Don’t overlook the biggest technology in FinTech

Guest blog by Chris Davis, Managing Director, Kyndryl Ireland.

techUK’s recent FinTech Campaign Week featured many vital insights into how banks and financial services businesses are navigating the choppy waters of technological change, from meeting new security and anti-money laundering expectations to exploiting the potential of generative AI and digital assets.

However, looking through those insights I noticed that not one of the articles included mentioned mainframe technology. In a way, this is both predictable and very surprising.

On the one hand, financial institutions (like other major organisations) often tend to frame transformation in terms of racing towards a technology-defined finish line – and in that context, the mainframe can easily feel like a marker of the past, not the future.

On the other hand, these are businesses that have spent many years, and in some cases half a century, investing in the mainframe platform which still powers many critical processes – as a result, can we properly discuss FinTech without discussing one of the biggest technologies in finance?

Indeed, research carried out by Kyndryl last year surveying 500 enterprises, including many financial services organisations, found that 90% respondents continue to see mainframes as essential to operations. The wealth of valuable data they hold, their capacity for highly optimised batch processing, and the depth of control and security they offer over sensitive workflows all mean that the mainframe continues to deliver irreplaceable value.

Four keys for better mainframe outcomes

The task, I think, is to redefine the modernisation journey, not as a move towards a particular set of technologies, but as a move towards a particular set of capabilities. With this in mind, we can better see how mainframe modernisation can be an important route towards goals like business agility, efficiency, and innovation.

The first thing this mindset reveals is the power of a hybrid approach: if we focus on defining the right platform for the right workload, we can start to weigh up where the cloud really enables us to succeed with its capacity for scalability and shorter time-to-market, and where it might in fact risk overspend and underperformance for regular, mission-critical workloads.

Second, it helps us see the data already held in mainframes as a resource for today, not something that needs to be transported and digested before we can start to leverage it. The option of exposing data and applications through APIs – using tools like IBM z/OS Connect, Amazon API Gateway, Google Apigee, or Azure Logic App Connectors – is severely underdiscussed as a way of standing up new capabilities on the back of existing mainframe technology.

Third, it highlights an important workforce development investment challenge which all financial services organisations will need to grapple with to stay competitive in the longer term. Developers entering the workforce today, armed with strong qualifications in Java, Python, and frameworks like Spring, may not be equipped to handle languages and technologies which are endemic to the mainframe like COBOL and CICS. Facilitating skill-building for them will enable businesses to bring contemporary approaches to the mainframe, to both bridge between it and the cloud and innovate on the mainframe itself through enhanced compiler and runtime technologies.

Finally, it reminds us that transformation is a progressive journey, not something we can chart and act on in one discrete, time-bound project. The right platform for a workload today, after all, might not be the right platform tomorrow, and tomorrow’s key workloads might not be what is on our radar today. If agility is one of our key goals in making technology investments, it follows that we should expect a process of constant re-evaluation in which we are consistently learning what new technologies can do for us – and what new things we can do with the technology we already have.

Fit-for-purpose modernisation

Underneath all of this, of course, sits a course-correction in how the organisation more broadly regards the mainframe. ‘FinTech’, as a term of art, is a relatively recent phenomenon; financial technology itself has a much longer history. Modernisation is essential in today’s financial services reality, but it will be most successful when we consciously recognise where we are coming from and carry forward the enormous value that remains embedded in this hugely significant and successful technology.

By being just a little celebratory of what mainframes have delivered over the past six decades, we might see our way towards recognising more fully where we are in FinTech and building a more successful, outcomes-driven strategy for the hybrid future.

Andy Thornley

Head of Financial Services, techUK

Andy joined techUK in August 2022 as Head of Programme – Financial Services. His role includes leading techUK’s work in building a greater understanding of the 'technological art of the possible' in order to apply it to the reform and evolution of financial systems.

Before joining techUK, Andy worked for a number of other bodies in the financial services sector, including the British Insurance Brokers’ Association, where in addition to owning policy and public affairs, he was also responsible for fostering InsurTech in the sector.

Andy has a degree in Human Biology and holds a Certificate in Insurance (Cert CII) qualification from the Chartered Insurance Institute. Outside of work, Andy is an avid cyclist and races competitively both on the road as well as the velodrome.

Email:: [email protected]
Twitter:: @AndrewThornley
LinkedIn:: https://www.linkedin.com/in/mr-andy-thornley/

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Ella Gago-Brookes

Team Assistant, Markets, techUK

Ella joined techUK in November 2023 as a Markets Team Assistant, supporting the Justice and Emergency Services, Central Government and Financial Services Programmes.

Before joining the team, she was working at the Magistrates' Courts in legal administration and graduated from the University of Liverpool in 2022. Ella attained an undergraduate degree in History and Politics, and a master's degree in International Relations and Security Studies, with a particular interest in studying asylum rights and gendered violence.

In her spare time she enjoys going to the gym, watching true crime documentaries, travelling, and making her best attempts to become a better cook.