Why You Need To “Blow Up” Your Legacy BI Platform and How to Start Again With a Sustainable Layered Approach

Blow-up-Data

 

 

 

 

 

 

 

Data is important and the key to deriving information which can drive meaningful decisions.  Yet most organizations have a data stack that is sprawling, brittle, unwieldy, and when it comes to driving information for key decisions often not useful.

Organizations that are dealing with such legacy systems might know what data they have and they are using it to some extent, but by and large, the information that they have is siloed across systems and not being utilized to its full potential – claims management solutions were built in isolation of client information systems; commercial loans and personal loans were two very different areas; deposit systems and wealth management platforms were often completely separate conversations; the data models were designed in different eras and with different intentions.

Pulling all of this data together is challenging, expensive and time consuming. However, not pulling it together is just as costly as organizations risk missing out on opportunities to build on existing relationships and offer more services to their clients. This is an area where new entrants are leveraging their newer technologies and using analytics to predict what services their clients may need next and offering solutions to their clients at just the right time.

So what can institutions do that are struggling to keep up?

Big Data is important, but not an answer in itself – certainly one layer in the solution. Big Data is of particular importance to financial service institutions that are dealing with outdated, complex systems, and vast amounts of historical and real-time data, while at the same time, trying to keep pace with the new velocity of change required in the industry.

What does Big Data mean for the financial services industry and why is it relevant? Well, for starters: financial service institutions have colossal amounts of data but this data is scattered in legacy systems and generally not interpretable.  In many of the core banking transformation projects that I’ve been involved in one of the most challenging aspects of the program is the archaeology on the data and finding the interpreters for the different fields – this is the landscape from which organizations are trying to derive meaningful insights!

A bespoke approach has been taken to address different areas of banking over the years.  A BI platform here, a data mart there, a product for this, and framework for that.  The systems complexity has grown exponentially with each additional actor. Most organizations are creaking under the strain of keeping all of these systems alive, let alone current and nimble. The cracks are starting to show, and this is a very serious threat when you consider that new entrants don’t have this legacy albatross and can take more of a holistic approach to data, store it all in one area and then pull out what is needed, when it is needed.

 

The solution is to completely re-think data strategies and remove the silos; instead build horizontal layers that hold all data and handle a category of needs. One approach is to stream event-based activities by using an event-based hub for all of the activities that react to events, also known as complex event processing (CEP).

Consider the following event:

A large value transaction arrives at a bank and is placed into a big data layer at which point the event-based hub triggers a notification to all interested parties that have indicated interest in this event:

  • Fraud – receives the notification because they want to know where the funds are coming from and what parties are involved – have they validated that know your customer (KYC) requirements have been checked? Are they on black or grey lists? Is there a case that needs to be started for further investigation?
  • Risk – receives the notification as they are keen to look at the interest rate and currency exposure and the potential next steps for these funds. Are these funds held in a currency where we have some risk? What is the interest rate on this deposit and how does it relate to the rest of our portfolio?
  • Sales and marketing for wealth and retail – receives the notification as they want to ensure that this is the ideal location for these funds, and if not, suggest a more suitable product. They also want to know who the receiving party is and if a relationship management approach is in place for them. If not, this is the perfect opportunity to reach out to the client.

At the base of this event is the same data: customer, counterparty, amount, source, currency, destination, etc. – but for most organizations, these simple data elements get pumped all through the building and down into a BI platform before they are reassembled and cascaded into reports for each of the stakeholders mentioned above.  A simple publish-and-subscribe eventing bus would greatly simplify the process.

Data has become an essential asset in the digital age (not just in banking) and the quest for data has spun up an entire industry that feeds on information while banks have more than enough data sources they struggle to create coherent and efficient information from this. By adopting a data strategy similar to the one described above, financial institutions can make better use of their data, speed up the process of getting the right data to the right people, and stay relevant in today’s changing banking landscape.

That’s a great idea! Let’s kill it..

GreatIdea

Companies seem to have automatic “immune systems” which are designed to protect the status quo and as a result reject new innovation — especially breakthrough innovation.

Innovation is a tricky area to navigate for most organizations: naysayers abound when it comes to changes, the element of risk makes people shy away from accepting innovative ideas, and in large organizations, the approval process for such changes is slow and full of roadblocks. There tends to be a ‘problems’ mindset rather than a solutions mindset.

I think the word itself, innovation, scares some people away.  Often people confuse innovation for invention and think they need to completely reinvent the wheel to have a successful innovation.  This is not always the case.  Innovation is more about taking something that already exists and improving upon it or doing something in a different way. All financial organizations are doing innovation to some degree — much great work has been done — yet most of it remains in the labs or the petri dish.

True innovation needs to become real and shake up the real world, some of the ways I think you can achieve this include:

  • Focus on fixing a really painful problem – do not start with a solution or product that nobody really wants or needs (remember New Coke?). People like innovation that takes the pain away.
  • Avoid having your innovation team operate in a silo; if you want your organization to accept new ideas, make sure that the team has “real world credibility” within your organization so that they are trusted when they bring strange new things forward
  • Include people who can bring a fresh perspective to the group, while still understanding how the organization and current landscape operates; similarly, discourage those whose default answer to new ideas is only to throw up barriers without potential solutions
  • Make headway early on with an innovation project by shaping the real world implementation into something that the organization is familiar with — give it a familiar structure such as a project, merger, or acquisition. It is easier for people to accept and understand something that they have seen unfold before.
  • Consider all of the ideas and permutations, then deliver them in appropriately sized pieces which will allow for success
  • Appoint stewards from each line of command in the organization to ensure that the project progresses quickly — short-circuit bureaucracy wherever you find it; but with an appropriate view on safety and soundness

So instead of killing that next great innovation by allowing the immune system to reject it, give it a structure and some momentum to allow it to overtake the resistance and succeed.

Navigating the Myriad of Mobile Financial Services

If you are a financial services organization and you build a mobile app then you’re done, right? You can check off the mobile category and get back to the joys of responding to regulatory requirements. But then something changes or- a question is asked about something that might be related -, “What about our internal people, don’t they need an app?” or ”What about security?”

Because of the explosive nature of mobile-related technology and the number of related decisions and topics in the mobile space, it is essential that any large organization have a game plan and view of how they will move forward – and specifically how they will deal with the velocity of change in this space.

This mobile world changes every day and includes many integrated and connected decisions that need to be taken in the optimal sequence and with overall alignment.  One decision that is connected but not foreseen can result in expensive reversals in design, which are especially painful given the seeming simplicity of mobile to the end consumer.  The simplest example occurs first – “how do I get this thing onto the network?” being a question that often comes up.  Using the guest network is an easy answer, and then the next question “how do I get access to my files” becomes more difficult.

The use of internal mobile applications and devices opens up a stream of additional questions around information access and device management.  The deployment of external facing apps opens up discussions around how to remain agile and current in the face of the customer and the velocity of change in the mobile space.

To start these discussions, I think it is helpful to start with an overall picture in mind and map out the topics that are relevant with a level of priority, and as importantly which topics will not be pursued or invested in.  This heat-map is the cornerstone of a pragmatic strategy that can help to anticipate the coming discussions and provide a direction and an agreed upon set of priorities.

A Mobile Map

I drew something up to help get my head around these topics and the layers in this space, and I’ve used this a few times to help organize the conversation around mobile and also to make sure that we are not forgetting something that might be related when looking at making mobile decisions.

Mobile Topics

In this version, I have done a heat-map of the mobile topics that  I see as Basics/High Priority/Future Consideration.  This is to help with crawl/walk/run discussions, as sometimes organizations want to begin with a full on sprint into mobile without considering some of the fundamental capabilities that are essential for sustained success.

Are there any topics that you would add or remove from this?  What would you suggest?

 

Avoiding a Design “Potluck”

iStock_000016415625Large

As the holiday season nears, I’m trying to make time for all the social commitments that come with the season, while still getting everything done at the office.

This is also a season of reflection, and as a recovering banking architect I often reflect on how banks get from concepts to solutions. There is too much misalignment in the way that financial organizations are operating and to make lasting and improving changes we need to rethink banking architecture in its entirety.  The sheer use of the term architecture has become contentious in some environments where it is associated with bureaucracy and cost without noticeable benefit.

As I’m working through these thoughts, I get an email reminder that I have yet to commit an item to the holiday potluck that I’m attending.  In a way, the current state of banking solution design is a lot like a potluck, everyone is off on their own and doing what they want without giving much thought about how it is all going to come together in the end. There will probably be a handful of salads, at least three nacho dips, someone will have forgotten to fully cook the Swedish meatballs, Tony from accounting will have drunk just enough eggnog to make things awkward, and if it is anything like my office potluck last year: nobody will have given any thought to bringing plates and cutlery to the event. Sure, the idea of a potluck sounds great in theory: everyone is involved, you share the workload, and get to try new things, but in reality, as the cliché goes, you end up with too many cooks in the kitchen.

Design greatness is eroded by too many “cooks” or design by committee. Everyone brings their own ideas to the table, processes become long and drawn out, and just when you think you have come to a conclusion, somebody suggests a new add-on or requests a change that sends everyone back to the drawing board.  Sure, some feedback and discussion enhances or improves a design, but too much and you wind up off schedule, over budget, and completely off track from where you originally started.

The problem with design by committee is that people tend to forget what their role is or decide that because it is a team task, they need to add one more thing to the feature mix (hence how the potluck ends up with three nacho dips).

Instead of design by committee, what is really needed is a chief designer, someone who can take the reins, delegate what needs to be done and by who, and then maintain that control throughout the project.  The chief designer has a clear vision of the end goal right from the start of the project, and they should consistently communicate and reiterate that goal throughout the project.  If a project starts to go sideways because of competing ideas and opinions, the chief designer will be able to rein everyone back in and discard any ideas that don’t align with the end goal.

Once you have that chief designer taking architectural charge and eliminating design by committee, there will be a better end-to-end design, more cohesive solutions, and an architecture team that contributes their skills to the planned design, rather than a chaotic mix of the design at each iteration.  Great design comes from vision and personal commitment to making that vision happen.

As for me and my potluck, I decide to take my own advice, and reply to the host’s email, not stating what I want to bring, but instead asking what I can contribute that will complement the other items being brought; after all, I can always save the nacho dip ingredients for another night.

 

 

 

 

 

 

The Time is Now: Moving Towards a Better Financial Solution Design

 

chaos

 

Much has been written about the onslaught of disruption facing the financial services industry. A few years ago, this was often taken as speculation and sensationalism. I think most now agree that this is a reality and a sign that the new normal will be quite unlike the past. What is not often discussed is the unsustainable backdrop from which financial organizations are facing this challenge and how they might address it.

The financial services industry is under increasing pressure to continually add new services, keep up with the competition, and deliver fresh technology. For years, the industry has been adding new services and making incremental changes to their systems in order to adapt to the market, fix problems, and make updates. Now, they are left with highly complex systems that are:

  • Unable to support fast-paced change.
  • Highly complex with many interdependencies.
  • Insufficiently supported with few people knowing the inner-workings of the complete system.
  • Brittle and nearing the end of life.

These problems should not be news to anyone, but knowing the problems versus knowing how to solve them are two completely different things. Ignoring the need to change is becoming less of an option as financial organizations are spending millions of their IT dollars each year on complexity driven spend; money that could be better spent on innovation and modern technology. However, making changes to the infrastructure system is a lengthy and expensive process, and for many organizations, the tangled mess of their systems makes it difficult to know where to begin making such changes.

For starters, organizations must understand the complexity of their systems and from there they can decide what changes will make the biggest impact. The focus should then be on continuous changes that reduce the complexity within the system, rather than using short-term solutions that increase complexity and bog down the system over time. After a reduction in complexity is achieved, there must be a shift in the way that we think about financial services systems, otherwise the same complexity issues will continue to prevent organizations from swiftly adopting new technologies and drain IT budgets.

A new way of thinking

The importance of design and innovation has become clear in developing value for consumer electronics and increasingly for business processes (think Uber), but there is little advocacy for beauty in the design of the things behind the scenes. Without making end to end design a priority complexity will continue to flourish as great ideas give way to immediate fixes.

In order to achieve this shift in financial solution design, C-level executives must work with the design team to better understand where complexity exists and to set targets for reduction. At this stage, the business strategy must be aligned with the IT strategy, and emphasis should be put on rewarding simplicity and quality in solution design, rather than making incremental changes that solve only short-term problems.

This shift in the financial solution design requires an increase in IT and operational flexibility, meaning that IT teams need a broader range of choices when changes are required and should have an agile mindset that allows for ongoing improvements to the system as a whole, rather than siloed components.

There must be a reduction in operational risk and operational cost. Organizations cannot rely on legacy systems that are in jeopardy of failing and having costly outages. Investing proactively in the system now will minimize costs down the road when maintaining and updating a system that was built to handle such changes.

IT teams also need to be rethought; having experts in separate areas leads to siloed decisions and a lack of knowledge in the understanding of the system in its entirety. This results in design by committee, which is expensive and ineffective. Emphasis must be put on having teams work together across architecture types so that impacts to the system are realized upfront, rather than making patchwork fixes after the fact to make the system function. Any changes must be well documented so that the organization understands how and why changes were made and how each change affects the system. Documenting the system also makes turnover within the team easier to handle, so that if someone leaves, they are not taking all of their knowledge with them and leaving future team members to guess at the inner-workings of the system.

None of these changes will be implemented quickly, and they will surely be costly; however, the cost and risk of staying with a legacy system that has not been working for years is not an option. It is time to move forward and break free of the legacy systems and outdated ways of operating in order to stay competitive in the present financial services landscape.

A Way Forward

The best way to tackle the hubris of financial services systems complexity is to address it head on in a focused manner. The approach that I advocate involves making complexity a key consideration in all major decisions and attacking complexity head on with a four stage approach:

MDECDiagram

Upcoming posts will explore these four stages further and look at how complexity can be addressed head on by creating a solid financial services platform from which innovation can be embraced and extended rather than merely responded to.