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Overcoming the limitations of legacy systems in a microservices era

Today, many banks are united by a common challenge: managing the limitations of their legacy cores and the operational, compliance, and customer personalization pitfalls associated with them. Monolithic legacy cores do not offer the level of functionality that modern banking customers need, especially those favoring digital experiences in a post-pandemic world, such as mobile apps, online statements, and real-time money transfers.  

Modernizing core banking systems is essential for enhancing customer experiences. Yet, modernizing the core is not an overnight sensation and can require transition roadmaps that span several years. Therefore, it is important to find ways to offer customers more personalized experiences, whilst the benefits of digital transformation are delivered in parallel.  

To align with evolving expectations, they need to engage their customers with personalized interactions. The benefits of core banking modernization are clear from an IT perspective, but banks must also create tailored experiences using a 360-degree view of their customers. Because without real-time decision-making capabilities, the legacy cores of many banks cannot keep up.  

Tap into the potential of customer personalization with an intuitive CDP 

Developing a single customer view is not a new commercial priority, but the challenge for today’s banks is finding a sophisticated way of making their customer insights meaningful for marketing applications. A modernized banking core can record customer data across each of its platforms, but it needs a layer of intelligence on top for it to make sense from a marketing perspective.  

Yet, as banks modernize their core, there is an opportunity to integrate an intelligent customer data platform (CDP) that makes tapping into the potential of customer personalization possible. The benefit of a smart CDP is that you can aggregate customer data from the core and apply analytics on top, which in turn provides customer intelligence that can create much more intuitive customer engagements.   

An intuitive CDP can combine insights from every stage of a customer’s banking journey, from their transaction history to their current spending patterns, to create a constantly maturing customer account portfolio. With such a platform, banks can gain and retain customers during the digital transformation process through personalized interactions, such as helping them navigate through credit card and loan application experiences that align with their specific circumstances and context.  

Investing in better customer experiences throughout the digital transformation process is sensible for banks, as modernizing legacy cores isn’t a “rip and replace” procedure. Migrating monolithic business applications into a microservices architecture can take years, but banks can continue to build mature customer profiles in parallel by integrating a sophisticated CDP. An intelligent customer data platform offers the layer of insulation that banks need to create truly meaningful customer interactions while modernizing their core.  

To summarize, not modernizing the core comes with many pain points such as compliance risk and cost, a limited data ecosystem, and a lack of real-time personalization. The hollowing out of existing cores to remediate for eventual replacement in 5+ years is how to ideally modernize a banking core. Phases of identifying, transforming, co-existing, and eventually eliminating the existing core, are the key to success.  

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Comments: (1)

João Bohner
João Bohner - Independent Consultant - Carapicuiba 10 September, 2021, 15:17Be the first to give this comment the thumbs up 0 likes

"eventually eliminating the existing core..."

That's it!

It's about reshaping the way to process financial activities internally, ELIMINATING cumbersome backend/office processes, product silos, ETLs/DWs, by deploying a single source of 'knowledge' for all operational and compliance purposes.

Doug Gross

Doug Gross

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NGDATA

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This post is from a series of posts in the group:

Banking Strategy, Digital and Transformation

Latest thinking in respect to Banking Strategy, Digital and Transformation. Harnessing our collective wisdom to make banking better. Ambrish Parmar


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