Legacy technology problematic for financial services
Too many major financial services companies are running legacy technology systems, according to new research from the Simcorp Strategy Lab, a research institution sponsored by major technology provider Simcorp.
According to the research report released late last week, one in four "buy side" firms run core business operations on legacy systems.
"Given that the top 2000 firms collectively manage upwards of US$80 trillion in assets, more than the 2012 global gross domestic product (GDP), trillions of dollars are at the mercy of outdated technology," the report analysis said.
The study defined legacy systems as those that had difficulty providing a real-time consolidated overview of positions and holdings; often run outdated, poorly documented or obscure technologies; are infrequently updated and have difficulty in automating or adapting to business processes.
Commenting on the report findings, SimCorp Strategy Lab president and professor at the Stern School of Business at New York University, Ingo Walter, said the financial crisis of 2008 had been attributed in large part to opaque instruments, toxic mortgages and the breakdown in corporate governance — but there had been a lack of insight into the role that technology systems played.
"Neither has there been an analysis as to why some firms were better able than others to understand their counter-party exposure and mitigate the losses resulting from the collapse of Lehman Brothers and Bear Sterns," he said.
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