‘Old school’ rules?

Macquarie Bank ©Mal Booth, Flickr

It would seem that for all the chatter about component-based core system replacement and gradual renovation, plenty of banks are still going the ‘rip and replace’ route.

Take Macquarie Bank, for example. In 2012, one of its senior managers called core system overhauls ‘old school’ and that the best model was to supplement existing platforms with layers on top for services such as apps.

In 2013, however, the bank went ‘old school’ and signed for a new core system, SAP for Banking. It has recently reported reaching a milestone in this five-year, AU$250 million project.

As the annual Sales League Table from IBS Intelligence shows, traditional core system replacement remains by far the most prevalent model. And even though many of these projects are going to be in phases they don’t constitute a new way of doing things.

Part of the problem, it would seem, is the lack of truly standards-based component offerings that can underpin the theory. By now, with all of the work done in the last decade within BIAN and nearer three decades within IBM’s IFW, it might be thought that we’d have an industrialised framework to which vendors, new and old, would be building plug-in ‘best of breed’ components. Constructing a new systems landscape would be akin to Lego.

However, there is no industry consensus. Oracle sits outside of the SAP-initiated BIAN, while the engagement levels of those vendors that are members is mixed. More of a problem is the inability of existing vendors to break down their long-standing, monolithic systems into components. Most of them have been attempting to do so for a few years but to describe the results as patchy would be generous. So for the time-being it is business as usual: ‘old school’.