Core: Don’t Toss Legacy but Do Reconfigure

by Brian Riley 0

Vehicles parked in front of the bank with the city as a backdrop.

 It is harder to hire a COBOL programmer in the US than one versed in XML. COBOLers went to college in the early 1970s, many are retired, others are a bit crusty and dangle cigarettes as they work their way through the environment section of COBOL code. And, according to Computer World, as of 2013, 73% of universities do not offer COBOL as a programming class. Today, it is probably 80% do not offer COBOL.

The scary part is that 71% of survey respondents believe that their businesses will rely on COBOL through 2023, according to the same study.

I used to be pretty good at COBOL way back when, because it always seemed structured enough to discipline a disorganized baby boomer. You have sections for defining the environment, setting up inputs and outputs, then link in VSAM or sequential files and away you go.

But banking has come a long way. New products, new opportunities, and new risks. Customers no longer settle for what we feed them, they have their own requirements and if you don’t meet them, you will be quickly cast aside.This is a nice article that discusses whether or not banks should “rip and replace” their software or modernize old code.

• As technology changes accelerate, banks increasingly must consider whether their core systems, which they may have had for decades and in which they have made considerable investments, can still serve their customers efficiently and economically

• “Some banks in some countries have tried to replace systems completely,” said IBM’s An. However, he said, many customers, especially in North America, have taken a different tack.

• Legacy systems, he pointed out, are really adept at transaction processing, low latency, and very high throughput, as well as having all the regulatory processes embedded.

These decisions involve billions of dollars of investments for banks who run their own platforms. From where I sit, unless you are a multinational global bank, FIS, First Data, Fiserv and TSYS offer great options that bring little risk. Each of those companies provided cloud services long before there was a “cloud”. But some banks have the competence to keep their own code inhouse for proprietary reasons, and there are plenty out there.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

Read the full story here

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