The mere mention of technical debt causes fear in boardrooms across the globe. Why? Because technical debt costs money and a significant dedication of time to resolve. Sometimes technical debt is the result of a strategic decision, but most often it accumulates because of poorly defined architecture or where instant gratification outweighed doing things right the first time, or resolving problems as soon as they are found. You can read more about strategies for solving for technical debt by modernizing legacy applications.
Now, Sub Saharan Africa’s Banking Industry is facing a rapidly growing backlog of technical debt that has been accumulating for years. Worse, instead of resolving it, the latest Gartner report from July 10, 2020 indicates that over 70% of banks across Africa are still choosing Commercial Off the Shelf (COTS) solutions. Consider a bank that buys a Core Banking Solution (CBS) Software. Out of the box, it provides the bank with an ability to create accounts for account holders, connect to systems, audit, security, and provides a basic interface for the customer to access their account digitally. This pleases the bank because it gets them open for business quickly, and revenue flowing.
Now consider two years later when that bank has done well and has outgrown the infrastructure, databases and software they were using before. Growth requires a new module to be bought and added to help ease the load. Some software gets maintained well with frequent updates, patches, and added features; some doesn’t. Some software companies don’t survive or are bought out. At some point, the software starts showing its age. Every modification, every change, every update, every patch to an existing bank COTS system has to account for overlapping software generations on top of overlapping hardware generations, and typically all by separate manufacturers. This problem doesn’t go away on its own; this problem doesn’t get better with age.
Technical debt is not unique to Africa, not unique to the banking industry, and certainly not unique to software in general. The reason this is such an issue for Sub-Saharan Africa is because of the path that the banking system chose over the last decade. In 2017, over 90% of banks in the country chose off the shelf core banking solution software as their primary architecture. Today Fintechs are disrupting the banking industry with faster, nimbler, and more modern solutions; Techolution has already seen this happening in Mauritius, where Fintechs serve international clients. Now, banks have to keep up to compete, so they’re trying to add more, too. And finally we cannot help but see the quagmire: Fintechs that are starting from scratch have a definite advantage. Banks have to spend more to compete with: a blank canvas.
Techolution brings a different approach: purpose built solutions that are designed around a real-time, event-driven digital architecture. This is known as the Leapfrog Transformation, because instead of spending time, money, resources, and a considerable amount of frustration trying to make the legacy architecture work by updating a piece at a time, we instead start with a clean slate and define which existing systems are really still needed. Meet with the Techolution team to find out why the 30% of banks that are choosing event-driven architecture are out-performing the competition and why more and more banks are choosing this path.
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