Many years of experience have shown that many banks are reluctant to take the decisive step towards modernizing their IT. Understandably, the old solution is still working, has been written off and is seemingly inexpensive. And: an IT (transformation) project is a challenge that costs a lot of energy - and sometimes doesn't go according to plan. And worst of all: what does the customer actually notice about the new IT?
But there is also good news: With a well thought-out strategy, the right partners and a clear, achievable goal in mind, an adventure can be turned into a success story. Modernizing your software offers strategic advantages, automates your processes and gives you a competitive edge: faster response times in changing markets.
Why modernization? A question of competitiveness
Digitalization knows no speed limit. Your customers (and the regulator) are setting the pace:
- Customers expect personalized and seamless experiences- whether in the B2C or B2B sector. Time-to-decision, time-to-money is what counts. Slow processes or an almost unmaintainable combination of systems and services make it difficult for you to be successful in the market.
- The regulator is constantly coming up with new requirements for you - whether in terms of ESG, cybersecurity or risk management. Not always just mandatory requirements, but also those that are in your own interest: more transparency, more control options.
- And then there are the competitors: they are increasingly relying on data-based decisions, becoming faster through automation and using innovative technologies such as AI. If you want to keep up, you need a modern platform - and you need it fast.
The modernization of IT systems is therefore more than just a technical upgrade - it is a strategic step in order not to lose touch with the market.
Challenges and solutions on the path to modernization
The transition from an outdated IT landscape with possibly very different systems and services to modern solutions that offer you resilience and can even be operated as software as a service (in a private or public cloud) brings with it various challenges. But there is a solution for everything:
1. complexity of the project - the right mindset
Many companies are afraid of the changeover because
- it seems (too) complex,
- the previous system with all the special features of your business that have grown over the years cannot be mapped and
- it can hardly be managed during ongoing operations with existing resources.
In fact, such a project requires precise planning and good resource management. But with the right preparation and the right mindset, risks can be minimized.
Solution:
- Select the "best" offer on the market for you - and orient yourself to the (product) standard. This not only helps to minimize subsequent maintenance and support services, but also leads to success more quickly. Please do not "rebuild" the old system.
- Develop a clear project plan with milestones - with a GoLive that can be achieved quickly. Specifics that differentiate you in the market will follow.
- Use the experience of your (new) software provider or bring external experts on board to provide you with professional support during implementation. Ask for reference projects that are comparable to your project.
2. security of your IT systems
An outdated IT system is like a door with a rusty lock - it may still hold, but whether it can withstand an attack is questionable. In a world where cyber attacks are becoming more sophisticated and regulatory requirements are constantly increasing, IT security is a crucial factor, especially for financial service providers. Outdated systems are particularly susceptible to security vulnerabilities, as manufacturers often only provide limited support and regular updates - or none of their IT specialists are familiar with the "interdependencies" or even the programming language(s). At the same time, the requirements for the protection of sensitive financial data are increasing - with new regulations such as DORA, the Digital Operational Resilience Act, financial service providers are obliged to have a robust IT security strategy - and the de facto protection of their systems and data.
Solution:
- Establish zero-trust security concept and minimize risks by continuously applying the latest security updates, role-based access rights and controls, encryption and continuous monitoring (SIEM / SOC).
- Plan the IT modernization in such a way that it meets the requirements of GDPR, DORA & Co (regulatory and factual). Work with experienced IT partners who are familiar with security and compliance requirements and take them into account at an early stage. They also offer you professional operation - as software as a service. You can concentrate on your business and its ongoing development.
3. costs of the transformation
Modernization costs money. But the investment pays off - in the form of modern functions, lower operating costs, more efficient processes and increased customer satisfaction. Instead of seeing costs as an obstacle, see them as the key to long-term success.
Solution:
- Create a realistic Return on Investment (ROI) analysis that makes the benefits of modernization transparent and captures the total costs (and benefits) (Total Cost of Ownership / TCO).
- Check funding opportunities or financing solutions to reduce the initial investment. As your business grows, your provider's pricing model should be flexible enough to accommodate this.
4. missed innovations
New innovative technologies often cannot be implemented in outdated systems. The systems are too complex or not documented, the software is simply outdated, interfaces are difficult to create and require a lot of maintenance.
Solution:
- Work together with the employees from your various departments and your IT to develop the requirements for the new system and the right software and services solution for you. Check what your IT can do and how it can continue to be involved - as a point of contact at eye level. There is still plenty to do in the future, not only in terms of integration and migration, but also in terms of outsourcing management.
- Get to know the established software providers on the market and their solutions. If they have successfully implemented many (comparable) projects, they have the professional and technical know-how as well as the knowledge of the regulations to be complied with.
5. loss of reputation
The older the banking systems, the more error-prone they are. If the system cannot process a growing number of tasks simultaneously and with high performance, the consequences such as failures, breakdowns and problems are guaranteed. As customers are less loyal, they change their financial service provider more easily than "in the past". Declining customer satisfaction becomes more transparent, is communicated via social networks - and leads to a loss of market share or reputation.
Solution:
- Work with experienced IT companies.
- Learn from the best practices of other companies.
Best practices for successful software modernization
To make your (IT modernization) and transformation project a success, you should consider the following steps:
1. evaluate your requirements
Analyze your current systems and business processes. What weak points are there? What functions will you need in the future?
2. choose the right solution
Opt for flexible, scalable and future-proof software solutions. Pay attention to their life cycle.
3. involve your employees
The key to success lies in the acceptance of those who work with the new software on a daily basis. Train your teams and let them help shape it right from the start - innovatively with new options and necessary adaptations to the provider's product standard.
4. look for strong partners
An experienced implementation partner can make all the difference. Choose only those who understand your industry, are specialized and have already successfully implemented comparable projects.
The advantages of a modern software landscape
Successful modernization pays off in many ways:
- Satisfaction: Inspire customers and employees with modern, intuitive solutions.
- Innovation: Benefit from new functionalities.
- Efficiency: Optimize workflows and increase productivity.
- Cost savings: Reduce operating costs with modern and fast solutions and automated processes.
Conclusion: The right time is now
Modernizing your business software is not a decision that should be put off. It is a key factor for your competitiveness and a necessary step to make your company fit for the future.
With a clear plan, the support of experienced partners and a willingness to embrace change, you can overcome the challenges and reap the full benefits.
Do you really want to wait until the competition has overtaken you?
Your NAVAX team - We will accompany you on your journey into the digital future.
