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"When computerization was introduced in the Indian banking industry in the early 1990s...". Is that correct?

I propose a question / subject to be discussed by the community:

- The soap is a product of the hygiene industry.
- The car is a product of the automobile industry.
- Brick is the product of the construction industry.
- And so on...

- What is the Bank's product? Money? But the money is not from the Banks, it's from the customers, is not it ???

My understanding is that Banks do NOT have products, they only provide SERVICES!
And that's makes banking so different of other business.

Comments / understandings are welcome.

It should also be highlighted the 'reusability' attribute, which eliminates a series of redundancies of processes and data.

Also the 'software version releases' will be highly simplified.

Very good article, congrats.

@Ketharaman,

it's not the question of replacing the mainframes, 'au contraire', new kind of big irons will be needed in the future, to handle integrated, corporate processes and data.

The matter is of replacing the old VERY EXPENSIVE way of handling the financial business (+ of 80% of operations budget, just to maintain the current systems), even they remained the most profitable sector in Fortune 500.
Deutsce Bank: € 4 Billion/year
Lloyds Bank: £ 8 Billion/year

     No 'unbanked' will endure that cost!

The replacing of the old banking way, will be done by a cheap handling of the financial business, in which that BILLIONS of unbanked will be allowed to use banking systems.

And that requires the rewiring the current 'legacy dragons' by eliminating the manual and batch processes, drastically reducing operating costs.

In my proposal of the "Bank of the Future" Architecture, huge 'big irons' will be required, to handle the Single Source of Knowledge and the Single State Machine, to handle the processes and storage replications, Corporately.

@James Tomaney,

You won't "turning off what you don't understand", unless your new option is tested, approved and running!

And for "reducing the TCO of the old in order to generate the desired ROI of the new.", you must strongly invest in the new, eliminating the old...



Open for discussions in this exciting matter!

@James Tomaney,

"You can't replace what you don't understand."

And, frankly, you will not want to replace the behavior of the "legacy dragon", so you don't need to spend resources understanding it.
As most opinions, discussions converge blaming the "dragon", I'll repeat part of my comment on the Nick Fernando's blog Legacy - Good or Bad?

= = = =

"It’s vital to rebuild that capability (to understand the 'legacy landscape') otherwise the journey ahead could be very bumpy indeed."

From my experience, this is a waste of time and money.

I've had a solution for a very complex international Citicorp system.
People bought the idea and hired CapGemini to make a 'functionality report' on the old system.
One year later, hundreds of pages of gap report, original managers relocated, one more book on the shelf and no more replacement project (Our senior management ... has altered our plans to replace...).

= = = =

The right approach to cope with 21st Century is to draw a clear Business Scenario, and then make a plan on how to get there, Corporately.

(Not think out-of-the-box. Forget the box!)

Great article, Nick!

It is very clear that the current legacy 'have negative connotations'.
The 'architecture' of the current legacy - to handle financial processes by Business Lines - was determined since computers were called 'electronic brains'.

Now is time to throw away those legacies, replacing them by STPs for all financial transactions - no more batch processes.

Your statement "To have a sound infrastructure backbone that is easily extensible", is the key factor for change.

And where you say 'backbone' let's understand 'Business Enterprise Architecture', Architecture that would be independent of any financial product/service and also technology independent.

This Architecture is feasible by reshaping the definition, handling, and storing the financial data, enterprise wide.

Comments on the Accenture's 'escaping legacy':

"Converge business and IT operating models to create one integrated digital organization."
      This reinforces the 'Business Enterprise Architecture' approach.

"It’s vital to rebuild that capability (to understand the 'legacy landscape') otherwise the journey ahead could be very bumpy indeed."
      From my experience, this is a waste of time and money.
      I've had a solution for a very complex international Citicorp system.
      People bought the idea and hired CapGemini to make a 'functionality      report' on the old system.
      One year later, hundreds of pages of gap report, original managers relocated, one more book on the shelf and no more replacement project (Our senior management ... has altered our plans to replace...).

The right approach is to draw a clear Business Scenario, and then make a plan on how to get there, Corporately.

This is very real:

"One of the channels for guaranteed success in business is accurate financial analysis based on business records ..."

Big companies are expending rivers of money in things like 'Big Data' (with doubtful financial returns) when its own basic business records are not 100% accurate...

By far, the best strategic description of the Future Scenario for Banks to pick up the pace of innovation, that I've ever found.

It is coherent, concrete and within the reality of what is happening in technology evolution.

No 'hunches'.


"The 4-key good digital things:

1 Efficient - Costs

2 Effective - Customer requirements

3 End-to-end process - Rewire the back end

4 Ecosystem - Bank x nonbank"


Congrats Mr. Suvo!

"...senior managers do not properly understand new technology...".

They don't have to!!! They have to know the financial business!

Watch out, IT heads!
YOU are responsible to show how technology will help financial business.

Allways remember Henry Ford:

"If I had asked my clients (the boardroom with senior managers) what they needed, they would have told me: 'faster horses'."

Henry Ford, American industrialist innovator, founder of the Ford Motor Company (1863-1947)...

@Stacey,

Yes, "there a bigger picture that bears far more valuable fruit".

And it must be reflected on the balance sheet!

See an impressive excerpt of Brett King's blog - 14 August 2013 - on Finextra:


"Despite a bigger IT spend than any other industry sector, the revenue or profits generated per employee are telling.

Bank of America, JP Morgan Chase, Wells Fargo and Citi between them employee 1.051 Million people to deliver that $51Bn in profitability, or roughly $48,517 per employee.

Google, Apple Computer, Microsoft and Oracle have between them 341,777 employees that delivered $85.2Bn in profitability in 2012, or roughly $249,285 per employee.

More than five times the margin than their FI equivalents!".

IT costs per user per year in USD (From banking-reloaded, Linkedin, 2013):

Google: 3.4
Facebook: 3.8
eBay: 7.4
Tier1/2 Bank 200.0

There is ONLY one way to drop that cost 30/40fold to allow banking service to un/underbanked people:

It is processing of the financial business in a 'Corporate way' - Single Source of Knowledge - rather than processing by 'Lines-of-business'- Silos and DWs.

This approach drastically streamlines processes and eliminates silos and DWs, providing a single source of knowledge for all of the Corporation's business.

It is not to 'think-out-of-the-box' but it is to forget the 'box'.