23 May 2018
Stanley Epstein
Stanley Epstein

Stanley Epstein

Stanley Epstein - Citadel Advantage Ltd

44Posts 188,731Views 52Comments
Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Legacy Thinking

22 January 2010  |  3734 views  |  2

I have just been running a series of training courses in Johannesburg on various banking subjects and something that one of the course participants said really struck a chord in me and in the group that she was a participant in.

What happened was this; we had been discussing the various barriers to progress in the realm of electronic banking and the reluctance of banks generally to face up to the realities of client needs, deferring to what banks' generally "think" their clients require.

As a part of an earlier discussion in the same group, we had also taken a critical and close look at the issues of "legacy systems". Just to get readers on the same page "legacy systems" are those computer systems that were installed by many of the large banks in the 1960s and the 1970s and which today, almost a half century later, still plod on, providing basic banking functionality. These legacy systems are the source of endless frustration to the banks and often clients as well as they impose huge operational burdens and constraints. Legacy systems in today's banking environment are the equivalent of trying to merge Microsoft Office Word and a whole office full of manual typewriters!

Referring to the stodginess of senior bank management today to the real needs of their clients this lady used the term "legacy thinking", as an exact people-equivalent to the "legacy system" of the computer world.

Her terminology was one-hundred percent on target. It really is legacy thinking that many banks are stuck with today.

On the one hand, these banks are slaves to their physical legacy computer systems, which more often than not throw up an insurmountable technological barrier to new ideas, practices and products. And on the other hand, the management of these banks are still trapped in a cycle of myopic thinking and resistance to all new ideas and concepts - truly Legacy Thinking.


Comments: (2)

Jonathan Rosenne
Jonathan Rosenne - QSM Programming Ltd. - Tel Aviv | 25 January, 2010, 07:03

On the other hand, I have seen all too often what may happen when one replaces a legacy system with a new, all singing, all dancing, buzzword compliant, modern system. These old systems have buried in them a vast amount of undocumented rules, regulations and practices. Replacement is both expensive and risky.

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A Finextra member
A Finextra member | 30 January, 2010, 02:15

Having cut my teeth on a legacy system in a bank (although the IBM360 and 370 were hardly legacy at that time) I have seen pretty well all there is in the arena.

It is a problem of almost impossible potential as legacy systems have often developed a life of their own.

There are some great companies out there with some fantasic tools to extract the relevant information out of your legacy systems and allow you to perform thoroughly modern operations on that data. It is also possible to use the legacy system as a component of a more modern capability and have a new layer of code sitting on top interfacing into the modern environment.

In some parts of the world goods are still delivered to dock by beast-drawn cart, yet they move onto superships and into modern docks and end up in the most advanced sparkling modern stores. Even words recorded on typewriters are now being scanned into vast libraries using the latest capabilities and transmitted to potentially billions of eyes. The legacy information in these cases is often more valuable than it ever was, because we can do more with it.

It may not be necessary to replace the legacy system if you can get rid of the legacy thinking, and perhaps a chat with someone like Rogue Wave could help open up to a few ideas.

ps. I have no pecuniary interest in either IBM or Rogue Wave.

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Stanley is a Director and co-founder of Citadel Advantage Ltd., an international consultancy to the financial services industry that provides specialist services and training in the areas of operation...

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