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Comment by raesene9 | Hacker News Reader

I'm of the opinion that all banks should be technology companies, in that pretty much all of their operations rely on computing, so the better they are at developing and operating computer systems they better they'll be able to do business.

Unfortunately, many banks (at least in the UK market) seem to see IT as some kind of overhead, to be minimized in cost and/or outsourced (e.g. Lloyds outsourcing to IBM https://www.theregister.co.uk/2017/06/06/lloyds_confirms_ibm...)

Of course there are ranges of new banks (the UK has a range of challenger banks most of whom take a more tech-focused approach) to challenge the "traditional" approach, and it'll be interesting to see how that shakes out...

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100% agree. My wife works in private banking, and her descriptions to me of the IT/software environment they have to deal with are absurd.

Recently, the integration of a new loan management system was badly botched and several clients have been hit by it. Bills not going out, therefore not being paid, therefore money being taken forcibly from their accounts without notice. And these are customers with millions each in the bank. This has been ongoing for a couple of months now. The client managers themselves are irate--they've been cultivating these relationships for years, and it's all been jeopardized.

How can so many banks be so blind to the fact that everything they do depends on getting the technology right?

Why is it always the "notifying" part that breaks with shitty software like this, and not the "money being taken forcefully" part, which always seems to work flawlessly? Doesn't that seem a little suspicious?

If they were uniformly bad at writing software, the critical money handling part should fail at roughly the same rate. If they can get that part to work reliably, failure of other parts of the system seem particularly inexcusable.

The product owners most likely decided to budget their time/resources accordingly so if something did fail it wasn't critical money handling part.

Always my favorite. You can take money out of my account instantly. Refund? "You should see that in your account in 3-4 weeks". Just brazen, at times.

It's possible the withdrawals do break sometimes, but undercharging people results in far fewer irate phone calls.

My theory has always been that the people in senior positions at these companies tend to be older and have come up through the ranks before IT was quite as integral to their operations.

So they don't understand technology and therefore tend to not take it as seriously as they should.

That said, that argument starts to hold less water these days. I had my first job in a web-focused bank 18 years ago now!

One of the consequences I've seen (and I'm guessing its even more prevalent these days with easy access to cloud computing resources) is that bad IT in banks leads to the rise of Shadow IT where departments take it on themselves to work around the main corporate IT function.

I studied business school in the mid 00s where most textbooks/classes still insisted that IT systems could be procured as standardized off the shelf products, despite the fact that all serious studies show that process management* and IT systems form a symbiotic relationship that makes it almost impossible to change one without the other.

*Business management is process management for most organizations.

I'm positive this is it. You see this all the time with medicine and government too - lots of old, successful people who don't like having to adapt to something new and difficult to learn

I worked for a bank in the UK that's a US bank that has no retail presence in the UK (that probably narrows it down a lot) but much of the IT operations were being run and managed from the UK. The headcount in the global IT organisation was about the same as the headcount of Apple at the time. I've always known banks has been relying on computers for decades and probably longer than most industries and from my experience this bank was particularly progressive when it comes to technology and happy to innovate and experiment. When working in other parts of the financial industry in the UK it wasn't quite the same as this. I think there's certainly a stronger engineering culture in the US and the benefits of technology delivering productivity at scale is appreciated. The UK also has a legacy of a lot of well paying functions in the financial industry that wasn't relying on technology with people who don't have an aptitude for technology.

JPMC always seemed quite progressive - for instance they embraced open source and open standards, with AMPQ and the Apache Qpid message broker which was part of their tech stack and I worked on for a while there, commiting the code I wrote at the bank to the ASF repository. this is very different from a decade or so ago, when any hint of open source was seen as a possible risk...!

The problem is legacy culture & systems. Theres almost no chance of a transformation unless a paradigm shift in senior management thinking takes place.

Maintaing their mess costs massively and large projects carry risks and a bad track record no one on top can support.

Too bad the fintech revolution lost some of its momentum challenging the profitable areas of banking

I'd agree that a paradigm shift is definitely needed to address the problem. Banks need to see that constant investment not "put it in and let it run for 10-15 years" is what's needed.

And yes the point about risk of new projects... who wants to lead a project to replace a mainframe system that's been running successfully for the last 30-40 years and if it goes wrong you're guaranteed to be on the front page of the papers...

I wonder if a pattern will emerge where big banks let the challengers develop the tech, then they buy them and move across to it, once the kinks are all ironed out.

>The problem is legacy culture & systems.

I'd argue regulatory oversight also makes innovation and risk taking less viable because every failure will be noticed and require explanation, which puts a damper on "fail fast." You can fail fast internally during your SDLC but doing so in front of an external customer is an extraordinarily bad idea.

https://gel.westpacgroup.com.au/

Most of what you say is true. But the reason they see IT as overhead is because their budget accounts for building the technology and find that supporting it may cost just as much. So they try to get rid of the overhead of Engineering the system to make room for Supporting the system they built. Now, they seem to quickly forget that you still need Engineering to build your next project. And that is why a lot of these companies treat IT Engineering as a disposable asset and then heavily out source the building of these projects to disposable IT Engineering consultants.

Not only in the UK. France, at least, is also like that.

On the other hand, it would be great for consumers and those wanting to offer software in the banking ecosystem if there were more standardization in the banking industry. I'd be surprised if anything a bank does is so unique that it requires all their software to be bespoke. Perhaps we could get better security and usability if there were some large providers that offered key software to almost everyone in the industry.

In the UK at least, we have a ray of hope on that front as mandatory Open banking APIs are on the way (https://www.openbanking.org.uk/) which should make it a lot easier for software providers to write applications on top of existing accounts and providers.

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