Legacy is not a dirty word: reclaiming the language of core banking
Use the word “legacy” in connection to an artist, architect or artisan and you can instantly discern pedigree, influence and sustained success.
Use the word to a banker, accountant or IT nerd and they visualise cobwebs, creaks and puffs of steam, an engine stretched beyond its abilities or intended usefulness. They speak of this odd acronym “Cobol” that elicits a visceral response.
Inside banks, we whisper the word, we hide behind it when saying no to things. And we don’t question it when others use it to say no to us: we all know the legacy is too heavy.
The way we have always done things too set. The change too expensive. We know we will eventually have to get to this, but maybe let’s get the low-hanging fruit first, maybe wait until the size of the opportunity is commensurate to the size of the cost of this endeavour. Only, when that time comes, the risk is of similar size (surprise surprise) and we are left chasing our tails.
So what’s the alternative? Three easy steps my friends.
Okay. Maybe not easy. But three clearly defined steps.
- What we talk about when we talk about legacy
Your legacy isn’t just your creaky core banking system and end-of-day batching or inability to catch a trade break in time so you don’t have the same reconciliations flag in 8 different places, fixed by ten different teams (don’t forget the post reconciliations query teams, folks!). It also means that but, if you have all that, it also means you have been around long enough to acquire it.
Crucially it means you have customers, market share, partners and a distribution network. And brand permission to bring new ideas to the mix. Because you are a viable business who’s succeeded before and that’s reassuring.
That’s also part of your legacy. That, I would argue, is your legacy.
It’s the part you are working to continue building, to protect and retain. The other stuff is what you delivered the business with. It’s a set of tools. Expensive and complicated, sure, but ours is a specialist and complicated business and as the business changes the tools change.
Using “legacy” to mean the tool kit has a double-bind negative effect: first it keeps you talking about the way you used to do business, instead of about the people and markets you used to do business with. The former will be eventually out of date axiomatically. The latter you can change with.
The second sinister effect is just an extension of this. If you focus on the “how”, you will waste too much time trying to find a new “how” that can become your forevermore legacy. That’s not how the world works. The “how” needs to be flexible, modular and responsive. It will change to serve the business, the business you have as part of your legacy and the business you can continue building if you move away from the fixation or wanting to deliver it with your old tools.
- Your core cannot be the mess hidden behind the shiny stuff
I get it. Your core banking system is big. Migrating to a new one is a headache nobody wants to live through twice. It’s expensive and disruptive and risky and thankless as the options are much of a muchness with a few add-ons. So the idea of replacing the core banking functionality with something more… contemporary is really not how you are thinking about the world. So change the thinking.
Because your core is what holds you together. It can’t be the thing you are afraid to maintain, the thing you think of as fragile. It cannot be your weakest link, the reason why you can’t engage in aspirational endeavours.
Your core needs to be the engine that allows you to be what you want to be. Not what holds you back.
- You don’t have to do everything at once. But you have to do something.
I can hear the objections even before you say them. Sure but… there is a lot to do here. It’s too much too big and we have stretched budgets and squeezed margins. Let’s do a few things that don’t touch the core first to get us going.
To that I say: we already have.
We have done all the bits that could conceivably be done without touching the core. Even if the odd thing is still left to do, it is not much.
We have made attempts, across verticals and geographies, to balance digital services on top of our existing infrastructure. And what we end up with are jarring customer experiences, uneven depth of offering, gaps and delays. We have to face some uncomfortable truths if we’re to make meaningful progress: it doesn’t work.
But the good news is, to do things properly, we don’t have to do everything at once. Going all the way across the banking stack all at once is not compulsory. It is not even advisable.
The bad news is, we have learned the hard way that going all way down when building a digital service is actually compulsory because it is essential. Unless a service is digitally native and consistently deployed all the way down, it’s not digital. It’s digitisation. It is essentially window dressing.
The fact that I feel strongly about this is not news.
The fact that time is running out is not news. The regulator is upping the pressure. Competition is coming of age. Open banking is here. We have to do this stuff.
What is new is the fact that now there are options for going all the way down, before you go all the way across. So we can move to the most important conversation: what’s your legacy in terms of why customers have hitherto come to you and how do you build on it?
Move the conversation away from tools to your purpose and business opportunities. Then build to match your ambition. It’s neither as scary nor as expensive as you think and it leads to tomorrow’s legacy at the other end: customers, profitability and business viability.
Your legacy should be an infrastructure to suit your appetite, not ambitions cut to the size of last decade’s technology limitations.
It’s time to reclaim your legacy.
By Leda Glyptis
Leda Glyptis is FinTech Futures’ resident thought provocateur – she leads, writes on, lives and breathes transformation and digital disruption.
Leda is a lapsed academic and long-term resident of the banking ecosystem, inhabiting both start-ups and banks over the years. She is a roaming banker and all-weather geek.
All opinions are her own. You can’t have them – but you are welcome to debate and comment!