applications , the actual transactional records of deposits and loans are often being handled by systems running COBOL – similarly to systems in the 1970s – then followed by decades of arcane patchwork fixes over the years .

What ’ s being lost by not modernising ?

These systems still work . They are often resilient and reliable in narrow contexts . So why modernise at all ?

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Modernising legacy banking systems is a challenge facing almost every segment of the banking industry .

Stable legacy systems do what they were created for but were never designed for the types of digital and data demands found within today ’ s market .

However , moving from legacy systems to a modern cloud platform is a challenging process with significant costs and risks involved . Any attempt to transition thoughtfully will involve mitigating as much risk as possible . In this article , we will lay out a strategy to accelerate the process while reducing risk during migration .

Why are legacy banking systems so entrenched ?

A legacy system refers to outdated hardware and / or software systems still in use because they are still able to fulfill their intended purpose but cannot be updated with modern technology advancements nor be easily upgraded or integrated with newer systems . In the case of banks , if you peek underneath mobile apps , websitesand high-end features of those

• Difficult to integrate : If modern and cloudnative systems and software packages need to be integrated into the business , they all need to connect back to the legacy systems , which were not designed for easy interoperability .

• Diverse vendors : Legacy systems in banking are only supplied by a handful of vendors , meaning that those vendors can often set prices .

• Lack of legacy talent : Developers for the older platforms are often nearing retirement age and aren ’ t being replaced by new talent entering the market . A limited pool of resources makes it difficult to keep up with business demand for legacy hardware and software .

• Limited ecosystem : There are a significantly greater number of limited application ecosystems for legacy banking systems , so new vendor packages are not readily available , restricting business agility .

• Growing volumes of interactions : Modern , fully digitised , and ecosystem-interconnected banks handle a higher volume of real-time interactions . Not all legacy systems can easily scale to this volume of interactions , leading to unsatisfied customers .

This amounts to a system that costs a lot of money to expand and upgrade .

Why keep legacy systems at all ?

Legacy systems have reliably worked for years and replacing them can incur significant upfront costs , even if there are expected savings long-term . Most banking organisations know that they need to modernise their systems but get caught in the challenge of doing so in an effective and costefficient way . � 14 www . intelligentfin . tech