Big banks need IT reform almost as badly as regulatory change
economist.com
economist.com
The relation between IT departments and the rest of the company are often weird, it even more complicated when the IT department has two jobs rolled into one : administrating the system and developing them. And they work by ticket for all these activities.
They have been told to run IT like a business on its own so everything is done by contract. But IT never can make a profit, and reinvest in cost saving or modernization measures. Purchasing off the shelf software eases and clarifies a lot of all that. Just having you IT services provided by an external company often does not.
A system I know of includes many barely-integrated parts, most of which are from different vendors: - A core processing system
- An online banking system
- An add-on to the online banking system to provide "enhanced" logon security to comply with an FFIEC mandate
- An add-on to online banking that provides online statements
- An email-alerting system (think "your account is overdrawn")
- A loan origination system
- A loan servicing system
- A CRM system
- A document archiving system
- A mobile banking "solution"
The WTFs you find in these systems will boggle the mind, and seamless integration is maddening.
Maybe the reason why it takes 3 days to transfer funds to another account really is incompetence rather than greed.
The problems banks solve are the reason mainframes exist. Billions of data points that must be processed 100% correct 100% percent of the time. It seems wrong to demonize mainframes as old and outmoded.
The State of California still runs all its payroll processing via an ancient mainframe running COBOL. Making changes is difficult, fewer and fewer programmers are available to perform the work (and so it costs more) and the problem just keeps getting worse. Apparently they have been trying to replace it since 2004, but the legislature doesn't want to provide the $100 million that is supposedly required.