If technology drives the business of banking, why are the banks’ core banking systems STILL so creaky? And are the large established banks which don’t address this most at risk from the regulators, emerging markets or smaller local institutions?
Over the summer, London and New York saw system failures at top retail banks and capital markets business, which are highly dependent on innovative technology. This led to Intellect, the trade association for the UK technology sector, to call for regulators to address the issue and “mandate change by requiring banks to ensure that their critical infrastructure is fit for purpose”.
Added to this, financial institutions in emerging markets are building core banking systems from scratch. Smaller, more agile organisations, such as Building Societies and online banks, are able to adapt their systems with less upheaval.
Banks can no longer ignore the issue of creaking core banking systems and the importance of expert advice is growing fast. GFT and Asymo partnered last year in order to meet this demand and have since then established an Avaloq Competence Centre in Switzerland, to help our clients work through the updating process. It’s time that banks grasped this particular nettle. Starting with assessing the risk involved in migrating to a new system by establishing a detailed knowledge of the underlying business processes and technology.
Wherever the threat comes from, a lack of investment in underlying systems will leave many banks encumbered by aging and complex technology, which reduces their ability to offer customers innovative products. The entire technology portfolio should be driving the business of banking, not being held back by outdated systems.