Banks face legacy IT skills gap crisis

Lorries still cart magnetic tape around the city after a hard day's banking. Even in this age of high speed networks, some institutions still insist on getting their data in this way.

Chris Dunn, business development manager at payments company Voca, said: "It sounds amazing but the settlement we give to the Bank of England is on physical media.

"The banks are keen to retire [tape] because it's not produced any more. We would much rather not heft these things around on tape."

And it's not just the tape that's old - banks continue to rely on technologies installed 30 years ago - but the number of IT workers with the skills to keep them running are declining.

Dunn said: "The biggest barrier is 'if it's working why should we get rid of it'. You've got to look at the cost and the reliability in the long term."

Voca is currently trying to move away from legacy systems with its Bacstel-IP programme. Dunn said the pressures of European markets pushed Voca to adopting a new model. The project is costing around £100m.

He added: "You have to have a really good reason to move. It's only when you get to the other side and you've managed the risk you can breathe a sigh of relief. These things are rarely cheap."

Analyst Forrester is seeing a trend in banks looking to move on from their legacy systems. It claims they are in the middle of a €100bn spend in a "race to renew their IT platforms" by 2010.

The analyst claims 69 per cent of European banks either have plans to update applications or are already doing so to dump outdated systems and change business strategies.

But one IT recruiter said demand for mainframe operators and support staff is as high as ever.

He said: "We've done loads of mainframe recruitment. The more specialised roles are where people are making the money. The development market is more buoyant but the support and maintenance staff are hard to find.

"It's mainly for banks and retailers because it's robust and they've worked with it for between 20 and 30 years. There is a reluctance to move out of that area until it's been tested."

And Bill Bentley, a managing consultant for Fujitsu Business, said that more legacy workers are retiring - making the remaining ones highly sought after.

He said: "The skills are dwindling so companies have to pay increasingly high contractor rates. If [firms] are running their business on technology that is getting harder to support that will drive a move."

Bentley said he didn't think university computer studies graduates are attracted to the idea of working on legacy equipment: "I suspect if you are an IT graduate you will be motivated by the creativity of new products rather than thinking of more money from working with older stuff. I'd guess the older people would have the monopoly on this stuff.

So as the creators of legacy leave the industry, firms are being forced to change - not to keep up with technology but perhaps to keep up with the skill set.

Bailey added: "People and technology - I don't think you can separate the two. There is also a people problem at IT management level. Mainframe and modern technology is very different. The whole industry is built around connecting the two."