The financial services industry is under immense pressure from both regulators and the market place. Concerns regarding resilience and security have triggered a raft of measures and standards that the institutions themselves and even their suppliers are expected to meet. Meanwhile, the transition to a digitally enabled generation is forcing a pace of change and innovation that can sometimes be uncomfortable for a naturally conservative sector with a history of being slow to adapt.
On the regulatory front, new technological concepts, such as cloud deployment models, have further complicated a landscape that was just getting to grips with increased adoption of third-party hosting and application management outsourcing in Software as a Service (SaaS) frameworks. Such solutions have legitimately required a rethink in terms of mitigating certain supplier risks. However, these approaches should not be confused with long-established concepts, such as standard packaged software solutions that may be adapted to fit the use cases of the financial institution without necessarily reverting to the supplier. It is a complex mix of new and traditional models that each institution and vendor must unpack to determine any additional needs contractually required from each supplier in order to demonstrate compliance.
With regard to adapting to the current, rapidly evolving market requirements, the old adage of “If it ain’t broke, don’t fix it” has left some institutions with significant challenges.
This natural tendency to avoid change has led to firms running versions of their mission critical software that are, literally, decades old. Banks and financial services providers have often balked at the relatively small incremental investments needed to keep pace with the latest version and therefore benefit from this investment. As a result, the gap between market expectations and technology capabilities creeps ever wider.
In the case of in-house, bespoke legacy systems or packages that are “end-of-life”, it is surely time to bite the bullet and replace the old with new, modern packaged software solutions. For these antediluvian systems, the cost of keeping up to date with both regulatory and market advances is simply too great. Top-tier core banking system suppliers invest heavily to stay on top of market requirements in terms of functionality, regulatory compliance and underlying technology. For institutions that have inadvertently slipped behind on the upgrade ladder, it is important to invest the time to get up to speed and understand the benefits offered by the latest version of the current package. Before embarking on the high-risk journey of selecting a new system and replacing the old, first evaluate the solutions that the latest version of your system can deliver in key areas, such as digitally enabled user experiences, composable functionality delivered through open APIs, cloud deployment options, security and interoperability.
On the face of it, the prospect of changing or upgrading these systems may seem arduous. Step into 2023 with a new resolution; openly engage with your core system supplier to update and refresh key stakeholders within your organisation regarding the system’s latest functional and technological evolutions. Discuss the most appropriate path to enable your organisation to enjoy the quick wins and longer-term benefits of up-to-date technology.
ERI is the supplier of OLYMPIC Banking System, offering award-winning levels of innovation, real-time process automation and compliance.
Article by Alan Goodrich, Regional Sales Manager at ERI, Fellow of the IAP (Institution of Analysts & Programmers)