Back-end modernisation for open banking


For decades, mainframes have been the cornerstones of IT infrastructure in many businesses, with banks at the forefront. However, the demand for increased flexibility to cope with ever-changing business processes and the need to reduce recurrent costs are forcing companies to move towards open platforms.

Just as banks have upgraded their entire range of front-end services to personalise and improve the customer experience, they are now starting to move away from monolithic back-end systems. In the new world of open banking, where banking products will no longer be marketed exclusively by traditional banks, the need for speed and flexibility will make all the difference.

The modernisation of the back-end is a strategic move that is part and parcel of the digital transformation banks must undergo to adapt to the market, become more agile and accelerate innovation. Abandoning a mainframe environment involves making a shift towards standardisation through an approach aimed at reducing complexity and thereby increasing cost efficiency.

According to a 2017 GFT survey of 285 banking professionals on the level of digitalisation within the financial sector, 62% of all banks surveyed said they had started to adopt the “Bank as a Platform” (BaaP) vision, a finding that gives a very clear picture of the degree of industry awareness of the need to transition to open banking.

This is the only way to make the paradigm shift in banking from a financial product-centric approach to customer-centric solutions. In fact, customer satisfaction, rather than product creation, is where banks’ true economic value lies. Customers are increasingly demanding two-way, multi-channel, multi-device and, above all, more personalised contact.

Do monolithic mainframe environments have the capacity to cope with this new scenario and to allow banks to offer third-party products or even use the platforms of other banks via APIs? The answer to that question is no. And, for that very reason, there is a need for infrastructure and application changes.

The transition from mainframe infrastructure to an open environment can be handled in different ways. Where possible, the choice should be based on advice from experts who have already overseen such projects, since the process is complex and requires a team with specialist knowledge of both the source and destination platforms.

Three mainframe modernisation options stand out from the rest. Their advantages and disadvantages must be carefully considered, since successful implementation depends on the bank having correctly aligned its objectives with its IT development plans.

The point of view “Back-end modernisation for open banking” recently published by GFT, explores the three most prominent modernisation options. Download it now to get a better understanding of how to transition from a mainframe infrastructure to an open environment.