Shrinking pool of experts leads to tough decisions for banks
The need for modernization has been accelerated by the growing shortage of legacy talent. Legacy business and technology experts are retiring in droves, leaving a dangerous vacuum of technical and institutional knowledge. As digital innovators continue to disrupt the market leaving legacy technology behind.
Until recently the risk of moving from an inefficient mainframe to something else scared decision-makers in financial organizations. Migrating to another platform or the cloud risked the kinds of issues that generate headlines and firings. Banks peeled away some processes here and there, even as they kept relying on antiquated systems. The strategy has worked until now.
Banking leaders now see keeping mainframes as even riskier than doing nothing. Younger generations have zero interest in COBOL and the other programming languages used in mainframes. Actually, it’s not negative that they waited. That’s because modernization options are better (and lower risk) than ever. Upgrading infrastructure, while keeping costs under control, requires financial organizations to find the right path to modernization.
Time for a heart transplant?
The mainframe is the heart (and lungs) of many, if not most, financial services providers. The exception would be fintechs and non-financial brands dabbling in financial services. Born at the dawn of the computer age, mainframes enabled better, faster financial interactions. Checks (yes, those paper things) cleared in days, not weeks. When you called customer service, agents answered many questions in minutes.
Even with antiquated mainframes, banks settle many transactions in a single business day. That’s no longer good enough. Modern systems support real-time processing, AI-powered personalization, and next-generation digital experiences. New entrants to financial services aren’t constrained by mainframes. Just as crucially, the people who know how to coax the best performance from mainframes are retiring. Their GenX peers prefer to work with more modern systems. Millennials and GenZ? They view working with 30-year-old systems as a career dead end. Soon, organizations will lack enough skilled people to manage mainframes.