Financial institutions typically build their IT systems yearly with a focus on new applications, seldom replacing or sunsetting outdated ones. This creates a highly complex IT environment that is difficult to manage, with IT costs growing more and more during the maintenance phase. With the expense and time required for comprehensive migration projects, more institutions are considering alternative ways to achieve IT modernization.
How can banks overcome challenges to modernize a slew of banking applications acquired over decades? Here are three ways you can simplify your IT modernization strategy.
1. Take the long view
IT modernization is a multiyear journey that requires a structured, planned setup and thinking in a cycle of seven to 10 years. While this may sound like a long time, many core banking or ERP systems have a history of 30 to 40 years. There are some e-banking front-end systems now entering 10 or even 15 years of continuous use.
Approaching IT modernization with the long view in mind also allows time to justify technology investments, like the cloud and AI. Since not everything can happen in parallel due to time, resource and budgetary restrictions, patience and a smart transformation plan are key.
2. Get buy-in from stakeholders
To keep a seven to 10-year IT modernization journey on track, it’s essential to keep stakeholders engaged by helping them understand how every technology investment contributes to the overarching goal. Transparency is important throughout the journey.
A key performance indicator cockpit or objectives and key results are tools you can use to measure the success of your undertaking. By providing high-level updates and activity summaries, you can help stakeholders understand all the players and factors involved. This also allows you to highlight how dependencies are managed and illustrate progress along the way.
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