Banks wanting to protect their trusted reputation as repositories for their customers’ funds will investigate fraud and risk management technologies in 2004, according to TowerGroup VP, Jim Eckenrode. Card issuers, especially, “are going to have to respond to the growth in online fraud schemes involving identity theft and transaction fraud”, Eckenrode writes. Operational risk, regulatory compliance, front-office and infrastructure investments were also identified by research firm, Financial Insights, as bankers’ priorities for 2004, while enterprise payments and integrated delivery systems are said to be “reaching a tipping point”.
Enterprise payments may be “near the fringes of mainstream adoption”, Financial Insights reports, but the remaining pieces of the infrastructure need work. In this respect, many banks have ‘holes’ between their legacy core systems and newer, web-based front ends, which is fueling demand for integration software. Banks are reluctant to replace their legacy systems despite the benefits, but cost containment and new reporting regulations are a big driver for integration. Transaction management is one area large banks select for the replacement of legacy systems, with many using proprietary software for this purpose.
Despite the merits of linking front-end web systems with legacy applications, the real-time aspirations of web services are defeated by the batch-processing nature of most legacy applications. In essence, the web front-end only connects to the results of the last batch run, which obviates the purpose of integration. Now that banks are demanding packaged solutions for legacy systems replacement, however, they need to work closely with vendors in the whole integration process, which may require the operation of two systems in tandem for at least one quarter, to ensure that that the systems replacement is up to speed.
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