A new PYMNTS article explores the challenges facing businesses when it comes to updating legacy systems to embrace and take advantage of modern workflow solutions.
Unfortunately, many firms find themselves facing a reinvention of their systems.
Many simply don’t want to, and it is holding them back.
Firms shackled by legacy systems frequently struggle to meet customer expectations, falling behind competitors who embrace modern technologies and adapt to changing market dynamics.
What’s more, incompatible legacy systems create silos, impeding data flow and collaboration within organizations, as well as expose firms to security vulnerabilities, leaving them susceptible to cyber threats in an ever-evolving digital landscape.
Regrettably, many businesses -- including FIs -- have the age-old mindset that "if it aint broke, don't fix it." This has led to the utilization of legacy systems for decades.
Challenges for Updating Legacy Systems
The article notes that while there are new digital and electronic payment methods, 62% of firms still use legacy method to pay for commercial goods -- including checks.
The article admits that there are factors preventing business from updating legacy methods, including:
- Requires "heavy lifting" or a significant amount of work/internal resources
- Capital investment
- Affects current vendors and contracts
“People are not saying, ‘Our biggest problem is paper checks’ — that is not currently in the debate … The general managers, decision makers, these folks are usually within a few years of their retirement, and they don’t want a lot of change because they want to finish out and let somebody else take on the next effort,” Jake Joraanstad, CEO at Bushel, told PYMNTS.
The Role of Financial Institutions and Core Processors
Businesses rely on their FIs and core processors for nearly everything when it comes to payments. So, why can't they rely on them to provide the latest and greatest solutions/technology? The simple fact is that FIs and core processors SHOULD alleviate, or better yet, take on the burden for their customers and businesses.
“It’s important that FI’s and the banks know that they can move forward with new technologies without destroying what they’ve already done, because a rip-and-replace technology is terrifying, it’s scary, it’s expensive, it’s risky,” he said. “So being able to move forward with some of the newer capabilities and work with companies that can provide those new services (is the answer).”
But FIs and core processors are not going at it alone. Replacing legacy systems with new technologies powered by artificial intelligence and machine learning may seem a daunting task, but the right partners have experience in completing these types of migrations and can ease the burden for financial institutions and core processors.
This includes check payments, where AI and deep machine learning technologies are helping FIs, core processors, and end-users (customers and businesses) streamline check payments -- with field performance of 99% automation and 99.5%+ accuracy.
As businesses look to rely on their FIs and core processors to help them update their legacy systems, FIs and core processors can look towards their fintech vendors to do the same.