Banking and financial sectors all around the world have embraced ICT to facilitate their customers with efficient services and innovative products through multi-channel. The central engine that runs the core operations of the banking and financial institution is the Core Banking Software (CBS). The operational efficiency of a bank largely depends on the CBS. Moreover, it determines what a bank can offer in the future. In Bangladesh, ICT embracement has got momentum in the last decade. Some first mover banks in Bangladesh are in the process of CBS upgradation, and some other banks are trying to implement CBS to improve competitiveness, operational efficiency, and regulatory compliance. However, CBS implementation has challenges; improper attention to these challenges may result in poor CBS performance. This exploratory study tried to identify the challenges that commercial banks in Bangladesh encounter in the process of core banking system implementation or upgradation. Factor analysis has been used to analyze data from 153 respondents from seven commercial banks. This study found three primary sources (factors) of CBS implementation challenges: management, technology and vendor. These factors include: consensus on requirements, the role of employees, vendor capabilities and credentials, the software flexibility, user friendliness, capability to meet requirements, employee skill set required and data migration. The findings may help the academicians to explore the factors in other cultures, countries and cross-industry. It will also help the banking practitioners to concentrate on this challenging area to better implement and upgrade the core banking software in future.

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