Complexity is the Hidden Killer
The problem is most acute in financial services. The latest report from TechUK says that “the technology platforms that support every function within financial institutions have in many cases stopped being a competitive advantage and are now widely acknowledged to be a burden”. Now TechUK is a pretty well respected organisation – it cites over 850 members, covering over half a million tech jobs – that’s about half of the entire sector in the UK.
It’s report is well thought through and is authored by real life financial services CTO’s rather than academics. And its conclusions are forthright. The problem, it says, is that the technology employed today across financial services has evolved over the last 30 years as multiple layers – each layer placed on the stack to respond to a particular requirement or regulatory change. So complexity builds. What’s more, these are “always-on” systems so changes really have to be kept to a minimum and they’re real time so if anything goes wrong, it’s very difficult to recover. Hence the meltdowns, such from RBS 2 years ago to Lloyds ATM issues this month. Add in information silos, mergers and acquisitions, cyber attacks and it begins to look precarious.
So what’s the prognosis? The millstone of legacy systems within established financial institutions opens the field for new, unencumbered players to come in. Retailers now offer financial services and Google Wallet is beginning to look a lot like a bank. However, the rise of cloud and “everything as a service” may give the traditional institutions the chance to move to a new paradigm. The trick will be to change from hungry caterpillar to beautiful butterfly without having to go through the bothersome downtime chrysalis stage.