Magic Quadrant for Global Retail Core Banking

Published: 22 July 2019 ID: G00368239

Analyst(s): Vittorio D'Orazio, Don Free

Core banking market demand keeps surging, underpinned by digital

banking transformation, with an increased focus on commercial off-the-shelf
packages, public cloud and open banking initiatives. Bank CIOs should
evaluate core banking products in the broader context of the open core
banking ecosystem.

Market Definition/Description
Gartner defines a core banking system (CBS) as a back-end system that processes daily banking
transactions and posts updates to accounts and other financial records. CBSs typically include
deposit, loan and credit processing capabilities, with interfaces to general ledger systems and
reporting tools. This Magic Quadrant assesses CBS vendors based on the multicurrency products
they offer in support of a bank’s financial transaction management in the retail banking market.
Gartner has chosen to keep the scope of this year’s Magic Quadrant consistent with those of
previous years that are based on the global and retail focus of the software, although selecting
criteria have become more restrictive. For this reason, we’ve excluded Islamic banking vendors —
many of which don’t support standard retail banking capabilities — and other vendors whose
offerings don’t meet Gartner’s established criteria.

The definition of a CBS hasn’t changed significantly over the years. However, CBS offerings are
evolving from autonomous islands of functionality to collaborative, open-banking-enabled
platforms. Moreover, the shift to open banking platforms is integrating all of the stakeholders in a
bank’s value chain: financial technologies (fintechs), technology partners, bank employees,
customers, regulatory authorities and other banks.

The resulting gaps with conventional CBS capabilities are driving advancements, including:

■ Migration to component-based systems

■ Embryonic use of microservices
■ Use of cloud computing with both cloud-based and cloud-native core banking components
■ Embedded analytics
■ Artificial intelligence (AI)
 All of these trends are leading to changes in the market’s boundaries, which are expanding to
include unconventional CBS vendor entrants such as leading front-office solution providers and
startup CBS vendors.

This is precisely why CIOs need to assess their CBSs and corresponding vendor landscapes —
based on the capacity to adapt to these trends — and deliver robust, scalable and relevant
products to their customers. The areas of change Gartner has identified, which are detailed below,
are:

■ API marketplaces
■ Cloud
■ Ecosystems
■ Analytics and AI

API Marketplaces
APIs are not new, but their importance to bank CIOs should not be underestimated. APIs are at the
apex of aspirational digital business strategy, but banks are increasingly contending with countless
vendors that lay claim to possessing the solution for their API deficit. More importantly, poor API
design can cause higher maintenance, revenue losses and missed business opportunities (see “A
Guidance Framework for Designing a Great API”). Standards remain elusive, but RESTful APIs are
the prevailing interface style that is more web-friendly.

So how should bank CIOs determine the best way forward to find the right fit for their digital bank
requirements?

As with any complex IT investment, there isn’t one simple response that’s relevant for every bank.
Gartner research explores the question of how to decide whether it’s better to deploy an API
marketplace with a do-it-yourself approach or leverage vendor solutions (see “Digital Disruption
Profile: APIs and the API Economy”).

Banks that turn toward vendor solutions find there are two basic alternatives: (1) partner with a well-
established horizontal industry vendor such as the ones mentioned in the “Magic Quadrant for Full
Life Cycle API Management,” or (2) explore core banking vendor offerings. One issue is clear — this
is not a pure numbers game; the vendor with the most APIs is not necessarily the best solution for
every bank.

Gartner evaluates vendors’ API strategies within this Magic Quadrant, but banks can independently
leverage a Gartner decision framework that outlines six assessment criteria for API marketplaces:

■ Breadth — the range of functionality (discrete to broad)

■ Aspect — the scope of coverage (internal to external)
■ Geographic — the expanse of applicability (limited to global)
■ Monetization — the financial opportunity (expense to revenue)

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 ■ Communal — the extent of collaboration (private to public)
■ Openness — the range of accessibility (closed to open)

API marketplaces are increasingly becoming the center of gravity for digital banks, and bank CIOs
need to carefully assess solution scope and parameters to ensure correct fit for purpose.

Cloud
Cloud-only CBS strategies are on the rise and accelerating among a broad range of banking
1
segments and geographies. Within a recent Gartner legacy modernization survey, more than 65%
of bank respondents stated that public cloud deployment was an objective within their core banking
modernization program. According to the results we see from Gartner’s “Toolkit: Digital Maturity
Assessment for Banking and Investment Services Firms,” 15% of bank applications are already
running on the cloud.

Definitionally, there are clear distinctions between cloud solutions. The one most commonly
understood lies within the notion of private cloud and public cloud infrastructure offerings; most
CBS cloud offerings are processed within private clouds.

As with the above reference to API marketplaces and core vendors’ capacity to support them, there
isn’t any shortage of core vendor assertions that their CBSs are either cloud-ready or cloud-native.
Simply put, Gartner defines CBS public cloud offerings as either cloud-based or cloud-native:

■ Cloud-based — ported to the public cloud, largely intact. This is the so called “lift and shift”
strategy, easier and faster to be pursued.
■ Cloud-native — designed for the public cloud, able to effectively leverage ecosystems and IoT
using hybrid, multicloud and edge computing. This is a SaaS approach that fully integrates with
the cloud. More complicated and longer to be deployed, especially with legacies that need to
be migrated.

Containers and Kubernetes play an important role in enabling a robust cloud-native infrastructure.
The technology evolution lies in service mesh, the convergence of serverless iPaaS on Kubernetes
and on bare-metal containers and microVMs (see “Top Emerging Trends in Cloud-Native
Infrastructure”).

Bank CIOs need to discern the connection between their bank’s digital business objectives and
their CBS cloud strategy. In particular, banks that aim to deploy over the cloud need to reduce the
risk of vendor lock-in and provide higher levels of application portability. A hybrid cloud and
multicloud approach can help.

The promise of distributed value creation lies in cloud-native solutions. The hybrid cloud (see Note
1) uses both private and public cloud by reserving the former for the most sensitive functional areas
(and data) and the latter to the least sensitive. Multicloud (see Note 2) is about vendor strategy. To
mitigate the risk of vendor lock-in, banks can leverage multiple cloud vendors for different areas of
cloud adoption so they can switch from one to the other in case of any problem. Some regulators
demand the bank have this risk management strategy.

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 Ecosystems
Digital business is causing banks to rethink many aspects of their business models, and
ecosystems are vital to this end. Banks can connect to new sales channels, increase the type and
value of customer interactions, and expand digital business platform model choices.

Although many of the changes reside within the business, the underlying CBS plays a distinct role in
extending functions and capabilities beyond the four walls of the bank. CIOs can’t execute
effectively on digital business strategies and business models without a CBS that has the necessary
agility to open and expose back-office business services to both known and unknown partners.

The future for ecosystems lies in third-party support for containers, support for stateful applications,
and maturing projects beyond Kubernetes by introducing standards in the way APIs are created.

Analytics and AI
Basic descriptive analytics in CBS are today quite normal, and most systems don’t even charge for
them. Nonetheless, the focus on more advanced analytics embedded into the core systems is
becoming a popular way to differentiate products and functions otherwise commoditized. The
availability of typical back-office data — such as credit scoring or customer address — straight into
the front office enables banks to respond to the challenges posed by digital-native clients that want
real-time authentication or real-time loans. This can be achieved by embedding this data in
microservices or by using data lakes that make specific data views available in real time. Also, the
ability to provide further data analysis requires advanced analytics and tools to elaborate them.
Today, most CBSs can provide such tools with predictive and prescriptive functions.

Moreover, CBSs typically pair the provision of basic analytics capabilities with their use in the
deployment of AI tools. The use of AI, especially in the front office, is increasingly required by the
business, which wants to replace human labor with machines that cost less and can lead to
increased automation. This can be done, for example, by virtual personal assistants that can handle
customer calls and support complex request about account balance, payments and other
instructions while learning from those interactions and ultimately improving their understanding and
the overall service.

Also, AI can bring better quality in repetitive tasks that can be easily automated. In this regard, the
front-to-back process for accounts or loans is an ideal place to apply such intelligent automation.
This makes a number of AI-based technologies very attractive to CBS vendors. This is especially
true for the customer onboarding process and the tasks associated with it that are extremely
structured and repetitive but still deserve some “intelligence” in decision-making points in order to
respond appropriately. Examples include chatbots that converse with clients, robotic process
automation (RPA) that leads to more efficient and convenient processes, and machine learning
business engines that can instantly analyze specific processes like credit scoring and risk.

All of these capabilities can be eased by modern CBSs and the way they interface with the data
collected on the origination front end and are managed throughout the process. In the past year,
Gartner has seen a solid and consistent trend in adopting such algorithms within commercial off-

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 the-shelf (COTS) core systems by all major vendors, and Gartner expects this trend to accelerate in
the coming years.

(Note: The analysis contained in this research is accurate as of 31 December 2018. However, due to
the dynamic nature of the market, Gartner clients should use standard inquiry processes for the
most up-to-date information on specific vendors and products.)

Magic Quadrant
Figure 1. Magic Quadrant for Global Retail Core Banking

Source: Gartner (July 2019)

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 Vendor Strengths and Cautions
All data and information are considered current as of the cutoff date (31 December 2018). The
structure of the vendor profiles is the same for all vendors, with:

■ A descriptive preamble that examines the company history, latest version of the product,
installation base, type of banks purchasing this product, geographic focus (see Note 3), some
technology compatibility, alternative delivery model(s) to on-premises, direct presence
■ A variable number of key strengths that motivate the positioning in the graphic
■ A variable number of key cautions that influence the positioning in the graphic

EdgeVerve Systems
EdgeVerve Systems is an Infosys product company headquartered in Bangalore, India. The
company launched its Finacle Core Banking Solution in 2000 — the surveyed version as of the
cutoff date, v.11.6, was released in May 2018. Gartner estimates that Finacle Core Banking Solution
has more than 470 installations worldwide, with about 70 in progress, with India being the country
with the most installations. EdgeVerve’s customer base is mainly universal banks in the small-to-
midsize segment, although the company has customers in every segment, including a few global
banks. The emerging Asia/Pacific (APAC) region has the highest share of existing implementations.

EdgeVerve’s product is coded with C/C++ and Java and is offered on UNIX/Oracle, as well as
Linux/Db2 (z/OS)/EnterpriseDB. In addition to on-premises implementation, Finacle has been
deployed as a hosted solution via ASP (notably, for a high number of rural banks in India) and
private and public cloud SaaS (in partnership with AWS). EdgeVerve’s go-to-market strategy is hub-
based, with a direct presence in 39 countries, but the company sells and services in 95 countries
worldwide and leverages its local partner network.

The Finacle App Center is the app marketplace, with 48 third-party APIs diversified across many
categories. This marketplace had a 31% increase in the number of APIs over the previous year,
although it does not feature any end-user apps.

Strengths

■ EdgeVerve has the best capabilities in place for market understanding. It consistently and
systematically collects information from clients and channels it into product feedback in order to
rapidly apply changes to the product with service packs and then with a new version every two
years.
■ Finacle is among the most componentized core banking products considered in this Magic
Quadrant, with 36 independent market components, which increased in the past year with the
deployment of the new Finacle Digital Engagement Hub. Finacle also boasts more than 1,200
business services that provide increased agility.
■ Innovation is an important asset within the Finacle offering. In particular, EdgeVerve uses
unconventional sources of innovation such as running a very large hackathon with 3,400

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 participants or the creation of innovative use cases and pilots (for example in the blockchain
domain) that provide solid differentiation.

Cautions

■ EdgeVerve currently goes to market with two distinct versions of Finacle (10.x, 11.x). Finacle
11.x is backwardly compatible, but most of the client base is in production with Finacle 10.x.
Gartner believes that the current release policy, though customer-friendly, increases complexity
and is having an impact on implementation satisfaction.
■ Finacle’s customer experience is rated average, according to the dozens of bank references
that Gartner surveyed. Implementation experience and the ability to meet SLAs are rated at the
low end of the assessments.
■ The scarcity of senior staff in the delivery of projects has become an increasingly significant on-
time delivery issue for EdgeVerve over the years. According to Gartner Peer Insight reviews,
bank clients are noting improvements with EdgeVerve’s advanced role and skill set availability.
However, the overall strong pipeline and the historical prominence of Infosys, its parent
company, in managing such system integration projects still constrain availability of human
resources.

Finastra (Fusion Essence)

Finastra is the result of the merger between the former Misys and D+H, a Canadian core banking
provider, and it is headquartered in London. Finastra’s Fusion Essence is a retail CBS deployed
worldwide since 2015 — the surveyed version as of the cutoff date, v. 5.3.1.3, was released in
September 2018. Gartner estimates that Fusion Essence has more than 80 installations worldwide,
with about 40 in progress. Fusion Essence is mainly sold to retail and universal banks. The region
with the largest installation base is Europe, followed by the Middle East, Africa and Asia.

Fusion Essence is written in Java, is database-agnostic and runs on all open platforms. Fusion
Essence is mainly delivered on-premises, but in the U.K. and Germany, it is also offered on
Microsoft’s Azure public cloud. This is a meaningful choice for challenger banks and those that want
greater agility combined with a leaner IT model and subscription-based pricing. Finastra has offices
in 38 countries; Fusion Essence and many other Finastra products are sold in all of them.

Finastra’s platform and app marketplace, FusionFabric.cloud, has 15 apps published by third
parties. This platform grew remarkably fast in the past year, with more than 60 fintechs signing up
and running 50 pilots to foster innovation.

Strengths

■ Fusion Essence’s 18 core banking components are completely cloud-native. This means that
they are ready to leverage the cloud to its fullest. In addition, Finastra has a high commitment to
enabling a microservices architecture in its product. Gartner has measured improvement on this

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 front across the past three years, although the absolute number of microservices remains
limited.
■ Finastra’s investments in the front end (e.g., Malauzai and IND Group acquisitions) have
provided Finastra with greater credibility in delivering digitalization projects by consistently
providing a back-to-front offering. Now Finastra has to demonstrate that this new, more
articulated offering is fully integrated and not simply the sum of different products.
■ Direct presence — Finastra has the highest number of countries with offices in relation to its
Fusion Essence installation base. This enables Finastra to support clients locally during each
stage of a CBS project.

Cautions

■ Fusion Essence has a limited number of market components and business services. This
number is below this Magic Quadrant’s average and much lower than the order of magnitude
that Gartner believes should be in the marketplace for a modern core banking system.
■ The public cloud offering by Finastra is embryonic in terms of both expertise (e.g., no real
deployment yet) and sophistication of offering (e.g., compatibility with multiple cloud providers).
Finastra can currently deliver its core banking in the public cloud only in partnership with
Microsoft Azure and only for the British and German markets.
■ Customer experience wasn’t a bright spot for Finastra, with clients particularly unsatisfied with
product support and services. The overall customer experience scored the lowest across the
Magic Quadrant vendors.

Intellect Design Arena

Intellect Design Arena is headquartered in Chennai, India, and its CBS product, Intellect Digital
Core, was launched in 2005 — the surveyed version as of the cutoff date, v.19.1, was released in
July 2018. Gartner estimates that Intellect Digital Core has more than 90 installations worldwide, of
which about a dozen are in progress. India is the country with the most installations. Intellect Design
Arena’s customer base is mainly universal banks in the small and largest bank tiers, including a few
global clients for which it provides selected components of its CBS. These installations are
prevalent across the emerging APAC region, followed by Western Europe and the Middle East and
North Africa (MENA).

Intellect Digital Core is coded in Java and runs over UNIX (HP, IBM and Sun), Linux and Windows on
Oracle Databases. Along with on-premises implementation, the product has been deployed via
SaaS and in hosted environments. Intellect Design Arena partnered with AWS for public cloud
services (although in the past two years Gartner could not verify any installations of this type).
Intellect Design Arena’s go-to-market strategy is hub-based. The company has a direct presence in
23 countries, but sells in more than 80 countries worldwide.

As of the cutoff date, Intellect Design Arena did not have a featured app marketplace.

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 Strengths

■ Intellect Digital Core shows a greater than the average number of exposed microservices,
according to the list provided to Gartner, and a moderate commitment to microservices
architecture that will become a solid differentiator if this trend continues.
■ The overall feedback on product evaluation and contract negotiation by references has been the
highest across the examined vendors in this Magic Quadrant.
■ Overall customer experience score for Intellect Design Arena is above the average across the
Magic Quadrant assessment. Most high scores were derived from Intellect’s core markets:
emerging APAC and MENA.
■ Operations are another bright spot for Intellect: Maintenance fees are the lowest across the
examined vendors in this Magic Quadrant. Minor releases that consolidate patches and
services packs are issued twice annually. Integration and deployment have been assessed by
references as above the average.

Cautions

■ The market understanding of this vendor is limited. According to survey respondents, this
vendor has limited capabilities to align to market demands. Also, its process-oriented
methodology for market understanding has basic features.
■ Intellect Design Arena is the only vendor lacking an app marketplace. This shows a static
approach to ecosystem management and is not in line with customer demand.
■ Despite the prior two years’ intent to actively participate, Intellect is still not a BIAN member, nor
can it show participation and adherence to BIAN standards with respect to product design. This
lack of compliance with some sort of standards shows low capability to deliver beyond
conventional means and within ecosystems.

Mambu
Mambu is a German company that was launched in 2011 and grew rapidly to today’s solid
customer base of more than 200 installations worldwide. Mambu’s CBS product is Mambu Banking
Engine. The surveyed version, v.7.9 as of the cutoff date, was released in September 2018.
However, Mambu’s cloud product gets updated on a weekly base, and therefore, a versioning
paradigm is not strictly applicable. In fact, Mambu is delivered exclusively via SaaS, often using the
AWS public cloud. Mambu has historically sold its product to microfinance institutions, fintechs and
challenger banks (90%), largely in the Tier 5 segment, and its installation base is spread across
Latin America, sub-Saharan Africa and Western Europe.

Mambu Banking Engine is entirely written in Java, but other languages are used for other services. It
runs primarily on AWS, where Mambu uses MySQL database. As this core system usually runs on
the public cloud, hardware platform compatibility is of minimal importance. Mambu’s go-to-market
strategy is based on a network of seven countries where Mambu has a direct presence that enables
it to support more than 200 installations across 44 countries.

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 Mambu Marketplace has 29 third-party vendors that support the development of complementary
applications, and it keeps growing every year.

Strengths

■ Mambu’s capability to deliver in the public cloud is a unique differentiator. All of Mambu’s
components are effectively cloud-native and can leverage the cloud ecosystem provided by
AWS at its best. Maintenance practices, as well as release strategy, are cloud-friendly and
provide a significant reduction of the overall complexity during postimplementation. The pricing
model and total cost of ownership are also affected by this type of sourcing.
■ Mambu’s pricing model is a very strong differentiator as it is truly pay-as-you-go. This model is
inclusive of everything — such as maintenance fees and hardware support. Therefore, it
provides a truly all-inclusive variable cost for the bank user, who can easily scale it up or down,
depending on the circumstances.
■ Mambu’s customer experience, according to the provided references, is above average, with
excellent scores on both the vendor’s ability to meet SLAs and the implementation experience.

Cautions

■ Mambu has a limited process-oriented methodology for market understanding. The company
has grown opportunistically by word of mouth, which has been very powerful so far and has
saved money through reduced investment in market intelligence. Nonetheless, this effectively
hampers Mambu’s ability to deliver innovation that really matters to clients, and therefore, it is a
limitation to customers that engage this vendor.
■ Mambu’s involvement in the banking industry network with participation in events, collaboration
in third-party working groups such as BIAN, and the run of specific conferences and end-user
groups is still embryonic or not established at all. This hampers Mambu’s clients’ involvement in
such networks, which can be very useful, for example, in resolving common delivery problems
with the assistance of community participants.
■ Mambu’s focus on microverticals is, so far, minimal, as the product can only cover the basics of
retail banking, and it has been deployed largely to small and midsize banks. Although Mambu
has experience working with Tier 1 banks on smaller bank deployments, the use case for large-
scale transformation remains unproven (e.g., more than 10 million accounts).

Oracle
Oracle acquired 75% of i-flex from Citigroup, and renamed it Oracle Financial Services Software
(OFSS). OFSS is headquartered in Mumbai, India. The company’s main CBS product, FLEXCUBE,
was built in the early 1990s, and in 1999 was acquired by Citigroup, which adopted the CBS. Over
the following decades, it evolved to become one of the most-adopted COTS CBS products in the
world. Gartner estimates that FLEXCUBE — the surveyed version as of the cutoff date, v. 14.1, was
released in May 2018 — has more than 800 installations worldwide. Approximately 40 of those are
in progress, with India the country with the most installations. FLEXCUBE’s customer base is mainly

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 universal banks in the midsize segment, but there are customers in every segment, including a few
global banks. The majority of FLEXCUBE installations are in the sub-Saharan African region.

FLEXCUBE is written in Java and runs over UNIX (IBM AIX, Oracle Solaris and HP-UX) and Linux
OS, and only on an Oracle Database. Apart from on-premises implementations, FLEXCUBE has
been deployed as a hosted solution via ASP. Private and public cloud projects are usually delivered
on Oracle Cloud. Oracle’s go-to-market strategy for FLEXCUBE leverages its huge worldwide
network of offices, with the ability to deliver and service even in remote locations.

The Oracle Cloud Marketplace, although having only 23 third-party APIs directly related to banking,
has more than 1,500 APIs that might be leveraged by a bank in sync with Oracle FLEXCUBE.

Strengths

■ While Oracle FLEXCUBE has an average number of market components (18), its number of
business services related to core banking is the highest across the vendors in this Magic
Quadrant and close to 2,000. This shows extreme parametrization of the core system, which
provides great flexibility to meet local requirements.
■ BIAN participation by Oracle has been assessed as above average, with several resources as
members of BIAN. Also, since 2018, Oracle has been actively changing its product in line with
BIAN principles, and this modernization process continues today.
■ Oracle has a centralized regulatory library, supported by a third-party consultancy that
organizes and keeps up to date the requirements for all international regulations in each
country. For local regulations, it has more limited intelligence based on regional approaches for
Latin America and North Africa, while for countries of strategic interest, it possesses specific
templates.

Cautions

■ In terms of product operations, Oracle FLEXCUBE releases a major version once every two
years — apart from a regular product release cycle of at least once every six months. It is also
supported with service packs and patches on a more frequent basis. However, this delivery
schedule is too slow for today’s dynamic and changing bank environment, especially for
deliveries in the public cloud where Oracle mainly delivers on Oracle’s own cloud infrastructure
(OCI).
■ Oracle FLEXCUBE maintenance fees (22%) are the most expensive, compared to the other
vendors in this Magic Quadrant.
■ The use of data lakes and embedded analytics is deferred to the parent company’s product,
derived from Oracle Financial Services Analytical Applications (OFSAA). This is limiting the cost
benefit of genuine embedded analytics, as these capabilities will only run after buying another
product from Oracle.
■ Oracle FLEXCUBE runs solely on an Oracle Database, and usually on the Oracle stack of
technologies. This lack of openness to other standards increases the risk for vendor lock-in.

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 TCS
Tata Consultancy Services (TCS) is headquartered in Mumbai, India. The company launched its TCS
BaNCS CBS in 1986 — the surveyed version, current as of the cutoff date, is v.17, released in
October 2017. The current TCS BaNCS is the result of the integration of the original product with
others acquired during the past decade. Gartner estimates that TCS BaNCS has more than 400
installations worldwide, of which 30 are in progress, with India and emerging APAC the country and
the region having the most installations. Its customer base is mainly cooperative banks (TCS
BaNCS has more than 100 such small clients in India via a joint venture with State Bank of India
called C-Edge) and in the small-to-midsize segment. It also has several large clients worldwide.

TCS BaNCS can employ components written in either Java or COBOL. Approximately 25% of
installations use Java components exclusively, while the rest use one or more COBOL components.
This evaluation refers only to the Java components of the product, and not to the COBOL part. The
product runs over UNIX (IBM, HP and Sun), z/OS, Linux (z/OS) and Windows on Oracle, Db2 and
SQL Server databases. TCS BaNCS is mainly installed on-premises, although a large number of
clients use a hosted solution via ASP. Although TCS is a formal partner of public cloud vendors,
Gartner is not aware of any installation on those public clouds. TCS did report that it has few
ongoing implementations on public cloud in addition to its deployments on private cloud. TCS
BaNCS’ product support is hub-based, with a direct presence in eleven countries, but TCS sells the
product in more than 40 countries worldwide.

TCS launched its API marketplace in 2018 — TCS BaNCS Marketplace — and it has 14 APIs.

Strengths

■ In terms of financial viability, the Gartner financial rating methodology for TCS assessed a
“Strong” rating that is an improvement from last year’s “Positive” — this is the highest across
Magic Quadrant vendors.
■ TCS BaNCS has the largest base of net new client wins in 2018, primarily within the Tier 4 and
Tier 5 segments, but also with some significant wins in top tier banks.
■ The overall customer experience score for TCS BaNCS is the highest across Magic Quadrant
vendors.

Cautions

■ Innovation focus is less strong than that of other Leaders. For example, despite the higher-than-
average core componentization, TCS BaNCS doesn’t have a higher-than-average exposed set
of microservices. Also, the featured app marketplace is still at an early stage of maturity, and the
number of open APIs didn’t improve significantly.
■ The partner certification program for system integrators is limited for a large core banking
company such as TCS BaNCS. In fact, the number of certificated partners (especially local
partners) is not enough to guarantee adequate worldwide coverage. Partnerships with relevant
system integrators are minimal in the delivery of projects, and the vast majority of CBS projects
are almost exclusively delivered by TCS, its parent company.

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 ■ TCS BaNCS’ geographic strategy is very conservative, with an installation base that has the
lowest country penetration across the Magic Quadrant assessment; the focus is limited to
existing countries of installations. Overall, the harmonization of the geographic strategy appears
to be opportunistic, rather than well planned.
■ While TCS is investing in the roadmap-based development of the product, it didn’t invest much
money for acquiring innovation in the core banking space from external sources (i.e., by
mergers and acquisitions). This conservative strategy delegates “innovation from outside” via
co-innovation partners, which is not necessarily bad, but it does pose questions around the
sustainability of this approach in the long term.

Temenos
Temenos, headquartered in Geneva, Switzerland, launched its T24 Core Banking product in 1993 —
the surveyed version, current as of the cutoff date, is v.18, released in May 2018. Gartner estimates
that T24 Core Banking has more than 700 installations worldwide, of which more than 100 are in
progress, with the U.K. being the country with the most installations. Its customer base is
distributed across banks of all sizes, with the largest number being universal banks in the small-to-
midsize segment, although in the last few years, the company has signed some large new clients.
T24 Core Banking’s installation base is mostly located across Western Europe.

Temenos’ product is coded in a domain-specific language and is used to generate Java, JavaScript
and XML. It runs on UNIX (HP, IBM and Sun), Linux and Windows on Oracle, Db2 and Microsoft
SQL (Server and Azure) databases. Temenos’ T24 installations are mainly deployed on-premises.
However, since 2011, Temenos has been deploying on private and public SaaS (in partnership with
Microsoft Azure), and T24 now has a growing number of installations on the public cloud. Temenos’
go-to-market strategy is hub-based, with a direct sales presence in 41 countries and sales in 135
countries. Where Temenos doesn’t operate, partners provide both installation and postsales
support.

Temenos’ app marketplace (Temenos MarketPlace) has 122 third-party APIs, organized across 14
categories. The number of these APIs grew by 41% from the previous year.

Strengths

■ Temenos scored highest for market understanding across the Magic Quadrant selection of
vendors. In particular, Temenos showed a high degree of process-oriented methodology with a
high level of effectiveness and sophistication that has enabled its product board to respond
quickly to evolving market dynamics, including cloud.
■ Temenos’ partner ecosystem is one of the best, with a well-organized certification program.
There is considerable participation from global companies, as well as from midsize regional
players that span the list of partners. Temenos has invested in acquiring companies such as
Avoka and Akcelerant to procure specific technologies that map to ecosystem requirements, as
well as expand its customer base.

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 ■ Temenos’ geographic strategy received a strong score. With well-organized and planned
capacity, Temenos is able to deliver, despite being spontaneously invited into almost every bid
by banks in existing customer countries. Regional and country penetration rates are very high
on a global scale, and Temenos has 35 preconfigured country model banks to help banks go
live quickly and support language and regulatory localizations.

Cautions

■ Temenos T24 Core Banking’s number of components didn’t increase from the past assessment,
and the number of exposed microservices is still very low compared to customer expectations.
■ Though Temenos continues to invest in its Expert Services Group and support capabilities,
customer experience of Temenos is one of the lowest across the Magic Quadrant list of
vendors. This might be more a consequence of sales growing at a fast pace than Temenos’
ability to address the inadequate number of human resources available to support clients —
often cited as a negative by clients.
■ Actual Temenos installations (R18 and previous releases) in the public cloud are all cloud-based,
which means with limited interoperability within the cloud ecosystem.

Vendors Added and Dropped

We review and adjust our inclusion criteria for Magic Quadrants as markets change. As a result of
these adjustments, the mix of vendors in any Magic Quadrant may change over time. A vendor’s
appearance in a Magic Quadrant one year and not the next does not necessarily indicate that we
have changed our opinion of that vendor. It may be a reflection of a change in the market and,
therefore, changed evaluation criteria, or of a change of focus by that vendor.

Added
Finastra’s Fusion Essence has returned to the Magic Quadrant this year, because it met the
selection criteria shown below.

Mambu — a German-headquartered vendor — has also entered the Magic Quadrant as meeting
selection criteria below.

For both these vendors, Gartner was able to proceed with a deeper survey of their products, and we
could survey a number of end users that were either installing it or in the course of deployment.

Dropped
The following four vendors were dropped from the 2019 Magic Quadrant because their products did
not meet the current inclusion criteria (see the Inclusion and Exclusion Criteria section for more
detail):

■ Avaloq: Avaloq Banking Suite didn’t meet the inclusion criteria for the minimum net new client
wins and the minimum net new production clients going live between 1 January 2017 and 30

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 September 2018. All criteria applied only to retail core banking installations, evaluated with a tier
analysis and excluding simple updates.
■ FIS: Profile — the retail CBS — didn’t match the minimum inclusion criteria for the minimum net
new client wins and the minimum net new production clients going live between 1 January 2017
and 30 September 2018. All criteria applied only to retail core banking installations, evaluated
with a tier analysis and excluding simple updates.
■ SAP: SAP Transactional Banking didn’t match the minimum inclusion criteria for the minimum
net new client wins and the minimum net new production clients going live between 1 January
2017 and 30 September 2018. All criteria applied only to retail core banking installations,
evaluated with a tier analysis and excluding simple updates.
■ Sopra Banking Software:
■ Sopra Banking Amplitude didn’t match the minimum inclusion criteria for the minimum
number of regions.
■ Sopra Banking Platform didn’t match the minimum inclusion criteria for the minimum
number of regions.

Inclusion and Exclusion Criteria

Inclusion Criteria
This year, assessment exclusion/inclusion criteria have changed. For the sake of transparency,
Gartner has decided to disclose in detail the reasoning behind such criteria and provide a clearer
and more satisfying response to the majority of the questions that might arise.

We have — as in the past — divided the criteria into two categories:

1. Market penetration, in terms of minimum number of installations by country and by region

2. Active market presence, in terms of minimum number of new clients and go-live installations

Moreover, in order to be included in our report, a vendor had to support multilingual and
multicurrency capabilities, plus global retail core banking functionality, for at least five of these six
services:

■ Current accounts
■ Savings
■ Fixed-term deposits
■ Consumer loans
■ Commercial loans

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 ■ Mortgage loans

Finally, for this year’s assessment we have improved these requirements by better refining them as
follows.

Market Penetration

Market Penetration by Country

The installation base of each product has been segmented by country.

The minimum number of countries with active installations has been set to 10, as in the past year’s
assessment. However, unlike in past assessments, one country has been considered as a valid
count only if a minimum number of two installations have been recorded in that country.

So, for example, a product with 10 installations, respectively, in 10 different countries would count
as zero for this requirement, while installations evenly distributed over five countries (e.g., two
installations each) would count as five.

This change has been necessary to account for any opportunistic approach to the market,
compared to more consistent go-to-market strategies that consider entering a country market for
further penetration.

Market Penetration by Region

The installation base of each product has been also segmented by region according to Gartner’s
taxonomy of 10 regions in the world (Western Europe, Eastern Europe, Eurasia, MENA, sub-Saharan
Africa, North America, Latin America, Emerging APAC, Mature APAC, Greater China).

The minimum number of regions with active installations has been set to four, as in the past year’s
assessment. However, unlike in past assessments, one region has been considered as a valid count
only if a minimum number of five installations have been recorded for that region.

So, for example, four installations in Western Europe would not suffice to demonstrate a solid
footprint in this region, and therefore, this region would not be counted.

This change is intended to exactly reflect the same philosophy as the previous requirement: global
footprint. In fact, we have found that, while a large number of vendors can claim a sporadic
presence in multiple regions, fewer can effectively guarantee a continued presence that a bank
would require during implementation and in postimplementation support.

Active Market Presence

New Client Wins

A minimum number of net new client wins in the past seven rolling quarters — that is, from 1
January 2017 to 30 September 2018 — has been reduced from 10 to five. The softening of this

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 requirement has been necessary to reflect market changes (according to data that Gartner has
collected) and to enforce a much stricter screening of such client count by focusing exclusively on:

■ Retail installations only — excluding wealth and corporate banking deployments.

■ Replacements and greenfield projects — excluding any update/major upgrade deployment.
Only deployments with new clients have been considered as a valid count.

Moreover, Gartner has introduced a new subcriterion in order to evaluate such new client names in
relation to the bank tiers (see the Gartner IT Glossary for the definition of bank tiers).

This change has been necessary to take into consideration the fact that the complexity of core
banking deployments varies greatly between banks of different sizes. In general, large client
deliveries are much more difficult than small microfinance institutions’ projects. Therefore, based on
data about the average duration of core banking projects, we have established a “conversion table”
that considers eight projects at Tier 5 banks to be comparable in duration to one average large
project at a Tier 1 bank. Projects in other bank tiers have a proportional duration. In this fashion, for
example, Gartner has considered as two valid counts either one project with a Tier 1 bank or eight
smaller projects with Tier 5 banks or two projects with two Tier 3 banks (see Note 4).

Clients Going Live

A minimum number of clients going live in the past seven rolling quarters — that is from 1 January
2017 to 30 September 2018 — has been reduced from 20 to 10. The softening of this requirement
has been necessary to reflect market changes (according to data that Gartner collected) and to
enforce a much stricter screening of such client count by enforcing the same criteria on counting as
the previous section for “new client wins.”

Exclusion Criteria
Many core banking vendors were invited to participate in the initial screening process, but most of
them were not selected because they didn’t meet the Magic Quadrant inclusion criteria.

Market Penetration by Country — The following vendors (and products in brackets) did not
provide sufficient evidence for the minimum number of live product deployments spanning 10 or
more countries, with a minimum of two installations per country:

■ Asseco Poland (Asseco CBS)

■ Bank Soft Systems (BSS) (CORREQTS)
■ Bankware Global (BX CBP)
■ Bankware Global (BX PF [Business Excellence Product Factory])
■ Banqsoft (View21)
■ Bantotal (BANTOTAL)

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 ■ BML Istisharat (Integrated Computerized Banking System [ICBS])
■ DXC Technology (Celerit Digital Core Banking)
■ Emid (Emid)
■ Enterprise (Core Banking EGBS Platone)
■ EVRY (EVRY Core banking solutions)
■ Finastra (Fusion Phoenix)
■ Finastra (Fusion Sparak)
■ Finastra (Fusion UltraData)
■ Finastra (Fusion Phoenix International)
■ FinLink (Mbanq)
■ Finzsoft (Sovereign)
■ FIS (HORIZON)
■ FIS (Integrated Banking Solution [IBS])
■ Fisa Group (Fisa-System)
■ Fiserv (Cleartouch)
■ Fiserv (DNA)
■ Fiserv (Precision)
■ Fiserv (Premier)
■ Gora (jOMEGA)
■ InfrasoftTech (OMNIEnterprise Core Banking Solution)
■ Intertech (inter-Face)
■ INTRASOFT International (PROFITS)
■ Nelito Systems (FinCraft Core Banking Solutions)
■ Profile Software (FMS.next)
■ SAB (SAB AT)
■ Technisys (Cyberbank Digital Core)
■ Thought Machine (Vault)
■ Tieto (BankSyst)
■ Tieto Sweden (EntraBank)

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 ■ Top Systems (Topaz Digital Banking)

Market Penetration by Region — The following vendors (and products in brackets) didn’t provide
sufficient evidence for the minimum number of product live deployments spanning four or more
regions with a minimum of five installations per region:

■ Asseco Poland (Asseco CBS)

■ Bank Soft Systems (BSS) (CORREQTS)
■ Bankware Global (BX CBP)
■ Bankware Global (BX PF [Business Excellence Product Factory])
■ Banqsoft (View21)
■ Bantotal (BANTOTAL)
■ BML Istisharat (Integrated Computerized Banking System [ICBS])
■ COBIS (COBIS Ubiquitous Finance Solution [UFS])
■ Datapro (e-IBS Core Banking System)
■ DXC Technology (Celerit Digital Core Banking)
■ Emid (Emid)
■ Enterprise (Core Banking EGBS Platone)
■ EVRY (EVRY Core banking solutions)
■ Finastra (Fusion Phoenix)
■ Finastra (Fusion Sparak)
■ Finastra (Fusion UltraData)
■ Finastra (Fusion Phoenix International)
■ FinLink (Mbanq)
■ Finzsoft (Sovereign)
■ FIS (HORIZON)
■ FIS (Integrated Banking Solution [IBS])
■ Fisa Group (Fisa-System)
■ Fiserv (Cleartouch)
■ Fiserv (DNA)
■ Fiserv (Precision)

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 ■ Fiserv (Premier)
■ Gora (jOMEGA)
■ InfrasoftTech (OMNIEnterprise Core Banking Solution)
■ Intertech (inter-Face)
■ INTRASOFT International (PROFITS)
■ Nelito Systems (FinCraft Core Banking Solutions)
■ Profile Software (FMS.next)
■ SAB (SAB AT)
■ Silverlake Axis (Silverlake Axis Integrated Banking Solution)
■ Sopra Banking Software (Sopra Banking Amplitude)
■ Sopra Banking Software (Sopra Banking Platform)
■ Technisys (Cyberbank Digital Core)
■ Thought Machine (Vault)
■ Tieto (BankSyst)
■ Tieto Sweden (EntraBank)
■ Top Systems (Topaz Digital Banking)

New Client Wins — The following vendors (and products in brackets) didn’t provide sufficient
evidence for the minimum number of net new clients between 1 January 2017 and 30 September
2018:

■ Asseco Poland (Asseco CBS)

■ Avaloq (Avaloq Banking Suite)
■ Bank Soft Systems (BSS) (CORREQTS)
■ Bankware Global (BX CBP)
■ Bankware Global (BX PF [Business Excellence Product Factory])
■ Banqsoft (View21)
■ Bantotal (BANTOTAL)
■ BML Istisharat (Integrated Computerized Banking System [ICBS])
■ Capital Banking Solutions (CapitalBanker)
■ COBIS (COBIS Ubiquitous Finance Solution [UFS])
■ Datapro (e-IBS Core Banking System)

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 ■ DXC Technology (Celerit Digital Core Banking)
■ Emid (Emid)
■ Enterprise (Core Banking EGBS Platone)
■ ERI (OLYMPIC Banking System)
■ EVRY (EVRY Core banking solutions)
■ Finastra (Fusion Equation)
■ Finastra (Fusion Midas)
■ Finastra (Fusion Sparak)
■ Finastra (Fusion UltraData)
■ Finastra (Fusion Phoenix International)
■ FinLink (Mbanq)
■ Finzsoft (Sovereign)
■ FIS (HORIZON)
■ FIS (Integrated Banking Solution [IBS])
■ FIS (Profile)
■ FIS (Systematics)
■ Fisa Group (Fisa-System)
■ Fiserv (Signature for International)
■ Gora (jOMEGA)
■ ICS Financial Systems (ICS BANKS)
■ InfrasoftTech (OMNIEnterprise Core Banking Solution)
■ Intertech (inter-Face)
■ INTRASOFT International (PROFITS)
■ Nelito Systems (FinCraft Core Banking Solutions)
■ Profile Software (FMS.next)
■ SAP (SAP Transactional Banking)
■ Silverlake Axis (Silverlake Axis Integrated Banking Solution)
■ Technisys (Cyberbank Digital Core)

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 ■ Tieto (BankSyst)
■ Tieto Sweden (EntraBank)
■ Top Systems (Topaz Digital Banking)

Clients Going Live — The following vendors (and products in brackets) didn’t provide sufficient
evidence for the minimum number of production customers for global retail core banking
functionality going live between 1 January 2017 and 30 September 2018:

■ Asseco Poland (Asseco CBS)

■ Avaloq (Avaloq Banking Suite)
■ Bank Soft Systems (BSS) (CORREQTS)
■ Bankware Global (BX CBP)
■ Bankware Global (BX PF [Business Excellence Product Factory])
■ Banqsoft (View21)
■ Bantotal (BANTOTAL)
■ BML Istisharat (Integrated Computerized Banking System [ICBS])
■ Capital Banking Solutions (CapitalBanker)
■ COBIS (COBIS Ubiquitous Finance Solution [UFS])
■ DXC Technology (Celerit Digital Core Banking)
■ Emid (Emid)
■ Enterprise (Core Banking EGBS Platone)
■ ERI (OLYMPIC Banking System)
■ EVRY (EVRY Core banking solutions)
■ Finastra (Fusion Sparak)
■ Finastra (Fusion UltraData)
■ Finastra (Fusion Phoenix International)
■ FinLink (Mbanq)
■ Finzsoft (Sovereign)
■ FIS (HORIZON)
■ FIS (Integrated Banking Solution [IBS])
■ FIS (Profile)
■ FIS (Systematics)

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 ■ Fisa Group (Fisa-System)
■ Fiserv (Cleartouch)
■ Fiserv (Precision)
■ Fiserv (Premier)
■ Fiserv (Signature [International])
■ Gora (jOMEGA)
■ ICS Financial Systems (ICS BANKS)
■ InfrasoftTech (OMNIEnterprise Core Banking Solution)
■ Intertech (inter-Face)
■ INTRASOFT International (PROFITS)
■ Nelito Systems (FinCraft Core Banking Solutions)
■ Profile Software (FMS.next)
■ SAB (SAB AT)
■ SAP (SAP Transactional Banking)
■ Silverlake Axis (Silverlake Axis Integrated Banking Solution)
■ Technisys (Cyberbank Digital Core)
■ Thought Machine (Vault)
■ Tieto (BankSyst)
■ Tieto Sweden (EntraBank)
■ Top Systems (Topaz Digital Banking)

Evaluation Criteria
Ability to Execute
The evaluation criteria for this axis focus on market traction, and on how the vendor and product are
positioned to sustain support for near-term banking market requirements and commitments.
Gartner has analyzed and compared 27 variables for each vendor’s CBS product, for a total of 189
data points, to map the vendors based on their Ability to Execute. Gartner also believes there’s no
better way to assess the ability of a vendor to execute projects than asking end users themselves.
For this reason, Gartner formally and extensively surveys references. This enables us to assess all

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 steps of execution: sales and contract negotiation; the value of the product capabilities; and
support of installation, customer experience and postsales.

In addition to these annual reference surveys, reference interviews were conducted with, or
information was derived from, Gartner clients during the past eight rolling quarters in the course of
Gartner’s usual interactions with its clients.

This Magic Quadrant axis places high stress on the following criteria, which means these criteria
have increased importance and value for banks that are selecting CBSs:

■ Product or Service: This element of a vendor’s ability to execute is concentrated on:

■ The capabilities and roadmap of the product
■ Technical aspects, including the level of SOA, component orientation, business services
reusability and real-time capacity of the system, as well as more specific compatibility with
DBMSs, OSs, hardware platforms and programming languages adopted in the core system
itself
■ The professional services offered in association with the product that support it along its life
cycle with new releases, service packs and patches due to environmental changes
■ Overall Viability: This focuses on business unit, financial, strategy and organization. It relates to
a vendor’s financial stability, and is mainly calculated based on the company’s financial
performance according to Gartner’s Financial Statement Scorecard for public companies (see
“Understanding the Methodology Behind Gartner’s Financial Statement Scorecard for Public
Companies”). Financial changes since the previous year are also taken into account to track the
trend direction, and take into account improvements or declines in the rating.
■ Customer Experience: This element includes a focus on customer interactions linked to:
■ Customer support and ability to respond to customer service issues
■ SLAs and the ability to meet them
■ Implementation experiences
■ Feedback on product support and servicing
■ Operations: This area of evaluation centers on how the vendor organization is equipped to
provide infrastructure mechanisms or resources for the consistent attainment of business goals,
including:
■ Program and project management structures and initiatives
■ Maintenance and major release practices
■ Partner programs
■ Sourcing models
■ Quality initiatives

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 The following criteria have lower importance in this specific assessment:

■ Sales Execution/Pricing: This element includes the customer’s overall experience with the
contract negotiation and sales process, based on the references’ feedback, as well as an
analysis of the pricing model and the new client wins.
■ Market Responsiveness/Record: This element describes the ability of the vendor to respond
to changes in, and upcoming challenges of, the market in terms of the impact from:
■ New customer segments
■ New business lines
■ Regulatory changes
■ Organizational structure and resources that support flexibility
■ Marketing Execution: This describes the clarity, quality, creativity and efficacy of programs
designed to deliver the organization’s message and influence the market, promote the brand,
increase awareness of products, and establish a positive identification in the minds of
customers. This “mind share” can be driven by a combination of publicity, promotions, thought
leadership, social media, referrals and sales activities.
Table 1. Ability to Execute Evaluation Criteria

Evaluation Criteria Weighting

Product or Service High

Overall Viability High

Sales Execution/Pricing Medium

Market Responsiveness/Record Low

Marketing Execution Low

Customer Experience High

Operations High

Source: Gartner (July 2019)

Completeness of Vision
The evaluation criteria for this axis are based on the effectiveness of vendor product strategies
linked to the market. Gartner has analyzed and compared 39 variables for each vendor’s product,
leading to a total of 273 data points, in order to map the vendors’ Completeness of Vision.

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 This research gives high weight to the following criteria, which means that these criteria have
increased importance for banks selecting CBSs:

■ Market Understanding: This element of a vendor’s Completeness of Vision centers on the

vendor’s ability to respond to anticipated and unanticipated market requirements, and on the
process that supports that ability. This demonstrates how closely connected the vendor is to
the banking industry.
■ Offering (Product) Strategy: This element corresponds to the organizational effectiveness of
the vendor or product group’s development and delivery capabilities. Consistency and quality
are key attributes. This criterion also explores the vendor’s product componentization strategy,
as well as its product roadmap’s focus on developing microservices.
■ Innovation: This element focuses on the vendor’s ability to enable innovation in its standard
product, nontraditional or differentiating partnerships, and associated market delivery. Many
aspects of innovation have been taken into account, including:
■ Use of innovation labs (innovation from inside)
■ Innovation by collaboration (innovation from outside)
■ Creation of innovation use cases
■ App marketplace capability
■ Participation in competition and hackathons
■ Focus on innovative trends in the industry (for example, blockchain, AI, microservices)
■ Geographic Strategy: This element of the strategy demonstrates the ability of the vendor to
directly service the bank customers and follow its global strategy by providing support across
multiple geographies. Key factors that are taken into consideration include:
■ Penetration rates at regional and country levels in terms of installations
■ Direct sales strategy and office presence
■ Specific sales and marketing initiatives

We have weighted the following criteria as medium, which means that they have regular importance
for banks selecting CBSs:

■ Sales Strategy: This element evaluates the strategy of the vendor in terms of marketing and
sales network inclusive of an app marketplace, as well as the developed methodology to
support the business development process. Also, we recognize the importance of partners in
the sales and support activity for CBS projects by analyzing the type of partners available for
each vendor and the role they have in CBS deliveries.
■ Vertical/Industry Strategy: This area of the evaluation is associated with banking industry
commitment to broader initiatives (for example, participation in standards organizations and
other industry groups), the vendor’s focus in terms of CBS investments and dedication. This

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 area also focuses on unique hiring practices, training and other means of maintaining close
industry relevance, such as specific areas of research.

We do not consider the marketing strategy and the business model relevant for CBS selection.

Table 2. Completeness of Vision Evaluation Criteria

Evaluation Criteria Weighting

Market Understanding High

Marketing Strategy Not Rated

Sales Strategy Medium

Offering (Product) Strategy High

Business Model Not Rated

Vertical/Industry Strategy Medium

Innovation High

Geographic Strategy High

Source: Gartner (July 2019)

Quadrant Descriptions

Leaders
Leaders in the global retail core banking market tend to possess a high-order market understanding
that helps in lead generation and ultimately in achieving more sales. In addition, they make it their
business to monitor market trends and funnel progressive innovation into their product roadmaps.
Most of them possess software development quality certifications (such as Capability Maturity
Model Integration [CMMI]) or are pursuing them. The Leaders are also, without exception, “thinking
small” or targeting component-based architecture as a gateway to providing increased accessibility
to the granular functionality that banks need to drive the basis for differentiation.

Leaders have high viability and great customer feedback, even though lately the increase in the
number of sales has brought challenges in supporting customers at high standards. Leaders also
focus on innovation — and the innovation trends that affect this particular market. They especially
focus on trends with visionary capability in managing the ecosystem for open banking platforms by
fostering open banking with their products and services in a collaborative environment with their
ecosystem partners. They also leverage the cloud opportunity by gradually making their product
more cloud-friendly with “APIfication” of the components and by introducing cloud-native
components.

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 Challengers
The Challengers in this market typically earn high marks in implementation, customer experience
and product support. They also possess better-than-average financial viability, showing solid
improvement over the previous year. However, product componentization, market trends and
innovation are usually low priorities for these vendors. Challengers also have an opportunistic go-to-
market approach, with limited market intelligence and scattered geographic strategy.

Visionaries
Visionaries in the global retail core banking market have a solid focus on vertical industry and
geographic strategy, with an extensive network of offices and direct presence in their target
markets. They also foster innovation and innovative trends, particularly on componentization,
although this forward-thinking approach might not find a receptive market (due to still-low market
maturity), which could limit Visionaries’ ability to compete and execute in practice. Vendors in this
group have been prevented from entering the Leaders quadrant mainly because of below-average
levels in certain critical capabilities.

Niche Players
Niche Players usually tend to have operations that are regionally limited and have lower global
market penetration than other players. Nonetheless, regional players in our Magic Quadrant do not
simply play this game in a few countries. They still need to demonstrate presence elsewhere,
despite their deep specialization in one specific regional market. Usually, they are less involved in
international trends and sales, while demonstrating great client proximity and intimacy, which are
their most important differentiators.

Context
Core banking programs are increasing in complexity, and the expected return on business-value
time frames is shrinking. But return on investment is also impacted by program duration. Based on
recent legacy modernization survey results (October 2018), banks that deliver core modernization
report a return on investment 64% of the time within a short two years; these banks chose a
targeted, major transformation modernization model.

Through client inquiry, Gartner is seeing banks with much more interest in KPIs to align with digital
business program expectations. This is centered on how to conduct their core banking renewal
efforts. Fundamentally, the success or failure of core banking programs can be traced to elements
of initial efforts, including the level of clarity of outcomes defined in business cases (see “Core
Banking Renewal: Building the Case”). Banks need to focus much more on the preselection phase
to ensure that their use cases are carefully constructed and transparent, and that their objectives
are documented before they issue an RFI or RFP.

Bank CIOs and other IT and business leaders need to be introspective, recognizing that their
organizations possess unique characteristics and cultures that will impact a program of this
magnitude, whether positively or negatively. They also need to conduct serious self-diagnosis to

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 identify negative traits and reduce, mitigate, avoid or defer risk. Sponsorship, communication and
program management are a few examples of areas that banks use to test maturity prior to
embarking on core banking renewal (see “Core Banking Renewal: Use This Readiness Maturity
Model to Avoid Program Failure”).

For these reasons, Gartner has further improved this year’s methodology by increasing the
granularity of the information detected for each CBS vendor/product (see the Evidence section).
We’ve also tracked the technology features, as well as the business implications, against the many
areas depicted in the Market Definition/Description section above.

Market Overview
This Magic Quadrant assesses the suitability of CBS providers and their product offerings to
address current market trends. This evaluation uncovers the primary strategies of these vendors
and products, reveals their underlying product and service capabilities, and affirms their relevance
to the changing conditions of the banking industry.

Vendor Landscape
The number of net new deals for core banking replacement increased during the past year,
expanding across all banking tiers and geographies. Based on client inquiries, face-to-face
interactions and surveys, Gartner has identified a growing demand for core banking renewal, driven
mainly by digital banking initiatives for which legacy systems prove to be inadequate.

Vendor consolidation continues in this market, though at a much less frenetic pace than in prior
years. Recent consolidation activities included megadeals in the payments ecosystem, with FIS’
move to acquire Worldpay quickly following Fiserv’s acquisition of First Data. Acquisitions are never
easy, and the extent of effective assimilation planning and execution often dictate the success of
these well-intentioned pairings. Impacted bank CIOs should expect defined objectives and timelines
from vendors within six months of the deal closing.

Demand for unconventional and emerging core vendors such as Technisys and Mambu is growing.
This growth is not isolated to independent startups or challenger banks; these vendors are also
beginning to be considered in traditional banks for core modernization. Larger banks such as Lloyds
are engaging with new core vendors (Thought Machine) at the trigger stage (no production banks).
Their value propositions are cloud-native, fine-grain business service models that promise to fuel
collaboration through extended partners and ecosystems. Demand for alternative CBS offerings
that support the pace of progressive digital business platform models will increase.

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 2018 Market Movers

Increased Focus on Componentization and Microservices

The CBS market is continuing its evolution to adapt to changes in the banking industry, especially
concerning digital banking. Gartner believes the key to successfully adapting to these changes is to
provide enabling technologies designed to address critical capabilities, like increased business
agility, diversified sourcing models and lower operational costs. The leading trend in establishing
these critical capabilities lies in advanced componentization: the decomposition of monolithic or all-
in-one CBSs into larger supersets of smaller components with discrete functionality.

As vendors acquire, build or migrate core systems to component-based, SOA-compliant solutions,

the repository approach will drive increased demand for industry-level service standardization.
Surviving CBS vendors will offer repositories of components, rather than packages and modules. A
bank can assemble these components into applications in a standard way (the “factory default”) —
or in a slightly different way — to create unique applications that meet its specific needs. This
approach is consistent with overall industry trends in SOA adoption in financial services —
predominantly SOA or SOA combined with event-driven architecture (EDA). Leading vendors are
responding proactively by extending their core banking functionality through loosely coupled stand-
alone components.

Banks as Platforms
The focus on evolving the digital bank strategy to keep pace with new target market opportunities is
leading a CBS technology evolution that exposes open-protocol APIs to external development
communities. As banks roll back traditional “do everything yourself” development models, the ability
to extend granular APIs to third-party developers is quickly becoming a requirement for CBS
vendors. This new open model — open, but not uncontrolled — fosters previously untapped
opportunities for the bank to become a digital platform and extend its product and service reach
beyond the usual borders of the financial domain. This change in business model can be delivered
only by a digitalization change in the bank organization, with the CBS as its foundation.

App Marketplaces
Leading vendors are aggressively developing component-based architecture and exposing
functionality with solutions available in app marketplaces. Exposing core system functionality for
co-innovation is an evolutionary step toward ecosystem interoperability that lies at the heart of open
banking. The apps available in marketplaces — delivered not only by innovation partners of the CBS
vendor, but also by end-user clients — can quickly deliver innovation to the bank’s clients and foster
new ideas. This enables CBS vendors to go beyond the simple componentization of their products
by leveraging other products and solutions beyond the CBS itself. Most of these vendors are hoping
to provide an alternative to well-positioned API players such as MuleSoft and Apigee.

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 Embedded Data
Once a bank makes the evolutionary step toward the bank-as-a-platform business model, it
requires direct and real-time access to its own data, as well as integration with other data sources
— structured and unstructured — from external providers. This type of data requires simplification
of data structures and management. CBS providers are aware of this trend and are investing heavily
in embedded data that can be easily leveraged and consumed by the bank, as well as by its clients.

Alternative Delivery Models

Demand persists for alternative CBS delivery models like SaaS and business process outsourcing.
Gartner expects public cloud usage to expand in the near term, at least in those jurisdictions where
the regulatory framework permits it. All vendors included in this Magic Quadrant offer alternative
delivery models, and can demonstrate capabilities in deploying the CBS beyond traditional on-
premises installations. However, only a few of them have proven deliveries and existing partnerships
with infrastructure-as-a-service providers such as Amazon (AWS) and Microsoft (Azure).

Deployment Reality Check

CIOs are frustrated by the high development resource and maintenance spending required for
custom integration that does not provide any direct value to end customers. Gartner has been on
top of this trend, which is driving the banking industry to provide broader standards for banking
architecture.

Under pressure from EU Revised Payment Services Directive (PSD2) mandates, banks are
searching for industry-standard organizations to ease integration challenges. BIAN — a consortium
of banks, vendors and service providers whose initial ambitions were intently focused on reducing
integration complexity — is redirecting efforts to the practicality of applying consistent guidelines
and leveraging APIs. The latest deliverable is BIAN Service Landscape 7.0, which contains 89
semantically defined APIs as of March 2019, and has a broader focus on credit card business
domains. Gartner is increasingly seeing BIAN questions appearing on vendor RFPs.

Banking Business Power, Drivers and Decision Makers

Core banking renewal has historically been viewed as a high-cost, high-risk undertaking that banks
usually take on only when they have no other choice. Although this perspective is changing — and
some large banks are already replacing their systems — discussions with Tier 1 and Tier 2 banks
reveal decision slowdowns, mainly due to the hurdles involved in gaining approval for large-scale
programs. In fact, some early large-scale deployments have been troubled by scope changes, cost
overruns and unmet bank objectives. Most banks, instead of undertaking a single large-scale CBS
replacement project, are choosing to go with many smaller projects. These projects are of shorter
duration — usually less than two years, more often around one year — and are run sequentially,
rather than in parallel. This phased approach usually provides short-term ROI, visible and
quantifiable benefits, and less risk of failure. Mapping to these new deployment models is not an
easy task for the bank or the CBS vendor. But it is quickly becoming the new reality for banks that
hope to reset their technology spending in favor of increased investment in innovation. The margins

Gartner, Inc. | G00368239 Page 31 of 38

 for large-bank (or Tier 1) core banking deployments are tempting, and vendors’ ability to
incrementally deliver smaller solution sets is increasingly becoming a key differentiator for the
vendors and a selecting criterion for banks.

A focus on more componentized products that can both reduce the cost of maintenance and testing
and leverage reusability, while enabling greater agility and ability to react to business challenges,
remains a critical concern for banks. The main drivers for changing CBSs reported by the more than
327 Magic Quadrant references were to “create internal/operational efficiencies” (79%), to “improve
business process agility” (65%) and to “improve customer relations/service” (62%). At the same
time, key factors considered by those same reference banks were “product functionality and
performance” (80%), “product roadmap and future vision” (52%) and “strong services expertise”
(50%). These results show not only an interest in the delivery of the replacement project itself, but
also a strong focus on the durability and continuation of the service provided by that product. This
is because the bank’s use of the CBS will, after all, not end with the implementation, but will likely
continue for a decade or more afterward. In this regard, Gartner has noted an acceleration of the
public cloud adoption trend. Banks perceive that cloud might resolve the problem of frequent (and
expensive and painful) updates so they can support their clients just like fintechs do.

Transformation that enables banks to reinvent the way they service customers, embed operational
efficiency and provide business change — without long waiting periods — is now a foundational
requirement. Many banks view this time period as an opportunity to gain traction in their respective
markets and sustain lasting competitive advantage.

As banks increasingly turn to core system modernization to drive change, they should expect a
correspondingly higher rate of implementation problems. CBS vendors will be dependent on their
system integration partners to extend their bandwidth, to a degree they haven’t experienced
recently. As core banking vendors add system integration partners to their networks, concerns
about training and certification will drive banks to exercise more due diligence during the core
banking selection process. Gartner assesses this capability within the Operations criterion for each
of the vendors in this Magic Quadrant.

Core banking technology decisions are firmly within the grasp of business owners and board
members, who are gradually recognizing the importance of a solid and modern CBS in underpinning
new winning strategies based on digitalization. The implications for making the wrong decision on
CBS will be lasting. That wrong decision could put banks at competitive risk, and candidates should
be properly assessed within the bank’s risk management framework.

Gartner Recommended Reading

Some documents may not be available as part of your current Gartner subscription.

“A Banker’s Guide to Core Banking Solutions for Latin America”

“A Banker’s Guide to Core Banking Solutions for the Middle East and Africa”

“A Banker’s Guide to Core Banking Solutions for Western Europe”

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 “A Banker’s Guide to Core Banking Solutions for Emerging Asia/Pacific”

“Cost Optimization Initiatives for Banks and Investment Services Firms”

“Bank CIOs Must Go Digital to Improve Business Value and Optimize Costs”

“How Markets and Vendors Are Evaluated in Gartner Magic Quadrants”

Evidence
The Magic Quadrant for Global Retail Core Banking has been driven by two equally important
factors:

■ We have increasingly focused on truly global CBS vendors by excluding those who were not
capable of servicing clients across the globe because of a limited presence. In this regard, we
have considered the total number of installations per product around the globe (by region and
country), collecting this information from the vendor, the public domain and daily interactions
with Gartner clients.
■ We have further increased the number of data points used to assess and compare the vendors.
In fact, Gartner surveyed all the most important CBS vendors worldwide in October 2018 as
part of its Global Core Banking Survey 2018-2019 initiative. This survey includes five different
questionnaires for the vendors, plus a reference survey run on 327 worldwide bank references
provided by the vendors, about projects delivered in the last five years. The respondents
represented banks from Europe (21%), MENA (13%), sub-Saharan Africa (16%), North America
(9%), Latin America (8%), emerging APAC (22%), mature APAC (6%) and Greater China (5%).
Out of the more than 60 vendors we invited to participate, 57 joined this initiative and answered
our questionnaires.

Gartner has used its core banking analysts’ client interactions, as well as use cases and demos
presented at selected industry events and tradeshows, to verify the information vendors provided.

Since componentization is increasingly important, Gartner measures it in two ways — market and
technology.

■ Market components are assessed on characteristics of functional isolation, separate pricing and
support as they pertain to stand-alone entities. These components may have dependencies
such that a consumer-lending component may require usage of the vendor-supplied customer
information component.
■ Gartner also measures the technical granularity and reusability as important considerations for
core banking software design to enable agility through exposed functionality. The relative
granularity of components can differ materially between and within vendors’ product offerings.
For example, product bundling and relationship pricing components differ in comparable
granularity as compared to an interest accrual component (coarse grain versus fine grain); fine-
grained components may very well support multiple coarse-grained components.

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 Finally, to determine vendor viability, we have leveraged the Gartner Financial Statement Scorecard
methodology (see “Understanding the Methodology Behind Gartner’s Financial Statement
Scorecard for Public Companies”). We have also used financial information — both publicly
available (independently retrieved by Gartner) and private (requested of the vendors by Gartner).

1 Gartner Legacy Modernization Study: Results presented are based on a Gartner Legacy
Modernization Study to understand the stage of legacy modernization; what strategies
organizations are pursuing and how legacy modernization will help to drive transformation. The
primary research was conducted online during August 2018 through October 2018, among 659
respondents distributed among six major industries. Findings presented are based on 101
respondents from the life and P&C insurers distributed across: U.S. (n = 26); Canada (n = 2); U.K. (n
= 16); France (n = 10); Germany (n = 13); Australia/New Zealand (n = 2); India (n = 13); Singapore (n
= 19).

Respondents were screened for involvement in their organization’s core IT systems modernization
activities in the manufacturing industry. Companies were required to have $250 million or above in
annual revenue. The survey was developed collaboratively by a team of Gartner analysts who focus
on digital business as well as thought leadership on market trends, systems and architecture. The
survey was tested and administered by Gartner’s Research Data and Analytics team.

Note 1 Hybrid Cloud

Hybrid cloud: Gartner defines hybrid cloud computing as a policy-based and coordinated service
provisioning, use and management across a mixture of internal and external cloud services. It also
implies both private and public cloud services (see “Utilizing Hybrid Architectures for Cloud
Computing”).

Note 2 Multicloud
Multicloud: Multicloud computing refers to using cloud services from multiple public cloud
providers for the same purpose (see “Hype Cycle for Cloud Computing, 2017”). Thus, multicloud is
specific to public cloud technology silos. Multicloud strategies are used to avoid lock-in, to support
high-availability architectures, or to address specific use cases that are better-served by different
providers. For more information, see “Decision Point for Selecting Single or Multicloud Workload
Deployment Models” and “A Guidance Framework for Architecting Portable Cloud and Multicloud
Applications.”

Note 3 Geographic Taxonomy

This report uses a specific Gartner taxonomy for defining each region. Specifically:

■ Mature Asia/Pacific: Australia, Japan, New Zealand, Singapore and Korea.

■ Greater China: China, Hong Kong and Taiwan.
■ Emerging Asia/Pacific: Includes all countries in the Asia/Pacific Rim excluding the ones
already in either Mature Asia/Pacific and Greater China.

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 ■ Western Europe: Austria, Belgium, Cyprus, Denmark, Finland, France, Germany, Greece,
Iceland, Ireland, Israel, Italy, Luxembourg, Malta, Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland, United Kingdom and other small countries.
■ Eastern Europe: Latvia, Lithuania, Estonia, Albania, Bulgaria, the Czech Republic, Moldova,
Poland, Romania, Slovakia, Bosnia and Herzegovina, Croatia, Kosovo, Macedonia, Montenegro,
Serbia, Slovenia.
■ Eurasia: Russia, Afghanistan, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan,
Mongolia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan.
■ Middle East and North Africa (MENA): Saudi Arabia, the United Arab Emirates (UAE), Qatar,
Kuwait, Bahrain, Oman, Turkey, Algeria, Egypt, Libya, Morocco, Mauritania, Sudan, Tunisia, Iran,
Iraq, Jordan, Lebanon, the Palestinian Authority, Syria, Yemen.
■ Sub-Saharan Africa: This is a very large subregion that comprises all African countries not
included in North Africa.
■ North America: The U.S. and Canada.
■ Latin America: All countries in the Americas, excluding the U.S. and Canada.

Note 4 Minimum Number of Net New Client Wins in the Past Seven Rolling Quarters
Large client wins are much more difficult than small microfinance institutions’ projects. Therefore,
Gartner has decided to assign a weighting system to new client wins in order to calculate a valid
count in meeting the active presence criteria. This change was necessary to adjust for such
differences between vendors that claimed 50 new, very tiny installations, while others could only
claim one or two large deliveries. For this reason, Gartner has introduced a weighted system to
evaluate that net new client count and, specifically, provides the weighting system across different
bank tiers.

Evaluation Criteria Definitions

Ability to Execute
Product/Service: Core goods and services offered by the vendor for the defined
market. This includes current product/service capabilities, quality, feature sets, skills
and so on, whether offered natively or through OEM agreements/partnerships as
defined in the market definition and detailed in the subcriteria.

Overall Viability: Viability includes an assessment of the overall organization's financial

health, the financial and practical success of the business unit, and the likelihood that
the individual business unit will continue investing in the product, will continue offering
the product and will advance the state of the art within the organization's portfolio of
products.

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 Sales Execution/Pricing: The vendor's capabilities in all presales activities and the
structure that supports them. This includes deal management, pricing and negotiation,
presales support, and the overall effectiveness of the sales channel.

Market Responsiveness/Record: Ability to respond, change direction, be flexible and

achieve competitive success as opportunities develop, competitors act, customer
needs evolve and market dynamics change. This criterion also considers the vendor's
history of responsiveness.

Marketing Execution: The clarity, quality, creativity and efficacy of programs designed
to deliver the organization's message to influence the market, promote the brand and
business, increase awareness of the products, and establish a positive identification
with the product/brand and organization in the minds of buyers. This "mind share" can
be driven by a combination of publicity, promotional initiatives, thought leadership,
word of mouth and sales activities.

Customer Experience: Relationships, products and services/programs that enable

clients to be successful with the products evaluated. Specifically, this includes the ways
customers receive technical support or account support. This can also include ancillary
tools, customer support programs (and the quality thereof), availability of user groups,
service-level agreements and so on.

Operations: The ability of the organization to meet its goals and commitments. Factors
include the quality of the organizational structure, including skills, experiences,
programs, systems and other vehicles that enable the organization to operate
effectively and efficiently on an ongoing basis.

Completeness of Vision
Market Understanding: Ability of the vendor to understand buyers' wants and needs
and to translate those into products and services. Vendors that show the highest
degree of vision listen to and understand buyers' wants and needs, and can shape or
enhance those with their added vision.

Marketing Strategy: A clear, differentiated set of messages consistently communicated

throughout the organization and externalized through the website, advertising,
customer programs and positioning statements.

Sales Strategy: The strategy for selling products that uses the appropriate network of
direct and indirect sales, marketing, service, and communication affiliates that extend
the scope and depth of market reach, skills, expertise, technologies, services and the
customer base.

Offering (Product) Strategy: The vendor's approach to product development and

delivery that emphasizes differentiation, functionality, methodology and feature sets as
they map to current and future requirements.

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 Business Model: The soundness and logic of the vendor's underlying business
proposition.

Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and

offerings to meet the specific needs of individual market segments, including vertical
markets.

Innovation: Direct, related, complementary and synergistic layouts of resources,

expertise or capital for investment, consolidation, defensive or pre-emptive purposes.

Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to
meet the specific needs of geographies outside the "home" or native geography, either
directly or through partners, channels and subsidiaries as appropriate for that
geography and market.

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