The traditional gap between the traditional banks and modern financial institutions is reduced, all thanks to the concept of digital transformation.
According to recent studies, over 40% of the surveyed decision-makers believe that the traditional financial enterprises will be entirely replaced by their online counterparts in the coming decade.
Now that nearly all fintech products and services are software technology-based, modern technologies such as Artificial Intelligence, Machine Learning, Cloud Computing, IoT (Internet of Things), and data analytics are the new regular legacy system.
FinTech enterprises and startups of every scale and size are looking forward to integrating such digital transformation solutions for growth and better results. So, If you are one of them, we’d say it’s crucial to understand “how to modernize legacy systems for your finance business” and what do you get out of legacy software modernization. But let’s start with the basics.
What is Legacy software modernization in FinTech?
In simple words, a legacy finance system is outdated software used by the employees for their day-to-day operations. Although it meets the essential requirements, the system cannot be aligned with modern needs due to the lack of modern technical support. The legacy software that runs on older technologies may be over-structured or rigid, hence, unable to sustain the finTech expansion in new markets.
This brings the need for legacy software modernization where the software products are integrated with the latest improvements.
The modern banking legacy software is well versed with the top three assets of the finance business- revenue generation, cost reduction, and risk management.
The most prominent feature of modernized legacy software is fulfilling the ever-increasing customer experience for digital services.
Now, why else do financial businesses prefer legacy software modernization? Below are the significant features of modern legacy software that are reshaping financial services.
Modernized legacy software products can:
- Streamline the complex operations while enhancing the customer experience and reducing the overall cost
- Adopt new technologies, save additional maintenance costs and benefit from the latest capabilities
- Operate efficiently in a dynamic and flexible manner
- Mitigate risk and avoid complications, along with improving security and compliance.
Another most important question is why should your finance business choose legacy software modernization? Well, our next point of discussion will clarify your doubts.
Aligning with the current financial market needs is not the only benefit a business gets out of implementing modernized legacy software systems. Let’s talk about more tangible reasons for upgrading your financial legacy system. Here is what your business gets when you use efficient legacy modernization.
Due to outdated software, financial institutions should not miss out on new business opportunities. Modernized software offers your business a range of accessibility to advanced digital products. For instance, a core software system compatible with modern APIs (Application Programming Interfaces) can be an opportunity to create your very own BaaS (Banking-as-a-Service).
This will also shift your customer’s perspective for your business from a product-oriented to a platform-oriented service.
Modern software systems are far more reliable with data management and assessment than traditional software. They ensure that no revenue is lost where it can be generated and boosted. Through effective data analysis, banks are now able to provide customized products and services for their customers.
Without an upgraded core system, it is relatively impossible to leverage advanced technologies such as RPA (Robotic process automation), data analytics, Blockchain, hot tech, etc. Modernization gives you the access to utilize these technologies for the best results.
Traditional legacy systems are more vulnerable to cybercrimes, data breaches, frauds, and other malicious attacks. By upgrading your core components, you are able to secure your software with current market compliance. This is also an advantage to prevent future risks that might harm your business.
Financial legacy software definitely asks for initial investments, but the cost of maintaining and upgrading these modernized products is significantly lower now that there are numerous cost-efficient approaches available.
All the above benefits ultimately result in monetary gains making the Fintech industry more secure and future-proof than ever. Although there are infinite solutions to integrate and upgrade modern software products, the industry experts recommend using the right approach.
Here’s how to modernize your financial legacy system.
How to modernize your legacy system: The process
Most processes boil down to hefty cloud-based solutions and application development. However, If you go with the technical experts’ guide, here are the three vital steps you must follow for modernizing your legacy system.
Here it would be best if you defined the areas where your existing legacy system is holding you back. Try answering the following questions to structure your findings.
- Is the software upgrade or development too complex?
- What are the business opportunities limits of the current legacy system?
- Are there any compromises with compliance or security?
Choose the option that suits your business best. You might need to consider several factors, such as the complexity and cost of the modernization, the code, and functionality of the software, features and development resources, etc.
Make sure you don’t miss out on efficient business processes.
Go for the most cutting-edge tech stack that ensures maximum compatibility and scalability for your financial business. Remember, even the most advanced solution can fail if not maintained post-implementation properly. Therefore choose a solution that easily adapts to the rapid evolution of fintech.
The modern legacy software system could be a complex and labor intensive process but the results are worth the risk. Hence, it’s time to modernize your core technologies and attain your digitally transformed macroeconomic scale. This concludes that the only way to maintain and scale your financial growth is to choose the modernization of legacy systems for your business. There are various digital transformation solutions available but make sure you seek reliable technical guidance before seeking such complex solutions. Now go ahead and play modern.