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Removing risk through reuse – modernisation in financial services
Published by Gbaf News
Posted on July 26, 2018
8 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Gbaf News
Posted on July 26, 2018
8 min readLast updated: January 21, 2026
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.
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.
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.
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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