Last week “Bank Technology News” published an interesting article regarding the challenges banks face as a result of dependence on older, legacy technology used in support of customer-facing systems. The article describes a convergence of challenging considerations that many banks are dealing with and puts forth a new label regarding a strategic approach to move forward.
In “The Case for ‘Progressive Renovation’” the author describes how many banks are constrained by legacy technology which is expensive to maintain and often doesn’t meet the demands placed upon them. The article draws attention to the repercussions that some banks have faced due to IT glitches caused by antiquated systems pushed beyond their limit.
“…such issues are likely to become more common, with many major banks running on legacy systems that are decades old and not equipped for the demands of today’s 24/7 multichannel banking. The cost of maintaining and updating these legacy systems typically requires an increasing level of IT spending…”
We wrote previously about multichannel banking, and that banks will need to explore how customer relationships are managed across all banking channels. Banks that want to compete on customer service will look to other industries to see how they support consumers as they interact with the bank in multiple channels at any one time for a given service activity. You can read about banks and managing customers across all channels.
Another assertion by the author makes a distinction that competitive entrants with more flexible solutions will have a competitive advantage and cites research that 75% of the fastest growing banks have replaced legacy technology.
“…sticking to older systems stifles the ability to compete with newer, better-equipped entrants to the market.”
We agree with Bank Technology News and believe that many banks will need to invest in order to deliver a consistent user experience across all banking channels, an important component of overall brand strategy. This will help differentiate overall customer service at a time when more customers are willing to change banks in search of better overall value.
In conclusion, the author describes how banks will need to update their systems to better meet customer expectations and reduce costs. The article further elaborates that banks should consider a component-based approach that will allow the “progressive renovation” of legacy platforms.
“Rather than a “rip and replace” approach to upgrades or maintenance, components can be tweaked, replaced or augmented on an individual basis.”
We agree this “progressive renovation” will help drive more value and provide a quicker path to innovation than large-scale system replacement projects.
If you are looking for a real-world example, view this webinar on how we worked with one bank to deliver deeper customer insights and the some of the best practices they implemented by updating components of their legacy technology to help gain a competitive advantage.
Want to learn more? Send us an e-mail.
This post was contributed by: Lee Grice.
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