Modernization is crucial for financial corporations to stay competitive, but it's not an easy journey. One significant hurdle they face is the gap between their existing infrastructure and legacy systems and the latest groundbreaking technology that promises to revolutionize the way they do business.
In this article, we will dive into the reasons for this gap's existence and discuss the four main challenges that financial corporates face during modernization: budget constraints, lack of skilled resources, legacy system integrations, and change management.
Budget constraints can be a significant obstacle to modernization, as it can be an expensive process. However, successful and well-managed modernization projects can yield a proven long-term ROI that can overcome budget constraints. It's important to keep in mind that the older a legacy system gets, the more costly it becomes to maintain. Modernizing the system can save up to 35% to 50% of the budget spent on infrastructure and maintenance, while also supporting regulations and compliance requirements.
The lack of skilled resources is another challenge that can make modernization difficult. Implementing modernization requires a team of experts with knowledge in technology, finance, and project management. Financial corporates can overcome this challenge by working with external innovation consultants who can bring expertise and project management skills, while also training the current employees, including those who have been with the company for many years, to work with new technologies. This can be an opportunity for employees to expand their skillset and grow together with the company.
Legacy system integrations are a common challenge for many financial corporations, often caused by End-of-life (EOL) systems, applications that cannot be scaled, heavily patched software, and applications that no one in the team knows how to maintain. To overcome this challenge, financial corporates should demand more from their vendors to help integrate legacy systems with new technologies. This can include working with vendors to develop a plan to integrate these legacy systems with new technologies, such as cloud computing or artificial intelligence, which can improve efficiency and streamline processes. By doing so, financial corporations can leverage the benefits of modern technologies while retaining the value of their legacy systems.
Last but not least, change management can be challenging as implementing modernization can be disruptive and require changes to processes, systems, and employee roles. To successfully manage change, a proactive and transparent approach that includes clear communication, comprehensive training, and ongoing support to employees can be implemented. Additionally, involving employees in the process can increase engagement and buy-in, and ultimately lead to a smoother transition and successful modernization.
In conclusion, modernizing financial corporations may seem daunting, but with a proactive and customized approach, the challenges can be overcome. It's important to remember that these changes won't happen overnight, but every small win is still a step forward toward achieving the ultimate goal. By involving and supporting employees, addressing legacy system integrations, working with external experts, and managing change effectively, financial corporations can successfully implement modernization projects that can bring significant benefits to their organizations, such as improved efficiency, streamlined processes, and enhanced customer experiences.
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