I couldn’t let this one go by without commenting on it. A regular theme in this blog is get rid of old technology if it’s running core systems. The reason is that systems designed before Mark Zuckerberg was born are surely not fit for purpose in this day and age. Well, the CIO of ANZ – a bank in Australasia – has just told me I’m wrong.
In a widely reported interview with the Australia Financial Review (AFR), Scott Collary says that there’s no compelling reason to rip out and replace its 40-year old Hogan system, now managed and maintained by CSC Hogan. So first, it may be worth reading what the article actually says.
So that’s all well and good. Digging around a little, I first found the announcement of Mr Collary’s appointment, which says:
Australian bank ANZ has appointed former Citigroup IT chief Scott Collary as CIO, following a seven-month search to replace the departed Anne Weatherston.
Collary previously held the role of Citigroup’s consumer CIO for North America since 2008, where he was responsible for simplifying products and introducing a ‘digital first’ strategy. Prior to this he was senior vice president and retail CIO at regional US bank Fifth Third. He has also worked in a number of leadership roles at Bank of America in the past.
Collary will begin his role in early December , reporting directly to ANZ group chief operating officer, Alistair Currie.
“We are pleased to have an executive of Scott’s calibre join ANZ. He brings with him a track record in leading large, global teams and driving a culture that is innovative and customer-centric,” said Currie.
“Scott has particular experience in leading large-scale digital technology programs and will have a key leadership role in continuing ANZ’s transformation to become the most compelling, most convenient and easiest bank to use for all customers.”
So he’s been in the role 18 months and his predecessor was there for five years, implementing a strategy to convert the bank to cloud. When that strategy (towards 2017) was announced in 2011, Anne also asserted that their core systems were fine:
“We will continue to have three cores; our business strategy does not require us to replace or consolidate them. Our analysis of the strategy requirements of ANZ’s business has persuaded us that in the next immediate years we are not constrained by the capability of our core systems.”
Note she wasn’t saying they were fine long-term, just for the near-term.
So, they know they have to change the core at some point, but the question is when? Equally, how come Scott is saying it’s not an issue when his boss, Alistair, says it is. Maybe the commentary on Ms Weatherston’s departure says it all:
I believe Australia’s banking IT sector will view Weatherston’s tenure at ANZ Bank as something of a mixed bag.
There is no doubt that the executive is a top-class global chief information officer. Weatherston’s visionary speech to a lunch of the Committee for the Economic Development of Australia in October 2011 certainly highlighted that fact and how deeply the executive understands the rapidly changing global banking industry from a technological perspective. Then too, from all indications the CIO has been able to successfully keep ANZ’s technology operations delivering to support the bank’s ‘super-regional’ Asian strategy.
ANZ Bank has been innovative from customer-facing and IT service delivery perspectives during Weatherson’s tenure. The CIO has pushed the envelope and deserves credit for this.
However, one also suspects that the executive has not been able to achieve the cut-through at the bank’s highest levels that other CIOs such as CommBank’s Michael Harte (now at Barclays) or Suncorp’s Jeff Smith (now CIO, IBM) have plainly been able to. Alone amongst Australia’s top four banks, ANZ still lacks a core banking rejuvenation strategy, and at times Weatherston has been overshadowed by business executives such as Currie or deputy chief executive Graham Hodges.
Few could forget the briefing Hodges and Weatherston held in July 2011 which was supposed to outline the bank’s technology strategy, but ended up delivering only vague hints of its roadmap. The contrast between this event and the all-singing, all-dancing technology roadshows put on by Harte at CBA could not be more stark; and the rapid advancements of CBA’s technology capabilities (especially its real-time banking abilities) shows how the bank’s investments in IT are strongly paying off.
Hmmm. Seems to me that Scott is trying to paper over the cracks of the bank leadership teams’ lack of balls to fez up and deal with the issue. In Banking Technology, he is quoted as saying:
“The core bank platform and the product processors aren’t holding us back from doing anything … the only reason you would really change your core was if it was end of life from the vendor and you couldn’t get support any more; you couldn’t find people to work on it; it wouldn’t scale to the volumes that you needed or you couldn’t use it to integrate the rest of the platform and it would slow you down from rolling out new innovation.”
Westpac-owned St George Bank, Bank of Melbourne and BankSA suffered an internet banking outage last year, and when the systems went live again, a major data corruption was discovered in the mainframe database, forcing Westpac to shut ITS services down for most of the day. It uses Hogan. Another longstanding Hogan user in Australia, Suncorp, is on the replacement path too, and will also be using OBP instead of Hogan when the project is completed.
Equally, taking his statements one by one … You only need to change the core if:The core system is at the end of its life from the vendor and you couldn’t get support any more
CSC owns Hogan support dating back to its acquisition of Continuum in 1996 (Continuum had bought Hogan in 1995). CSC is very happy for its users to pay for the COBOL, JCL, CICS and other pre-internet-era personnel.They couldn’t find people to work on it
See last paragraph.It wouldn’t scale to the volumes that you needed or you couldn’t use it to integrate the rest of the platform and it would slow you down from rolling out new innovation.
Well it can scale, because it runs on big old IBM mainframes; it can integrate because CSC and IBM work with you to do that; and it doesn’t slow down innovation because you enjoy sticking lipstick on a 40-year old pig. They implemented this core system in 1976. Just to repeat:One of our main core banking systems turned 40 this week. [But] whilst it’s 40-years-old it works perfectly. Software doesn’t decay as long as you’ve got the right people in support.
Really? It doesn’t decay as long as you can find people who can still code COBOL, JCL, CICS and all that stuff, yes?
Let’s put this into perspective. 1976 was the year the following events happened:
- The Cray-1, the first commercially developed supercomputer, is released by Seymour Cray’s Cray Research.
- Apple Computer Company is formed by Steve Jobs and Steve Wozniak.
- Microsoft is officially registered with the Office of the Secretary of the State of New Mexico.
- The first commercial Concorde flight takes off.
- Harold Wilson resigns as prime minister of the United Kingdom.
- Ronald Reagan announces US senator Richard Schweiker as his vice presidential running mate.
- Frampton Comes Alive! by Peter Frampton is the best-selling album of the year.
- The Ramones and the Sex Pistols release their first albums.
- Bob Marley is shot dead.
- One Flew Over the Cuckoo’s Nest wins Best Film at the Oscars.
Oh, that last one sounds just for you Scott.
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– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Main photo: ANZ