Monday, April 13, 2009

While the Cash Cow was Milked...

Nearly all of the top retail banks in the US and Europe are still operating core systems from the 1960s, based on creaking mainframe technology. Frequently, this is attached to a chaotic IT estate of some 600 surrounding applications or more, rendering the core systems environment not only inflexible but quite often untouchable. - The Banker

In contrast, new banks in emerging markets, "in particular Asia-Pacific countries including India, China, Taiwan, Thailand and Korea, have competed or initiated projects to replace their core systems, and in turn rationalise their IT estates. 2007 some 50% of Asia-Pacific banks began investing in projects to reduce the costs of running core systems, and to rationalise their systems architecture. core technologies have evolved highly agile component-based architectures, which are frequently inexpensive to operate and easy to integrate."

A main advantage of the more techno-savvy banks is the speed with which they can react to market opportunities by launching new products with "hyper-speed to market". They are ahead in their mobile banking offerings, and have expanded ATMs into multi-functional service areas where customers can arrange loans, pay tuition, and on and on.

For years western banks knew they should upgrade their systems and they even planned upgrades, but according to the article they were "distracted by revenue growth". Another unfortunate side effect of our recent bubble, I suppose.



Northern PoV said...

US and Europe

and our big 5?

Yappa said...

Hi NorthernPoV,

Canada never seems to get mentioned in internatinoal articles. In fact the article specifically said "US and Europe", and I was unable to find out how the Canadian banks fit into this. I would guess we're somewhere inbetween, based on my own experience.

I thought the info was still interesting because it suggests some possibiilities for directions of change after the recession.