UK banks are lagging behind their western European
counterparts in the drive to upgrade core banking platforms, and
some are being held back in part by the complexity of their ageing
legacy systems.
This was one key message from Jost Hoppermann, vice-president at
Forrester Research, speaking last week at the research group's
European financial services forum in London.
Hoppermann said financial services organisations across Europe
were still hamstrung by the patchwork development and extension of
their core platforms over the past 20 years, and UK banks were
among the least likely to have embarked on a major initiative to
upgrade their platforms.
Most UK high street banks had identified a clear need to renew
their existing IT infrastructure, but were being put off by the
huge challenge of planning the renewal of every application in
every workplace across multiple sites.
Financial services institutions should parcel up the project
into a series of smaller tasks to help navigate their way through
their multi-year journey towards complete platform renewal, he
said.
This approach was more likely to receive backing from the board,
to whom it would be difficult to make a compelling business case
for complete platform renewal. Research by Forrester showed this
could cost up to £170m.
Despite the difficulties faced by UK banks, in the European
financial services sector as a whole Forrester's research revealed
a strong commitment to renew and replace ageing platforms.
Its most recent study showed 38% of organisations were currently
embarking on a major platform renewal, and another 25% of
respondents said their organisations were taking active steps to
begin platform renewal.
The research also showed that the majority of firms will have
started some form of platform renewal by 2010 at the latest.
For 63%, the starting point of that process lies in rebuilding
the architecture or application infrastructure to support renewal.
Fifty per cent of respondents said upgrading core banking
applications would be among their top priorities.
Based on analysis of several case studies, Forrester estimated
that on average a financial services firm would need five years to
renew branch and multi-channel applications, as well as its
extended IT infrastructure.