Modernizing Outdated Systems: The Crucial yet Overlooked Key to Powering Financial Innovation for Mid-Market Firms
The Need for Modernization
While innovations like AI and sophisticated data analytics have become more accessible, many mid-market financial institutions still rely heavily on legacy systems. Modernizing these outdated platforms should be a key priority. In fact, AI now jumps ahead of other technologies according to a recent survey conducted by Deloitte, as the top tech investment priority for 40% of mid-market companies, compared to just 12% predicting a significant AI impact a year ago. More than twice as many firms with active AI solutions also report over 20% revenue growth.
Quick Wins Through Automation
We have seen many regional banks and credit unions struggle with mission-critical platforms that are 10-15 years old, leading to manual processes and limited digital capabilities. Upgrading these systems, as painful as it may be, enables the ability to launch new digital offerings while leveraging flexible cloud infrastructure. Leaders appear to be seeing results from a sustained focus on data security as well, with 74% indicating high confidence in their cybersecurity capabilities. AI adopters notably have 2.5 times the rate of very high cyber confidence. Process automation is another key element. Robotic process automation (RPA) can eliminate repetitive tasks draining efficiency. According to that same Deloitte survey of mid-market firms, one wealth management firm used RPA to automate new account opening, cutting process time from 21 to 4 days. This freed up employees for more valuable services and saved the firm significant money.
Taking a Strategic Approach
Legacy systems modernization sets the foundation for innovation, but it's also important that companies take a strategic approach even for foundational upgrades. Over half of mid-market firms see competitive threats moving into their markets from outside sectors. However, 70% have developed assets that could expand outside their industry.
Identifying High-Impact Areas First
When embarking on modernization, mid-market financial firms should start by identifying the biggest pain points in terms of manual processes, bottlenecks, and poor customer experiences. By tackling these high-impact areas first, quick wins can be demonstrated to build momentum while expanding into adjacent sectors. Think, CRAWL, WALK, RUN. It’s not only important to prioritize and address a big pain point but you must also be able to demonstrate that the prescribed solution is solving the problem. This allows for confidence to be built amongst all the stakeholders in the business.
Constructing a Long-Term Modernization Roadmap
In parallel, companies need to evaluate long-term objectives around areas like real-time data analytics, open banking APIs, cloud infrastructure, and product innovation. This helps construct an end-state vision and roadmap to modernize legacy platforms incrementally. Rather than a single, high-risk “big bang” replacement, this agile approach transforms systems gradually.
The Value of an Iterative Approach
With the right strategy and planning, legacy modernization delivers immense value. But it is also an ongoing journey of continuous improvement to retain scarce tech talent and keep pace with innovation as technology and customer needs evolve. By taking an iterative approach, financial institutions can leverage modernization to meet future demands. Vantage Point has deep expertise in both financial services and Salesforce and can be an invaluable partner in this modernization journey. As a boutique firm focused on client success, we work closely with institutions to prioritize upgrades based on business goals, build cross-cloud roadmaps, and take an agile approach to transform systems incrementally without disruption. With full-service Salesforce offerings spanning advisory, implementations, integrations, and managed services, we enable clients to get the most value from their Salesforce investment en route to more innovative digital platforms.