Within my firm, we were part of 12 core banking go-lives in 2012.. to me this is a sign of real transformation progress in the financial services industry. As I see it the big story is not the specific go live events or that some of the banks that went live in 2011 and 2012 are starting to see benefits in flexibility or efficiency.. the big story is that Core Banking Transformation has gone mainstream.
Increasingly the topics of modernization and transformation are becoming relevant for analysts covering the financial services industry and for the mainstream press looking to cover the challenges and opportunities associated with bringing banks into the modern age. Typically, the undercurrent of the writing is that banks are facing unprecedented challenges and must change to adapt to the modern world. Much of this is true, I believe, in the long term: but the timing and urgency in the short term is around being prepared to change and to create an agile and flexible foundation that will allow easier navigation and execution in even more challenging times.
When “core banking” is a topic without a high peak or deep valley — this has been a continuous topic of activity since Google started tracking it in 2004.
Yet this type of tracking only represents the volume of the discussion, not the value. I see a few major steps forward in 2012 that are milestones in the evolution of core banking transformation:
- New investments: Oracle has invested in a new platform, SAP has increased focus and investment in the industry. When the industry giants are taking the topic seriously and investing, this is a sign of things to come.
- Mainstream press coverage: I had to read the byline twice to confirm that this article was published by Forbes.
- Burgeoning specialized coverage: Journals such as IBS and sites like Bankinnovation.net regularly cover the successes and activities in the banking transformation space. Both have regular activity in social media and promote insightful dialogue on the topic.
- Successful go lives: The most successful go lives that I know of are not covered by the media, because they are silent — that I know of several of these that are now live and operational is a great sign that banking transformation is more than just a pipe dream conjured up by industry vendors and overly caffeinated bank executives (of which I have been both..) It is a real response to a business strategy and a method of shifting business operating model into high gear.
So, good progress in 2012.. but what about 2013? What do we need to improve on this year? Here are some suggestions.
Core Banking Resolutions for 2013
- Agree on the affliction: In my experience, the true problem is complexity — the more that we can do to understand, manage and decrease complexity and treat it as a serious challenge to the industry the better the results of transformation will be. Those banks that only transform at the superficial layer and add complexity are in a worse overall condition than those that eliminate complexity along the way — it can be done but it needs to be visible and considered as part of the journey.
- Formalize methods: Part of the challenge of banking transformation is that there are not a great deal of established methods and practices on how to plan, design and execute these large and challenging programs. Part of my motivation in setting up this blog years ago was to encourage progress in this area so that we can all learn, evolve and improve.
- Celebrate Success: As I mentioned earlier in the article, the greatest successes that I know of are almost unheard of outside of the organizations themselves. Banks are hesitant to reveal their strategies and major platform changes for many reasons including tipping off the competition or concerns about systems security. It would be great to see more insight into the how these projects were completed and the stories behind the projects.
- Follow through: Banking transformation is an evolution and something that needs to become part of the DNA of the industry. The focus for the follow through activities is to derive as much benefit from the transformation as possible and to continue to evolve toward the future direction.
I am looking forward to a busy and exciting 2013, and I would like to thank the many subscribers and readers of this blog for a great 2012 and wish you all the best in the year ahead!