Transformation in banking is over, enter progressive modernization

We have entered a new era in banking and financial services. The period of transformation has given way to an era of “agility and flexibility,” driven by relentless technological advancements, fierce competition and the demands of digital-savvy customers.

Traditional banks find themselves at a crossroads of balancing the proven reliability of their legacy systems with the need for agility. And with fintech disruptors, the expansion of big tech into financial services and the increasing demand for embedded finance solutions reshaping the industry, there’s no time to waste hesitating. Modernization is a necessity – not an option.

Legacy technology, the long-standing backbone of banking operations, is becoming a burden. These outdated systems are ill-equipped to cater to the demands of the digital age that require real-time transactions, data analytics and seamless integration with modern SaaS solutions.

The operational costs of clinging to these systems are 20-30% higher due to the maintenance required. This also diverts resources and means a 50% slower time to market for new products as well as higher risk of security vulnerabilities compared to banks that have modernized their systems (McKinsey, 2023).

Finding people with the capabilities and expertise to maintain these systems is also becoming a challenge as the pool of legacy IT talent, such as COBOL programmers, dwindles. As these professionals retire, fewer people have the knowledge required to operate and fix these antiquated systems. As this expertise becomes scare it also becomes costly.

Faced with these challenges, banks are increasingly implementing a strategy of progressive modernization by updating an…