Anthony Jenkins, founder of 10X Banking, recently discussed the state of modern banks and how they could be considered "museums of technology". Whilst it is true that many banks could benefit from improvements to their digital infrastructure, the statement does not capture the entirety of the situation. 

One could compare banks, especially traditional high-street financial institutions, to the systems that are employed at Transport for London (TfL). With its Victorian tunnels and legacy rolling stock, TfL infrastructure could also be considered a ‘museum of transportation'. However, ongoing modernisation means TfL today includes very sophisticated technology, from tap in / tap out ticketing, to the introduction of the Elizabeth Line, and the continuous renewal and replacement of rolling stock. Yet, we do not see a push to replace Victorian tunnels despite the obvious benefit of doing so. A more holistic picture would be to consider both TfL and large traditional banks as complex networks of legacy and modern technology that coexist and evolve to fulfil their customers’ requirements in a time-efficient and cost-effective manner. 

When it comes to banks, however, with large legacy IT estates and many systems that are decades old yet continue to operate and function effectively, the question of whether all systems need a technology refresh is far more complex than upgrading a transport network. These legacy IT estates sit alongside the latest cloud-based technologies, offering resilient and scalable solutions for online and mobile banking, and data analytics. Not to mention, banking products and services tend to change more frequently. Estate optimisation is, therefore, a continuous journey that is driven by requirement yet constrained by budget. 

Banks must therefore approach their digital estate modernisation in a considered way, ensuring business requirements are met, whilst the upgrade process is as cost-efficient as possible, and creates new opportunities for revenue generation. Technology for ‘technology's sake’ rarely features within this approach, nor should it be featured too frequently, unless, for example, access to legacy tech estates begins to impact costs.  

Digital transformation experts help clients determine how best to approach this modernisation of tech infrastructure. Businesses typically benefit more by retiring older systems than by refreshing technology. However, it should be kept top of mind that analysis across thousands of systems also takes time and effort. Moving an inefficient estate from data centres to the cloud typically results in increased consumption costs. The first step should, therefore, always be to address the inefficiencies through re-architecting and optimisation.  

Whilst it is true that financial institutions are likely to miss out on the benefits of the migration process that arise out of optimisation and re-architecture transformation, it is also natural that there have been barriers to organisations (including banks) in keeping up with each and every innovation that comes to the industry. 

In summary, banks will always have new innovations and technologies available to them. Whilst it is right that the modernisation of legacy IT infrastructure at banks should not be delayed, integrating new innovations should be done in a controlled and sensible manner.  

The sector should always strive for faster adoption of technology, but banks must also be pragmatic when weighing the benefits against the cost. Perhaps, when we consider banks as ‘museums of technology’, we should think about the small, narrow tunnels through which millions of passengers commute daily, and appreciate the challenge banks face in tackling their own legacy technology.