16 April 2019
We Need to Talk about Legacy IT Architectures
Cliff Moyce, Chairman of Advisory Board at DataArt, contributes an article on Legacy IT Architectures to Global Banking & Finance Review Magazine. Moyce argues that banks must reduce the cost to income ratio to remain competitive. While replacing a legacy system architecture with a modern one would reach this objective, the task is similar to redesigning a battleship in the heat of the battle.
“Unlike their challenger bank siblings and fintech cousins, incumbent banks have one particular problem to solve if they are to remain viable and competitive. That problem is high cost to income ratios of (typically) around 60%. Compare that figure to fintech firms engaged in ‘unbundling the bank’ who even when fully operational are operating at ratios as low as 20%.
A large part of the difference in costs is the cost of operating and supporting legacy system architectures.
“Getting old and new applications, systems and data sources to work seamlessly can be difficult, verging on impossible. This lack of agility means that legacy systems in their existing configuration can be barriers to improved customer service, satisfaction and retention.”
“One radical approach to solving the infrastructure issues is to design and implement a new, more modern architecture using a radical clean-slate or blueprint-driven approach.”
“But how easy is it to design and implement a new IT architecture in a large mature organization with an extensive IT systems estate? Rather than the unplanned house analogy, a better analogy might be a ship at sea involved in a battle. Imagine if you were the captain of such a ship and someone came onto the bridge to suggest that everyone stop taking action to evade the enemy and instead draw up a new design for the ship that would make evasion easier once implemented. You might be forced to be uncharacteristically impolite for a moment before getting back to the job at hand.”