The digital transformation is leaving some businesses behind, and they know it. Companies that are holding on to their legacy software are beginning to feel the pinch.
In a survey by Riverbed Technology, 97% of respondents said their legacy financial software will have difficulty keeping pace with advances like cloud-based tech, and 98% say a next-gen network is critical to keep up with the needs of their business and end users.
Moving to a new software is a big decision. Data transfers and training needs are understandable concerns and barriers to replacing outdated legacy technology. But those concerns are far outweighed by the gains made by moving to new systems.
Find out more about the risks you take by hanging on to legacy financial software, and why TAMP1 can be the best solution for your wealth management firm.
Hanging on to an old system can become a problem when a vendor no longer supports it.
This is what some consumers are facing now. Microsoft has stopped supporting its operating system Windows 7 as it favors the newer Windows 10. Some people are holding on to their legacy system, for convenience or familiarity. However, they risk crashes, security vulnerabilities and viruses because software updates and security updates have ended.
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When businesses consider updating technologies, one of the biggest concerns they have is how to justify the cost. But there’s a countervailing question: What’s the cost of keeping outdated technology?
A survey about the changing face of global fintech by PricewaterhouseCoopers identified some issues companies face when moving to updated systems. Financial services companies said security, compliance and data privacy risks were the top issues blocking a new fintech strategy. Other top issues included the risk of adding to their existing systems, and the barriers of regulatory compliance.
Many organizations lagged behind in implementation of new fintech. Of the surveyed organizations, more than half didn’t have fintech fully embedded across their system - in fact, 16% had no formal, documented strategy how to do so at all.
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The decision to keep legacy software and not upgrade to newer fintech opens companies up to risks, both internal and external. Here are some of the risks wealth management firms are left with when they don’t rid themselves of legacy software.
Most legacy systems are incompatible with newer systems. “Old” and “new” technology rarely works together. If your legacy system prevents you from using new, advanced capabilities, you yield advantage to your competitors. This imperils your business by risking your clients and revenue.
Older systems are often plagued by increased failure rates. This makes system downtime unavoidable, creating issues for your small business. Downtime like this can set off a cascade of problems:
The cost of keeping legacy systems can add up for a small business trying to manage a budget. Making constant adjustments to a legacy system becomes increasingly difficult. There will come a time when you’re spending more money to maintain your legacy systems than you would have spent if you had upgraded everything when you should.
Decreased security is a huge concern when it comes to using legacy systems. As in the Windows example above, unsupported systems become more vulnerable to attackers. A single vulnerability, left unpatched, can enable attackers to access all applications and databases running on a server platform. Plus, without modern backup and disaster recovery solutions, the business will never be able to properly safeguard its data.
As your business grows, you’ll have changing technology needs. Businesses that are constantly evolving need software that can keep up. Legacy software could inhibit growth and scalability. Remember, if you’re not growing, your competitor almost certainly is.
According to PricewaterhouseCoopers, 53% of multinational and large corporations have embedded fintech fully across their strategic operating model, while only 39% of middle-market and 34% of micro, small and medium-sized enterprises have done so. If you’re not using up-to-date fintech, you’re ceding that advantage to your competitors.
There are dozens of ways new fintech can help you grow your business. From taking the pressure off of legacy software to presenting an up-to-date look to clients, wealth management firms can find new benefits and build client retention from new tech.
In the PricewaterhouseCoopers survey, financial services firms say these are the most important ways emerging technology can help retain customers:
Here are 3 of the top ways your company itself can benefit from ditching legacy software.
The more you can take control of your data, the better for your operations. Customers expect immediate access to their data, and you can provide it with the right fintech.
Clients are looking for speed, availability and ease of use - all of which are typical features of new fintech.
PricewaterhouseCoopers says they believe most people expect such speed and ease, so firms that focus on these might only meet customers’ expectations and not differentiate themselves. They see this third point as they key to keeping business.
Personalization is one of the biggest advantages of new fintech over legacy software. In a rapidly changing marketplace, companies that can offer personalization gain a significant advantage.
Clients want to see data that is relevant to them and easy to understand, not to mention easily accessible. The right fintech application will meet those requirements.
Companies that have embraced fintech are making big gains, and those that haven’t are being left in the dust. In fact, three-quarters of executives in the PricewaterhouseCoopers survey said they’re stepping up their fintech investment in the next two years.
Empaxis offers several cloud-based solutions to help you develop a comprehensive set of services that your clients will love.
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