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Removing risk through reuse – modernisation in financial services

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Removing risk through reuse – modernisation in financial services

Derek Britton, director of AMC strategy at Micro Focus, considers the risks of removing critical business systems – along with the core advantage they provide – to replace them with something newer, shinier and less reliable

 Going red? 

In the last few weeks, the financial services industry was once again in the headlines for another IT failure.

Hot on the heels of card processing problems at arch-rivals Visa, credit provider Mastercard returned the favour with reported issues over processing payments.

Earlier this year, customers of UK bank TSB reported issues with the bank’s online and mobile channels. These problems were attributed to the bank’s transition from its Lloyds Bank-based system to the Proteo4 system developed by its new owner, Banco Sabadell. The TSB situation, which saw the bank’s CEO summoned to answer questions from the UK Government about the crash, is a sobering example of the dangers of large scale IT system changes.

Issues including missing payments, unexplained credits and visibility of strangers’ accounts were reported. TSB is not the only bank to have reportedly suffered a recent outage during an IT system change: RBS, Barclays, Lloyds and WestPac have also been accused of similar glitches, forcing red-faced IT executives to review IT procedures.

Recent evidence suggests root causes of major IT outages range from security hacks, poor planning and insufficient testing to simply over-ambitious scope. Significant IT changes carrying a lot of risk were badly planned and inadequately executed, in organisations where that sort of risk is totally unacceptable.

Adding value 

When we take money out of an ATM, or open a new account, get a new car insurance quote online, or simply check our account balance on a mobile device, a mainframe somewhere is handling the request. Mainframes are the bedrock of the financial services industry. According to a study by BMC, over two-thirds of the mainframe community are now increasing their capacity to support modern demands. Furthermore, a Micro Focus customer survey revealed that plans are in place to maintain or modernise 84 per cent of mainframe applications in the near future.

For many organisations, what differentiates them from their competitors is fused into the computer systems that run the business. In retail, banking, insurance and other industries, very little separates one brand from another. The nuanced, subtle “business rules” housed in core IT systems make all the difference. As such, protecting that advantage, that intellectual property, is vital. While often referred to as legacy systems, the label “legacy” is misleading, because those systems have been actively maintained, and remain as valuable today as they were when they were first implemented, possibly three or four decades ago. Such value is inherent in those mainframe COBOL systems.

It therefore holds that throwing valuable, critical business systems away to replace them with something newer and shinier is not only incredibly complex, but the risks are wide and varied.

Low risk modernisation 

If it makes sense to build on what already works, what are the considerations for successful modernisation? How best to tackle what is a complex beast? A useful way to consider it is to look at ‘modernisation’ through three lenses – namely what to change, how to change and where to change.

  • What – the application: Extend application value with low-risk innovation. From a modernised, secure web and mobile experience, to process automation, to APIs, web services, and managed code models that support composite application delivery.
  • How – the delivery process: Match enterprise application delivery speed to today’s required pace of change. Achieve DevOps-ready rapid application understanding, agile development, continuous testing, accelerated delivery, and controlled user access.
  • Where – the underlying IT infrastructure: Achieve flexibility, security, and cost efficiency by deploying applications across host, server, cloud, and mobile – insulating valued IT systems from infrastructure changes while assuring access security, governance, and data protection controls.

In each case, technology offering a low-risk, rapid means of modernisation already exists – allowing IT to leverage what’s already working, often on mainframe COBOL systems, and embrace new innovation to transform the business.

Forbes quoted new IT system implementation failure rates at a worrying 50-75%. By focusing on protecting the customer experience and providing incremental improvements of service, financial services organisations can support their primary objective of driving improved levels of service without any risk.

One client we spoke to commented,“Maintaining and carrying forward our business rules saved time and money; we estimate a cost saving of at least 85% over an application rewrite.” Ignoring the core advantage that already provides business value is a risky business. Far better to be in the press headlines for the right reasons.

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UK retailers see sharp fall in sales and mounting job losses, CBI says

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UK retailers see sharp fall in sales and mounting job losses, CBI says 1

LONDON (Reuters) – British retail sales fell in the year to February as stores cut jobs at a rapid rate, with only supermarkets reporting any growth during the latest COVID-19 lockdown, a survey showed on Thursday.

The Confederation of British Industry’s gauge of retail sales stood at -45, up only slightly from January’s eight-month low of -50. The measure points to falling sales and is below the consensus forecast of -38 in a Reuters poll of economists.

Retailers’ expectations for March – when non-essential shops will remain closed to the public as part of lockdown measures – fell to -62, the lowest since the series began in 1983.

In another sign of a changing consumer habits during lockdown, the survey’s gauge of internet retail sales hit a new record high.

“With lockdown measures still in place, trading conditions remain extremely difficult for retailers,” said Ben Jones, principal economist at the CBI.

“Record growth in internet shopping suggests that retailers’ investments in on-line platforms and click-and-collect services may be paying off, but the re-opening of the sector can’t come soon enough to protect jobs and breathe life back into the sector.”

Job losses among retailers accelerated according to a quarterly question in the survey. For the distribution sector as a whole, which includes wholesalers and car dealers, employment fell at a record rate, the CBI survey showed.

(Reporting by Andy Bruce, editing by David Milliken)

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Holiday bookings soar as Britons hope for travel restart

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Holiday bookings soar as Britons hope for travel restart 2

By Sarah Young

LONDON (Reuters) – International holiday bookings surged by as much as 600% after Britain laid out plans to gradually relax coronavirus restrictions, giving battered airlines and tour operators hope that a bumper summer could come to their rescue.

EasyJet said flight bookings from Britain jumped over 300% and holiday bookings surged by more than 600% week on week after the government indicated on Monday that travel could restart from mid-May, while holiday company TUI UK said that its holiday bookings surged 500%.

This summer is make-or-break for many airlines and holiday companies which are struggling to survive with close to a year of almost no revenue due to pandemic restrictions. Without it many will need extra funds after burning through cash reserves.

UK-listed travel stocks were buoyed after new bookings flooded in on Monday evening and Tuesday despite ongoing uncertainty over exactly how and when international routes can reopen.

Shares in easyJet jumped 9%, while British Airways-owner IAG traded up 6%, TUI and Jet2 both jumped 6% and Ryanair was 3% higher.

While British tourists are some of the biggest spenders in Europe, the presence of a more infectious variant of coronavirus in the UK could alarm some countries. France and Spain have shut their borders to most UK travellers due to variants.

UK holidaymakers will know more on April 12 when the government publishes a travel review. It has said that a lockdown ban on most international travel will stay until at least May 17.

That should give airlines time to plan their summer schedule, a process which takes months.

EasyJet said trips from the UK to beach destinations such as Malaga, Alicante and Palma in Spain, Faro in Portugal and Crete, Greece, were the most popular destinations with holidaymakers keenest to travel in August. July and September were the next most popular months.

TUI said destinations in Greece, Spain and Turkey were the most booked overnight, with people opting to go from July onwards.

Britain’s route back to normality is helped by rapid progress with its vaccine plan. Over 17.7 million people, or a quarter of the population, have already had a first dose of the jab. The government is also considering options for vaccine passports.

The airlines and travel companies hope such progress will mean that from May 17 the UK will end its holiday ban and remove a 10-day quarantine requirement, a big deterrent for holidaymakers, and some of its COVID-19 testing rules.

(Reporting by Sarah Young, Editing by Paul Sandle and Susan Fenton)

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Concern over rich-poor divide seen on the increase during pandemic

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Concern over rich-poor divide seen on the increase during pandemic 3

By Matthew Lavietes

NEW YORK (Thomson Reuters Foundation) – People have become more concerned about the gap between rich and poor during the coronavirus pandemic, especially the young, the authors of a new global study said on Tuesday, urging governments to take steps to redress the balance.

More than 8,700 people in 24 nations were surveyed at the start and end of 2020 by the Glocalities market research agency, with the findings showing an increase in the share of respondents who thought income differences should be reduced.

As the coronavirus pummeled the global economy last year, the survey also found a 10-point rise in the percentage who said decent work and economic growth were the most important means of improving quality of life.

“It has slapped people in the face and made them realize that things are not going well,” Ronald Inglehart, one of the lead authors of the study, told the Thomson Reuters Foundation, referring to the pandemic.

“We need government intervention on a larger scale. We don’t want a state-run economy, but some of the resources need to be reallocated to balance off this powerful trend.”

Policies that will create “good-paying jobs” in the fields of child care, environmental protection and infrastructure would help address mounting frustration over income inequality Inglehart added.

Young people are particularly concerned about income disparities, the study found.

A third of respondents aged between 18 and 34 said they were more concerned about income inequality than unemployment or economic growth at the end of 2020, up from 29% at the start of the year – before the coronavirus had spread around the world.

“Feelings of being upset, being afraid, feeling let down, feeling like ‘I have no prospective anymore’ are on the rise,” said Martijn Lampert, who also co-authored the study.

“So this requires very wise and just government interventions to channel this unrest in a positive way.”

Inglehart said he sees evidence of such sentiments among the students he teaches at the University of Michigan.

“The job market is dismal … My best students, the stars, they’re finding jobs at a lower level than they’re anticipating. And the ones who aren’t stars are getting nothing,” he said.

The global economy is seen shrinking 3.5% last year, according to the latest estimates by the International Monetary Fund, and numerous studies have shown how the global health crisis has exacerbated economic inequalities.

As a result of the pandemic, the number of people living in poverty has doubled to more than 500 million, according to a report issued last month by the charity Oxfam.

Meanwhile, the collective wealth of the world’s billionaires rose $3.9 trillion between March and December 2020 to reach $11.95 trillion, the report said.

(Reporting by Matthew Lavietes; Editing by Helen Popper; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)

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