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Top2. Reasons Of Conversion
Managing financial systems requires to act quickly and decisively to improve the efficiency and effectiveness of the finance functions. The aim is to align the finance function with the company’s strategy to manage through the expected recovery by creating a more flexible, cost efficient finance organization. Many finance organizations are comprised of inefficient, manually intensive processes, disparate systems and data structures that are not integrated. These organizations need to renew their systems and perform conversion process (Limberg, 2013).
In financial industry, the main reasons for conversion of the systems are developing technology, flexibility to meet the new requirements and survive in the market. Moreover performance and scalability issues and maintenance cost are also crucial reasons of transformation.
A survey done in USA shows the numbers of the firms changed their banking infrastructures. The Figure 1 indicated that only in this country in three years about 1100 banks transformed their infrastructure (Crossman, 2011).
Figure 1. The number of firms in the USA changed the banking infrastructure (Adapted from Aite Group)
Although there are several crucial reasons for conversion of financial system, there is high risk in this operation, especially in large size companies. To transform core banking system is like open heart surgery for banks (Shimeall, 2002). To minimize the risk testing strategy should be define clearly and it should align with business strategy and objectives.