By Scott Underwood, Head of Solutions Consulting at Niu Solutions
12th April 2016
One of the biggest challenges for financial institutions today is the need to operate using IT legacy systems. Unable to replace them with a more up-to-date solution due to the sheer volume of critical data that they hold, traditional banks are forced to combine them with the latest applications and software to compete with their digitally-focused counterparts.
Many financial institutions also suffer from a distinct lack of knowledge about the software they have been using with these legacy systems, sometimes for decades. More often than not, the training courses designed to teach professionals how to use the technology, install upgrades and resolve any technical issues have long been discontinued due to the systems no longer being actively sold. With many of the IT professionals who are experienced in the fundamentals now retired, and a new generation of talent who are unfamiliar with the technology taking their place, we face a critical skills gap.
The repercussions for a bank’s customers can be serious if a legacy system fails and causes a disruption to its services. If consumers can’t access their funds when they need them, they could be late paying their bills, even defaulting on a mortgage payment, which could have a negative impact on an individual’s credit rating.
Many banks fear making changes to their systems as they worry that any delays in implementation or system errors will impact on the customer journey. We only have to look at the latest news headlines for affirmation that any disruption due to a legacy system failure could cause serious damage to the reputation of the bank and have a significant impact on brand loyalty.
However, completely replacing a legacy system with a single new system just isn’t an option for many banks, in part due to the sheer quantity and quality of critical data that it stores. The banks must therefore take a proactive approach, rather than waiting until the legacy system causes issues at a later stage and the damage is harder to rectify.
By adopting a bespoke solution which can be customised to suit the business’ individual needs, financial institutions can integrate legacy applications with the next generation of cloud and mobile technology at rapid speed and on a budget. Financial institutions who are able to successfully combine legacy with next generation applications will gain a significant market advantage.
We are reaching a tipping point where challenger banks which have been established without the encumbrance of legacy systems, have the flexibility to solely use digital platforms including cloud-based platforms and mobile technology. These new players are putting pressure on traditional banks to look at new ways of adapting to a changing market. Financial institutions needn’t be hindered by their legacy systems, and instead can bridge the gap between legacy and next generation applications to support the business, and allow it to thrive in an increasingly digitally focused world.