Ancient IT makes a lending

 

Ancient IT makes a lending meltdown inevitable

New wine in the old wineskin

Despite sizeable annual IT funding by using maximum banks (from masses of millions of pounds to multi-billion-pound investments), nearly 80% of that investment goes toward maintaining and enhancing the present core programs base – which includes legacy structures. The remaining 20% has traditionally been devoted to more than a few quick-time periods and medium-term IT traits.

Typically, greater than half of that 20% is spent on initiatives that both meet an immediate product or service demand or are had to reply to new regulatory reporting necessities.

That leaves simply eight-nine% for medium-term – and once in a while long-term – strategic programs. To shape the incredible velocity of IT improvement, this level of investment is pitifully insufficient. The impact is maximum substantive wherein game-converting technology is applied and is specifically mentioned in retail banking wherein client expectations are converting unexpectedly. For instance, people an increasing number of count on to have to get entry to to a number of banking offerings not handiest thru their PCs but also via their mobile gadgets.

For many UK banks, the handiest sensible response is to apply the legacy structures as a release pad for brand new packages. The front-stop applications are newly advanced, but all of the returned-stop processing remains inside the legacy machine.

Unwilling to alternate

For most senior banking managers, IT is viewed as a cost. The stress to reduce value has caused a growing dependence on IT outsourcing and offshoring over the past 20 years. Often this manner method that systems fail to satisfy patron expectations, and a lot of these projects are questionable in terms of reappearance on investment.

Still worse, IT is regularly viewed by means of senior executives as a "basket case," plagued with overlooked project time limits, finances busting overspends, and a wonderful-tune document of mission failure. This has regularly led to an unforgiving bias closer to IT, which militates against long-term investment.

One end result is a mentioned loss of financial will through senior executives to sponsor – or maybe be seen sponsoring – strategic IT projects. This is, in addition, exacerbated with the aid of the fast tenure for key executives, then CIOs in major banks then frequent structural and employee upheaval. The final result is a lack of credible medium to long-term strategic planning for IT in most banks.

The solution

The likelihood for any UK bank to conquer the legacy IT degenerative problem at a character stage may be very slender. Even some of the brand new entrants to the market have determined to apply certified IT systems which might be basically legacy applications.

Senior leaders from UK sets need to get together urgently to systematically discover the demanding situations and possibilities associated with upgrading the IT infrastructure for UK banking. This isn't always a difficulty for the IT specialists on my own. It is a strategic problem that requires the total involvement of senior enterprise executives. The opportunity is to maintain to bury our heads in the sand, watching for the following inevitable disaster to strike.

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