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Retail banking – Legacy is not for life

Source: Payments Cards and Mobile/Lusis Payments

In their 2013 report designed to identify payment system challenges for the 21st century, European software and services provider Lusis Payments found that an aversion to change and conservative attitudes in the big banking systems are holding back change. With global consumers armed with the technology and eager to spend, can their obsolete infrastructures cope?


Financial institutions are faced with many pressures: cost savings, increasing regulation and customer demands for new and improved services. The harsh reality is that it is increasingly difficult to respond to this challenge using their current technology platforms. Legacy systems developed for the payments world of the past cannot adapt to meet the pressures of the current market place. Technology has moved on and customer expectations of retail banking and payments have followed. They require services that are simple, fast and secure.

Institutions should understand their business strategy clearly and question if their technology can deliver. If they cannot demonstrate the ability to provide new services reliably, flexibly and cheaply, then their customers will switch to competitors that have positioned themselves ready to address the payments challenges of the 21st Century.

Payment system challenges for the 21st century

The fast-moving payment landscape is driving banks to review their retail payments systems infrastructure; in order to cope with new consumer payment requirements, new payment technologies, and an ever-increasing volume of transactions.

The importance of having a fully-functional retail payments system in place has never been more evident. With multiple channels, customer touchpoints, products and services all reliant on a robust, flexible and scalable system.

At present, the banking and payments industries are witnessing an exponential level of growth of electronic payment transactions, not just from plastic cards, but from newer channels and devices such as the mobile. Changing consumer payment behaviour will also have a major impact at a system operational level.

Banking organisations must have a clearly defined roadmap to identify where they can add more value. While many have ramped up their activities in new channels such as mobile commerce, simply playing catch-up is not an option.

John Bycroft, sales and marketing director at Insider Technologies, states: “There are still a lot of banks, if not all banks established more than 20 years, that are still running a large part of their operations on COBOL programmes and batch programmes which run overnight.”

By upgrading to more modern platforms, banks can potentially move from large mainframe-type systems onto UNIX-based servers and blades which radically reduce the costs.

Impact of the cloud and Big Data

Perhaps the biggest impact on banks’ systems strategies over the next few years will come from cloud computing and Big Data, both of which are having a significant impact on existing hardware and software requirements.

In terms of cloud-based technology, the Big Data concept opens up the possibility of banks being more collaborative with each other. Tackling fraud is a prime example of this.

Cloud computing extends the point of delivery for banking systems, making it easier for the general public and for intra and interbank access. In terms of the cloud effect on systems, the two need not necessarily be closely connected.

Cloud also offers the opportunity for bank organisations to generate better services in a scalable and flexible environment without the need for physical end-points in place – another cost benefit in terms of reduced infrastructure. 

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