Top 5 Reasons Banks Should Modernize Their Core Legacy ApplicationsFinTech companies are competing for lending market share from consumers demanding a real-time, digital banking experience. Most large- and medium-sized banks are being forced to consider replacing their core banking systems. These legacy applications are the heart of the bank’s lending operations and banking activities including DDA, consumer lending, commercial lending, and loan processing. Replacing core banking systems is challenging but will ultimately give banks a competitive advantage in the evolving digital marketplace.
Why are banks hesitant to modernize loan account management software?Core legacy applications have been reliably supporting critical accounting functions and millions of customer transactions for decades. Replacing “bullet-proof” COBOL core systems is not an easy decision to make.
Core legacy applications have typically been customized to specific bank products and services over time. Banks assume such functionality will not exist in modern servicing systems.
Most banks have already made significant investments to improve their customer experience by building or integrating needed applications and services around their core applications. Banks may be fearful this makes the core system replacement strategy too complicated.
Migration to modern platforms involves a significant investment and risks. The project effort will require a tightly managed data conversion, updates to integrations and data points, unwinding layered applications, and reworking internal configurations and processes.
Why should banks modernize their loan account management software?
- Digital transformation: Modern systems offer real-time, web-services-driven tech stacks which allow you to compete for customers in an evolving digital marketplace. Banking innovation should not be hindered by the inefficiencies of legacy applications.
- Compatibility: Integration with modern technologies and third-party vendor applications will be critical to remaining competitive. Database-driven software, AI, and agile are not just a thing of the future, but of the present. Older technologies can be difficult and expensive to integrate with third party solutions.
- Improved IT (Information Technology) support: Software upgrades, service updates and patches, including security improvements, regulatory compliance, and internal controls, will be less obtrusive for your operations staff and users, and less costly and easier to implement.
- Access to critical IT talent: The COBOL and mainframe resources needed to support legacy systems are dwindling and will be difficult to replace. The current workforce is proficient in state-of-the-art technologies such as JAVA, Python, C#, and SQL and Oracle databases.
- Better customer and employee experience: Your organization will be able to provide improved service levels, maximize customer satisfaction, and improve user and customer service productivity. Today’s workforce expects to work on modern systems that give them the power and flexibility to do their work effectively.
Banks will find it difficult to support their core legacy systems in the long term. Lack of available IT resources, incompatibility with modern technologies and applications, cyber-security vulnerabilities, dwindling vendor support, scalability restrictions, and the high cost of ownership will force banks to modernize. The need to improve the customer experience, by meeting consumer digital and mobile expectations, will also be a key driver for legacy system replacement. To compete in a constantly evolving digital marketplace, banks should consider modernizing their core systems.
About Shaw SystemsShaw Systems’ Spectrum loan servicing software is the accounting system of record for some of the most sophisticated lenders in North America. Spectrum’s real-time accounting capabilities allow payments to be posted immediately, giving our customers up-to-date loan information when presenting information to their borrowers or reporting on the portfolio.
Shaw’s flexibility in configurable lending products allows our clients to easily deploy and manage a wide variety of consumer lending products including simple interest loans, precomputed loans, and lines of credit. Clients have 360 degrees of visibility for every accounting and behavioral aspect of their portfolio. Preconfigured queues allow clients to take the correct action to service their borrowers, from due date changes to complete loan rewrites.
The core of Shaw’s accounting software is our Spectrum loan and line of credit servicing system. Many of the largest and most sophisticated bank and finance companies in North America leverage our software to improve their business. Our clients choose Shaw for their loan servicing software requirements because of our depth in functionality and flexibility in technology.
If you would like to learn more about Shaw’s Spectrum software, call us at 713.782.7730, or email us at firstname.lastname@example.org.