Category Archives: banking

Banks, Declutter Your Data Architecture!


Banks do not need to be wedded to complexity, says Navin Suri, Percipient’s CEO 

Marie Kondō’s bestseller, The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing, is sweeping the world. Her message that simplicity pays off applies as much to a bank’s data architecture as it does to a person’s wardrobe.

Few bankers would argue with the notion that the IT architecture in banks is overly complex and as a result, far less productive than it could be. So how did we get here? Rather than a single blueprint, most banks’ IT evolved out of the global financial industry’s changing consumer demands, regulatory requirements, geographic expansion, and M&As. This has led to a tangled web of diverse operational systems, databases and data tools.

Rapid Digitisation

But rapid digitisation has put this complex architecture under further stress. Amid dire warnings, such as the one from Francisco Gonzales, then CEO of BBVA, that non-tech ready banks “face certain death”, many rushed to pick up the pace of their digital transformation.

Banks rolled out their mobile apps and digital services by adopting a so-called “two-speed infrastructure”, that is, enhanced capabilities at the front, built on a patchwork of legacy systems at the back. Now over a third of all banks, according to a 2015 Capgemini survey, say “building the architecture/ application infrastructure supporting transformation of the apps landscape” is their topmost priority.

Fragmented Infrastructure

Meanwhile a key reward of digitisation – high value business intelligence – remains elusive. Banking circles may be abuzz with talk of big data, but the lack of interoperability across systems makes this difficult to achieve. In some cases, cost effective big data processing technologies like Hadoop have actually deepened the problem by introducing yet more elements to an already unwieldy architecture.

To address the problem, financial institutions have opted for two vastly contrasting approaches. Either paper over the cracks with a growing number of manual processes, or bite the bullet, as UBS is doing. The world’s largest private bank announced in October last year that it will be spending US$ 1 billion on an IT overhaul to integrate its “historically fragmented infrastructure”.

Attack On Complexity

However, for those banks unable or unwilling to rip out and replace their existing sytems, there is a third way. The availability of highly innovative open source software offer banks the option of using middleware to declutter and integrate what they have.

Percipient’s data technology solutions, for example, enable banks to pull together all their data without the need for data duplication, enterprise data warehouses, an array of data transformation tools, or new processes and skills. These solutions are, at their core, an attack on the architectural complexity that banks have come to grudgingly accept.

Visible Order

As Marie Kondō points out, “Visible mess helps distract us from the true source of the disorder.” In the case of most banks, the true source of the disorder appears to be an IT infrastructure derived, rather than designed, to meet the huge demands placed on it by digitisation. There is now a real opportunity to turn this visible mess into visible order.

This article was a contribution to, and originally appeared in,


Open Banking is Happening, Folks!

Wireless transfer of money through mobile phone vector concept

On February 2, 2017, the UK’s open banking ambitions took a step closer to reality when the Competition and Markets Authority (CMA) issued its final order for the implementation of open banking reforms.

The final order sets down a strict one-year time frame for nine of the UK’s largest banks to launch their open banking API interfaces. This means that by the end of Q1, 2018, these banks will have enabled their customer data to be securely accessed by competitors and third parties.

A definite shift

For those of us who, having worked in banks, once considered the “open banking” concept to be no more than a pipe dream, this marks a significant milestone. If data is new oil, and banks are really only just starting to mine its full potential, then sharing this asset with the external world is a very tough decision, new opportunities notwithstanding. Which is why it was unlikely to happen without the CMA’s firm hand.

But all that is history. The UK’s open API banking initiative now looks to be set in stone with other regulators likely to follow suit. Meanwhile, the European Union already have their own open banking directive – known as PSD2 – due to kick in in 2018. So how will this change the lives of banking customers?

Choice, choice and more choice

The CMA’s Open Banking report, published in August last year, gives us some idea of what is to come. At this point, the most relatable improvement, from a consumer’s point of view, is the potential to view multiple bank accounts via a single app. Many industry players have already begun to envision that such an app could be used to not only keep better track of one’s finances, but to “cherry-pick” banking services.

The development of a so-called “banking-as-a-service” (BaaS) platform would pave the way for customers to easily select and assemble a set of banking services from across several providers. Similar to other portals, the criteria for choosing one bank’s services over another would extend beyond just fee and features comparisons, and include the available channels and digital experience on offer.

The new era of inter-bank platforms

However, whether this takes off in the way the CMA would like depends in large part on whether individual customers are sufficiently reassured about the security and confidentiality of their data. This in turn rests on the regulations, IT platforms and security protocols being established to support such BaaS projects.

For example, the PSD2’s Access to Account requirement stipulates that banks are obliged to share their customers’ payment account information with third party service providers. While the regulators have indicated that strict conditions apply, including how “payment account” is defined, and how service providers will be licenced, the industry is still struggling to interpret the guidelines.

Similarly, the private sector has sought to build common standard open banking protocols and platforms. These include the Ixaris-led Open Payment Ecosystem, the Microsoft and Intuit-led Open Financial Exchange (OFX) standard for the exchange of financial information, and the Banking Industry Architecture Network (BIAN), an association established to define a common IT framework for banking inter-operability. It remains to be seen which of these will take root.

No pain, no gain

 Despite the flurry of activity, it is no surprise that some banks have serious reservations about the effort required to support open banking. Aside from regulations that are extensive and still evolving, open banking brings the risks of fraudulent third parties, digital intrusion, impersonation, and the illegal use of data.

The pain of acquiring the resources and new skill sets, including in risk, compliance, technology, and data science, suggests substantial short term pain ahead of gains that are as yet unquantifiable. Clearly, the first salvos in support of open banking have been made, but there is still much work to do.

Background vector created by Lexamer –