An excerpt follows from an interview with Chief Architect Nitesh Varma, who operates an Enterprise/Solution Architecture consulting service, on the Chief Architect Forum Podcast. Varma, a member of the CAF, was interviewed by Brice Ominski, global chief technology officer at DeepDive World. The full interview can be heard here.
Nitesh, a seasoned banking professional with nearly 15 years of experience, delves into the challenges and innovations in core banking modernization. From legacy systems built on COBOL mainframes to the digital transformation of today’s banking sector, he shares his journey at the Royal Bank of Canada, where he played a pivotal role in integrating core banking systems with modern digital channels.
Question: Nitesh, you’ve had a lot of experience with core banking systems and online banking. Recently, you helped the Royal Bank of Canada modernize its system. How have core banking systems evolved in recent years?
Answer: Core banking represents the digital expansion of banking. I say that because many of these banking platforms were implemented in the 60s, 70s, and 80s. They all, pretty much without exception, work on COBOL mainframe technology. The challenge with today’s banking environment is that it used to be that the customer used to come to the bank. Now, the bank must travel to the customer through online, mobile, or partner channels. For example, you may be doing a “buy now, pay later” program with a fintech company, and the back end may be a large bank because the fintech company has outsourced the back end to a large bank. Then, they must integrate with core banking. So, the challenge with core banking and core banking, in general, is how to create that integration for digital channels, digital applications, partner applications, etc. and make it work seamlessly.
Question: I think I hear you saying that you’re extending a core banking system, which is kind of a legacy system. What are some of the challenges you faced in extending that? What did you do architecturally at the integration level?
Answer: We looked at multiple options when we started this journey with Royal Bank of Canada. We decided that to be able to service the digital channels, we had to productize the legacy platforms into digital products. That means that we had to extract the data out of core banking into a new platform, which is more geared toward servicing digital channels. So that was the first step. Once you extract the data out of the legacy into a new platform, the challenge is that you must keep the new product data product platform in sync with the legacy platform because the legacy platform is still serving all the different channels and all the different banking activities. You cannot shut those things down. But once you have this thing, you can start doing some things. For example, you can start exposing those data products to set up APIs or dimensionalize and stream that data, changing that data through Kafka or another event-sourcing model. Those were the two models we pursued, each of which had challenges.