by LiquidX
Establishing a modern approach to banking isn’t just about embracing the trends. It’s about remaining competitive, resilient and customer friendly in today’s digital first world.
Some institutions push back on ditching their legacy systems due to fragmented processes, resistance to change, isolated functions and data quality concerns. However, smart leaders have realized the benefits modernization brings to not only their business, but their customers as well. lt enhances operational efficiency, improves agility and scalability, enables them to access new technical capabilities, and delivers a better experience to their customers.
Understanding What’s Influencing the Move toward Modernization
The global core banking software market was valued at $12.5 billion in 2022 and is predicted to expand to $40.67 billion by 2029, at a compound annual growth rate (CAGR) of 18.3%, according to Fortune Business Insights. Below is a look at the factors driving the need for banking modernization.
Challenges with Legacy System Management
With a general lack of understanding of how they work—coupled with an incompatibility with modern operating systems and programming languages—many legacy core banking systems are nearly impossible to upgrade.
Enhanced Focus on the Customer
Today’s customer demands have changed. They don’t just want a solution that solves their problems, they want a solution that can truly understand and respond to their problems. They’re looking for personalized experiences tailored to their individual needs and preferences.
Evolving Regulations
The regulatory landscape within financial services is complex and rapidly changing. It’s expected that new rules and regulations will pressure banks, in particular higher capital and liquidity requirements, as well as heightened scrutiny of risk modeling. To keep pace with these changes while remaining compliant, banks need the agility and flexibility to adapt to these new inputs and requirements. This is not something legacy core banking systems can accommodate.
Push toward Cost Reduction
It’s not a well kept secret that advances in technology have brought with them streamlined processes and increased automation, especially when it comes to the introduction of artificial intelligence (AI). Banks know modernizing their software will accomplish this efficiency while lowering costs by eliminating time spent on manual tasks.
Rising Level of Competition
The banking sector has emerged as one of the most competitive sectors in business. It’s the old adage of sink or swim that points to the consequences of financial institutions continuing to use outdated legacy systems their competitors have long since moved on from. Either adapt to the changing way of doing things the rest of global finance has embraced or be left behind.
Improving Business Operations through Modernization
Modernization has naturally occurred with many institutions as a way to address several different pain points with the way they operate – and importantly, the way their customers expect them to operate.
The rise in technologies such as the cloud, big data and AI have changed the landscape of the banking industry. Integrating these technologies has advanced visualization capabilities, turned complicated data into comprehensible information, increased security methods and more.
The myriad of benefits of modernization illustrate the positive move the industry has made.
Lower Operating Costs
By eliminating the need for physical infrastructure with servers and on premise databases, banks can now save big on management and maintenance costs. Modernizing legacy systems also enables banks to consolidate applications, further reducing overhead.
Faster Processing Times
Parties on both sides of the transaction want it done faster and better. Legacy systems are known for slowing down transactions, creating long wait times and dissatisfied customers. Modernized systems, on the other hand, use cloud platforms capable of processing large quantities in minimal time. Transactions are processed in real-time, increasing productivity and therefore the ability to handle more trade finance programs at one time.
Increased Scalability
Cloud based global trade finance software can be easily scaled up or down as needed to accommodate demand from sudden influxes of transaction requests. And it can do so all without slowing down processing times and negatively impacting the customer experience.
Enhanced Resilience
Legacy systems and degrading hardware go hand in hand. Aging technology leads to more downtime and expensive fixes to restore the system until it breaks again. Not only are modern systems not breaking as often, but cloud providers also have comprehensive plans for redundancy. This offers users fewer service interruptions, greater resilience and business continuity.
Enhanced Security
Cloud providers have the resources to dedicate to security with teams who have access to industry leading cybersecurity solutions, such as machine learning, AI and more. Plus, by hosting all company and customer data in the cloud rather than on premise, banks reduce their exposure to data breaches.
Working with Experts Who Know the Industry
LiquidX has always stayed ahead of the trends providing customers with innovative and industry leading global trade finance solutions. Using advanced technology, like machine learning and AI, our fully digitized systems automate manual tasks, increase efficiency, enhance accessibility, improve risk management, reduce costs and empower businesses to scale.
Take the first step toward banking modernization and reach out to the LiquidX team. We will walk you through our solutions and make sure you have what you need to stay competitive in this modern world.
