A Case for Proven Technology

I make use of a highly efficient and convenient MAC application to manage my personal website/blog (see FrankSchwab.de). Recently, I discovered that this application is no longer under active development. Further research revealed that it ("Fishbeam Goldfish") was a solo project. After 19 years, the developer behind this user-friendly tool moved on to join a mid-sized IT firm.

This brought to mind a €20 million project at Deutsche Bank, where a team was building a new lending platform. They chose an application development platform supported by only 20 people globally. A €20 million project relying on 20 individuals. Given the scale of Deutsche Bank and the project, this was untenable, forcing us to stop it. The risk of losing future support was simply way too high.

While technology can be a key differentiator in banking, adopting the latest unproven tech, tools, or platforms can be a trap. I have frequently witnessed once-cutting-edge legacy systems, now interconnected in complex webs, accumulating substantial technical debt. This must be avoided.
Crucial factors like the number of users and the level of support needed - how many developers are backing the platform, and the stability of the provider behind a technology - must be thoroughly assessed.

From my experience in banking IT, I’ve found that innovation—whether it's exceptional user experiences or cutting-edge, real-time digital products—can flourish even when leveraging proven technology.

While I’m a real fan of Fishbeam Goldfish, I’m considering a transition to WordPress.

http://www.FrankSchwab.de

Published in SundayThoughts, strategy, technology, innovation, legacy, all on 22.09.2024 9:30 Uhr. 0 comments • Comment here

A fool with a tool is still a fool

"A fool with a tool is still a fool" captures the current AI hype, where many believe AI can solve all problems. Just like a person with a hammer sees every problem as a nail, some misuse AI inappropriately, leading to flawed systems that may provide inaccurate insights or perpetuate biases. This overreliance on AI can create a false sense of security, diminishing the role of human judgment and accountability. AI is often treated as infallible, overlooking its limitations, biases, and the need for critical thinking. To truly harness AI’s potential, it's crucial to understand its strengths and weaknesses, and apply it thoughtfully, not indiscriminately. This requires education, training, and a balanced approach that values human oversight alongside technological tools. AI's real power is in augmenting human capabilities, not replacing them. By recognizing AI as one tool among many, we can avoid the pitfalls of misuse and truly benefit from its potential.

http://www.FrankSchwab.de

Published in SundayThoughts, technology, AI, all on 15.09.2024 9:30 Uhr. 0 comments • Comment here

Annual Planning in Banking IT

It's the same every year. During the annual budget planning, every bank I know faces an overwhelming number of IT project requests. I've often heard senior managers proudly proclaim, "As part of this year's budget planning, we've reduced IT project requests by 50%." This is frequently touted as a success, which always surprises me. Additionally, false hopes are often raised about what IT can deliver during the planning phase, when in reality, fulfilling all requests is neither feasible nor desirable.

The annual struggle of IT project planning in the banking sector highlights a fundamental challenge: the disconnect between ambition and reality. This ritual is flawed for several reasons. Firstly, it assumes that all IT projects are created equal. In reality, some projects yield significant benefits for the bank and its customers, while others may offer only marginal improvements or even prove detrimental. Secondly, it overlooks the crucial role of IT in driving innovation and competitive advantage. Banks that fail to invest strategically in IT risk falling behind their rivals, losing market share, and ultimately jeopardizing their long-term viability.

The key to overcoming this challenge lies in proper prioritization. This involves not just reducing the number of IT projects, but selecting the right ones. Desirable projects are those that create tangible and measurable benefits for the bank and its customers, such as faster payment processing, more reliable and accessible account services, or enhanced security features. By focusing on such projects, banks can ensure that their IT investments deliver maximum value and contribute to their overall strategic goals.

Moreover, proper prioritization requires a clear understanding of the bank's overall business objectives and the role of IT in achieving them. This means aligning IT projects with the bank's strategic priorities, ensuring that they support the bank's core business functions, and delivering a clear return on investment. It also involves involving key stakeholders in the prioritization process, including business leaders, IT experts, and customer representatives, to ensure that all perspectives are considered and that the chosen projects have broad support.

http://www.FrankSchwab.de

Published in SundayThoughts, banking, technology, planning, all on 01.09.2024 9:30 Uhr. 0 comments • Comment here

Mitigating the Risks of Shadow IT: Empowering Users with the Right Tools and Training

It's not a common occurrence, but last week, I engaged in a heated discussion regarding the IT department's responsibility to provide the appropriate tools to all business users. Whether it's analytic tools or AI solutions, preventing shadow IT hinges on IT's ability to deliver these resources and training promptly.

In my experience within the banking sector, the proliferation of shadow IT and shadow AI has emerged as a significant challenge. These practices, where employees utilize unauthorized IT resources or AI solutions, often arise from a need to fill gaps in the official offerings of the financial institution. A 2021 Gartner report indicates that shadow IT can account for 30% to 40% of IT spending in large enterprises, underscoring the scale of the issue.

I recall several instances where ambitious teams deployed new functionalities from external vendors to improve, e.g., customer profiling or risk assessment. While the results were positive, the lack of integration with core systems led to inconsistencies in data handling and reporting. This mirrors findings from a McKinsey study, which noted that shadow AI efforts often misalign with a company's overall IT strategy, leading to fragmented implementations.

To address these issues, any IT department must proactively enable all users with appropriate tools and platforms. By providing robust, flexible, and secure IT solutions that meet diverse departmental needs, reliance on shadow IT and shadow AI must be reduced. This approach not only enhances productivity but also ensures adherence to data governance, security, and compliance standards.

Furthermore, investing in user training and support across the organization for these tools ensures that employees can fully utilize the provided resources without seeking unsanctioned alternatives.

In conclusion, by equipping users with the right tools and fostering collaboration between departments and IT, the risks associated with shadow IT and shadow AI must be mitigated. This not only enhances operational efficiency but also strengthens security and compliance posture, aligning with industry best practices and regulatory requirements.

https://FrankSchwab.de

Published in SundayThoughts, technology, risk, all on 18.08.2024 9:40 Uhr. 0 comments • Comment here

Does the Future Hold a Place for Traditional Core Banking Systems (CBS)?

This week, I reconnected with a dear friend from the business world. We collaborated on Deutsche Bank's core banking transformation between 2007 and 2010—the "famous" EUR 1.5 billion Project Magellan. Back then, I served as Deutsche Bank's chief IT architect.

He inquired about my perspective on the future of traditional Core Banking Systems (CBS). This topic has come up in discussions with over a dozen CEOs and CIOs across Europe and MENA in the past two years.

Here's what I believe:

Traditional CBS face a challenging future. They'll either be stripped down to their core with minimal customization or replaced by fourth or fifth-generation CBS. These newer systems are real-time, AI-powered, and focused on essential functions like account and customer management. Other major functions, like credit and payments, will be handled by specialized, flexible vendor products using the latest software technology stacks.

My conclusion: CBS as we know it is nearing its end.

https://FrankSchwab.de

Published in SundayThoughts, CoreBanking, technology, banking, all on 13.07.2024 9:30 Uhr. 0 comments • Comment here