Swiss Banks Stick to Aging IT Cores Despite Innovation Woes

The study from the Institute for Financial Services Zug at Lucerne University of Applied Sciences and Arts reveals a paradox in banking technology: banks are increasingly dissatisfied with the innovation capacity of their core systems, yet they are more reluctant than ever to replace them. While 95 percent of executives praise the reliability and fail-safety of their current platforms, 64 percent identify poor user-friendliness and sluggish development speeds as critical weaknesses.

Faced with high migration costs and a lack of compelling alternatives, most institutions have opted to build innovation around the existing core rather than through it. Nearly 70 percent of banks now implement new features via surrounding systems, leaving the central platform as a static operational foundation. This modular approach, however, introduces significant friction. Integration remains a major hurdle, with 62 percent of IT executives describing the connection of supplementary applications as demanding or complex, as aligning disparate data models and development cycles proves difficult.

Artificial intelligence remains the most significant point of friction. Although 41 percent of banks prioritize AI integration for the coming years, current systems score poorly on delivering these capabilities. Furthermore, the promised cost benefits of AI remain elusive, with IT budgets continuing to climb. For established providers like Avaloq and Finnova, this environment secures current market share but shifts the competitive battlefield toward open platforms and the ease of managing a growing web of third-party applications.