Sunday, December 13, 2009
Banks have outmoded IT systems (Economist)
The Dec. 3, 2009 issue of “The Economist”, on p. 83, has an intriguing article about the information systems in financial institutions, “Silo, but deadly: Messy IT systems are a neglected aspect of the financial crisis”, link here.
The article points out that banks were among the first large businesses to invest in home-made IT back in the 1960s (about the time of the IBM 360), a lot of times with the help of EDS.
But bank systems seem to lack the architectural flexibility to develop new ways to reliably assess risk, which helped contribute to the collapse of 2007/2008, and now to their unwillingness to lend to small businesses. The article suggests that the way banks use data warehousing systems can be one piece of the puzzle. I was considered for a data warehousing project with Wells Fargo back in 2002 while I was still in Minneapolis and still vaguely remember the issues.