Those of you who have been involved in replacing legacy systems know how prohibitively costly, technically challenging, and high-risk the task can be. For these reasons, such undertakings are perpetually delayed and avoided for as long as possible.
However, as financial services IT departments struggle to address the growing backlog of business process improvement needs and regulatory dictates, the pressure to take decisive action will continue to grow. When it comes to refreshing systems, the greatest challenge centers on balancing the stability of these fragile structures with the need to make meaningful process changes.
The "If it isn't broken, don't fix it" mentality is very pervasive and difficult to overcome, particularly when the system in question has reached its limits in terms of prudent code patches. The underlying issue is that legacy systems were developed for a detailed specification incorporating an architecture that does not accommodate change well.
This has left today's financial institutions searching for another way to add functionality and comply with regulation while avoiding the risk of outage or of introducing instability to an otherwise stable system.
With high-speed data monitoring software, financial services organizations can trigger new processes and services without affecting the host system, by simply allowing access to and monitoring the data flowing through their existing systems.
This can be accomplished with a layered addition that monitors business events in real time and enables dynamic modification based on what it finds.
When the burden on legacy systems becomes too heavy, this breed of software offers a safer, less costly approach to meeting business, competitive, and compliance challenges. While the common wisdom is "Don't touch it," software that monitors business activity allows you to satisfy both the "Don't touch it" and the "I need it now" camps.
For organizations where replacement time frames are one or two years out and an extension of life and augmentation of capabilities is critical, business activity monitoring offers an ideal alternative to a complete overhaul.
These new tools can pull data from multiple systems in real time, evaluate and compare it with new and established business rules, and initiate business processes without directly affecting the operation of existing systems.
For example, new credit scoring can be introduced to a loan origination system and be in compliance with Basel II without affecting the legacy system. With business activity monitoring, this can be done outside the current system by using an external credit score and business process management functionality that will restore the credit score to the host application later in the underwriting process.
This ability to monitor data and apply new business rules across a variety of systems could also be applicable to anti-laundering and know-your-customer requirements of the USA Patriot Act and the SEC's Rule 17 a-4.
Additionally, it is critical for financial institutions to arm employees throughout the organization with a complete view of the customer to improve their responsiveness and understanding of these relationships. Traditional line-of-business siloed systems do not have the flexibility to deliver a full view of the client relationship. As a result, customers may not be receiving the consideration their relationship merits; for example, they may be excluded from a marketing initiative.
In the risk management arena, business activity monitoring can offer case management functionality that draws data from a variety of systems to provide a complete customer view. Currently, case management capability is silo-centric, as opposed to client-centric. Real-time business activity monitoring can offer a complete picture of the client and facilitate decision-making. Moreover, the data gained can be used to initiate new business processes.
More than any other organizations, financial institutions possess detailed data on things like their clients' finances, buying trends, most-frequented restaurants, and hobbies. If it weren't for the fact that all this data is buried deep within line-of-business silos, financial institutions would be able to cross-sell to their clients with total precision.
Here again, business activity monitoring could be used to capture data from existing systems to build a total customer view and initiate cross-marketing recommendations. By enhancing the understanding of customer behavior in a more timely fashion, business activity monitoring and business process management can address customer needs and situations more effectively. Cross-selling becomes less about pushing the offer du jour and more about responding to customer realities.
Expanding the functionality of financial services operations without hurting the performance of legacy systems delivers an important advantage for financial institutions. Add to this not having to modify older code, and the immediate benefits are obvious. Your systems can become more intelligent and have a longer lifespan without creating a heavy burden in terms of staff time or financial resources.
