Why Keep Patching Up the Past? Give Your Bank’s Foundation a Future-ready Upgrade

Remember the thrill and excitement of your first flip phone?

That little gadget was a tiny wonder—perfect for calls and occasional texts, with a sprinkle of multimedia fun. It felt so revolutionary at that time. But then came the smartphones, exploding onto the scene like a supernova. Suddenly, your pocket held the entire universe: web browsing, streaming apps—everything you could ever want—all in one sleek device.

Fast forward to today. Let’s take the example of your bank that functions on outdated systems. It is like navigating the digital world with the old flip phone. Sure, it gets the work done, but it’s too slow, cluttered, and woefully unprepared for the evolving demands of modern finance. Your peers are zipping ahead, offering:

• Hyper-personalized services
• Real-time payments
• Seamless cross-device experiences

Amidst all of this, your core system could be holding you back. In 2024, patching up those aging banking systems won’t be enough. It’s time for a bold upgrade. Embrace the evolution and transform your systems to lead the charge.

The Heavy Price of Legacy Systems

Every day, the chasm between the expectations of your customers and the capabilities of your legacy system widens. As transaction volumes surge, customers also become demanding. They expect hyper-personalized banking experiences that are aligned to their specific needs across multiple channels, and integrated with other services they already use.

Then there’s the cost.

According to McKinsey, 70% of bank IT budgets are currently consumed by keeping these legacy systems operational.

Regular maintenance of your legacy systems doesn’t come cheap either. Maintenance cost increases as the system ages, technical debts stack up, and you find yourself relying on expensive workarounds just to deliver elementary functionalities.

Gartner highlights that by 2025, 40% of IT budgets will be spent just maintaining technical debt.

As regulatory compliance grows increasingly intricate, maintaining antiquated systems turns into a major hassle. Before you know it, the cost of maintaining old technology exceeds what it would take to invest in newer technology.

Meanwhile, your peers—fintech companies and neobanks—are racing ahead with innovative solutions. They’re fast and flexible, and their systems are designed for today. Moreover, in the era of open banking, embedded finance and the partner ecosystem are reshaping how banks operate. If your core systems can’t handle these changes, good luck staying afloat in the competitive landscape.

Core Modernization: How Banks Can Upgrade Their Systems

Sure, core modernization isn’t exactly a walk in the park either.  It involves:

• Reorganization
• Retraining workforce
• Adapting to new processes

Source: EY

While initial adjustments are unavoidable, here’s the silver lining:

Today’s modern platforms (with composable architecture and cloud-based systems) enable banks to integrate changes more swiftly and efficiently than ever. These ensure:

· Streamlined integration with minimal disruption

· Progressive, phased rollout of updates—without the headaches of traditional, monolithic systems

· Quicker ROI realization, allowing banks to tap into the value quickly

You can move at a manageable pace while making significant improvements.

Furthermore, here are three key enablers you must look for while driving core modernization initiatives:

Beyond selecting the right technologies, banks also require a holistic roadmap for modernization that outlines a clear strategy. Rushing into this without the proper execution support may lead to setbacks. Banks must engage the right partners, including technology providers and consultants, who have the expertise to navigate the complexities of core modernization.

Simplifying Your Transformation Journey

At Newgen, we drive transformation with our digital banking platform. More than just incremental upgrades, our AI-enabled, low-code platform ensures seamless integration with your existing banking infrastructure, sparking innovation at every turn. The industry-recognized platform is designed to help banks integrate AI-powered solutions and transform core processes with ease. With Newgen, you can:

• Quickly deploy new products and services with a low-code platform
• Seamlessly integrate new-age technologies for streamlined operations
• Automate banking workflows and enhance decisions using AI-driven solutions
• Integrate smoothly with core systems for flexible modernization

WithNewgen, you can breathe new life into legacy systems, enhance operational efficiency, and offer personalized, customer-centric services that are future-ready.