IBS Journal May 2016


33


modernising their systems and processes is necessary to comply with regulatory change.


Danilkis says: “If you are a large bank and have a big IT team using legacy systems, they’ve invested a lot of time to become experts in those, so the change management side can be difficult. A new set of knowledge is required, and for some people, that change will be threatening. Some companies have forward thinking leadership and know that 10 years down the line, this will be an existential threat. However, the instruction for change needs to come from top leadership.”


Barrows adds: “You never want to be the first one to adopt a new piece of software or web service as you are doing something unproven. Banking is risk averse at the core, while needing to be innovative. You need to be agile, but at the same time you can’t do something stupid.”


The future


Despite the obstacles, modernisation is “certainly happening”, says Goble. “We have heard banks start to say, ‘it must be cloud first’.” However, Goble concedes: “At the very low end, cost outweighs all concerns. The bigger the


bank, the more resistance you are going to get.”


And banks’ caution is understandable: if a firm such as Royal Bank of Scotland (RBS) is not able to process payments for a few days, it has a ripple effect; not just for the bank, but the whole economy. Therefore, as Barrows puts it: “It is unlikely big systemic banks will be moving core systems to cloud in less than decade or so.”


With this in mind, Danilkis agrees big firms will be slower to move to cloud. However, these banks are looking at ways to adopt SaaS while avoiding organisational risk, by developing a proof point internally before rolling the technology out further. “The traditional guys know they need to use this technology and think, what’s the best way to get involved? So they look at which business line can be used.”


Danilkis thinks second tier banks such as the Co-operative Bank – which are at risk from big institutions with scale as well as agile digital challengers – could benefit from moving core banking to cloud. “They are looking at how they can innovate, so there’s an imperative for this type of bank to be considering whether they can push things out to cloud. And from a scale and systematic importance point of view, it’s much more viable for them to do that.”


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