Why Application Modernization Is Urgent in Financial Services

According to research from Gartner, software security and integration are the top challenges for finance firms. In fact, 72% of businesses said they planned to spend more on software in 2024 than the year prior. One reason is the prevalence of legacy applications that are still in use in the industry, even as these apps become more and more obsolete.

These apps remain common because they’re familiar. They may be clunkier to use than modern solutions, but they’re often ingrained as part of operational culture.

Security also plays a role in the ongoing use of legacy apps and systems. In theory, the insular nature of these tools makes them more secure than their public-facing counterparts. In fact, these applications may become the source of security issues if firms attempt to modernize by deploying always-on apps and connecting them to legacy tools. This creates an unexpected compromise path: Since older tools were never designed to work with web-based services, they lack the security required to keep data safe.

The result is a roadblock formed by firms’ own applications, and one that is naturally resistant to modernization.

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Shifting Away from Mainframes Requires Application Updates

Another factor in banks’ ongoing use of legacy apps is the industry’s historic reliance on mainframe computing systems, which had long been seen as safe and stable.

Modern finance, however, requires far more agility and scalability than what mainframes are designed to provide on their own. These are precisely the benefits that businesses seek from cloud and hybrid infrastructure.

Instead of prioritizing a slow and steady approach, many financial enterprises are now looking to partner with fintech organizations to help them bridge the gap between legacy and cloud-based systems, or in some cases are building modern custom applications themselves.

Sometimes it makes sense to replace existing applications with fintech functions. In others, it may be possible to refactor existing apps so they work with modern software solutions. And sometimes, the only option is to retire apps altogether. But how do financial services firms find the best way forward?

UP NEXT: The tools businesses are using for application modernization.

It starts with assessment: Understanding what applications firms have, where they’re located and how they work. SAMA offers fully automated assessment and reporting to help finance teams discover where they can simply move to the cloud, where more work is necessary, and where legacy apps and systems must be entirely replaced.

This sets the stage for effective application modernization that keeps what’s working, modifies what’s possible and deploys new solutions where necessary.

This article is part of BizTech’s EquITy blog series.