Mark Greene, vice president of financial services strategy at IBM, a major backer of Linux, said IBM is experiencing 'explosive growth' in sales of systems running the operating system for branch offices. On the other hand, 'the back office is still lagging,' Greene said. 'But banks generally aren't doing a lot around their core mainframe-based systems. It's just a difficult environment to move to anything new.'

Curry said Union Bank does plan to port its internal credit-reporting and document management applications, both currently running on IBM Unix servers, over to Linux this year. But the bank expects to keep its primary transactional database on an IBM zSeries 890 mainframe for at least five more years, he said.

One roadblock for Linux is that despite its attractive projected cost of ownership, ripping out and replacing systems that are still working fine isn't an option for many banks, which tend to pinch pennies on IT compared with their cousins on Wall Street.

'The economics of banks are hard,' said Alenka Grealish, an analyst at Celent Communications LLC, a Boston-based consulting firm that focuses on financial services IT issues. 'IT projects tend to hit a glass ceiling in terms of size and also extend out in their cycle time.'

The heavy merger-and-acquisition activity among banks in recent years has also slowed adoption of Linux, Grealish said. Instead of taking mergers as an opportunity to switch IT systems, banks are generally preoccupied with ensuring that integration work goes smoothly, she said.