Hello and welcome back to MoneyLive TV, great to have you with us. I'm Lindley Gooden and here we are to talk about purposeful coexistence in your journey to a digital core with Abhijit Bhattacharya and Travis as well. Great to have you with us. First of all, if you wouldn't mind introducing yourself and tell us who you are.
Well thank you Lindley, it's great to be with you. So I'm Travis Porter Walker, Chief Marketing Officer for Thought Machine. Thought Machine is a next generation core banking vendor founded in 2014 with many clients all over the world, many of them in production states and of course some of those in coexistence states with their cores.
Which is exactly, which is so relevant, we can't even go, we'll go into that straight away. Abhijit, just tell us who you are and what you do, that would be wonderful.
Abhijit Bhattacharya, you can call me AB, the name is long so it's at times difficult. I lead technology and engineering for Publicis Sapien. We are a consulting system integration organization.
So coexistence, coexistence, coexistence. Tell us about your joint report, the key themes first of all if you wouldn't mind Travis.
So look, I guess the key theme is that the principles of the past are not relevant for the future. So the principles of the past is that banks tended when moving from one core system to another core system to do what generally got described as a big bang migration. It wasn't really a big bang, lots and lots of preparation in advance of that in terms of many years of work and then a weekend cut over. And the problem with that is it's both risky, it's incredibly expensive and indeed new technology doesn't really turn its hand to that mindset anyway. Coexistence on the other hand, the principle of running two technology sets, two generation of technology sets side by side for a period of time and migrating in parts the body of customers and products from the past into future technology is what we're saying here. So the purposeful coexistence is effectively a narrative to consciously undertaking that program with multiple cores but with a target state of new core at the end state and the program of work that you have to wrap around that coexistence.
I think most of the good people of banking watching us today would say hurrah. It's long overdue, it's time. We've wanted this for a long time and actually many have been working towards that. But first of all tell us where you can get the report because I'm sure a lot of people would like to see it but also yeah just that answer to it's a long time coming. First of all where's the report?
Sure well in terms of where the report is so it's on the Thought Machine website, it's also on the Publicist Sapient website and in fact I think the good people who are putting this video together have got a QR code somewhere around us on the screen so just scan the QR code and you'll be able to get access. Long time coming, over needed. Yeah so look the report is effectively a bit of a roadmap if you like in terms of some of the activities that you need to undertake for successful coexistence. How do you do migration? What does the talent resource look like? What's your data strategies associated with coexistence? So yes in some respects long time overdue but more specifically actually getting the mindset and the state of preparedness for coexistence is effectively the narrative of the report.
Got you. Abhi great to have you with us. Look where are we with our legacy systems? I think you know coexistence depends on yes a solid core but a new type of core also. Just tell us where we are.
Yeah so typically in a bank, in the center of the bank would be a large monolithic core banking system. These were probably written 20 years back, maybe 30 years back. They do many many functions. They try to be bank in a box but don't do a good job of it because they have to integrate with thousands of systems. Each of these integrations most of the times are batch based and feed based which makes it very difficult to make any changes to that architecture. Very difficult to introduce new capabilities, new features, new products. What is now happening is these large core banking systems are getting disintegrated, decomposed into smaller functions and more lightweight you know smaller core banking systems like Thought Machine are coming into the picture. And these are very powerful in the way they do product definitions for example using programmatically or using code. I think the world, the banks are moving in that direction and we see a lot of that movement happening especially in the challenger banks but also in many many incumbents and large banks.
What for you are the benefits of coexistence and how do we get there in terms of the tech?
Without coexistence what traditionally when you say core modernization I want to modernize my core infrastructure. People used to move from one monolith to another monolith and that movement used to be a big bang movement. Overnight you would want to move and it's luck and hope which was your best bet at that point in time. The world's moved away from that. What is happening is you move in phases, you learn, you do small movements, you see whether it worked fine, then you move more. So coexistence is a reality, it's a way to manage risk and the technology is enabling us to do that. Technology is at the API layer, technology about integrating data and data streaming, real-time reconciliation. These technologies allows you to do that which were not there 20 years back.
So what does the new type of core look like? I mean we can imagine what it looks like, we talk about it a lot, what you need to be nimble, what you need to have a platform approach to things. But of course legacy is by very nature of what we do, you need to have that core infrastructure. But what will it look like? How beyond legacy, beyond this monolith will we get?
So beyond monolith we do see modern core coming in, thought machines coming in. We do see coexistence happening as well. You won't believe there are still banks which are running past books. You have to go to the branch to get your past books stamped every month or so. I received a check the other day, can you believe it? So there will be, I think there will be some products which will not migrate to the new. May not make sense to migrate to the new because it may be more expensive to migrate to the new. Maybe keep it in the old and run it and let it die its own due course of time. So some of that coexistence is going to reality. However, if you can move, move quickly as soon as you can, get rid of the old legacy, reduce your cost of operations and focus on new technology.
Travis, how can we start to move away from thinking of this as a huge footnote or something that I'd rather not think about until later? The migration is so fundamentally important. Coexistence for now, migration to something new. How do we start to change the mindset on that one?
Yes, so just building on some of the points that Avi has said there. So one of the key aspects is that in the previous programs of work, you kind of needed to know everything at the point that you did the migration. And actually you don't need to know everything. You can build out programs that develop over time, both in terms of the skill sets of the individuals, both in terms of redesigning the operating model for the bank and identifying which books of business you're moving in what sequence. You don't necessarily have to have mapped all of that at the beginning of the program or through the program itself. Effectively, learn, change direction, develop as you're going through that coexistence program. It could be that you want to build a new front book product offering. That's fine. That's perfectly credible. That's a way of putting your new technology stack in. It could be that you want to move a geo or a specific book of business or a specific regulated environment or a specific technology type from one of your cores across to the new core. The kind of the manner or the sequence in which you do things will be unique to each bank. But don't try and map everything, every decision and every operating model up front. That's too complex. That's the previous kind of mindset. The new mindset is be agile and develop and deploy as you go along.
And transitioning to cloud, you know, it enables you to be that nimble, more responsive. You can start to plug in, take away, start to be much more flexible in your approach to banking. It's a relief.
I mean, it's certainly true that cloud infrastructure and cloud native technologies are more adaptable. They're quicker to deploy. They're more flexible technology types. And then particularly, I guess, when you talk to, you know, thought machine and volt core, you look at how the product manufacturing is undertaken. You were talking earlier in terms of how we do that using smart contracts that allows the bank to manufacture new products very quickly, either in finite replication of their previous products or completely new products in the market. But the flexibility and speed at which that can be done now is a paramount change to the past.
Just one thing from you, Abhi, as well. How do you feel about that? What's your take on cloud and its significance? How important it is to go to that type of system core in the future?
Cloud is a huge enabler for this because it scales as you want. You can move things around quickly. You learn. I mean, your procurement cycles are minutes, not months, right? So you make a mistake, you can change. But let me highlight one more thing. Cloud is just one of the enablers, right? A lot has happened in technology. You know, the whole APIs, the open standards around it, this whole notion of event and event driven architecture, the ability to stream