However, the potential benefits include doubling of revenue growth owning to increased differentiation, cross sales, retention of high value customers, improved credit quality, speedy product creation and through enhancement of access to finance by vulnerable groups. It will also reduce annual IT costs including simpler application, optimization of hardware configuration and back office automation. Moreover, it would enhance reputation with clients and investors with exact regulatory compliance and better results in risk and financial management. 9.1.5 The effects of using ageing core banking systems were revealed by several surveys conducted on banks in Europe, Asia/Pacific and North America in 2001. Given heavy reliance on manual processes that hamper productivity, banks in the Asia/Pacific region have indicated that they spend 48% of their time on back office activities. North American and European banks spend a significantly lower amount of time on back office activities, ranging from 34-36%, respectively. Although the survey results are fairly old and things have changed dramatically since then, there is a clear call for modernized and integrated core banking solutions. The more encouraging news is that a significant number of banks around the world are planning major core banking replacements over the next few years. Banks, which have done comprehensive changes can relax, at least in the near future. 9.2  Use common or shared systems instead of propriety systems  9.2.1 It is also noted that, currently, an overwhelming majority of large banks in Europe and the Asia/Pacific region are running propriety systems.

Rapid advancement and gains to the banking sector  1.1 Overall, technological innovation has brought about the speedy processing and transmission of information, easy marketing of banking products, enhancement of customer access and awareness, wider networking and, regional and global links on an unprecedented scale. IT development has thus changed the product range, product development, service channels and type of banking services, as well as the packaging of such services, with significant efficiencies not only in the banks, but also the ancillary and feeder services to banks. The financial services industry has thus become virtually dependent on IT development. Most banks make visible efforts to keep up with new systems and processes. 1.2 The development in ICT has enabled banks to provide more diversified and convenient financial services, even without adding physical branches. The present day ATMs are more sophisticated machines that can scan the customer and a bank teller, accept cash or cheques, facilitate customer application for loans and allow for face-to-face discussion with a service representative via video. 1.3 The development of Internet services, which is an extensive, low-cost and convenient financial network, has facilitated banking services to customers, anywhere and anytime. Along with Internet and Web-based services, a need for changing core banking architecture has emerged. The introduction of new core banking systems by some banks and their links with the improved telecommunication network has enabled banking transactions to be done on-line, in contrast to the batch-processing mode used earlier.