A report by Sir Christopher Kelly, a former senior civil servant into the £1.5bn losses at Co-operative Bank revealed numerous failures in a project to replace the core banking systems. The report also revealed how the bank underestimated the complexity of the project and lacked robust internal communication to manage such a huge programme successfully. In the end the bank shelved the plan to migrate to an off-the-shelf system amid huge losses.
This real life case study describes the difficulties faced by many UK retail banks in modernising their IT. Unfortunately this failure also offers the excuse for many not to even attempt the task.
A recent survey for blur Group among 400 C-suite buyers showed some startling facts to support buyer inertia. 51% of those surveyed agree there are better service providers than their current partners and 46% believe their companies engage with partners longer than they should. There is no doubt that part of this inertia is driven by fear.
Jean Louis Bravard, former global CIO at JP Morgan and senior adviser in the IT services sector, recently told Computer Weekly there are off-the-shelf core banking systems, but they have limits and could introduce further risks. “Each bank is so different that the package would only be a start-up kit and any later deployment would annihilate the value of a ‹package’ while incorporating risk from any supplier”
This is true of many complex core systems within the Financial Service Industry where the age and complexity of the systems and the many interfaces between its components, mean that the technology platform can be unstable, expensive to maintain, complex to adapt and ill-equipped to support modern business requirements.
We believe the solution to the widespread legacy challenge will come from a new breed of supplier, such as ourselves, that offer a more nimble approach and can build new systems from scratch using the latest technologies and architectural trends.
The first step though is for leaders to recognise they cannot maintain what is no longer maintainable and have the courage to look at new suppliers. The disasters of technology projects in the past must not deter companies from tackling their big challenges. They should learn from past mistakes, not use them as an excuse to do nothing.