Legacy Systems Are Failing Commercial Bankers
June 16, 2021
By: Kate Drew
Legacy technology isn’t adequately serving commercial banks’ needs. In fact, less than a quarter of commercial bank execs surveyed by Gartner indicated high confidence in the ability of legacy processes and systems to meet current demands, despite 69% saying this was of high importance. This represents a huge gap between how important it is for these systems to perform and the likelihood that they will actually do so. More worrying is that the survey asked specifically about current demands and not future requirements, meaning these bankers are stuck with processes and systems that aren’t meeting their needs today, never mind tomorrow.
With most looking toward the future, the prospect that current requirements aren’t being met is a scary one. But perhaps it can be used as an impetus for change. Commercial banking has long lagged behind retail banking when it comes to digital capabilities, and the Covid-19 pandemic put a spotlight on those shortcomings. Many banks were forced to up their game in areas like digital onboarding, remote relationship management, and even origination. For example, 70% of respondents to Bank Director’s 2020 Technology Survey reported implementing or upgrading technology to support the Paycheck Protection Program (PPP), which set aside $659 billion in government funding to provide relief to small businesses in the form of forgivable loans. The smartest institutions will be those that build on these foundations and shed their legacy technology more entirely in favor of newer, digital-first solutions.
The Covid-19 pandemic changed expectations for businesses. While it was probably only a matter of time before commercial clients began to demand the same tech-savvy options as retail customers, the last year or so has brought that reality closer, faster. Gartner’s data suggests that, if you are a commercial banker still leveraging older processes and systems and you’re not frustrated or panicking, you are part of a very small pool. And the bar is only going to keep getting higher. That means the time to make a move was probably yesterday, especially as these things don’t happen overnight — just 31% of respondents to the survey are confident that their organizations can quickly or effectively overcome legacy processes and systems to adapt to change. Getting this right will require a strategy and a clear roadmap, not to mention a lot of work. But this is a do or die moment. Of course, it’s not too late to get started. But it certainly isn’t time to wait around, either.
