analysis: application architecture
IBS Journal September 2015
The adoption and adaptability of customer touch-points will eventually evolve across the three stages of presence, interaction and transaction. Banks are prepared to make heavy investments to have a strong channels framework.
No matter how big or small the bank is, it is inevitable that the largest investment – and there fore the highest degree of C-suite attention – is focused on the core banking platform and its extensibility to the new age demands. While there are banks that would like
to continue with legacy systems – even if they have to dilute them to be just trans- action processors and surround them with state-of-the-art ancillary systems stitched well by a middleware layer – old core plat- forms are giving way slowly, yet steadily, to the new age universal banking systems. And the reasons are not difficult to deci- pher: no matter how good the channels are, how effective the analytics engine is built and how seamless the payment sys- tems are made to be, the sustainability of the technology architecture in the long run is always going to be determined by the power of the core banking engine. Part of the challenge here is the will-
data have only made the volumes of data that a bank now has access to, multiply manifold. What however makes it all worthwhile, is when such data is appropriately pro- cessed to unlock the real potential of deter- mining what’s the next best requirement of the customer that needs to be addressed – and that is where predictive analytics comes into the foray. Be it determining what is the next best product for a custom- er, or determining who is likely to attrite, or predicting which customers are best posi- tioned to cross-sell or up-sell, banks are increasingly finding the value of predictive analytics to be immense. The advent of analytics has also rede-
fined the contours of meaningful BI. From being a post-facto lag indicative report- ing, technology investments are more driv- en to produce executive dashboards that are more ‘lead’ indicative. This is a distinct trend, adopted by smart, savvy banks inde- pendent of their size.
Payments: the digital wave
Contactless payments, NFC, mobile wallets, mPOS, virtual and crypto-currencies, bitcoin – the terminology list in a new age banking dictionary seems to grow by the day! And all of this simply means just one thing: the payment model – the way payments are made, is simply not going to be the same.
40 We are already witnessing a flurry of
global activity here. Natwest and RBS are offering Apple Pay to its customers in the UK. Nedbank in South Africa is looking to offer PocketPOS, an EMV-certified mPOS platform catering to its SME customers. Samsung Pay is launching imminently in South Korea with the support of major banks, followed by the US, UK, Spain and China. This trend is not only observed in the
space of retail payments, but in the B2B and cross-border payments industry as well, which have seen significant advance- ment driven by technology. From a banking technology architec-
ture standpoint, there are implications too. To start with, there would be a need to collaborate with new modes of retail pay- ments such as Apple Pay, and investing in technology that drives straight-through processing (STP) in the area of payments. As banks begin to expose APIs for third par- ties to embed in their applications, a key implication will be the need for increased investment in cyber security and fraud management, as digital payments also pose a much larger business risk, and not just an operations or technical risk.
Core engine: retain, upgrade, replace or outsource?
And here comes the issue of the biggest piece that sits in the middle of any technol- ogy stack for a bank: a core banking engine.
© IBS Intelligence 2015
www.ibsintelligence.com
ingness to deal with the elephant in the room. Core banking replacements are akin to changing airplane wheels at thirty thou- sand feet, and has implications not just from a ‘big ticket’ investment standpoint, but also a serious commitment of man- agement bandwidth. Now that is easier said than done. Which is why we still find banks that are happy running core banking engines of yesteryear, and having the tech- nology architecture window-dressed with modern channels and front-end systems. However, this is not sustainable. The one definite trend that we are
looking to witness is the change to the core banking platforms that banks will inevita- bly need to make. Depending on how old the platform is, and how much it extends to the demands of the new era, the choices that banks may have vary between upgrad- ing to a later version and having it fully replaced. While these may not be overnight decisions, these are inevitable and hence bound to change – slowly but surely. So, in conclusion – it would only
be fair to say that banks can ill afford to ignore the change that is happening all around – and the implications on the tech- nology architecture are obvious. While there may be differences in approach with regards to the sequence of the change, the speed of overhaul, and the choice of suppliers or solutions, there is no running away from the need of aligning your tech- nology, with what could just be the new age of banking.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56
