By Manish Narayanaswami, Kissflow
Legacy core banking systems including mainframes are outdated and may not be able to support the latest technologies, such as cloud computing and digital channels. This can limit an enterprise’s ability to retain large customer segments as more nimble, digital-first service providers (e.g. fintech, insuretech, and neobanks) compete for market share.
The legacy systems that power the bulk of the BFSI industry are on-prem, making them inflexible and difficult to integrate with other modern systems and applications. This can make it challenging for BFSI enterprises to develop and provide customers with new products and services, or to share data with partners and regulators. Further, it limits the industry’s ability to shift to secure remote or hybrid work—making talent acquisition difficult.
These systems are also costly to maintain and require specialized skills and knowledge to operate and may be expensive to upgrade or replace in a full rip-and-replace strategy. This can put a strain on an organization’s IT budget and divert resources away from more strategic initiatives.
With the fast pace of technological advancement and changing customer expectations for banks, insurance companies, brokers, credit card companies, etc., legacy systems can also pose a security risk. Contrary to what one may think, legacy systems may not have the same level of security features as modern, cloud-based systems and may be more susceptible to cyber-attacks.
It is important for BFSI organizations to consider migrating from legacy systems to more modern, agile, and secure technology platforms. According to a report from Endava (formerly Level), IT leaders in the BFSI industry indicate their top IT challenges are security, maintaining legacy systems, and cloud and data management. These legacy processes prevent companies from improving customer experience, increasing efficiency, and staying competitive in today’s digital landscape, especially when more nimble digitally native companies are prioritizing these core value propositions.
At the same time, managing transitions from legacy systems to modern technology platforms can be a complex and challenging task for organizations. However, relying on low-code or no-code powered platforms can help to simplify and streamline this process using a lift-and-shift migration strategy. One of the primary advantages of using LCNC for legacy migration is that it allows a flexible framework and platform to migrate in stages and phased manner, eliminating down services and minimizing time-to-market.
A step-by-step migration, allows the different IT teams to collaborate closely to ensure that the old system does not break down while they build the new environment. Here’s how low-code can be a low-cost solution to digital transformation and systems migration for BFSI organizations.
1. Low code Integration for Your Legacy System
Many enterprises aspire to take advantage of the latest technology while migrating legacy systems, but mistakenly discount the value of the old systems. By not immediately throwing the baby out with the bathwater, BFSI organizations can leverage their legacy system and use low-code as a bridge to the updated environment. Low-code allows you to keep your legacy systems alive a bit longer by activating parts of their functionality and making them available and useful to the new system.
For example, think about handling payment exceptions. Your legacy systems might flag these exceptions but your back-office teams might not have an interface to resolve them. Low-code can help extend the functionality of your legacy system and build a payment resolution workflow.
2. Data model reusability
It’s increasingly important for organizations to evolve their data warehouse strategy by designing reusable data models. This enables them to leverage data sets in a way that maximizes insights and reports that are important for a BFSI organization’s reporting, compliance, customer segmentation, etc.
The reusability of the existing data model is another major benefit of moving to a low-code platform. IT leaders can simply utilize their existing data models. Since data modeling is essentially a form of writing code (similar to software development), low code allows for a seamless transition from old infrastructure to new since users have the ability to design a new user interface while still using the same data model. This is the modern DevOps approach to data analytics and model building.
3. Adaptable systems designed for the future
When migrating legacy systems, enterprise must create a solution that is both flexible and adaptable to future needs. IT staff should be cautious not to design a system that is rigid and inflexible—preventing usage down the road. The good news is that migrating the legacy system through a low-code platform will ensure a smooth transition because of its inherent customizability. Low-code platforms enable organizations to use a contemporary app architecture that leverages microservices to improve agility.
Low-code can also be used to automate and digitize manual processes. This can include operations around account opening, claims processing and other customer service functions. By automating these, BFSI organizations can reduce the risk of errors, improve efficiency, traceability, auditability and gain real-time visibility into their operations at a thousand-foot vantage point.
Finally, low-code can be used to quickly develop and deploy new applications. This can be especially useful for BFSI organizations that need to respond quickly to changes in regulations or market conditions. Largely, low-code systems can be vital to organizations that are struggling to find the personnel resources and time to focus on innovation, but know that they need to in order to stay ahead of the competition.
Global Banking & Finance Review
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