Can Banks Stay Agile Despite Legacy?
The word ‘legacy’ was first used in the 1970s. Today, decades later, as we witness the rise of AI, machine learning, bots and open APIs, the problem of legacy still remains relevant. This manifests into two major problems for financial institutions- technical debt and manual work.
It is so because legacy systems are often tied to a specific version of the software, hardware, or operating system. This technical debt hinders the ability of processes to remain flexible and evolve with new age technologies.
Further, legacy systems often require manual intervention at multiple steps. This manual work can easily be avoided with automation. Moreover, when developers and administrators don’t have to struggle with mundane manual tasks, they can use their creative intelligence for innovation.
How Legacy Systems Impact Business and Customer Experience
If we consider the case of lending, the application process remains opaque to those who apply, making it difficult for customers to check the progress of an application or for the bank to provide updates through online or mobile channels. Customers struggle to find and select the product that incorporates the appropriate features suited to their needs without speaking with a bank agent. This prevents holistic view of the customer, which is imperative for customer satisfaction in today’s competitive market.
However, even when banks wish to integrate with legacy systems to overcome such challenges, they face several hurdles. To integrate with their legacy systems, banks can either replace their core (i.e. legacy system) or add a solution that is flexible enough to cater to current & future demands. However, the former requires banks to heavily invest in terms of cost and time and, simultaneously, take a huge risk.
Agility despite Legacy
BPM based solutions are highly flexible and provide a modular approach to systems integration. They provide flexibility to add and remove components, allowing you to see which configurations work better. It allows usage of the data extracted from the legacy systems to trigger workflows and tasks, automating processes such as emails, notifications, alerts, and reports and so on.
Further, BPM integration with legacy systems has a profound impact on a bank's business strategy and has significant incentives. The integration instantaneously places banks in a position where they can take full advantage of the opportunities offered by digitization. The legacy system still remains a part of the infrastructure. It offers the business the requisite agility to respond to market changes faster with quicker access to information residing in core systems. This not only keeps banks future-ready, but also offers a faster time-to-market.
Making a Business Case for Legacy System Modernization
In order to actualize the above mentioned scenario, you will have to put forward a strong business case. Building a case for legacy system modernization depends primarily on losses due to loss of time and revenue. Whereas the benefits gained lead to reduction in repetitive tasks, operational costs, human hours spent, and erroneous processing. Moreover, the agility gained should be a coveted property in this rapidly evolving technology landscape.
Senior Vice President (Sales & Marketing / Products) Newgen Software