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Are systems ready for the new risk of technology?

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Are systems ready for the new risk of technology?

Are systems ready for the new risk of technology? 1080 1080 Charlotte Edwards

The age of the Fintech Revolution

With the role out of 5G taking place this year, it shows the demand for faster access and technology. Consumers want direct access with speed to apps, the internet, and it is of no surprise that less people take the time to go into stores, when everything can be done quickly sat on our own sofas. However, this change in the way consumers want products, could pose a real risk to current data systems. Digital transformation has led to many companies falling behind in providing customers with what they want; the pace of transforming systems can just not keep up with demand and innovation. It’s the age of the Fintech Revolution.

Legacy Systems

In the 1970s/1980s, our banks were the lead in digital transformation, being ahead of the game and were some of the first companies to use the fax system (remember that?!). However, innovation has overtaken development, and in order to save money and avoid a major change programme, many financial institutions have just added to or patched their legacy systems to enable the new requirements such as ATM, BACS and international payments. With many of the systems in place today still being those initially designed and implanted over 30years ago, it is no wonder that cracks are starting to show. Many systems cannot cope with the extra demand and layering that has been put upon them. Beneath these layers, problems are brewing and often result in the shutdown of online services, cards not working, and customers being increasingly frustrated with the service that their banks are providing. With Nationwide Building Society being a front runner in digital transformation, budgeting an estimated 4.1bn transformation project over the next five years, it is clear to see that investing in a new data platform and transforming legacy systems is costly. It is also interesting to see that Nationwide want to simplify their systems, taking data stores from 20 down to two. They are a clear example of seeing how a new system is easier to implement rather than patching legacy systems and dealing with the constant problem aftermath. It would be interesting to see the comparison of costs between fixing legacy systems and starting from scratch with a new one.

Is the cost of digital transformation worth the change risk?

However, compared to the fines that banks such as Lloyds TSB (currently at approx. 330m for 2019) has faced over the past year, the cost seems worthwhile. It is also the cost to the reputation of the bank. With SME businesses using the new technology to enhance their business, is it not a bit of a joke that global corporations use systems that are over 30years old? Some of the systems still work on reporting T-5, therefore the data used is always out of date. In an age where google can bring the latest news in under a second, its barely conceivable that financial institutions are working with old information.

And so, department heads weigh up the risk of change versus the risk of legacy systems. It easy to see why change is feared; some corporations have had monumental failures with moving systems, and what we know always seems to be the most comfortable option. However, with the right team, knowledge and correct partners, a transformation project can be run smoothly, and the result is a success for customers and the company. There are many Fintech SME companies now who would take the challenge by the hands and enable a seamless transformation. It is their area of unique expertise – use them. Come on banks, lead the way in digital transformation, set the bar high for the rest of us and take the plunge – the risk of not changing is greater than the risk of keeping things are they are. You can do it; I believe in you.