group, said.

For BBVA, moving away from a homegrown system to Alnova Financial Solutions was all about flexibility.

The bank currently uses Alnova in 30 other countries, and it will soon support BBVA Compass' operations across Texas, New Mexico, Florida, Colorado, California, Arizona and Alabama. It's designed to improve the bank's cross-selling and customer retention, and to boost efficiencies by integrating its U.S. banking network with global operations on a single platform.

Alnova will also deliver real-time bank processing capabilities and support higher transaction volumes.

Robert Hunt, a research director with market research firm TowerGroup's Retail Banking business, believes BBVA's multi-million dollar change-out may be key in driving industry-wide core system updates.

"There's only a handful of others under way now," he said. "I think we're still a couple years from seeing a significant increase. But, I think [BBVA] is one of the banks that will drive others -- if it does well."


Originally published on Computerworld |  Click here to read the original story.
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