November 26, 2014
www.forbes.com

… Componentization, coupled with standards like BIAN to allow the components to talk to each other, is a key to achieving faster implementation and greater value.

“The leading trend to establish these critical capabilities [increased agility, diversity of sourcing and lower operational costs] lies with the decomposition of monolithic or all-in-one core banking systems into a larger superset of smaller components with discrete functionality. This process is called “componentization.”

This will allow banks to move some or perhaps all of their systems to SOA on internal or external clouds. Eventually at least some vendors will offer a core banking app store. Banks have traditionally been builders of IT systems; now they are becoming brokers of systems from vendors.

“Distribution and decentralization of IT is the path more banks will take,”said Free. “Cloud will be an integral part of that. If I can break the core into smaller parts, I can outsource some and focus on strategic items in-house with my staff. The CIO can look for the best deals, get economies of scale, and outsource something like exception processing for credit.”

BIAN is key to the industrialization of banking technology which is required to reduce costs and speed implementations. Now the cost of integration can be 3x to 10 x the cost of a software license.

Business leaders and board members at banks need to understand their business objectives and what vendors are offering, the report concludes.

“Core technologies are evolving into highly agile architectures, and the implications for making the wrong decision will be lasting – and could put banks at competitive risk. “

Read the full article at FORBES