By: Paul Higgins, Digital Execution Practise Transformation Lead of Mendix
The looming introduction of central bank digital currencies is further evidence that digital transformation is no longer an option for financial institutions looking to remain competitive and relevant to the consumer. As the landscape continues to evolve, it is becoming even more obvious that embracing digital transformation is not solely the prerogative of financial giants. Even banks with limited resources need to keep pace through strategic partnerships and leveraging enterprise solutions like low-code platforms.
Legacy systems constrain opportunities
Financial institutions face the risk of reputational damage and customer lash back if services are disrupted. As a result, they can shy away from major system updates and maintain legacy systems that are woefully out of date. However, the pandemic was a much-needed wake-up call for institutions that, year after year, had continued to deprioritise digital transformation.
As businesses and our society moved to a hybrid world, banks that had already embarked on their digital transformation journey and implemented measures to modernise their legacy systems found themselves better equipped to handle the surge in online banking demands. In contrast, those who were already lagging in their digital transformation experienced significant struggles adapting to the monumental shift to online services both for customers as well as for employees.
The pandemic must serve as a lesson for banks not to neglect technical debt. Even if a legacy system is still working, it will not be sustainable long-term – the costs to maintain such systems increase as they and the underlying technology get older. Core to the issue is how to prioritise digital transformation and clear tech debt at a time when balance sheets are already under pressure while also reducing the risk of disruptions to services.
Partnering for progress
Creating a vision and strategy for digital transformation and the accompanying legacy modernisation is daunting for those responsible at a bank. It requires specific expertise and experience that is likely not present in the institution. Strategic partnerships with technology providers and implementation experts will give the bank access to that expertise and experience.
A wealth of technologies and strategies, such as microservices architecture, API gateways, data virtualisation, service mesh, incremental deployment, and more, can be combined to enable phased upgrades that minimise the risk of disruptions.
Speed and efficiency with low-code
Low-code has steadily matured over the last two decades, and while some leading platforms focus more on personal and team productivity, others provide the flexibility, governance, and security required to build enterprise-grade systems. This second category provides a compounding effect of speed and efficiency that smaller institutions cannot ignore when it comes to modernising their legacy business-critical systems. In other words, every saved hour and shorter development cycle means that value is achieved sooner and accelerates the delivery of subsequent projects and innovations.
Major factors in the efficiency of building applications with low-code are the visual interface that enables effective collaboration between business and IT teams, as well as the platform automating many of the time-consuming, low-value, repetitive tasks that typically form a significant portion of a developer’s workload.
Enterprise low-code platforms are built on and integrate seamlessly with the technologies and strategies that facilitate a smooth migration to a modern system, making them ideally suited to legacy modernisation. When choosing a low-code platform, it is advisable to look for one with flexible deployment options that easily integrates with internal and external systems and providers. This ensures it can tailor to your bank’s unique circumstances as well as being able to meet future requirements.
Digital Transformation – a banking imperative
Digital transformation is no longer a luxury for smaller banks. Recent turbulent events have shown us that adapting and having organisational agility is crucial to staying competitive and relevant in the modern age.
The size of the budget is not what determines digital transformation success. Instead, the willingness to innovate and collaborate will determine the winners in the banking industry future.
