Archive for August 27th, 2010

How did banks’ IT get in such a mess?

Friday, August 27th, 2010

The Economist has an interesting article on UK banks and the problems of historic systems development causing a lack of co-ordinated, fully integrated, customer focussed IT.  Of course, it would be great (although pie in the sky) to migrate to a greenfield IT architecture, but only brand new companies (like Metro Bank) truly have that option.

The lack of integration in banking has been caused by a combination of build and buy, the need to address regulatory changes, the launch of new products (yes, I remember the launch of credit cards, never mind ISAs).  But you might assume that, because banks have been around since IT was invented, and have been perpetual early adopters, that it is only old industries that suffer this problem.

It got me thinking about newer industries, take Telecoms and Media for example.  Why didn’t they have the opportunity to greenfield their IT?  My take is that it is the opposite of the banking scenario.  That is, the industry exploded so fast the ability to keep up with the pace of change meant that systems had to be cobbled together on the fly.  To grow a company from almost nothing to £80Bn in a few years must put enormous pressure on the CIO.

So despite the provocative headline of this post, the mess is entirely understandable and it is difficult to envisage any other result than the one we have.  We now must learn how to live with it, both in the short term and the long term using a combination of strategic and tactical initiatives targeted at the nirvana offered to new entrants.  However, if Metro Bank experiences the sudden growth it expects, I wonder how long before it suffers the same integration problems as everyone else?