4 May 2016
We Need to Talk About Legacy IT Architectures…
Cliff Moyce, Global Head of Financial Services Practice at DataArt, discusses legacy IT issues in Global Banking & Finance Review Magazine, stating that in order to remain competitive, banks need to solve infrastructure issues. While replacing a legacy system architecture with a modern one would reach this objective, the task is similar to redesigning a battleship in the heat of the battle.
“Unlike their challenger bank siblings and fintech cousins, incumbent banks have one particular problem to solve if they are to remain viable and competitive. That problem is high cost to income ratios of (typically) around 60%. Compare that figure to fintech firms engaged in ‘unbundling the bank’ who even when fully operational are operating at ratios as low as 20%. A large part of the difference in costs is the cost of operating and supporting legacy system architectures. Getting old and new applications, systems and data sources to work seamlessly can be difficult, verging on impossible. This lack of agility means that legacy systems in their existing configuration can be barriers to improved customer service, satisfaction and retention.
One radical approach to solving the infrastructure issues is to design and implement a new, more modern architecture using a radical clean-slate or blueprint-driven approach… The temptation to start again is enormous, but big-bang approaches to legacy IT systems replacement can be naïve, expensive and fraught with risk.”