Traditional High Street banks are being held back from innovating by their own outdated IT systems, new research from Talend has suggested.

Half of the banking industry professionals polled by the software firm cited the limits of legacy systems as the number one IT challenge facing the sector, with 43 per cent also naming it as the main barrier to realising the benefits of Big Data analytics.

Nine in ten respondents agreed that banks understood the potential power of Big Data, but 56 per cent blamed legacy systems for the lack of data integration, with 45 per cent saying that the quality of their data was preventing “real-time insights for the business”. This was despite the need to develop new revenue streams being named as one of the main banking industry challenges over the next five years by 46 per cent of those canvassed – second only to compliance and regulation demands (54 per cent).

However, whereas the UK’s new challenger banks had the ability to invest in agile technology from the start, Talend acknowledged that older banks were not in a position to remove huge legacy platforms.

“Major banks are never going to ‘rip and replace’ the systems that form the backbone of their business,” explained Nimish Shah, banking sector lead at Talend. “So, data integration and data quality should be top priorities across the operation. When you consider that banks are so focused on understanding their customers, the fact that 40 per cent of respondents say that data quality prevents them ‘improving efficiencies or effectiveness of new marketing initiatives’ is very telling.”

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