The task of replacing entire core solutions in one go is daunting, particularly if there is a large data migration at the end of it. Typically, core systems have hundreds of integration points, service multiple channels, and feed many downstream systems. When transforming, wouldn’t it be easier and less risky to digitise solution components gradually and over time?
Maybe just pause on what’s the risk we’re trying to manage here is with a large transformation, although it’s led from a business outcome and strategy perspective, there’s a real risk that because you don’t endure the program timeline, you end up with more than one of what you started with. And componentization is a manner in which you can minimize that risk. So componentization, without a doubt, is an opportunity for an organization to step back away from a major technology change to enable the business outcome and start piecemeal. Lean out that account engine or that core banking platform to become an accounting engine that is simply posting the debits and the credits and raising interest and move out capabilities such as pricing, statement generation, payments, etc, out of the technology over time. And it allows an organization to potentially pause during that journey without creating any technology complexity. The question probably you would want to ask and answer before you went down a componentisation journey is does my core banking engine give me time to do that? The engine itself runs on an operating system and on a database which needs support, needs to be secure, needs to be able of managing the business for the next period. Otherwise, you end up in a situation where you’ve started to lean out and you realise now I’ve actually got to deal with my core because it’s gone out of support, it’s unsecure, exposed to fraud actions etc. So, a couple of decisions to make before you go down that journey as well.
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