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To compete in the digital age, banks and financial institutions need to become customer- centric, with processes driven by data and powered by open and agile systems.
46% of bankers see the legacy systems as the biggest barriers to the growth of commercial banks.
Everywhere you turn digital innovations are disrupting the marketplace, leaving the legacy systems in banking behind. Today, customers’ expectations and demands from banks have grown multifold and they demand the same kinds of features and services they routinely receive from companies on the leading edge of digital innovation.
It might come as a surprise, but a large number of banks that were started back in the 1970s or even 1980s relied on a few obsolete technologies within their core banking processes. But with time, and the evolving market scenario, the need for digital solutions and agile software architecture has replaced traditional systems. There is constant development in the technology space, and today we have Artificial Intelligence, Machine Learning, Data Analytics, Connected devices, Open APIs morphing into the mainstream business processes.
Since the legacy systems are unable to support the rising expectations and there is a visible slump in revenue, banks and other financial institutions are looking to modernize their systems. The traditional legacy systems also weigh heavily on the overall operational cost and maintenance, combined with the dearth of experts who can resolve issues arising within them.
The first two orders of business for banks looking to make sweeping changes, according to Deloitte’s 2019 Banking and Capital Markets Outlook, are updates to their digital capabilities and modernization of legacy systems. These two categories alone make up 51% of banks’ focus in the coming year.
Challenge areas for banks
We are in an era when the need of the hour is speed to market, constant innovation, and business growth. Modernising the legacy core banking systems becomes even more critical, as it could help businesses stay ahead of the game and achieve business goals. The main reason for modernising legacy systems are;
Modernising Legacy Systems:
In the study Financial Services Technology 2020 and Beyond: Embracing Disruption, PWC has shared that there are a few elements that banks & financial institutions should adopt as quickly as possible. One of which is core banking modernization, followed by use of modern software architecture. Banks need to upgrade their systems to meet the digital standards of the market, adapt to change swiftly and achieve reduction in costs among others. by simplifying legacy systems.
The major benefits of modernising legacy systems are,
Digital Edge: Modernisation of the legacy systems allows end to end support of all digital features and capabilities that the bank adopts.
Smarter Use of Resources: There is visible reduction in dependency on expensive and scarce legacy specialists. The low code digital solutions also offer a better tech environment for the younger developers.
Better Service: Improved service levels, product innovation and enhanced customer satisfaction.
Lesser Risk: With modernisation, banks are assured of complete adherence to regulatory compliance and therefore experience lower internal controls risk element.
Improved Efficiency and Lower costs: There is a drop in service delivery costs from early stages of modernisation. There is also optimization of resources, improved productivity and efficiency. Modernization also gives banks the opportunity to shift from a “customize” to a “configure” deployment model that helps with reducing investments.
Data and Business Growth: By adopting data analytics and advanced automation, including cognitive automation & RPA, banks can open doors for new business opportunities with their customers. The process also improves the process cycle time and launch of new applications.
Dynamic and Flexibility: Adopting cloud-based solutions will enable banks to achieve flexibility.
We all know banks face a wide variety of challenges – across regulations, rising customer expectations and changing competition, to name a few. But then, there are advanced technologies available to address these challenges.
Modernization of the core banking systems is where the transformation journey begins. Banks need to redefine their strategy going forward and look towards a software architecture that will ease development and deployment of digital solutions, and provide a flexible and dynamic environment.
With an array of solutions designed exclusively for the BFSI sector, Neutrinos has helped enterprises with their legacy modernization efforts. For one of our clients (a leading insurance company), policy sales took 20 minutes per policy, and their system was not user friendly. We helped them with their legacy modernization which took just 6 months to go live, and today, sales on the new platform takes just 8 minutes! Other benefits include:
1. Built in microservices to enhance performance
2. User friendly UI that enables faster sales and easy navigation
3. Reduced total cost of ownership [TCO]
4. Better agent coverage and productivity
To understand how to modernize existing legacy systems and transform your banking business, reach out to us now