Large banks in the U.K. have a problem that just won’t go away – clunking legacy technology platforms. Banks are trying to recruit legions of IT contractors to update their systems, but top technologists would rather focus on more exciting projects.
The issue of decommissioning legacy core IT systems is not a new one for banks; they’ve been battling it for decades and the raft of merger activity during the financial crisis in 2008 has only made the problem more complex. Most banks have been focused on integrating acquired banks’ systems on to their own rather than a fundamental overhaul of their core systems, which are increasingly looking antique.
It’s a daunting prospect that few CIOs have been willing or able to embrace with much enthusiasm – it doesn’t help that turnover at the top is relatively swift. One CIO described it as “trying to replace the engine of a plane whilst still in flight”.
The baby-steps approach to core-system overhaul has one upside though – ongoing recruitment of IT contractors on relatively attractive rates of £500-600 a day.
“Many banks have enormous and archaic systems, which have to process vast volumes of routine transactions. In a number of instances these are based on outdated mainframe technologies such as Cobol,” said Jonny Ward, head of financial services technology at Twenty Recruitment. “The enhancements and improved functionalities that are required – utilising more modern object-orientated languages – are tricky to implement because, put simply, the new parts of the system still need to speak to the old parts.”
So, if you’re a developer with experience working on legacy systems and knowledge of Java and C#, consider yourself hot property. Except, generally speaking, few IT contractors are willing to take on these roles.
One of the upsides of working in banking technology has been the exposure to supposed “bleeding edge” technology (at least that’s what the banks would have you believe). Legacy systems, quite simply, are not sexy, said Ward, and most contractors are heading to front-office related projects in investment banks. Add in the fact that most banks aren’t going overboard when it comes to day rates, and it’s understandable why contractors are reluctant to sign up.
More often than not, banks have to instead call in the services of consultancies. This may bypass using the budgets allocated to headcount, but it’s still an incredibly expensive way of working, with most consultancies charging double that of an independent IT contractor.
One IT consultant has been working for a high street bank on an integration project for the best part of five years, he tells us, and there’s no sign of the work stopping. “It’s a cascading problem – when one issue is solved another invariably crops up. Banks have yet to commit enough money in any meaningful way to overhaul their core systems.”