Current events paint a picture of a finance sector plagued with “Technical Debt” resulting in security breaches, ATM lockouts, blocked debit and credit cards, and more. It often feels like as consumers we have little choice but to accept these faulty systems. But, the more I read about these challenges, the more the enterprise architecture (EA) side of my brain takes over. From an EA perspective, the breakdown started a long time ago when executives chose a wait-and-see approach to problem solving that consisted of applying system patch – after system patch versus wholesale upgrades or rebuilds. Looking back makes it clear that the sector can no longer be idle. Let’s start from the beginning.
Where Were You for the Moon Landing?
Our current banking systems date back to the 60s and 70s when transactions posted over night. But, today’s systems demand real-time automation for things like ATM and mobile banking. The kicker is that as the products and services evolved the core systems did not. Things like mobile banking channels require mobile technology and consumer mobile technology didn’t exist during the days of Neil Armstrong. So, instead of a complete re-do the legacy systems were built on, over, and side-by-side.
Back to the Future
Now troubles are creeping in as a result of the MacGyver-style remedies. The UK seems particularly afflicted by obsolete technology, most notably with two very public RBS failings in 2012 and 2013. The RBS missteps prompted a formal investigation where the appointed regulatory body found significant deficiencies at eight major UK banks stemming from the various legacy system band-aids.
The UK findings have lead to more stringent regulations that carry hefty fines when standards aren’t met. Tighter regulations coupled with the uphill battle of trying to maintain outdated technology have put the sector in a tough predicament.
For most CFOs and CIOs it can be dizzying to think about it. Maintaining the status quo in these conditions is hard enough; imagine trying to repair it at the same time. That’s the beauty of enterprise architecture. It’s more than identifying what needs to be changed; it allows business leaders to understand the impact of the change in the context of the connected enterprise. When done right, EA provides a complete look at the systems that have amassed. It’s an exploration of how legacy systems connect to key business processes, the technology they rely on, the applications that make them work, and the information that flows through them. This visibility and line-of-sight gained gives a clear picture of both the costs and the benefits of change so that business leaders can develop an effective plan to upgrade and transform their legacy systems to modern ones.
Companies like American Express (building the business case for Enterprise Architecture), Swedbank, and Discover Financial Services have seen tremendous benefits from EA initiatives. In fact, the Discover Enterprise Architecture Repository project received InfoWorld’s 2010 Enterprise Architecture Award. The project realized over $4.7 million in IT savings and / or cost avoidance.
Yes, it takes time and a lot of hard work. But, like Neil Armstrong taught us at the same time these systems were put in place, one small step can also equate to a giant leap.