The diagram that scares the next generation of banking IT professionals

The next generation of IT professionals in the banking sector will face the same legacy headache as their predecessors

This diagram was picked up at an event recently. It depicts all the individual processing components and their interdependencies in a single mortgage system at a large, full-service retail bank. 

Big banks have thousands of systems providing current accounts, savings accounts, mortgages, loans and many more. All of these will have a diagram similar to this associated with them. Some systems at banks are now only understood by a couple of people, and newcomers to IT are not prepared.

But banks must take on this challenge or face threats from more agile competitors targeting specific financial services. So what can they do?

Here are some potential options outlined by a senior banking IT executive:

• Forget changing systems and try to remove complexity. This is what often happens when the people making the decisions are near retirement or can't stomach a multi-year, multibillion-pound project.
• Buy a modern core banking platform off the shelf, get it working, connect it and migrate everything from legacy systems onto it.
• Acquire one of the growing number of new banks with their state-of-the-art IT, and eventually move the whole bank onto these modern systems, which can be tailored to the bank's needs.
• Spend money on a state-of-the-art system and make it pay through acquiring other banks and moving them to the platform.
• Artificial intelligence (AI) could solve complexity issues. For example IPSoft's AI customer service platform, known as Amelia, can read all instruction manuals and automated fixes and could possibly support legacy transformation.

Jean Louis Bravard, IT outsourcing consultant and former JP Morgan CIO, said: "Nobody has the balls to replace legacy systems at the big banks." Although RBS has worked out the problem, he said recovering from it will involve painstaking manual work to ensure no mistakes.

Legacy systems can be replaced, but big banks are not taking it on because they are led by people who don't understand technology. "The root cause of this is that banks are being managed by former traders," said Bravard. "Under this leadership, no big bank is going to invest huge sums of money over five years with no return on it."

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