There’s no doubt banks need to modernise legacy systems to keep up with today’s demand, but the risk of big bang migrations (moving an entire dataset from legacy to targeted systems in one operation) has never been higher. And it’s proving to be a blocker for progressive platform modernisation.

The arrival of non-bank providers, including Big Tech players, fintechs and new challenger banks is the driving force behind current payment platform modernisation. They have completely shifted dynamics. Payments are no longer a bank-on-bank business, now a lot of new players are going after bank franchises.

The majority of these new players are born in the cloud using modern, data-centric technology. Add to that the smartphone, which has completely changed the demand for speed and user experience in the economy — something that has been especially accelerated by COVID.

All of this puts a huge amount of pressure on banks, particularly traditional banks, as it’s increasingly difficult to compete while hampered with old technology in today’s modern society. Over the years, many have evolved legacy systems to improve the user experience, but some are still running on older core systems. And eventually, they will need to future-proof these systems if they stand a chance against the growing fintech crowd.

Here are the key steps banks need to take for successful modernisation.

Identify business requirements

There is a real risk that banks will approach modernisation as a business-as-usual upgrade. But true payments platform modernisation requires many new elements - such as data storage and agility. Market and consumer expectations are changing all the time and a clear vision of where things will be in five years is impossible, which is why it’s key to identify current business requirements - like agility - to ensure banks can evolve and prepare for whatever lies ahead.

Move strategically and grow the new in the cloud

The cloud is a famously broad subject, and it’s not just a data centre in the sky for hosting. It’s a broad set of technologies that enable agility and modernisation securely. For banks, it also offers many new tools, including data and data processing, Artificial Intelligence (AI) and Machine Learning (ML). All of which are critical elements in any payment platform modernisation piece. Payments are not just about the widgets that consumers process as payments, but the insights and the context consumers can gain from them as well. And the cloud is a key enabler for banks to gain these insights.

Wind down the old

Business models are changing and part of that fundamental change within a bank. The journey to the cloud starts with the infrastructure and then many financial institutions add more sophisticated elements as the project continues. And that’s the general trajectory of the industry; the winding down of the old goes hand in hand with adopting the new.

Plan for future fit

It’s vital to remember that it’s not actually about the technology, it’s about what you want to achieve from a strategy point of view, from a client point of view, and that has to be the real driver. Take cloud technology - it’s about agility and the ability to accomplish modernisation, not simply the adoption of new, ‘cool’ technology. This attitude, along with looking for the right partners will help plan for future fit platforms. As, having the right partner will create new ecosystems which bring in new customers and sales channels.

Enable room for growth

With a future-proofed payments infrastructure, financial institutions have an evolution path that enables them to modernise without interrupting their business. With modern technologies and solutions, there is a choice to leverage different deployment models at different stages of the platform modernisation process: in-house processing, cloud processing or hybrid implementations with the option of a managed services approach — which all bring benefits tailored to the individual growth strategy of the business.

Ultimately, for banks to start their journey to payment platform modernisation, they must allow room for new services and products that target today’s modern society. This will make their organisation far more competitive against the rising fintech crowd and more likely to exceed customer expectations to drive new revenue streams.