Illustration of banks upgrading legacy banking systems without disturbing customer experiences

Many banks have had their current rules-based legacy banking systems in place for up to several decades though the course of occasional major upgrades every several years. While there’s certainly nothing wrong with this option, the fact remains that fraud prevention technology has come a long way since the days when rules-based technology was the only method available. 

Upgrading legacy systems is a wise investment when considering growth. But some banks are hesitant to replace them because they’re afraid to disrupt the customer experience. While this is a perfectly reasonable concern, it’s easier than many banks realize to upgrade core systems without causing customer friction.

Here’s why it’s time for traditional banks to upgrade their legacy banking systems – and how to do it without disturbing the customer experience. 

3 Reasons Banks Should Upgrade Their Systems

  • Legacy systems struggle to keep up with newer technology. Fraud detection and prevention technology has made considerable leaps forward in recent years – and revealed the limitations of rules-based legacy technology. With each advancement, banks must find ways to integrate multiple technologies into their system. The result? Cluttered patches of middleware that stitch together several disparate systems. Arrangements like this can cause chaos and confusion for bank staff as they struggle to get different solutions connected to different teams.
  • Increased digital banking activity. The rise of FinTechs and digital payment options creates additional challenges for legacy banking systems. In an age where customers expect to be able to make payments instantly, these systems struggle to keep up. Today’s consumers also embrace open banking and embedded finance solutions that give them the flexibility to use financial tools outside their primary bank. These realities have exposed the inadequacies of legacy systems.
  • Advancements in cloud-based systems. The availability of cloud-based technologies makes it easier for traditional banks to undertake a legacy infrastructure replacement project. In the past, a rip and replacement project for a legacy system could take years. Cloud-based technologies can quickly plug into a legacy system via an API ecosystem and are considerably more nimble than legacy systems.

A Guide For Banks To Replace Legacy Banking Systems Smoothly

The rapid growth of digital banking, the rise of big data, and the availability of cloud-based systems create the ideal conditions for banks to undertake what would otherwise be a cumbersome and daunting project. However, while undertaking this effort it’s important to ensure bank customers are not disturbed as they conduct business. 

Here’s what banks can do to ensure a smooth upgrade of core banking systems. 

Communicate the Goal of Legacy Technology Replacement

It’s important for everyone at the bank – including the board of directors, the managing director, IT staff, and bank customers themselves – to understand the benefits the project will deliver. Clarify the intended goal of the project and the KPIs you intend to meet. Is the goal to enable new banking functionalities? Or implement faster, more accurate fraud detection capabilities? Or is it necessary as the bank expands into new geographies? Communicating the goals early will help avoid a misalignment of what the improved system will accomplish.

Start Small, Then Expand Efforts

Replacing legacy systems is a large undertaking. If something goes wrong, it will impact your entire customer base. That’s why it makes sense to start with a smaller sample of customers before expanding the efforts to the full customer base. Work with the vendor to establish the project’s “north star goal” – the top goal that drives the project; make sure the customer understands it. Choose a sample group of customers (e.g., from the credit card portfolio) to test the project’s hypothesis. Make sure your vendor delivers on the stated goal.

Design the Upgrade with Security First

When working with a solutions provider, make sure they are  security-oriented. This is a critical step in avoiding service interruptions, potential data breaches, and negative headlines. The last thing your bank needs is to be on the cover of WIRED because of a security oversight. Bear in mind that data regulations have evolved considerably in the past few years alone. Instead of being locally stored in on-premises systems, a bank that uses cloud-based hosting must ensure they handle data securely and responsibly. 

Keep an Eye on the Long-Term Plan

The purpose of upgrading your bank’s legacy system should not be to solve a single problem. After all, like other banks you’ve got plans to grow your operations and you’ll need a partner who can keep up with your bank’s increasing needs. Ask your vendor how they can help with increased volumes of payments and transactions. Look for a provider who can grow with you – preferably one who has been through this type of project before. 

Today’s bank customers expect to be able to transact at a rapid pace. Financial service providers who can’t deliver on those expectations will risk losing customers to competitors. Upgrading legacy banking technology is a critical step to delivering on that expectation. But banks need to proceed carefully so they do not interrupt their customers’ journeys. Working with the right vendor in pursuit of clearly stated goals is the right way to get started. 

If you are looking for a fraud solution that provides strong digital trust, we’d like to help you. Schedule a demo with us today to see how our experts and our technology can help establish digital trust for you and your customers.