I‘ve been talking about the sorry state of banking IT for a while. Many banks have systems that are design dead. Changing or adding new functionality is a high risk operation because of the unknown (and unknowable) impact of those changes. Even worse, it’s impossible to turn off these machines because they’re tied into a network of systems and nobody know’s how the entire system works.
Systems this complicated take years to create, and it’s understandable how they come about. Banks consolidate and merge, and so they throw their disparate systems together. Fast forward 20 years and you have a system that’s impossible to support. This state of affairs is well know in the banking industry although they are unlikely to admit to it.
And, so when the Economist publish this article last week I read it with great interest.
As a result banks tend to operate lots of different databases producing conflicting numbers. “The reality was you could never be certain that anything was correct,” says a former executive at Royal Bank of Scotland. Reported numbers for the bank’s exposure were regularly billions of dollars adrift of reality, he reports; finding the source of the error was hard.
I find it interesting to read about the difficulties that incumbent banks face, and the business opportunities that are available to smaller more dynamic companies.
It takes Vietnam’s Techcombank, one of the country’s fastest-growing banks, days to launch new products. It takes weeks for foreign rivals.
How does your bank compare?