London -- A recent survey of banking professionals, commissioned by Fidelity National Information Services, Inc. (FIS), finds that despite seeing major problems with legacy IT technology, banks are unable to envision a medium-term future without it.

According to the research, 91 percent of respondents believe that legacy IT systems are becoming increasingly expensive to update and maintain while 76 percent say they increase costs and decrease flexibility. Still, 76 percent also believe these same legacy systems will be running financial institutions in 2013.

These factors, along with the compliance, legal and regulatory requirements that 88 percent of respondents say are putting great strain on banking systems and IT infrastructure, indicate that many banks would consider switching from core IT systems to an Application Service Provider (ASP) model in which the provider hosts, runs and maintains the system on behalf of the bank.

The independent research, conducted by Spectrum Consulting, reveals that 67 percent of respondents think using an ASP would give them access to the best technology without the capital cost, while 42 percent feel it would help them respond quicker to market conditions. More than half, 53 percent, recognise the market potential of this approach over the next three years - one in four respondents give an even shorter timescale of 12 months - indicating that the ASP route is an attractive solution at a time when most banks are facing serious pressures.

"The widely reported mortgage and lending famine is a sign that financial institutions are becoming highly risk-averse, while government is looking to impose even greater regulatory controls and compliance, adding to the cost of doing business and further squeezing margins," said Mark Davey, managing director EMEA, Fidelity National Information Services. "Consequently, lenders appear to be sharpening their focus on reducing capital expenditure, improving cash flow and cutting IT spending. As a result, we are seeing a dramatic increase in interest in alternative IT models, especially where a bank can move from often very old systems to a shared service centre, paying only for what they use. This approach, common in other industries, can drive big savings for a bank and also ensure that costs are linked directly to customer volumes."