Pacing ahead to conquer the next-gen technology & drive business growth
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Legacy Systems have been at the heart of banking architecture for ages. Even while many banks have embraced modern applications and tools, it’s the legacy systems that have underpinned their core business. A survey has revealed that only 17% of banks have succeeded in the digital transformation at scale. However, it’s about time for banks to incorporate true digital transformation and get ready for the future.
Legacy system challenges
As the name suggests, typical legacy systems are usually archaic and outdated, making it difficult to integrate them with other modern solutions and data sets. They are difficult to manage, as updating them can be cumbersome and challenging.
Yet, or the many banks using them, the legacy systems are part of their critical workflow. As banks are averse to any form of disruption to their vital operations, they are reluctant to carry out a major overhaul that can risk damage to their core platform. According to a 2019 survey conducted by Censuswide, “43% of the people expect to open an account instantly, but only 37% of traditional banks offer this service.” However, several market forces like digital disruptions and customer expectations are forcing banks to modernize their legacy systems.
Business heads at one of the top IT companies have acknowledged that the ongoing pandemic has accelerated the shift to digital payments. In India alone, 66.6 billion transactions worth USD 270.7 billion are expected to shift from cash to cards and digital payments by 2023 – and increase to USD 856.6 billion by 2030. This clearly shows that banks in India are facing an urgency like never before to modernize their systems.
Transformation is now an obligation
To take advantage of the new digital technologies and modern management approaches, it has now become important for banks to invest in modernization initiatives. Any further delays could expose them to additional risk and liability. The recent advances in banking and financial solutions in terms of technology now provide banks with more options for renovation. The innovations in data architecture and application management approaches have also made the transformation much less daunting. As per a report, 75% of banks believe that open banking will attract a lot of new investment, and 50% of them are open to co-innovate with third-party players as an innovation.
Advantages of Modernization
Moreover, modernizing the legacy system can help the banking industry become more agile, robust, and secure. These advantages can be converted into an enhanced experience for the customers that are sure to drive growth and profitability. Some of the major benefits include:
Uninterrupted Data flow : Cascading data between modern SaaS solutions and the cloud is easier and more seamless
Hassle-free Maintenance : The modern hardware infrastructure is much easy to manage and scale
Seamless Integration : The modern software is open for quick integration with leading-edge APIs and cloud-based solutions
Improved Security : The contemporary security architecture is more robust and secureThe contemporary security architecture is more robust and secure
Operational Flexibility : The ability to scale up quickly and embrace innovative features guides the digital transition
Making it happen
CTO of another major IT firm had earlier mentioned that in the banking environment, the approach to modernization of application usually varies based on the commercial-off-the-shelf attributes as well as the digital and business drivers for the organization.
In essence, the core and app modernization is a shift in the IT model from the on-premises system to cloud-based and related innovative tech solutions. It also means a departure from a complex and rule-based approach toward simplified configuration like Self-service Analytics framework and Data Lake architecture. The following are some of the upgrading opportunities and their benefits:
Big Data : Modernization starts with integrating the silos that emerge from disparate systems within an organization. By eliminating the barriers, it can allow banks channelize vast amounts of Big Data from various new sources to help support the business decisions.
Digital solutions : With the current scenario pressing for accelerated digital adoption, innovative cloud-based and AI-driven solutions can augment traditional business continuity. AI tools can also be used to optimize remote call management, which will subsequently address the gaps in staffing and operations.
Predictive Analytics : The AI-based monitoring and assessment, coupled with digital workouts for loan restructuring, can help banks to manage asset quality deterioration and risks in a better way. AI and Machine Learning can proactively predict the main reasons for surging customer grievances and help address the issues through critical insights.
Cyber security : By upgrading to cloud-based solutions, banks can re-calibrate their digital initiatives by driving innovations amidst the highly regulated and stringent security requirements.
Moving towards these leading-edge solutions in Analytics, Business transformation, and Infra modernization is the key to update the legacy banking systems. Tech experts like NSEIT and others have been enabling the digital transformation journey of the BFSI sector in India by delivering mission-critical infrastructure, scalable solutions, and innovative delivery models to optimize customer engagement. By embracing these modernization initiatives resourcefully, banks in India can build robust and scalable solutions that will make them future-ready.
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