Did you know that maintaining outdated legacy systems carries more costs than upgrading them with software integrations? Going digital or dying is one of the hot topics for the finance industry to consider for the present and future.
Investing in technology can be expensive and not necessarily meet all the regulatory requirements to operate certain types of services. But it’s something to consider when modernizing your legacy systems. Check out what older systems costs are and how you can adapt your financial system to what your business needs with software integrations.
Hidden Costs of Keeping Legacy Systems Afloat
Upfront and Maintenance Costs
While starting a digital transformation can mean a huge investment, the maintenance cost of legacy systems is definitely a bigger one. The older the system is, the more it costs to maintain it. But the lost opportunities in manual processes and engaging clients with innovation are part of the hidden costs of banks and credit unions.
On the one hand, finding developers or IT teams with skills focused on older systems is harder, more expensive, and scarcer than hiring someone who knows Java. On the other hand, adding new features to legacy systems is more complex year by year with new technology integrations focused on providing a better customer experience.
In this scenario, manual processes are becoming more and more obsolete. This given the extra staff money and time spent increases the chances for error and reduces the focus on core activities that can make a difference in value to convert. This can include improving work efficiency in different departments of your bank or credit union.
An Accenture survey before the pandemic found that around 70% of C-level corporate executives said that the technical debt of maintaining legacy systems limits their innovation in IT operations. With the upcoming recession, the expectation to scale operations and quickly adapt becomes even more relevant in terms of smart budget spending.
Customer Experience Costs
It’s no secret that gaining customers costs more than retaining them, so constantly improving the customer experience is one of the drivers of investing in IT. While trust is key to customer retention, it gains more relevance in the finance industry where it is necessary to protect sensitive data.
More than just deeply understanding your clients and making sure you are offering them what they need to increase their satisfaction, digital transformation can help you with all of the already mentioned pain points that you have with your business.
Where legacy systems are limited in data gathering, data analysis, and cybersecurity because of their infrastructure and manual processes, modern systems meet customer needs in an efficient manner.
Digitizing will drive you to identify areas of opportunity alongside making your system security scalable. Additionally, you can offer clients easy, remote, and secure ways to enter data, make payments, and receive customer support. Think big! Once your system gets all this data, you can offer them a highly customized and seamless experience each time.
Legacy systems can also lose revenue, profits, and customers due to limitations on real-time data and its analysis. In contrast, gaining more data insights and being able to build automated reports with digital transformation can take you to the next level in investing in the right areas, like we already mentioned with innovation, and gaining and retaining customers by making smart decisions. The latter can include omnichannel offerings for clients.
Employee Costs
On the employee side, allowing more software integrations and investing in digital migration will help them automate certain processes. These include data entry and claim management, among others. Not only will this help you streamline processes and provide clients with faster responses, but it will also increase employee satisfaction and retention by not doing manual and tedious tasks. Remember, digital transformation is about making smart decisions, not about replacing humans with machines.
Highly Game-Changer Software Integrations for Finance
Once you have decided to move on to digital transformation, these are some of the most popular software integrations you can implement in your licensed software. This custom system will allow you to adapt the existing framework to your business needs in terms of data, automation, blockchain technology, and more.
AI Chatbot
Counting on a chatbot will ease making payments and fund transfers, checking accounts and balances, reporting lost cards, asking questions, and contacting customer support for more specific information. As an advantage, you can also gather more information about customer patterns.
Data Sync
This feature allows you to gather new data from financial accounts that are connected to your web or mobile app. This includes account balances, transactions, among others, each time the user triggers the connected account. The data can be manually or automatically updated, depending on what your business needs.
CRMs
CRMs have gained popularity because they centralize information and help you gather insights on customer satisfaction. In terms of features, this process offers you automation, customer interaction, analytics, segmentation, and more.
Smart Contracts
These are self-executing programs that automatically run agreements between parties. The transaction terms are distributed using a protocol that is based on blockchain technology. One of its major conveniences is that it can automate manual banking processes. It can even be used for compliance, claim-processing, and loan evaluation eligibility.
Financial Planning Platforms
They allow teams to manage financial planning, budgeting, forecasting, reporting, and analysis of bank or credit union customers. It works as a dashboard that provides the agent with real-time information based on clients’ behavior patterns. This helps them customize suggestions and create financial proposals.
Finance Process Automations
Finance automation helps businesses complete tedious and repetitive tasks without much human effort. So, it could help improve the efficiency of the processes. The latter can include financial planning and analysis, as well as revenue management, among others. The main goal is to add value to other activities that actually require human interaction.
ERP Systems
It provides you with the centralization to track financial accounting data, make financial reports, and manage expense reporting. As a result, you will have greater access to financial information to gain control over strategic decision-making. Additionally, you will integrate critical processes in a simpler and quicker manner.
POS Systems
The POS system works with features that help you to track and monitor inventory, payment processing, pricing accuracy, and customer management. Consequently, with a modern system, you can gather customer data to help you improve the experience of your clients.
Software Integrations
By implementing software integrations, you can centralize and automate your data flows while customizing your licensed software to better serve your needs. Not only will this allow you to manage different applications in your ecosystem, but also to gather specific data and create specific processes with the security of an API integration.
Low-Code / No-Code Systems
Low-code / no-code provides banks and credit unions with an easy interface to build applications and improve the capabilities of developers in time and scalability. With all of these available customizations, changes can be made quickly providing businesses with more adaptability in these fast-changing times.
Take This into Account for Your Digital Transformation
Now that you know the costs of maintaining outdated legacy systems, it’s important that you consider the quality of a digital transformation strategy when you’re about to invest in it. One of the most essential parts of it is to count on the right tech talent, that is to say, matching with an IT outsourcing partner that has experience in the finance industry.
Be able to adapt, be able to move forward! Are you up to talking about how we can help you face the upcoming economic downturn? Let’s talk about your legacy systems!
