Art Gillis continually writes good stuff, that should be wake up calls to all Banks. This post though goes to the top of he heap. Every Bank CIO should read this, and should immediately act.

In 1987, the Wall Street Journal published a study that evaluated technology in nine industries. Banking got the lowest grade, C-. Nineteen years and about 152 bank tech conventions later, technology is better. We now have GUI front ends. But the back end is still based on '60s technology. What never appeared in the evolution of bank technology was the proverbial clean sheet of paper. No one ever asked, ?Why the hell are we even talking about automating this process, when we should be reinventing the process?? R&D in bank technology today is a matter of writing COBOL modifications to existing code. That?s called maintenance, not innovation.

Banks are low risk, and we have all heard the arguments that the DDA/ deposit system is so key/ core/ fundamental that we cannot risk the stock market reprisal of a failed implementation, and heaven forbid we will have a run on the bank.

Consider this … I know of one Bank that has 35,000 employees. There is one person ("1") consdered an expert in the modified IBM assembler language used in their DDA system. Fortunately that person has a few years in him. But one person!!!!

Many banks still run their ABM's on Windows NT, and many still run OS/2. Yes, OS/2 is whats delivering your cash at the ABM all across North America. How many Gen Y'ers have even heard of that. Who will service OS/2 in 2025?

Relavance to Bankwatch:

One day the stock market analysts will look beyond the quarter by quarter results that banks are measured on, and suggest its time to get out of banks, until they solve the technology obsolescence problem.

Tags: technology_obsolescence