We love Mainframe, but we could definitely use some modernization

Modernizing Legacy Banking Systems

It is not a surprise to many that Banks love mainframes. The Big Iron has been particularly popular with Banks and Financial Institutions over the past few decades because it has been the right tool; a tool with power. Only a Cobol developer like me, who also dwelled into newer technologies and other DevOps stacks can admire the simplicity of this very expressive language.

While the Mainframe still continues to be the robust and reliable soldier to the banks supporting some of their core processes, the world is changing faster than ever before now forcing many financial institutions to transform the way they offer their services. The influx of new technologies, cloud, and open banking, etc have forced the traditional banks to rethink and realign their way of operating. The modern core banking systems require better flexibility, and scalability to respond to evolving customer demands, and be cost-effective at the same time.

High costs of transformation and the risk of breaking critical functions running today have left most organizations in two minds, However, the benefits of legacy modernization outweigh them. Some of the key motivations for legacy modernization are:

1. Digital Competitiveness

2. Enhanced security

3. High cost-efficiency

4. Becoming future-ready

5. Flexibility and Scalability

Modernizing requirements of each financial institution vary vastly. Banks and Financial Institutions have to understand very well their need to modernize. Modernizing requires a disciplined and well-thought approach of either a full replacement or systemic upgrade.

• Full replacement: Immediate replacement is not only too risky but can be quite expensive and time-consuming and should only be opted in those situations of sudden regulatory imperatives or obsolescence. The biggest pitfall in full replacement is that the benefits or any internal issues can only be realized or tracked when the migration is complete, and the legacy system software is de-commissioned.
• Progressive Re-platforming: The most popular strategy amongst banks, also known as phased migration, undertakes a systematic and steady migration approach. It allows the banks to keep working with legacy systems for a considerable amount of time while simultaneously introducing a modernized architecture and transitioning into it.

There are already a plethora of players in the market providing competitive modernizing solutions for core banking systems and success stories from organizations who have already gone down this path. The new is happening and financial service providers have powerful tools to be more strongly positioned for the future.