Financial sector reforms worldwide have brought about rapid changes in the structure of financial markets, particularly in banks. A study of banking prior to 1980s and banking now, will present a perfect case of contrast. Traditionally, core banking replacement has been considered a strict no-no by banks. The reasons for its non-acceptance were varied, some of which can be attributed to the established comfort level with the existing technologies and processes, relatively comfortable margins that provided the luxury of overlooking operational inefficiencies, and finally, the fear of the unknown. All this had ensured that banks steered clear of this subject. But the current state of competition and the increasingly demanding customers is forcing the banks to undergo a change in their technological environment to ensure that their IT strategy is aligned to their business objectives. The solution to such a problem is the core banking replacement, however, replacement of Core Banking Solutions (CBS), be it for large or small banks, global or regional, it is a herculean task for any institution. This can either result on one hand in the bank burgeoning to a greater degree of differentiation and an enhanced customer value proposition, or on the other hand can pose considerable risks for the bank if the transition is not managed properly.
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