What is core modernization?
Core modernization involves the digital transformation of IT applications and infrastructure that results in more agile digital applications and strategies for businesses. As more businesses move to cloud platforms, they are faced with outdated legacy systems that are rapidly becoming obsolete. While they may have performed optimally at one time, without sufficient updates, repurposing them by moving them to the cloud renders them inefficient and outdated. Without core modernization, those organizations who depend on outdated legacy systems risk losing their competitive edge.
Incremental modernization results in a rapid-fire response to ever-evolving technological advancement. When migrating from premise-based systems to the cloud, organizations often benefit from an incremental and continuous approach to modernization. This response helps them maximize the value of their core business systems, while lowering the cost and risk often associated with digital transformation.
Core modernization has the potential to completely transform the financial services industry. Increasingly customers have been foregoing interactions at brick-and-mortar locations to transact in mobile environments in real time, leaving banks vulnerable to regulatory risk tied to these transactions. Yet they continue to rely on decades-old legacy systems rather than step outside of the firewall to meet their customers. Through hybrid integration, connecting these legacy systems to new internal applications, as well as external third parties, allows financial institutions to meet customer demand in the digital space, facilitate regulatory compliance and drive revenue while reducing cost.
The business benefits of core modernization are:
- Simplify.Legacy systems, along with their applications, including their associated data, network configurations and security applications, are tightly coupled, so system updates are often a challenge. Core modernization breaks apart monoliths into their individual component parts, making it easier to upgrade application components individually.
- Realize greater efficiencies. Companies look to core modernization and cloud migration to improve profitability through operational efficiency, which ultimately results in higher productivity. Modernizing core systems helps companies work smarter and cheaper, improving time to market and at the same time, reaching more customers.
- Reduce risk. As legacy systems age, so does access to a talent pool with the expertise to support what is often decades-old infrastructure, resulting in more rigorous, costly maintenance that is fraught with risk, including regulatory risk. Modernization positively impacts the effectiveness of compliance risk management practices.
- Find new revenue streams. Digital transformation brings with it the potential to create new features, automate manual processes and launch new service offerings—allowing companies to create new products and services or processes that deliver value to existing customers, and also help to attract new ones.