At their core, financial services industry (FSI) companies are technology businesses. Every product and service they offer is technology-enabled, and the rapid evolution of mobile banking and digitization of processing in general makes technology even more critical. At the core of these technology businesses, however, sits a long-standing, and growing, problem: outdated information systems. Layer upon layer of aging information technology (IT) systems, including mainframe computers dating back to the 1960s, pose significant problems – excessive maintenance costs, process and decision-making friction, degraded business agility and more – that can easily degenerate into strategic risks.
To prevent these risks, FSI companies need to modernize their cores. Too few of these companies are considering modernization efforts, however: Less than one-third, according to the latest Protiviti research.1 The widespread reluctance is understandable. Core modernization projects are typically measured in years and hundreds of millions, even billions, of dollars. To overcome this reluctance and successfully modernize aging cores, IT executives and teams responsible for modernization projects should understand – and communicate clearly to stakeholders – the benefits and risks of these endeavors, and then put together a road map for moving forward that is suited to the unique environment and needs of their company.
In this white paper, we examine the need for this type of renewal, assess the risks and benefits of core modernization, and identify five approaches to this undertaking.