Core Banking Crisis: 55% of Banks cite Legacy Systems as top barrier to transformation

By Gloria Methri

• Over 55% of banks say the limitations of their existing core solutions are the biggest roadblock to achieving their business goals
• Approx. 93% of survey respondents said their success depends on choosing the right core banking solution
• Integration of AI technologies is a key driver of transformation, yet a significant challenge presented by existing core solutions

As the banking sector faces digital transformation challenges, a report from 10x Banking reveals that 55% of banks view their core banking systems as the biggest obstacle to achieving their digital goals. The report, “Core Banking without Compromise,” surveyed over 200 senior IT decision-makers and highlighted the urgent need for a shift toward modern banking solutions.

Legacy Challenges Persist

The independent study, conducted in June 2024, highlights that 53% of institutions utilising legacy core systems are struggling to scale their operations due to data silos and production bottlenecks. This sentiment underscores a growing consensus in the industry: banks must prioritise transforming their core banking systems to embrace the potential of cloud technologies fully. However, the research also indicates that the perceived risks associated with migrating to newer technologies are significant, with 69% of respondents citing these fears as a barrier to deploying next-generation solutions.

The AI Integration Gap

Despite the pressing need for transformation, only 32% of banks have successfully integrated artificial intelligence into their core systems. The appetite for AI is growing, with 39% planning to implement it within the next year and 27% looking to do so in the next two to five years. Notably, just 1% of respondents have no plans for AI integration, suggesting a broad acknowledgement of its potential benefits in enhancing operational efficiency and customer experience.

Moving Towards the Future

In a market where innovation is critical, the findings show that 93% of decision-makers agree that their company’s future success hinges on selecting the right core banking solution. Remarkably, only 2% of those surveyed have no intentions of moving away from their legacy systems, with 42% planning to replace elements of their outdated technology stack within the following year.

Antony Jenkins, Founder and CEO of 10x Banking, commented on the survey results, saying, “While there are more core solutions available than a decade ago, this research shows that limitations and compromises remain—and they are frustrating both business-as-usual operations and long-term transformation activities of banks. With the rapid advance of AI and changing customer expectations, the core challenges facing banks could quickly escalate from frustrations to business-critical risks.”

A Solution on the Horizon

To address these pressing concerns, 10x Banking recently launched “meta core,” a cloud-native platform designed to offer banks the agility to introduce innovative products and personalised services at unprecedented speed and scale. This next-generation solution aims to mitigate the challenges identified in the report, allowing banks to transform without the risks and compromises that have historically plagued legacy and neo-core technologies.