Author: Kevin Phillips
Banks need to service their customers online, but what was once the shiny flagship internet banking platform has quickly become expensive to maintain, and almost impossible to progress. So what’s the solution?
At the dawn of internet banking, when banks foresaw the need to service their customers online, they urgently prioritised big budgets to make it happen.
Now, with that generation of platform likely obsolete, and one or more subsequent big-budget implementations having taken its place, we are experiencing a cycle of expenditure and effort that is becoming increasing frustrating.
Not wanting to go through this large upgrade path on a regular basis, organisations are trying different tactics to keep the need for a replacement system at bay.
These include bolting on additional silos, such as mobile, as well as building a development team in house to keep up with platform maintenance.
Balancing both cost and effort against the ailing platform itself they are left with the question: when is the right time to replace it?
Flagship to flagging
It is true. New-build internal projects that deliver the next generation of digital platform are exciting for everyone. Marketing love the unique selling points, business love the growth models, finance love the return on investment projections, and the development team love the new code. No matter what it takes, the likely outcome is a new, shiny internet banking platform that meets enough of the stated success criteria that everyone can celebrate. In the end, the new flagship banking platform is ready. Job done; or is it?
When it comes to what-happens-next, why do these once great banking platforms inevitably lose their lustre? When the flagship site starts to creak and groan, when the on-going internal maintenance costs spiral, and when the excitement of working on it has faded, the energy drains away.
So, why does this happen, and how long can you put off having to do it all over again?
Why your software rusts
I call it rust, as for me there is no other concept that seems to match so well. Software is code, digital, ethereal, and therefore cannot wear out, right? Yet it does, and here are six reasons why:
1. Changes in regulation
Requirements change, especially when it comes to regulation and compliance. Software has to change to keep up or it will fail to meet the new rules… and then you’re in big trouble.
2. Operating system updates
No doubt about it. You wrote the code to run on a specific operating system, and now it is almost out of support. The platform won’t run on the next version without a) re-writes, and b) full testing of everything.
3. Obsolete hardware
Software needs hardware, and hardware wears out, becoming expensive to support and replace.
4. New technology
New devices are emerging all the time, and the software has to be able to support them; from new smartphones, to wearable technology and beyond. Most likely the existing online platform wasn’t designed to cater for all this new tech-gear.
5. New trends
Customers want to interact with their banks in new ways; banks want to diminish less optimal channels (such as tumble-weed branches). Demands for information are ever more instant, concise and sophisticated. Digital marketing, location based data and proximity responses are changing the needs of the customer and banks of tomorrow. I expect that none of this was in scope when the current internet banking platform was designed.
New advances in software techniques, tools and methods affect those with the skills to create these solutions. No-one wants to be stuck supporting older code and techniques when there are new things to learn. It’s not just for interest; it affects career prospects in a big way.
Standing still is falling behind
In short, if you don’t keep up with the continual change then you will just be falling behind. In most cases, just keeping up in order to stand still is expensive enough. Even with a megalithic budget to hire an army of developers you may be left with little to show for it except a maintenance programme. The old idea of throwing bodies at a problem like this to solve it is a myth. Regardless of what you try, in the end the likely outcome is that the cost of maintenance reaches a tipping point, and then you will go for an all-out massive budget start-again project.
What’s the alternative then? Even if you get a third party to build it for you and take the resourcing pain away, you will be back to the tipping point again and the next cycle of replacement.
Is it a question of buy-verses-build then? Not always. Buying an off the shelf product, even if it fits well into your requirements for today, may leave you stranded again in the future.
It’s time for something else, an internet banking platform that continually evolves; one with verve and energy. You need to look for specialists who know what they are doing, who can demonstrate and prove it, and who can show you how they deliver on sustainable development and real innovation.