Bank modernization is not just about banks providing modernized experiences to their customers. It also involves the banks themselves keeping up with the ever-evolving digital world. Legacy banking solutions, such as Flexcube are often cumbersome and slow, limiting a bank’s ability to provide seamless customer experiences and meet the demands of the digital age.
In this article, we’ll look at how banks are modernizing their legacy and legacy-on-legacy infrastructures to provide a seamless experience for their clients and to achieve a fully integrated digital banking solution. Let’s dive in.
What Is Legacy Modernization in Banking?
Legacy modernization in banking is a system used to maintain and develop legacy systems with the help of the latest technology. It is an effective strategy for improving banking software in a cost-effective way.
The most important advantage of this strategy is that it helps you develop an efficient banking system quickly while minimizing the risk.
What are the benefits of legacy modernization in banking?
As mentioned above, banking institutions that want to serve their customers better, which is the main reason for their existence, should take advantage of this strategy. There are some major benefits to this strategy that are mentioned below:
Advanced digital capabilities
Legacy modernization is an essential part of the digital transformation of banking institutions. It helps in increasing the efficiency of the banking software, and in doing so, it helps the banking institutions by saving energy and time, which can be used for other purposes.
Legacy modernization provides banking institutions with the tools that are required for effective digitization on the whole. As a result of this, it helps the banking institutions provide better services to the customers.
Streamlined business processes
A streamlined business will allow the banking institutions to operate in an easier way, and in that way, it will increase the overall productivity of the entire banking sector. And if a bank can increase its productivity, it will be able to reduce its costs and, hence, increase the profit ratios of the entire banking sector.
Furthermore, streamlined business processes will help banking institutions be more scalable and flexible.
Improved security
In digital banking, banking institutions can achieve security at a much higher level than traditional banking institutions. Because in digital banking, security is achieved by using blockchain technology, which is a distributed ledger technology, hence it is much safer than any other existing technology.
In addition, the digital banking system is secured by using cryptography, which is a very secure and accurate method. In this way, the digital banking system can provide the highest level of security to all users.
Access to a variety of new digital products and services
In digital banking, banking institutions will be able to access a variety of new and advanced digital products and services in order to attract customers to bank with them. And if a banking institution provides more products and services to its customers, it will be able to attract more and more customers to bank with it.
There are several issues that are being faced by traditional banks, and in order to overcome these issues, traditional banks are implementing the Oracle Flexcube universal banking solution.
Optimized operating expenses
Traditional banks are spending a lot of money on maintaining their operations, and they are not able to optimize their operations because they are facing a lot of financial crises.
But digital banking will help the banking institutions optimize their operating expenses, as online banking will help the banking institutions reduce their operating expenses because online banking will reduce the costs of maintaining the banking branches.
Capitalization on the Value of Data
In digital banking, banking institutions will be able to capitalize on the value of customer data that they already have with them. By capitalizing on customer data, banking institutions will be able to provide more personal and customized banking services to their customers, which will help them attract and retain customers.
Traditional banks are not able to capitalize on customer data as the customer data is mostly in the form of paper documents.
Legacy Modernization Approaches
Legacy modernization approaches in banking refer to upgrading the existing legacy banking applications, which is done without changing business models.
Banks have adopted the following approaches to upgrade their legacy applications.
Legacy Modernization: Replacing Legacy Systems
In this approach, the existing legacy systems are replaced with new systems that are built using modern software engineering techniques.
The replacement systems can also be developed using the platform of existing operating systems. This approach is suitable when the existing systems are cost-effective or when new systems offer better features.
Legacy Modernization: Refactoring Legacy Systems
In this approach, the existing source code of the legacy systems can be modified without changing their structure and organization.
This is done by making changes in the source code, such as replacing the programming language of existing code or adding missing functionalities, and also by modifying existing code to use the latest products. The changes made to the source code and the source code itself form a new system, that is, a refactored and modernized system.
Legacy Modernization: Replatforming Legacy Systems
In this approach, the existing source code of the legacy systems is ported to a new operating system. This porting process is done by incorporating the source code into the new system as a sub-component.
This approach is similar to the code refactoring approach. The difference is that in this approach, the existing code is ported to a new operating system that has its own new features and programming languages.
Legacy Modernization: Rehosting Legacy Systems
The source code of the legacy systems is ported to a new hardware platform.
This approach is almost similar to the replatforming approach. The difference is that in this approach, a new hardware platform is used instead of a new operating system.
Legacy Modernization: Rebuilding Legacy Systems
In this approach, the legacy system is rebuilt by incorporating the business logic directly into the new system, and the end-users are linked together with the new system.
This approach is similar to the refactoring approach. The difference is that in this approach, both the code and the end-users are directly linked to the new system.
Conclusion:
Modernization projects are opportunities to move key legacy applications to the cloud, eliminate manual processes, and, in many cases, completely refresh or rebuild systems using the Oracle Flexcube 14.x, all with a consistent customer experience. While it may be tempting to address legacy modernization in a piecemeal fashion, the cost and risk of doing so are formidable.