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The ever-evolving financial ecosystem is making the transformation in banking more related to necessity than choice. It is about the transformation of legacy systems, the adoption of state-of-the-art technologies in core operations. The main objective of this transformation is to improve customer experience and also to meet the increasing regulatory requirements. Key drivers include digital transformation, efficiency, and competitiveness in an increasingly technology-savvy market.
This is no mere operational tweak; this is an enterprise-wide strategic initiative, precisely the one that will define the future of the bank.
Data and system migration is one of the most crucial and complicated pieces in the jigsaw of banking transformation. In simple terms, migration means transferring data, applications, and operations from legacy systems to modern platforms or integrating a new system into the existing ecosystem.
Any transformation should be able to provide smooth migration. Whether it is onboarding of a new core banking system, providing digital banking, or migration to the cloud, any migration should be seamless. Key challenges are:
Migration is the linchpin of transformation programmes.
A successful migration requires a well-framed strategy in tune with the bank's overall objectives of doing business. The key factors include:
A good approach should consider objectives, timelines, and resources. It has to state scope-of-work in terms of full-system replacement, phased migration, or hybrid approach, and be aligned with broader transformation imperatives such as improved customer service or cost efficiencies.
Data is the lifeblood of banking, and at no time should it be compromised. Key processes would include:
Governance frameworks will be robust in governing the migration and mitigating the associated risks of accountability. Engagement at various touchpoints with stakeholders ensures alignment of IT, operational, compliance, and customer service teams. Third-party specialists might also provide insight and expertise.
Operational change accompanies migration. Effective change management encompasses thorough training, communication, and continuous support to overcome post-migration issues.
Poorly executed migrations carry significant risks, including but not limited to the following:
Failed migrations may lead to system outages, transaction errors, and delays. As recently as 2018, the IT migration failure of TSB Bank was far from painless, considering the prolonged outage affecting millions of customers and costing £330 million in remediation.
Non-compliance while migration results in heavy fines and also knocks down the reputation of a bank. The big fine imposed on a large European bank because of an inadequate level of protection of data during cloud migration is quite well known.
Poor migration causes disruptions and quickly erodes customer confidence, leading to customer churn and abandoning the bank for competitors.
These migration processes are getting quicker and more reliable due to new technologies.
These technologies automate data cleansing, mapping, and validation to ensure higher accuracy with less human effort.
Cloud platforms provide scalable and cost-effective solutions that ease system integration, improve disaster recovery, and enhance resilience during migration.
Data extraction, validation, and testing are easily done using tools like RPA; hence, migration would be faster and human errors are reduced.
Analytics tools support real-time monitoring during the migration process and provide insight into data quality, system performance, and bottlenecks to enable an informed decision-making process.
Migration in the future will also characterise the core of banking transformation. Banks will have to innovate by becoming agile in methodologies and culture for continuous improvement through the following:
In other words, migration is the linchpin of banking transformation programmes. All aspects-modernisation of operations, improvement in customer experiences, and competitiveness-depend on migration. The path is also strewn with several challenges, from crumbling old systems to very strict regulatory compliance. However, banks can surmount all these challenges through strategic approaches: technological innovation, data integrity, and good governance as the enablers.
Indeed, investment in strong migration frameworks and practices will bridge standalone projects into a continuum of innovation and growth over the coming years.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Victor Irechukwu Head, Engineering at OnePipe Services Limited
29 November
Nkahiseng Ralepeli VP of Product: Digital Assets at Absa Bank, CIB.
Valeriya Kushchuk Digital Marketing Manager at Narvi Payments
28 November
Alex Kreger Founder & CEO at UXDA
27 November
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