Part 3: Historic Approaches to Transformation

Martin Walker

Since the mid-1990s, banks and other major financial institutions have been trying to radically transform their trading infrastructure by pursuing a small number of interrelated strategies (see Figure P3). Some of these strategies are architectural blueprints such as “functionalisation” and “component-based architecture”. Others would be better described as approaches to change, and include “front-to-back re-engineering” and “simplification”.

Figure P3

Every major bank has tried most of these (sometimes under different names) approaches at various times. Although a great deal of money has been spent, easily running into the billions of dollars, results have been (to put it politely) mixed. Typically, the bigger and more ambitious the programme, the smaller the return on the investment. Some programmes have not just failed to show a return, but probably damaged the overall infrastructure. However, no approach has failed consistently. In at least some banks (generally on a smaller scale), most have “worked” to some extent. This means it is worth looking at each of these approaches in turn to understand the costs, benefits and barriers to successful execution.

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