Legacy IT systems are holding back many UK banking institutions, preventing them from implementing the kind of innovation required.
According to a recent study by Talend, an integration software provider, 48 per cent of banking professionals cited outdated systems as the industry’s main IT challenge, with 43 per cent also claiming that it is preventing firms from tapping into the potential benefits of big data.
Customers are demanding a more modern approach from their banks, including seven-day switching and more flexible initiatives like mobile and online banking, but in order to achieve this banks need more robust data integration and access to real-time insights. This is proving a challenge without up-to-date IT systems in place.
Nimish Shah, banking sector lead at Talend, believes that it is promising that many in the banking sector recognise the importance of big data, but more needs to be done to move the industry forward.
“There are clear signals that the banks know what they need and want to do. It’s encouraging that a decisive 76 per cent of the banking professionals we surveyed agreed that the industry has a clear understanding of the benefits of big data,” he said. “However, scratch beneath the headline stats and there’s a gap between this understanding and what’s being put into action.”
Because the majority of major banks are reluctant to overhaul the legacy systems that have constituted the foundations of their business for years, they must prioritise elsewhere. Improving data integration and data quality must be primary concerns and improving the in-house skills of employees is also vital.
The challenges facing established financial institutions is being exacerbated by the rise of new banks, unencumbered by IT restraints. If more traditional players are to remain competitive they will need to find a way of embracing big data analytics that opens up new revenue streams and delivers a level of service that keeps their existing customers satisfied.