Long-term IT strategy for bank’s core system renewal

A large Australian bank was adversely impacted by its complex IT environment. IT projects were costing more and delivering much less than packages – plus delays added further high costs.

The bank’s in-house solution had been developed over the past 30 years, comprising 30 core applications to support the retail and business banking environment. Overall, IT applications numbered over 2000.

Challenge
While it was increasingly apparent that the core legacy environment needed to be replaced to meet current IT requirements, the bank also wanted to build the best infrastructure for its future business needs.

But a simple replacement strategy didn't exist. The current environment was extremely complex, with a high level of integration and custom developments. A.T. Kearney was engaged to work with the IT team to develop the bank’s long-term IT strategy for replacing the core banking system and channels environment.

Approach
The joint project team employed a structured approach to assess and plan for the core system upgrade:

• Assessed current issues with the core platform (functionally, architecture, economic perspective), investment and operating aspects, and organizational implications
• Determined future requirements – next 10 to15 years – and distilled them into a set of capabilities that the core system must provide to ensure longevity of the platform
• Developed a future state architecture to meet long-term strategic requirements and deliver strategic capabilities
• Undertook vendor evaluation against key strategic capabilities and technical architectural considerations
• Developed flexible migration options, along with economic modelling to establish the most viable future strategy

Results
The project provided the bank a long-term IT strategy with a robust roadmap for replacing the new core system – allowing the bank to gradually renew the legacy environment with limited customer or operational impact. The strategy will enable the bank to manufacture and distribute new products in compressed timeframes, including bundled and third-party products. Perhaps more importantly, despite a likely multi-year technology investment in the hundreds of millions of dollars, the investment will result in positive business benefits and payback.

Key deliverables for attaining the renewed core system include:

• Future-state conceptual architecture, allowing for de-coupling of manufacturing, processing, and distribution functions, so they could be renewed independently with the optimal solutions
• Supporting services architecture for core banking requirements, with mapping from the current state to future-state requirements and vendor capabilities
• Incremental and phased migration path for minimal disruptions