Blog article
See all stories ยป

Old car exchange scheme for platform renewal

European banks are teeming with legacy platforms- inflexible, expensive, long time-to-market and ageing skilled workforce. Providers and package vendors who propose to change this are stuck given the budget situation. Is it time for a "return your old car and get a discount on a shiny new one" scheme? Here is the vicious circle: bank needs to survive -> cost cuts and budget restrictions -> compliance-related expenses are prioritized -> legacy transformation decision is postponed -> bank continues to do worse with its legacy platform. Meantime the provider / package vendor has spent several months - maybe a couple of years or more - on several rounds of presentations, workshops and RFIs with no results/revenues to show. They have come up with a hosted / ASP version so that takes care of getting in some small and medium logos, but the big bucks are still missing. For either to be around in a year from now, Banks and providers need to talk! We are talking serious money, and it can't be all coming from banks trying to drag themselves out of the recession, while package vendors sit pretty on license and AMC revenues. If the "old car" is worth nothing, the new car got to come on equal installments, based on results, or on new customers or number of transactions. High time for vendors to put their skin-in-the-game and dominate, instead of wait for that budget that ain't coming anytime soon!
3797

Comments: (3)

Nikhil Mittal
Nikhil Mittal - Wells Fargo - Charlotte 02 May, 2012, 06:01Be the first to give this comment the thumbs up 0 likes

Quite rightly said when you mentioned about the issues with the large European or american financial organisations which are sitting cashless. When no cash, they cannot think of new car bacause new one comes with a premium. No matter even if the vendors launch multiple variants (from a basic one to full-specced), the banks dont have the money and hence dragging the existing setup.

The immediate need is to address the core issues banks are facing, reducing ops costs and increasing risk coverage across asset portfolio. IT will be one of the enablers to achieve this but t has to start with pruning down the existing car bit by bit. In parallel picking the newer ones bit by bit and building the new car.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 03 May, 2012, 11:56Be the first to give this comment the thumbs up 0 likes

How true! In times like these, innovative business models that unearth latent sources of value have the best chance of upending the status quo and ushering in new technologies. In a recent example, a state-of-the-art billing / statementing solutions provider was able to take its appeal to the next level by upgrading a plethora of over 100 legacy systems to a spanking new, unified system for no more than the customer's outflow on its existing landscape.

However, vendors need to be very cautious about developing such business models for it doesn't take much for capex-starved customers to suddenly claim to become opex-challenged as well.

Samarth Shekhar
Samarth Shekhar - SixThirty Ventures - Amsterdam 27 June, 2012, 10:40Be the first to give this comment the thumbs up 0 likes

Thanks for your comments Nikhil and Ketharaman! Would you say that package vendors realize this disconnect (between banks' lack of CapEx and their traditional upfront licensing/AMC model and have started to do something about it?

Now hiring