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When it comes to replacement, there’s “no point beating around the bush”, says Schouten. “This is open-heart surgery, so controlled, stage-by-stage migration is of the essence.” The cloud’s ability to provide properly planned and scheduled system implementation is often overlooked, the Ohpen CEO argues. “Numerous Tier 1 and 2 banks have already switched over to cloud-based SaaS core banking solutions, so the experience with these kinds of migrations has increased as well.”
Smooth sailing
So when might we see an all-new, all-cloud, all-agile core banking- based industry? It’s already happening, says Schouten: “Some of the Netherlands’ most important financial institutions are now benefitting from a fully cloud-based core banking engine.” Schouten also points to Capital One, Spanish Bankinter, Italian Unicredit and Commonwealth Bank of Australia. “These are great examples of banks that understand the future of the industry and proof that a new generation of bank leaders focuses on innovation,” she says.
Christopher George, Nymbus: there is no way a bank running old software on old hardware can possibly keep up
The nature of a modern core is that it is designed around an interface that can be plugged into a network of systems, he adds: “The ability to actually configure bank products, add customers and accounts, post transactions and operate as a ‘bank’ can literally be accomplished in days or weeks. Virtual test environments can be procured and spun up in minutes. Benchmarks, scalability tests, stress tests, failure scenarios, business continuity and DR can all be tested easily and repeatedly – at all phases of the project.”
According to Sanchez, the big procurement, big capital, big upfront commitment and big execution risk models that accompany core system conversion projects “are an anachronism. With a cloud infrastructure, SaaS, and an APi-first application model, costs are incremental and availability is measured in minutes versus days, weeks or months.”
Cloud computing providers are “hardened by fire”, continues the Finxact founder. They have infrastructure that “blows away all but the largest FIs”. They face “the most difficult challenges in the industry day in, day out”. Compared with their everyday problems – all of which occur in the public eye and incur business risk if failed – what is a Core Banking switchover compared to that?
to get out of the way of progress will soon be forgotten. It’s that simple
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www.ibsintelligence.com | © IBS Intelligence 2018 The banks that choose
Frank Sanchez, Finxact: the sooner a bank starts a migration, the sooner it can reap the benefits
George says: “We all know the old saying: Lead, follow or get out of the way. Banks that lead the charge to the cloud will be the true success stories of the next 10 years. And banks that follow will mostly fare well, too. However, the banks that choose to get out of the way of progress will soon be forgotten. It’s that simple.”
Sanchez believes that the reasons for banks to quickly migrate to this modern architecture are “too compelling for it to be science fiction”. In terms of how long it will take for the entire industry to migrate, he adds the question we should really ask is: “When will the longest legacy contract expire?”
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