Beyond Incremental Change: A Deep Rethink of IT Architecture in Finance

Jonas Brammertz
Feb 13
3 min read

Despite significant investment in technology within the financial sector, challenges persist without notable improvement. Brute-force reconciliation and technical debt continue, even after decades of massive spending on both “run the bank” and “change the bank” initiatives. Fintech developed flashy interfaces and payment innovations but produced thin core systems useless for critical financial applications. Financial analysis and risk management are at best an afterthought for Fintech, and regulators continue to fly blind.

How we got into this mess

The disorder in financial systems began with the arrival of computers, which were among the first tools applied in the industry. Initially, these computer applications streamlined current account management and ensured error-free double-entry bookkeeping, resulting in significantly lower costs and improved efficiency. As time passed, additional systems were introduced for both transaction processing and analytics, all of which required integration. This ongoing addition ultimately led to an unsustainable and complex architecture.

Consultants and technology vendors responded by recommending data warehouses to streamline the interfaces between transactional and analytic systems within financial institutions. However, this approach resulted in the loss of cash flow logic. Analytic platforms began reconstructing these flows using only initial-state data and proprietary algorithms, different from the underlying transaction systems. Fundamentally, the core issue in IT architecture in finance is the separation of data and financial logic.

The dire situation of the industry is illustrated by the evolution of its terminology from “data warehouse” to “data marts,” and eventually to “data lakes,” underscoring the futility of the current approach.

How to get out

The solution is to re-architect and re-think the financial sector bottom up from first principles. The primary function of financial institutions is to create, service, trade, and analyze financial contracts. Financial contracts define an exchange of payments, or cash-flows, over time. The rules which define the sequence of payments can be represented by well-defined algorithms.

The missing link of finance is a standard that represents financial contracts not only from a data perspective but also from a cash-flow generation perspective. The algorithms that describe the exchange of cash-flows in a financial contract must and can be standardized.

The open-source ACTUS financial standard defined and standardized these patterns as algorithms and makes them available in a reference Java code and understandable by all participants. With ACTUS, it is possible to define financial contracts as native digital financial assets or smart financial contracts since numbers and algorithms can truly reside in computers.

Watch the Video here.

About Ariadne Solutions:

AnalytX: A unified analytics architecture for finance and risk—spanning basic accounting through advanced financial simulation. Financial analysis and risk for treasury, finance, and risk functions, AnalytX delivers unmatched clarity, simplicity, and consistency, resolving long-standing challenges of traditional data warehouses enabling liquidity planning, budgeting, ILAAP, ICAAP, IRRBB, LCR, etc.

SolitX: A modular, consistent, and extendable product engine for any financial product—from savings and loans to bonds, swaps, futures, options, etc. Built with RESTful APIs and cloud-native architecture, SolitX enables configuration of any financial instrument without a software change and accelerates product launches from months or years down to weeks.

Beyond Incremental Change: A Deep Rethink of IT Architecture in Finance

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