Do your customers want new experiences that you are unable to deliver, quickly? Are your employees swiveling across systems and applications to access customer data for more informed cross-selling and upselling? Are you concerned with the amount of regulations you have to keep up with and the security of your IT infrastructure? Are your IT teams struggling to deliver projects on time?
If your response to any of these questions was yes, the good news is you’re not alone. The best news? MuleSoft is committed to helping you address those questions.
Legacy systems stand in the way of efficiency, productivity, and resilience
The way we interact has evolved since 2020. With customers, there is an increasing trend and attraction toward services, products, and experiences that offer convenience, flexibility, and control. For employees, The Great Resignation and hiring has also created a preference for optimal work experiences. This has increased pressure on business leaders to prioritize service and operational excellence, and as expected, IT is feeling the most heat from this pressure.
MuleSoft’s most recent financial services connectivity benchmark report shows that 94% of ITDMs believe that the rate of digital transformation has increased over the last five years, yet only about a third of them delivered on their digital transformation projects. Worse, of that third, only about half of the projects were delivered on time. This gap in delivery is the reality of many IT teams and leaders, especially within banking, and the key to closing this delivery gap is in modernizing legacy systems.
For business leaders across all sectors,especially banking and financial services, last year was all about growth and emerging from the pandemic stronger. Today, while they are still focused on growth, there’s a heightened sense of urgency around efficiency, productivity, and resilience.
As a result, we’re seeing increased interests in solutions that enable service and operational excellence as well as productivity. This has generated more conversations on topics such as integration and automation. Essentially, digital transformation remains a priority. It’s not a buzzword that’s going to fade with time; it’s the reality of succeeding now.
This reality is especially important for financial institutions. The impact of failing to address these changing market dynamics is not only apparent, but it’s also significant.
Today, 72% of customer interactions are digital. Comparing this datapoint to reports from previous years shows that regardless of the interaction – whether it’s a retail purchase, a medical appointment, or a mortgage loan processing – customers are increasingly attracted to service options that offer convenience, flexibility, and accessibility. Financial institutions that fail to reflect these in their products and services are at risk of losing about $7.5M in revenue.
Yet, many struggle to deliver connected experiences as quickly as customers demand. They find it difficult to integrate these end-user experiences for a number of reasons, but the most common challenges are data silos, outdated IT infrastructure, and security and governance.
Understandably so, many financial institutions are legacy institutions that have been in existence for decades, and this is also reflected in their technology infrastructure. Legacy systems built on outdated architecture are often complex in nature and not flexible or agile enough to support the delivery of modern initiatives. Legacy systems rely on traditional integration approaches, such as custom code and point-to-point integration.
As a result, IT is overworked with designing, building, and testing new custom integrations between systems and data. Even more troubling, IT is spending over 70% of their time maintaining custom integrations versus innovating. The business, on the other hand, is spending over $3.5M on maintaining those custom point-to-point integrations. Across the board, legacy systems have costly implications.
There has to be a better way to do this. How can financial institutions with legacy systems unlock innovation and adapt to a more dynamic and complex environment?
To address legacy modernization, we must first address data silos
Data is truly what drives digital transformation. Understanding how your customer interacts and engages with your products and services unlocks insights on how you should evolve your operations, solutions, and delivery of desired experiences.
With legacy infrastructure, data lives in hundreds of systems and applications that are often not integrated. Because applications are at the center of digital transformation and efforts to enhance the user experience, the average enterprise has close to a thousand systems and applications used to power digital user experiences.
Yet, only about a quarter of those systems are integrated. Our research shows that the average digital interaction requires 35 or more technology systems, so that gives you an idea of the implication of these silos on IT and business teams. Data silos impede innovation with costly implications.
Essentially, applications, data, and systems are on the rise. However, integration is not, and this is causing an increase in data silos. At MuleSoft, we believe the way to solve this problem is by turning every asset in your organization – every piece of data, every process, every application – into standardized reusable building blocks, like APIs, which form the foundation of composability.
By doing this, you can go faster, and build more securely with the future in mind. You no longer have to write custom code or build point-to-point integrations each time you have a new digital project to deliver.
APIs are the building blocks that represent unique business capabilities – like payments data or CRM information – that can be composed easily into a connected experience. How does this work?
If various components are wrapped in APIs that can be easily discovered, understood, consumed, and secured, they enable different teams across the organization to access data and digital capabilities in a way never before possible, while giving IT the tools to manage and secure them at scale. This allows organizations to roll out new connected experiences faster today and in the future.
Close the IT delivery gap by empowering everyone with tools to automate
IT faces more complex challenges than in previous years. The number of applications in your technology and business landscape has dramatically increased; so has the need for automation.
Before, the only solution to integrating data, systems and applications to build desired customer experiences lay in the hands of a developer with a backlog of point-to-point integration work.
This approach has costly implications not just for IT teams, but the business as well. Everyone should be empowered to build these experiences. To stay competitive, financial institutions should be harnessing the potential of every person in the organization to drive digital transformation. IT needs to free up capacity to innovate and business teams need to be empowered to go faster.
As a composable business, by reassembling reusable building blocks of packaged business capabilities like APIs, you go faster with each subsequent project. You’re more efficient because you’re reusing, not rebuilding. On a single platform, you can create, manage, monitor, secure, and govern all of these assets at scale. In addition, you can start to automate common processes and APIs. This accelerates your pace of innovation and time-to-value.
Not only does this make you more adaptable, it puts you in a better position to scale your delivery capacity, support more initiatives, deliver projects faster, and drive business outcomes.
Modernizing legacy banking systems is the key to unlocking innovation
To truly unlock innovation, banks and financial institutions with legacy systems must begin their infrastructure modernization journey with these three steps:
- Aligning IT and business objectives
- Unlocking core systems and integrating siloed data securely
- Minimizing complexity and maximizing reuse
This holistic approach considers initiatives beyond the short-term and allows you to build a future-proof foundation for a secure, agile, and efficient architecture.
Faced with a complex landscape of legacy and modern applications, a rapidly changing regulatory compliance environment, and an evolving set of customer expectations, banks and other financial institutions are poised to benefit from legacy modernization driven by composability.
Learn more about the benefits of unlocking core systems and leveraging an API-led approach to connectivity.
