Theory versus practice
In the theoretical world of the analyst, we think about the perfect world and the perfect solutions. Regrettably, that isn’t the world that most of our clients live in. There are legacy systems, limited budgets, time to market issues, project risk, reputational risk, etc. This helps explain why established legacy systems are continuing to sell in the US market and those more perfect (modern) solutions aren’t. This helps explain why systems designed 30 years ago are continuing to sell in the US market. They are proven; they work.
Some data points….
Celent wrote a case study on Webster Bank which moved from a real time system (Miser) to a batch system (Systematics). Isn’t this backwards? In theory it is; in practice it’s not. My theoretical thinking was, why move from real time to batch, when your business is becoming more and more real time with debit, internet, mobile, etc. In practice Webster needed deep business functionality and didn’t particularly care whether the system was batch or real time so long as it could meet the needs of the bank.
Foreign vendors are trying to enter the US market, and failing up to this point.
Oracle (formerly iflex Solutions) FLEXCUBE came into People’s Bank in Connecticut. The implementation wasn’t proceeding as planned and management ended the project. People’s United now runs FIS (formerly Metavante) IBS.
Union Bank (formerly of California) selected Infosys Finacle. Implementation is not proceeding as planned.
Citi announced they were moving their domestic deposits to FIS Systematics. Again, I asked myself, why go through all the trouble of moving to a new core system, and not move to a real time system? Citi viewed the operational and project risk much greater. They were already using Systematics in other parts of the bank, so they had familiarity with it. They also didn’t want to move item processing from a batch environment to a real time environment. Changing core systems was quite enough change, thank you. Restructuring operations on top of that added more risk to the project.
The latest announcement is BBVA Compass moving to Accenture’s Alnova platform, a real time platform developed in Spain and deployed across the globe. I see opportunities for success here. Accenture brings a broad and deep base of US banking experience from their US consulting arm. Assuming they work in a non-arm’s length manner with their Spanish colleagues, meaning the Alnova team, things will hopefully come to a successful end. Many have underestimated the difficulties of a core banking migration.