Constraints For Core Banking Transformation in North America

The Legacy Systems.. 

The third wave of core banking transformation is on the threshold of North American banks. It has not moved in the desired pace as expected. The wind sits on the shoulder of the sails. The ship is still in the harbour. The world is waiting and watching with bated breath for something to happen.

The core issue is the legacy systems that have grown in such proportions that the creators themselves do not really know what its potential is. The bottom line is lines and lines of code that was created over the last few decades and to unravel it is next to impossible. The underlying risk is so immense that no CXO is willing to bite the bullet to give the green signal for replacement. It's the bonus that matters as the baton gets passed. The day is not far off when a CXO will have none to pass it on.

How does a typical legacy system look like? Multi functional with multi interfaces. It is both an upstream system and a down stream system. It is a part of the whole. How important? This will only be known when the old boy is replaced.  The transaction data for mortgages resides in the system (legacy system 1). This with the customer information (legacy system 2) and pre approved lines of credit (Legacy system 3) gives a part view of a customer. A file each from these systems moves into a third party (statement formatter) system that is out sourced. The reg reports depend heavily for 'some' critical information from legacy system 1. All these are 'source systems' for Basel reporting.  The best view one gets is the enterprise architect's view of the system. There are multiple icons of mainframes with a maze of lines (networks) inter connecting all these. The mystic maze.

The newkids in the block out to replace the legacy bigboys will never understand any of these. And if some one knows the intricacies, it will never be revealed for the fear that the knowledge if shared, the person becomes dispensable.  

The transformation will have to occur for greater transparency,more customer centricity and better risk management. The world is waiting and watching as the wind sits on the shoulder of the sails. The ship will have to move.