Be more like Suresh

I have a friend called Suresh. He loves gadgets. It amazes me how he always seems to have the latest toys.

Wouldn’t it be great if you could replace your core banking tech on a regular basis?

One time, I stopped him and questioned him with: “Hey, Suresh, is that the latest Samsung? I’m sure I saw you with a different new phone a couple of months ago?”

“Yes, Dharmesh, I didn’t get on with the other one and this one has better features,” he replied.

“That must be expensive switching just like that?” I asked, mystified not only by the cost but the complexity of moving his apps and data.

He responded: “No, not really, I typically sell my old stuff online, and being an early adopter, I tend to get a good price. I often make a profit actually!”

Amazing, I thought. I need to be more like Suresh. Instead, I have become a hoarder of old tech. I still have my old record player, cassette player, CD player, VHS tape player, Blu-ray player, and the list goes on. I have a graveyard of old technology that I know still works, but I have kept it just in case I may need it or want to be nostalgic. I can count on one hand how many times I have used this old tech in the last 10 years. I need to be more like Suresh.

What has this got to do with banking, you must be wondering? I guess the question is: should banks and banking software companies also be more like Suresh?

I mean, wouldn’t it be great if you could replace your core banking tech or any system on a regular basis? Obviously, you wouldn’t do it unless you could realise the benefits economically. I suspect the answer is that many would still find excuses not to do something different: it’s too risky, we can do that eventually, it’s too costly, we have other priorities. I’m sure you can think of more.

But to make this a reality, what you need is some standard definitions of data and processes to run an entire bank. Then you would need to show how those pieces should interact so that at any time you can replace a function by writing something new or acquiring it from a vendor.

As I have written before, this is the domain of BIAN (Banking Industry Architecture Network), and its vision of composable “coreless banking”. In a nutshell, BIAN is an independent not-for-profit organisation focused on creating a common framework for banking interoperability. BIAN consists of a number of banks and vendors working together to create and prove this framework. It was started in 2008, and so has already transcended a number of technology shifts.

This week, I’m just saying, be more like Suresh

These aren’t theoretical standards. They are proven with real software running inside banks on legacy platforms as well as vendor solutions both old and new. So, we have a set of standards and an independent organisation that can support banks in the migration towards a much more flexible technology platform. We also have vendors working with these standards providing solutions that conform to the standards and we have examples of this working in action.

So, I am actually mystified as to why:

• More banks and vendors are not adopting BIAN.
• Banks continue to buy legacy banking solutions that will only further hem them into an inflexible future.

As I highlighted in my previous article, the need to move to a more agile platform is driven by the increasing pace of consumer and technology change. In the past, consumer adoption has also been slow, but this too is increasing (just look at ChatGPT’s adoption as an example).

This week, I’m just saying that both banks and incumbent bank software companies need to schedule for their legacy platforms to be replaced by the next generation.

For vendors, it is no longer acceptable, and becoming clearly transparent, when an old solution is being packaged up with marketing statements alone and not actual new capabilities. Right now, some of the more advanced core vendors are busy embedding AI into their platforms. This is more than a marketing gimmick. It’s like the shift from physical music (records, CDs, even MP3 players) to streaming: the same music, but delivered on demand, real-time, anywhere you want it. It’s simply better.

I saw an Alipay presentation some years ago that said they have replaced their core four times in 12 years! This week, I’m just saying, be more like Suresh.

About the author

Dharmesh Mistry has been in banking for more than 30 years both in senior positions at Tier 1 banks and as a serial entrepreneur. He has been at the forefront of banking technology and innovation, from the very first internet and mobile banking apps to artificial intelligence (AI) and virtual reality (VR).

He has been on both sides of the fence and he’s not afraid to share his opinions. All opinions are his own – feel free to debate and comment below!

He founded proptech start-up AskHomey (sold to a private investor in spring 2023) and is an investor and mentor in proptech and fintech. He also co-hosts the Demystify Podcast.

Follow Dharmesh on Twitter @dharmeshmistry and LinkedIn.

Read all his “I’m just saying” musings here.