04 Jan Why Are Banks Engaging in Application Modernization?
Your bank may offer an attractive mobile app for your smartphone but it can be guaranteed that in most cases a major part of its critical IT infrastructure might be built on technology that is on an average about 15 – 20 years old. These old core bank systems are often difficult to manage and expose banks to cyber security risks since they are usually difficult to patch.
According to the 2018 Retail Banking Trends and Predictions, published by the Digital Banking Report, enhancing customer experience has been the number one priority for financial institutions for the last three years.Many financial services organisations understand they must modernize their digital strategy to remain competent in the market.
Path to modernization
Nearly 80% of bank operations leaders say their organization’s existence could be threatened if they don’t update technology to be more flexible and capable of supporting rapid innovation.
But when banks think about how to bring their legacy systems into the digital era, their initial assumption is a complete overhaul of their older systems. The reality of doing that is very different owing to cost pressures and IT budgets being under close scrutiny.
Emerging technologies have the ability to transform how organizations use and interpret data, equipping them with greater and more powerful insights. That being said bringing IT systems into a digital ready model is an iterative process that occurs over a multi-year transformation journey.There isn’t a one-size-fits-all solution, the key is creating flexibility to add new digital layers, which supplement business functionality and support growth.
The need for improved, real-time insight and the distribution of this insight directly to consumer devices is bringing the back office to the forefront of banking.With intuitive, transparent, and secure processes and systems, the back office will run like a customer experience front office.
In order to successfully lead the organisation’s systems into a path of modernization, adopting micro-services architecture pattern is key. Instead of building a single application, the idea is to split applications into sets of smaller, interconnected services. These micro-services makes applications easier to build, scale, test and maintain.
The good news is that there are multiple approaches to modernize legacy IT systems in banks. And with many possibilities for approaches and architectures, modernization efforts for legacy platforms can create new service-based technology to fill banking needs.
Here’s a quick look into how IT modernization can enable substantial digital transformation in banking systems