This is startling information which will make the technology groups in Banks laugh.  They will laugh because they don’t believe it.  However I have seen enough outside the Banking environment over the last few months to confirm my earlier suspicions that Banks are hamstrung by legacy beliefs and practices, that restrict how they think about moving forward with technology.

This time the focus was very much around the financial costs to build and deploy these web applications (as opposed to elements like lines of code or revenue). It also touched on what it costs in monthly maintenance. Here is an overview of the data they shared:

• DropSend: Build $48,012 / Monthly $3,625
• Freshbooks Build $20,000 / Monthly $46,000
• Maya’s Mom: Build $70,000 / Monthly $30,000 
• Mobissimo: Build $60,000 / Monthly $150,000
• Wesabe: Build $200,000 / Monthly: $3,000

 

• One other interesting thing shared was that FreshBooks cost $430k total to build and maintain, until they reached break even ($140k of those expenses went to marketing).

Source: SXSW: The Figures Behind The Top Web Apps

Some practical examples suggest to me that a full function, for example funds transfer between accounts, or bill payment, can be developed in developer land’ for $25 – $50K.  I know I am generalising but I am confident enough in those numbers.  Then there are the costs to integrate with the appropriate systems, and that’s dependent on the degree to which open connections have been built within the Bank.  No estimate provided there for sure.

Wesabe is in Rails I believe, and its renowned for their focus on functionality and security. 

All this leads me to believe that the best solution for Banks is to look at rebuilding online banking in a new and current language that is optimised for the web [Ruby on Rails], and let the Bank systems integrate with it. 

I had a long conversation with a development shop on this subject earlier this week.  Every URL (pardon me if I am off on my technology representation here) within a RoR application is capable of being an API.  That API is automatically capable of html, RSS, wireless, XML (perhaps more). 

So, out of the box RoR is just waiting to be spoken to …. consider the comparison to current online banking applications, where custom design means any change or connection requires a rebuild.

The benefits of a quick shift to something like RoR would be exponential in support costs, and in cost of future enhancements.  It should be an easy business case.