A post relating to this item from Finextra:
09 August 2012 | 9534 views | 16
Intellect, the trade association for the UK technology sector, has called on financial regulators to force banks to upgrade their legacy IT systems, or risk future financial crises and systems failure...
Earlier this month Intellect published a report that,
“calls on financial regulators to force banks to upgrade their legacy IT systems, or risk future financial crises and systems failures”. Among the contributors to the report were 150 technology suppliers to financial services, which brings some level of
doubt to the findings. However, recent high profile retail banking systems failures have sparked public debate on the replacement of legacy core banking systems and, in the eyes of some, validated the recommendations of the report. I would be very wary about
bowing to the ‘court of public opinion’, in my view what we want is considered outcomes based on analysis and logic.
The fact that banks’ technology is on the radar of the FSA and the future Financial Conduct Authority has the potential to be a good thing, as it is critical that the incredibly complex architectures maintaining the UK’s banks are understood and sufficient
skills are employed to maintain them. However, simply forcing banks to renew their systems will not, in the majority of cases, solve the underlying problems that can lead to critical banking systems failures.
Commonly, it is not the systems themselves that are an issue, but the way in which they are managed. Problems often arise when banks do not afford their run-the-bank systems the respect they require. It is now clear that expertise, time, and resources are
necessary to ensure these systems are kept in line with the practices of the bank, its technological requirements and strategies.
A system replacement may well be the right answer for some banks, but certainly not for all. A new core system is not a cure-all for a bank’s problems, and to treat it as such over-simplifies the issue. Where there is a valid business case and a technological
need to replace a legacy core system, then banks should absolutely invest in doing so, but this is a decision that needs to be made by the bank. To enforce a blanket upgrade of all banking legacy systems – as is suggested the FSA will do – is not a sound basis
for making reasoned decisions. Surely, once the goals of the bank are determined, the key is to utilise the right resources, to manage the run-the-bank systems, upgrade them, replace and integrate them when the time is right?