The payments industry is powered by legacy platforms. There, I said it. All the buzz focused on modular, cloud-based processing platforms make for great panel discussions, but the world is still dependent of decades old technology. If you are a new FI or program manager, then it probably makes sense to launch with the latest technology. However, the banking, travel and public sector still process the majority of their transactions on a legacy system. So how do current payment providers stay competitive with the fintech companies seeking to disrupt the space? By adopting a customer centric approach that delivers the user experiences that today’s consumers demand while playing to the strengths of the legacy platform.
Modern computing is based on the concept of sessions that may involve several different systems. This approach to computing was unheard when most of the legacy platforms were designed. Core banking platforms can provide significant value to the business but are extremely outdated in terms of modern features and functions. But there are a few basic approaches to make your legacy platform competitive.
Blue Oceans/ Green Fields
For some organizations, a complete mainframe application rewrite that provides a web and cloud-based system to improve the customer experience is the way to go. While it may make sense if you are a large company that needs the core to stay intact, it is probably the most expensive and risky modernization approach. However, IT departments can use, code conversion, automated code analysis and cloud deployment tools can greatly reduce the risks and costs. You will not get the flexibility of a true cloud-based, modular platform, but this approach will make a significant impact.
Lift and Shift
If your main concern is to reduce capital expenditures, then you can move your platform to the cloud and eliminate the costs to maintain an obsolete mainframe. Several companies offer emulation platforms that run COBAL and other legacy programming languages the will speed up the processes and provide better user access. But it will not allow you to create a flexible, highly-configurable solution that a purpose build cloud platform offers.
This approach is the most common solution for payment providers with multiple legacy systems. Many of the large companies in the industry have grown through acquisition and they have 1000’s of clients on several different platforms. To replace them all at once would be too complex and disrupt key relationships. Therefore, you prioritize platforms and replace them in a purposeful method. To accomplish this, an organization develops an abstraction layer (APIs or an interface) between the legacy application and the modernized cloud based application module. This allows them can operate the legacy mainframe functionality side-by-side with the modernized cloud application module. Once fully tested and confirmed, the mainframe functionality can be decommissioned and the cloud-based functionality takes over. This provides a nice balance of risk and capability.
Shrouding legacy platforms in web-services-based interfaces improves systems integration and the user experience. It is an effective short term solution as part of a transition plan but it is not the path to enduring success. Ultimately, payment processors need to offer a modular platform with highly configurable components that can be quickly assembled for customized solutions. Additionally, it should be a global platform that supports the regulatory and processing requirements at the country, province and municipal level. This allows an FI or program manager to quickly and efficiently adapt their programs to meet the ever-changing payments expectations of the end user.
Are you looking for a solution to replace your legacy system? We work with leaders in the industry that can help you develop a strategy. Book a Payments Discussion at https://www.paymentexecutive.com/book-online