THE PROMISE OF DIGITAL DECOUPLING MEANS FEWER HEART TRANSPLANTS AND MORE BYPASSES.
Traditional mainframe core banking applications are not well suited to the digital economy. The world of overnight batch processing and four o’clock p.m. transaction cut-offs sits uncomfortably with customers’ expectation of real-time banking.
One solution is to rip out decades-old technology and replace it with modern, real-time architectures capable of powering a digital customer experience. In other words, a “heart” transplant. For those banks with a five-year time horizon and deep pockets, that could be an attractive option—albeit an expensive and risky one, especially in light of the promise of blockchain as a medium-term replacement for traditional books and records.
However, for many banks, the alternative of “freeze and wrap” is becoming increasingly attractive. It is where existing core products systems are retained as books of record while customer engagement and analytics systems are decoupled and powered by a cloud-based data layer that sits atop legacy systems—what is more akin to a heart bypass.
Purists might say it’s a temporary fix for a chronic disease, but with the emergence of new cloud-based core banking-as-a-service providers along with the power of blockchain, 2018 will be a year in which we are likely to see fewer heart transplants and a lot more bypasses.