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Banks' push to upgrade hampered by complexity of legacy systems

Christian Annesley

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.

 


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