Reported by: banking|Updated: June 18, 2018
With competition becoming nimbler and customers more digital, banks need to fight harder to stay relevant. They need to assess and overcome their operational shortfalls. The need of the hour is a flexible and agile operating environment that can quickly respond to dynamic market requirements. However, legacy systems in traditional banks have hard coded rules around product features like interest rate, term length, fees etc. This not only makes banks less agile, but also inhibits development and modification of products.
Further, developing customer centric business strategies is getting increasingly important. To achieve this, information should flow seamlessly across the enterprise. To build more connected information flows, banks need to eliminate the silos within their core systems and new applications. Information available in discreet and disconnected systems creates time lags. A healthy flow of data between the main application and the rest of the enterprise is necessary to quickly adapt to market needs. To achieve this, banks need to overcome the limitation of their legacy systems.
For instance, if the lending process is not transparent, it gets difficult for both the customers to know the status of their loan application as well as for banks to share updates to them through various channels. Customers struggle to find the right product suitable for them without consulting their bank agent. This prevents holistic view of the customer, which is imperative for customer satisfaction in today’s competitive market.
However, even when banks wish to modernize legacy systems to overcome such challenges, they face several hurdles. To modernize their legacy systems, banks can either replace their core (ie legacy system) or integrate with a solution that is flexible enough to cater to current and future demands. The former requires banks to heavily invest in terms of cost and time and, simultaneously, take a huge risk.
However, it is not easy to either build the whole system from scratch or buy a point solution. This makes banks struggle with the Build vs Buy paradigm. In such a scenario, organizations can harness a robust Business Process Management (BPM) platform that leverages legacy systems without replacing them as a whole. A BPM platform acts as a ‘Process Glue’ and is entirely customizable as per business needs. It employs the configurable user interface that can integrate systems across organizations with the UI, providing a single work platform for users to access.
BPM solutions are highly flexible and provide a modular approach to systems integration. They provide the flexibility to add and remove components, allowing you to see which configurations work better. If not, it’s a simple task to revert back at any point BPM can also use the data extracted from the legacy systems to trigger workflows and tasks automating processes such as emails, notifications, alerts, and reports and so on.
Further, BPM integration with legacy systems has a profound impact on a bank’s business strategy and has significant incentives. The integration instantaneously places banks in a position where they can take full advantage of the opportunities offered by digitization. The legacy system still remains a part of the infrastructure. It offers the business the requisite agility to respond to market changes faster with quicker access to information residing in core systems. This not only keeps banks future-ready, but also offers a faster time-to-market.
However, the tentacles of legacy reach far beyond technology. They encompass process management, risk management, release management and more. When a bank is run with a legacy perspective, it leads people to take decisions in a state of inertia. Thus, the way of operating also becomes legacy!
Therefore, legacy perspective is a bigger threat than legacy infrastructure! Banks should refrain from thinking because ‘it’s not broken, it shouldn’t be fixed’. In this evolutionary era of digital technologies, only the fittest bank can survive. And, the key to ensuring survival lies in overcoming the legacy perspective!