Overcoming legacy issues in banking to achieve faster results

Legacy IT challenges

The challenges of bridging old and new IT systems have been demonstrated recently by banking outages at some of the leading retail banks. Meanwhile, the COVID-19 pandemic has brought to light the necessity for banks to switch to a fully digitalised customer experience, as a way of adapting to the new normal of working from home.

Innovation is on highest priority for traditional banking, however the complex IT landscape and decency on legacy is not helping them innovate. Many institutions were caught out by the pandemic - manoeuvring their clunky IT legacy systems while attempting to sustain a consistent customer experience.  

If traditional banks do not start transforming their legacy systems and introduce newer modern technology into their landscape, they will be outpaced by their nimble and agile competitors. The introduction of emerging technologies such as cloud native banking and digitalisation have disrupted the market, provisioning for MVPs at lightning speed.

So, how can banks compete on a level playing field? 

Taking a greenfield approach

Firstly, traditional banks should move away from nostalgic ways of working. Many banks think that relying solely on ideas from inside their organisations will yield the best results, which can make the process time consuming to bring new products and services to the market.

Secondly, for many banks looking to achieve digital transformation the issue is a technological one. Banks simply aren’t set up to overhaul their entire systems with new processes, and the consequences can be disastrous for those that embark on digital transformation without the right tools and/or expertise.

Despite this, financial institutions have slowly begun to realise that they must commit to transforming their core banking systems or face becoming irrelevant.

Banks need to set up a new greenfield in parallel to their existing system to future-proof for the next generation of banking – one that is free from legacy issues.  By establishing proof-of-concept zones, business labs and technology labs, banks can innovate much quicker and ensure seamless integration and continuous development while keeping their business running, observing the benefits within months rather than years.

For banks to do this, they need to embrace ‘Open Banking:’ the opening up with APIs to technology specialists to accelerate the provision of new products to the market – creating a bespoke service for their customers.  

A lending solution for faster results

A best in class example of how banks can take advantage of the greenfield approach is across its lending portfolio. COVID-19 resulted in businesses requiring loans instantly to ensure their survival, and with a digital lending platform the results can be instantaneous.

With a digital lending platform in the cloud, credit checks and approvals can be automated, speeding up onboarding processes; from application to loan execution.  This makes a loan available in days rather than weeks and months.

A cloud-native digital lending platform can modify existing processes and deploy new ones, while having the ability to be customised and understood by people with a non-technical background, removing the need for an external agency or vendor. As the digital platform can be implemented in parallel with a bank’s existing systems this speeds up the banks’ lending processes, while ensuring business continuity.  

It is clear that the greenfield approach is not just useful for digital lending but can be applied to any product or service in banking. Banks can then choose whether to migrate their data from their legacy systems over to the new and improved system, or to keep it running in parallel – offering greater flexibility in comparison to incumbent IT vendors.