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How one bank changed core systems

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After blogging yesterday with my regular beat to get rid of old legacy systems, I then had another thought.  Don’t get rid of them.  That is a possibility.  Maybe you don’t need to replace the core.  Maybe you just need to create a new platform that is digital and gradually migrate customers across.

In other words, you place all of the existing stuff into a legacy locker.  You close the locker and remove the key and walk away.  No more investment in the old stuff, just cryogenically frozen for all time, or up until the time it can be switched off.

Then you take the money you saved to develop the new digital bank. 

The new digital bank has a digital core that is clean and single.  No silo’s, no separations, but a single digital core for access internally and externally.

The bank then creates the digital products, services and organisational structure to leverage that digital core.  They work out the branch role in this process, if needed, and consider the options around remote digital services such as video-based call centres and digital assets and services.

Once the new digital core and service is agreed, it can be developed using the savings from the cryogenically frozen systems savings from locking up the legacy.  Then, when ready, the bank can launch the new digital bank and persuade customers to switch to the new digital bank products and services.

Finally, when all customers have switched to the new digital bank, the old legacy can be switched off.

Sounds ridiculous?

Not really, as I know a bank that’s done it. 

This is what mBank in Poland has done.

I’ve talked about mBank before, but I do like the story of their transformation.

First, they stopped investing in the legacy.  They then spent 15 months building the new bank platform which cost them only a 10% increase in the overall IT budget, thanks to the savings made from stopping investment in the legacy.  The bank rolled out the new services and persuaded customers to switch in five phases:

  1. Sign up to the new bank services as a pre-registration (leading edge customers)
  2. Sign up to the new bank services from the big launch campaign (early adopters)
  3. Sign up to the new bank services through targeted communications (demographic focus)
  4. Switch to the new bank services because of all these benefits (mass market)
  5. Switch to the new bank services as we will charge you for the old bank services (laggards)

After a year from launch, the bank has managed to get over 70% of customers to use the new digital bank services and, for those who are loathe switching, they are now being told that there will be a charge for staying on the old bank platforms from next year.

So, if you think becoming a digital bank is impossible because you can’t replace core systems, then just take a leaf out of mBank’s book.  It can be done.


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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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