Retail banks with outdated infrastructure must modernize in order to remain competitive against startups, according to a new report by Info-Tech Research Group. The report highlights the challenges faced by traditional banks in adopting innovative products and services due to their reliance on legacy mainframe systems and outdated software development methodologies.
The retail banking industry is facing increasing competition from fintech companies that are leveraging advanced hardware and software solutions to meet the evolving needs of customers. In contrast, traditional banks are struggling to keep up with these innovations due to their outdated infrastructure. Many banks are now re-evaluating their mainframe investments in order to address these challenges and deliver modernized offerings.
As the financial services market undergoes a significant transformation driven by technological innovation, traditional banks are embracing modernization efforts. However, a new wave of fintech companies is rapidly evolving, making the banking industry increasingly competitive, said David Tomljenovic, principal research director at Info-Tech Research Group. The current systems in traditional financial institutions were designed for batch processing, accumulating, and processing data at the end of the day, which conflicts with today’s customers who desire instant banking services.
The research conducted by Info-Tech Research Group emphasizes the rising costs and difficulties faced by banks in maintaining their mainframe hardware and software. The support for legacy mainframe hardware has become increasingly expensive, while the industry is also struggling to keep up with the accelerated pace of transactions, such as instant payments and real-time systems.
To navigate this transition, banks need to consider modernizing their mainframe systems to enhance their hardware and software solutions. Mainframes offer crucial capabilities in transaction processing, large-scale data handling, and security, which are integral for building a modernized banking infrastructure. Info-Tech’s blueprint for Mainframe Modernization for Retail Banking provides a comprehensive guide for banks to navigate the complexities of legacy systems and embrace agility and innovation.
The research also highlights the advantages of modern mainframes in facilitating faster and easier development processes. Modern mainframes support widely used development languages like Java, which can generate executable code for these systems. Additionally, the availability of development tools such as microservices and APIs can significantly simplify mainframe operations that would otherwise be complex and time-consuming.
By leveraging modernization efforts, banks can maintain a competitive edge in the banking industry. However, it is essential for banks to overhaul their software stack and shift their software tools and methodologies to successfully navigate this transition.
The report by Info-Tech Research Group emphasizes the importance of modernizing legacy systems in retail banks to remain competitive against emerging startups. By embracing innovative hardware and software solutions, banks can enhance their offerings and meet the evolving needs of customers. With the availability of tools like Java, microservices, and APIs, retail banks can streamline their operations and deliver instant banking services, which are increasingly demanded by customers.
In conclusion, the retail banking industry faces intensified competition from fintech startups. To remain competitive, traditional banks must modernize their legacy infrastructure and adopt innovative hardware and software solutions. By leveraging modernization efforts, banks can enhance their offerings and meet the evolving needs of customers. The availability of tools such as Java, microservices, and APIs can significantly simplify operations and improve retail banks’ competitiveness in the market.
