As the nights draw in and 2023 winds down, banks and other organisations are reviewing their technology platforms and architectures, with a view to planning and budgeting for 2024. In many cases, this review will identify the need to upgrade or replace legacy technology that is old fashioned, unwieldy or no longer fit for purpose in the modern financial services environment.
Of course, this process is not a new phenomenon. It is to be expected that systems and technology have a finite lifespan, and upgrades and replacements will inevitably form part of the technology ‘cycle’ of a firm. In such an innovative industry, it perhaps comes as no surprise that capital markets firms sit rather closer to the ‘cutting edge’ of technological advancement than organisations in other industries, which means that the technology cycle is typically shorter, as financial services firms are forced to move quickly when new business, technology and processes evolve and supersede the old. Larger, more established financial firms often struggle, however, to modernise their technology as quickly as the younger, more technically agile firms, which nip at their heels.
The Buy or Build Question
Technology replacement initiatives require many decisions to be made, and an important one that should be asked early in the review process is the question of whether to buy a solution from a third-party vendor or to build one in-house. Often, this is not a straightforward question to address, and answers may vary from firm to firm, and even project to project, as there are many variables to consider, and it may not always be a strictly binary choice.