Modernizing legacy technology with start-up disruptors
Established banks and insurance companies have been around a long time, and many are working with legacy systems, or outdated computer hardware or software technologies, that were introduced more than half a century ago. When the first computer systems were introduced in the 1960s, there was little expectation that this new technology was here to stay, and it wasn’t intended to be upgraded or replaced. It wasn’t, in other words, designed with future-proofing in mind.
Fast forward to 2023 and the financial services industry has changed beyond all recognition. Digital start-ups are disrupting the marketplace, customer expectations of digital integration and seamless transactions are sky-high, and banking services are no longer simply the preserve of established financial institutions.
Working within an established financial institution can feel like you’re at the helm of a supertanker, and the digital disrupter startups are agile speedboats, whizzing around you and racing off into the distance with their innovative products that exceed customer demands. To continue the analogy, to change the direction of an established bank, like a supertanker, is slow, laborious and involves lots of people.
But the process of updating or replacing legacy technology for established banks isn’t completely bleak. Like supertankers, with their size, resources and momentum, these institutions can weather the storm while the nimble disruptors will be at risk (as Klarna’s round of redundancies in the summer of 2022 demonstrates). And with their financial stability, customer base and solid reputations that the digital disruptors lack, some may question why these established institutions need to innovate at all.
continue reading »