The much-discussed replacement of core banking systems is, for now, not materializing. Sixty-five percent of the banks surveyed expect to still be working with their current provider in ten years. In the 2023 predecessor study, that share was only 32 percent. Only 10 percent consider a switch within the next five years likely.

This is shown by the study on the future of core banking systems published on Tuesday by the Institute for Financial Services Zug IFZ  at Lucerne University of Applied Sciences and Arts. However, the growing attachment to existing providers comes with considerable reservations about their systems.

Reliable in operation, weak on innovation

Banks value operational reliability above all: 95 percent count stability, availability, reliability, and fail-safety among the three biggest strengths of their core banking system. Overall, 64 percent are rather or completely satisfied with their system.

When it comes to further development, the verdict is much more critical. Sixty-four percent cite user-friendliness as one of the three biggest weaknesses, while 61 percent point to innovative capacity and the speed at which new features become available. Flexibility, at 51 percent, and costs, at 47 percent, are also frequently criticized. The focus of the complaints has therefore shifted. While costs were in first place in 2023, banks are now more critical of usability and the pace of development.

Modernization around the existing core

The authors of the study explain the decline in willingness to switch by pointing to several factors. Established providers have regained trust by announcing that they will open up their platforms. At the same time, convincing alternatives are lacking. High migration costs and risks are also likely to make a switch more difficult. Another reason lies in the additional applications surrounding the core banking system. They enable banks to modernize individual areas without having to completely replace the central platform.

Already today, 68 percent of the institutions surveyed implement innovations rather or mostly through such so-called surrounding systems. Only 8 percent see the core banking system as the primary driver of innovation. For another 19 percent, both contribute roughly equally. The core banking system therefore remains the operational foundation. New customer functions, data analytics, and artificial intelligence, by contrast, are often created outside this central platform.

The workaround creates new complexity

This approach has its price. Sixty-two percent consider connecting an additional application to be demanding or very demanding. Only 15 percent find integration easy or very easy. Even standardized interfaces apparently solve the problem only partially. Although 69 percent use such interfaces to connect supplementary systems, aligning data models and processes, tests, and differing development cycles remains challenging.

According to the authors, the central challenge is therefore shifting: increasingly, what matters is how well a bank can manage its various applications, data flows, and service providers. As the number of additional systems grows, so do the demands on provider management and risk management.

AI raises expectations — the cost benefits are still missing

The gap between expectations and the perceived offering is particularly clear in the case of artificial intelligence. Forty-one percent count its integration among the three most important requirements that core banking systems must fulfill in three to five years. By contrast, the statement that a bank's own core banking system is increasingly integrating AI technologies receives only around two out of five possible points on average. That makes it the weakest performer among the future features surveyed.

Financial relief is also hardly visible so far. According to the expert interviews, possible cost advantages from AI in software development have not yet reached the banks. The majority of the institutions interviewed expect their IT costs to rise more slowly, but not to stop increasing.

Stable customer relationships, new competition

For established providers such as Avaloq and Finnova, the low willingness to switch initially means stable customer relationships. According to the study, however, competition is shifting more strongly to individual modules and supplementary applications. The openness of the platforms and the ease of integration are therefore gaining importance.

The study is based on an online survey conducted from May to June 2026. Of the 123 IT executives contacted at Swiss and Liechtenstein banks, 63 took part. In addition, 14 expert interviews were conducted. Regional banks, savings banks, and Raiffeisen banks account for 49 percent of the sample, with cantonal banks making up another 24 percent. The provider shares within the survey are expressly not representative of the overall market. The composition of the sample also differs from that of the 2023 study.