Many existing bank card systems are simply not ready for the digital world and its associated challenges. Banks yet to realise this soon will do – as a result, all banks should now be preparing for the realities of a world focused on digital payments in which current levels of complexity will only increase.
At Tietoevry, we commissioned a study into senior banking executive views of their card systems this year. This study found that more than half the card systems currently in use are between 10 and 20 years old and lack the flexibility to adapt to new digital-first product offerings. The survey also found four in five banks are having to employ more people than they did five years ago to patch up and maintain these systems. Banks know their systems are outdated, expensive to maintain and complex – and yet a lack of confidence in their internal capacity and concerns over operational interruptions and costs are preventing them from taking action.
In our experience, banks that fail to prepare end up making forced decisions to migrate to more modern systems and processes. Planning for migration means more than releasing a “request for proposals”: senior executives need to clearly articulate a comprehensive strategic plan to their organization, as well as finding ways to improve working practices in the bank, and be present to manage the plan when it is underway.
In our new study, we argue that banks should invest time and resources to align their IT requirements with the needs of their business, defining the scope of their migration internally to ensure they are able to replicate their existing functionality and add new features as part of the migration. The challenge banks face is to maintain current interfaces with customers while introducing scope for future growth and new capabilities.
We find there is often significant dissonance between a bank’s senior management and its IT management. While IT management will look to vendors to help manage internal process re-evaluation, there can be a reluctance to actually change the business processes that go along with the changes in systems and software platforms. As payments and business go digital, such process changes will be required: banks that do the strategic work today and have the foresight to take action now will be the ones that will thrive and win tomorrow.
Our new report, Options for Change: migrating to modern card payment systems, outlines different migration strategies banks can adopt and the pros and cons of each method, using case studies as examples. No matter which migration strategy banks choose, it’s clear that they should be working with experienced external partners who can guide and advise them at each stage of the process. As our report explains, banks should be migrating to modern card platforms without delay – or risk losing competitiveness and market share to more nimble, digital first competitors such as fintechs and neobanks.
To learn more about the right card system migration strategy for your bank, download the new report here.