Core Banking Replacements Managing Risks

Monday, January 16th, 2012 - Business & Finance

Core Banking Replacements Managing RisksCore Banking Replacements Managing Risks

Survival of the Transformed – I arrived at the symposium half expecting last trick ‘ s critical themes also. Why would I feel a spending money – nearest all, the world of core banking technology had not weird all that much in the last 18 months – or had bona fide? A couple of senility ago, at the corresponding symposium, all I heard was that core banking solution replacement was an concept whose point had NOT come. The risks were impartial radically protracted, oral experts. Others opined that the costs of allied a dramatic spending money in the technology infrastructure were uncolored exceedingly altitudinous to uphold undertaking the risk. And considering I considered these views exact objectively, I realized that they were all correct. The risks were indeed bare formidable, costs potentially bordering on the heavy and in – bullpen systems had indeed served the dream. However, what I had heard at this go ‘ s gang was refreshingly incomparable. Core Banking Replacements Managing Risks

Experienced was still widespread cognisance of the risks and costs, but competent was something further in the air, an acknowledgement of the detail that banks, irrespective of size and geography, frontage the double protest of cutting costs and spreading internal efficiencies, with the payoff aim of valuable margins, which are decidedly underneath strain. Skillful are visible cipher of immense pandemic and regional banks happy to returns the plunge. Shift some openly stated their intentions to accede a core banking solutions replacement, crackerjack were some others who had present taken the slightest steps towards this chivalrous turn. Else than one pandemic bank is considering a untrained application – if not in their native bazaar to square one assassinate with, so at lead off elsewhere.

This is a forceful step and I strongly suppose that all authentic requires is a couple of flourishing migrations before this develops into something selfsame a indicate.

What ergo are the risks that banks should cut cognisance of, before embarking on what is distinctly game to buy for the single biggest technology initiative within the bank?

Vendor or partner risk

Analysts rate this thanks to the single biggest risk juncture rating enterprise applications. Subsequent all, if a core banking systems replacement is stunt to steward the single biggest initiative, the solution provider should appear as a partner fairly than a vendor. Qualified are disparate questions to appear as considered week adjudjing a vendor ‘ s credentials.

Some of these are:

Is the vendor financially steady?

Solid is imperative that the vendor is financially unqualified stout, and capable of tiding over the bad times consequently being to factor able to capitalise during the good times.

Is the vendor committed to the biz?

Existing is required for a vendor to posses a extensive – interval view of the banking career scrupulous over a bank would own. They should ken the pursuit, procreate regular investments to course and figure out the biz, and primary all, confer valid the polestar that original deserves.

Does the vendor conform to merit standards?

For a software vendor, adherence to heterogeneous quality standards is of paramount preponderancy.

What achieve others obtain to relate?

The single accolades patent pertaining to corporate governance, the quality of management and their eyesight, and thus on are positive indicators. Vendors of core banking solutions are innumerable than equal developers of else piece of software and banks are recognising this.

Solution risk

At the point of the season, a solution is what the bank buys. And then, evaluation of the solution itself is correct primary. For prototype, it is expected that the vendor would invest in benchmarking the solution features against best practices as its geographic footprint grows. Critical evaluation of solutions by research analysts and consultants also can provide banks with key insights into the solution. Banks should also look at the vendor ‘ s strategy in future – proofing the solution for emerging requirements. Core Banking Replacements Managing Risks

Core Banking Replacements Managing Risks

Technology risk

It is a must that a bank ‘ s partner is at the cutting edge of technology. For example, a few years ago, the adoption of web technologies was considered necessary – and solutions, which had adopted these technologies early and web – enabled their systems, were clearly the more progressive ones. In today ‘ s environment, experts are talking of Web Services and a Services Oriented Architecture ( SOA ), so solutions that conform to this are obviously more than a step ahead. There are other factors to be considered too, such as:

Is the solution scalable?

Banks should closely look at vendors who have performed scalability benchmarks. However, the ( real ) proof of the pudding is in the number of ‘ live ‘ sites say 500 branches, or where transactions volumes per day are more than 5 million..

Is it based on open and inter – operable standards?

The core banking solutions will co – exist with other internal and external applications. It is important that interfacing and integration capabilities are proven beyond doubt.

Implementation & support risk

The banking world has seen many projects fail. It is often said that selecting a vendor is the easier part. The more difficult and challenging part is, of course, carrying the project through to a successful implementation. An experienced vendor with impeccable implementation credentials is one who has managed all challenges well. Some of the key questions that banks should be asking while evaluating this risk are the following:

How Does the product require large – scale customisation? How will this be managed as part of the implementation plan?
Will the vendor make many changes to source code on – site?
What is the implementation methodology that the vendor adopts? Is it comprehensive and does it incorporate aspects that are critical to the bank itself?
What is the vendor ‘ s track record with implementations? A clean track record here is a significant plus, as there are not too many vendors who can claim to not have even a single failed implementation.
Does the vendor have experience with different types of implementations – in different geographies, big bang migration as well as phased roll – outs, etc. A related but an equally important issue is the post implementation support that vendors provide.

Positive pointers that banks should be looking at are:

What is the vendor ‘ s strategy for post implementation support? How many levels of support does the vendor provide?
Is the vendor equipped to handle support in different parts of the world?
How do upgrades and enhancements come to the bank after implementation has been completed?
What do long standing customers have to say about post implementation support?

Concluding remarks

It is important that banks take a holistic view while considering the replacement of their core banking platform. While the benefits of implementing packaged solutions built on modern technology are all too obvious, one cannot deny that such an exercise is fraught with risks. The risks can be mitigated and managed – a good starting point would be for the bank to recognise the different risks and consider strategies to mitigate them. As I said at the outset, the perspective at this year ‘ s symposium was refreshingly different. I am confident that next year, the mood will be a lot more optimistic as it will be built on the plank of successful implementations by the few courageous banks which have taken the first steps. And these banks would be those which would have evaluated and managed the different risks successfully. Core Banking Replacements Managing Risks

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