Imagine communicating with other people in your industry but you only have a pen and paper while everyone else is using instant messaging. That’s what it's like for banks that still rely on legacy payment technology instead of modernized practices.
An IDC study predicts that nontraditional financial services institutions will be responsible for managing 80% of consumer transactions.
The opportunity for financial institutions (FIs) to modernize their payments technology stack allows them to become successful figures among the next generation of consumers.
Businesses that are stuck in the past are losing customers to those who are integrating modern systems into their tech stacks with progressive modernization tactics.
In a digital-forward society, cloud-native banking practices provide customers with efficient services at the level of quality that they are looking for in the financial services industry.
Defining progressive modernization and its benefits
Progressive modernization is a phased strategy for financial institutions to improve their traditional banking platforms. By slowly incorporating features into cloud computing technology, financial institutions can expect a wide variety of benefits that meet the needs of their customers in an expanding digital world.
Progressive modernization is executed in sections to minimize issues that could result from a one-time overhaul to an entirely new platform at a financial institution. This low-risk option provides banks with a method of modernization that won’t disrupt their daily workflows.
Utilizing the progressive modernization strategy provides FIs with the increased agility needed to satisfy the new demands of today’s digital economy. Innovative cloud compatibility allows businesses to prioritize the mobile-first needs of their clients while streamlining internal processes.
Exploring the challenges of financial institutions today
Today’s digital society introduces new demands from both customers and employees at financial institutions. Now, everything needs to be faster, easier, and compatible with expanding practices. Many legacy tactics are not able to keep up with mobile banking, pushing financial services institutions that rely on traditional technology behind their advancing competitors.
Unsecure technology
For many years, the financial industry was the leading target of cyber attacks, according to IBM's 2022 Threat Intelligence Index. Although financial organizations are no longer the most targeted institutions, this provides insight into how modernized approaches to banking infrastructure can keep businesses safe from malicious attacks. Those who stay behind in modern advancements are more likely to be victims of these attacks if they fail to implement up-to-date security measures.
Updated compliance regulations
Today’s financial trends are emphasized by technology that makes all internal and client-facing processes easier than before. Compliance regulations require procedures to ensure the privacy of clients, but recent shifts have made almost all transactions entirely digital. Obtaining new licenses can be difficult with old hardware that no longer falls in line with updated standards.
Growth limitations
As we see a shift to nontraditional banking methods, FIs need to be able to expand with the changing needs of their customers. Legacy payment stacks that are not able to grow with new demands could end in serious consequences, like over-exhausted servers that operate at a slow rate due to high traffic.
How progressive modernization can help financial institutions
From ease of use to growth capabilities, the progressive modernization approach to cloud computing provides banks with the flexibility to keep up with the pressure imposed by the new generation of banking.
Enhanced security features
Threats to security grow with increased cloud usage, but cloud technology is expanding as well. New tech increases security features by integrating access control management and encryption capabilities. By transferring banking practices to cloud software, security measures can be regularly modified and updated to avert the threat of cyber attacks.
Regulatory compliance
Strategies like eSignatures are both user-friendly and comply with updated compliance standards. Old tech stacks that fail to incorporate features such as this are going to fall far behind their competitors and other banks, but modernized practices allow for updated regulations to be seamlessly integrated with advanced functions.
Automated processes
To keep up with the fast-paced mobile world, cloud software provides automated capabilities. Data organization and internal communication efforts can be simplified to boost productivity. Automatic processes allow for banking practices to be completed right away while employees can focus on other tasks, like helping customers.
Scalability
Modernization to cloud technology allows for FIs to grow as needed without completely changing their infrastructure. As institutions grow or clients are requesting more services, banks can add-on new features thanks to cloud capabilities, which improve customer relationships, acquisition of new customers, and customer loyalty.
The risks of not being proactive with modernization strategies
Legacy technology is often incompatible with new applications of banking practices. Waiting too long to upgrade old tech can lead to system failures, and finding the right experts who can repair damaged systems is becoming increasingly difficult due to the rise in demand for IT professionals.
Consumers are not willing to wait around for other businesses to keep up with their needs. If clients find that legacy payment systems are not meeting their standards, they will find other locations that are able to fulfill their demands.
FIs that fail to introduce modern technology soon enough are likely going to lose customers to other organizations that are being proactive with their improvement efforts.
Why financial institutions should invest in progressive modernization now
Acting quickly is the best way to ensure that banks can meet the needs of their customers. While progressive modernization approaches take time to implement, the sooner the project can begin, the sooner your organization will transform into an agile and resilient business.
Investing in cloud computing technology provides FIs with an opportunity to streamline their workflows, making daily practices easier on employees and promoting positive customer experiences. As banking trends continue to change, it’s important to have a platform that allows your business goals to grow as well.
Any FI that still relies on legacy tech runs the risk of losing business and taking a massive step backward compared to its competitors. Those who understand the importance of agility and growth in today’s digital banking atmosphere will be strong players in the industry.
Modernize your tech stack with E6
To keep up with the latest customer demands, E6 stands as a global provider of payment processing technology. Our platform allows FIs to transform their banking practices into a carefully managed program that allows for customized growth and flexibility.
Legacy technology can leave you stuck with many limitations, but utilizing the progressive modernization approach to our cloud-based applications can help you adapt to any changes that arise in the financial space.
To get started, contact an E6 team member today and learn more about our line of products and services and how they better help you serve your customer base.
