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Forrester Research Sees The End Of The Line For Vintage Banking Platforms

Sunday 12 December 2004 23:05 CET | News

A recent Forrester Research survey showed that application renewal is one of the top IT concerns of European banks.

Heads of IT strategy, planning and architecture at banks speak of large volumes of ongoing projects intended to cope with new and often urgent requirements from their business divisions. A pair of Forrester reports advise European banks on transitioning to agile platforms. The shape of todays European banking industry is massively influenced by a highly challenging environment: Mergers, acquisitions, reorganizations, and disposals are constantly creating new business scenarios. At the same time, banks need to increase revenues, manage costs, create new products, get ready for the industrialization of banking, and cope with regulatory requirements. Are all banks’ application platforms ready for all this? According to Forrester Research: Probably not. A recent Forrester survey showed that application renewal is one of the top IT concerns of European banks. Heads of IT strategy, planning, and architecture speak of large volumes of ongoing projects intended to cope with new and often urgent requirements from their banks’ business divisions. These requirements can be prompted by mergers and acquisitions -- for example, the Royal Bank of Scotland’s takeover of the UK’s NatWest in 2002 and Spain’s Banco Santander Central Hispano’s current restructuring of the UK’s Abbey -- but are perhaps more predominantly due to the growing need for banks to boost revenues and reduce costs. New functions and applications are meant to help grow existing customer revenues and acquire new customers. Banks increasingly analyze their profitability on a customer-by-customer basis and try to lower the cost of serving customers by migrating to new self-service technologies. But these technologies represent only a small part of a comprehensive multichannel solution -- business requirements, such as improved customer risk scoring for credit and insurance, are a large part of the equation. And banks need to cope with all of these challenges while managing the ever-increasing pressure to reduce the costs of running the bank. So how can banks achieve agile platforms? According to Forrester, banking platform renewal requires a sound, business-oriented foundation that consists of a set of clearly defined and communicated decisions, including a sourcing strategy, an IT strategy, and a concise description of current and future functional maps. A lean and dynamic planning methodology is needed to cope with new and changing business requirements, select the right solution, and execute a migration lasting several years. The approach used depends on the maturity of the existing banking platform. Most banks -- including some claiming to already have an agile platform -- need to prepare for platform renewal step by step. The necessary steps in this process include: aligning IT portfolio decisions with the bank’s situation and objectives; recognizing that the strategic sourcing option is more than just build or buy; providing migration with methodological support; and investigating off-the-shelf navigation.


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Categories: Payments & Commerce | Payments General
Countries: World
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Payments & Commerce


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