Celent Model Bank 2014, Part 3: Case Studies of Legacy and Ecosystem Transformation Innovation
The vision for Celent’s Model Bank research, now in its seventh year, was to try to answer an apparently simple question: “What would it look like for a financial institution to do everything right with today’s technology?” To answer this question, Celent sought examples of best practices in technology usage.
These examples span a five-part report series:
- Part 1: Digital and Omnichannel Banking
- Part 2: Innovation and Emerging Technology
- Part 3: Legacy and Ecosystem Transformation
- Part 4: Payments
- Part 5: Cash Management and Trade
In Part 3, Celent profiles three innovative initiatives:
- Credit Union Australia: Nucleus Project
- Export-Import Bank of India: Transaction Processing Initiative
- National Savings & Investments: Core Banking Initiative
Banks’ technology was, at one point, a differentiator; it’s now a significant hindrance to innovation. Transforming both technology and culture is the fundamental challenge to banks of all sizes, one that they must face directly as they fight commoditization and change the ways they interact with a vast web of customers, counterparties, and regulators. Banks must prepare for the future while dealing with the realities of what’s already in place. Celent’s Model Bank 2014 nominees presented a rich and creative variety of initiatives to meet this challenge.
“Most readers naturally think of core replacement as the key element of any legacy transformation,” says Dan Latimore, Senior Vice President of Celent’s Banking Group and coauthor of the report. “Changing bank culture, however, is equally if not more important. Openness, nimbleness, and appropriate risk-taking are all necessary, even if they’re somewhat new to banks.”
“Back end innovation isn’t a widely discussed topic in financial services technology, subsequently becoming an opportunity that many institutions miss,” adds Stephen Greer, Analyst with Celent’s Banking Group and coauthor of the report. “Banks are complex organizations with extremely varied geographical and market-driven needs. Institutions that try to move beyond a ‘one size fits all’ approach to back end technology open up opportunities for innovation.”
This report provides an overview of the legacy and ecosystem transformation in banking, giving a summary of the state of innovation in the market. Then Celent profiles three innovative projects, and finishes with conclusions that are indicative of broader market shifts.