Banking system compliance and complexity set to test mainframe mettle

By Graham Opie | 12 June 2014

What happens when the lights go out in Britain? No, not a shock election result or an energy brown out, but a financial system error that causes a catastrophic wave of bank outages.

Bank service disruption can be triggered by innocuous incidents that can escalate, causing wider outages that quickly damage high street brands. Let’s take as our example the Heartbleed bug – attributed to one programmer’s mistake – that has heightened security risks from transactional websites.

Could constant demands on banking IT teams to plug system maintenance gaps, not to mention the many compliance updates driven by regulatory changes, be creating unsustainable workloads? Could this ultimately compromise the smooth performance of the long-established and trusted mainframe systems that control all banks’ core data and applications?

We recently undertook a study of this area for Micro Focus, which examined the state of mainframe system and operations maintenance in nine countries’ financial sector. The UK findings, from interviews with 116 CIOs and senior IT managers, suggest that our banks’ technology teams regard risk as a top priority, but are all too aware of the many daily pressures on them.

Mainframe longevity

Around since the 1960s, the mainframe lives on within the very foundations of UK banking technology systems, even in the online age – and our research bears this out.

Asked for how much longer their organisation will be reliant on mainframe applications, the majority said five to 10 years while nearly one third (30%) believed that they will be needed for between 10 and 20 years.

The research highlights a continued reliance on the value and resilience of the mainframe environment and its continued reliability in years to come. However, as with any mature technology, there is growing concern in the banking industry about how to maintain and modernise such technologies to keep up with business demands for new and innovative services.

One growing concern amongst senior IT leaders in relation to mainframe application maintenance and updates is exposure to compliance and risk issues. A worrying 58% of our survey respondents confirmed their organisation is exposed. Containing risk does top almost every IT manager’s agenda though – 98% of CIOs say that it is becoming more important to demonstrate mainframe system resilience, with 91% believing this ability will only increase in the future. 

The programming skills conundrum

Our survey confirmed that banking industry corridors do indeed echo to the sound of baby boomers walking off to retirement.

Attracting new blood to the mainframe team can be problematic without the continued support of businesses and academic institutions in encouraging mixed programming skill sets. The overwhelming majority (91%) report some degree of difficulty finding IT workers with mainframe application skills. Clearly expert knowledge is not being replaced quickly enough.

A tough sell

Although the banking industry will be reliant on mainframe technology for some time, CIOs are finding that making the business case for beefing up mainframe development is a tough sell to the board given today’s tighter technology budgets. Over half (56%) of interviewees said it is difficult to convince internal stakeholders of the need to invest in mainframes.

The documentation challenge

The financial sector’s regulatory load, which has generated an ever-rising flood of compliance updates since 2008, is exacerbating the mainframe knowledge issue. Asked whether they think their organisation has lost knowledge of original applications and data, 46% of respondents said this scenario was very likely.

We also asked interviewees how robust their internal application documentation is to enable rapid compliance changes to mainframe applications; only 13% said they have complete information ready to hand whilst almost three-quarters (73%) thought their documentation is incomplete.

The shadow of the Cloud

In the face of these pressures, can banks’ IT teams harness mainframe system power to meet ever-expanding customer service needs in the world of apps and mobile?

When asked what percentage of their mainframe applications is currently accessible via Cloud and mobile devices, 41% of respondents said it’s no more than 25% and 18% said none at all. They expect this to improve imminently but also foresee a battle when seeking the investment and resources required to make those improvements.

A perfect storm?

Our survey shows that UK financial sector CIOs and IT managers face a raft of demands that challenge staff and their organisation’s overall exposure to risk. Though they expect Cloud and mobile apps to transform further the availability of mainframe-based applications, their IT team’s rising workload, with a backdrop of constrained resource pools, seems to be holding back the development of new applications. Sadly too, tight budgets are making it tough to win the business case for investing in mainframe capabilities in general.

The UK financial sector, affected by serious recent upheaval, is understandably committed to managing risk. But added recent complications – regulatory demand, heightened expectation and pressures to innovate – look set to make the coming decade one of the toughest test yet for its most tried and trusted mainframe systems.

 

By Graham Opie, Director at Vanson Bourne 

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