In the perpetual innovative digital landscape, banking, finance, and insurance industries (BFSI) are in constant hustle to provide seamless customer experience and frictionless operations. Most of the financial service providers have started evaluating their legacy systems to deliver modern digital experiences. To stand out in today's economy and accomplish digital transformation goals, BFSIs are adopting to modernize their existing systems. Either they are looking to rebuild the entire application from scratch or refactor and extend, choosing a low-code development platform to stay agile, flexible, and innovative, meeting customers' evolving demands.
In this blog, we will talk about application modernization, BFSI industry problems, and application modernization methodologies. In addition, we will explore how OutSystems, a high-performance, low-code development platform, aids in modernizing legacy applications for BFSI.
What is application modernization?
Application modernization is like renovating applications built using older technology and methods, making them harder to maintain and adapt to new needs. It involves updating and improving the old software to make it more efficient, secure, and user-friendly. This means rewriting parts of the code, changing the underlying technology, or even completely rebuilding the application from scratch while maintaining its core functionality. The goal is to keep the application up to date so it can work better with the latest devices, be more reliable, and meet the business's and its users' current needs.
Challenges in application modernization for BFSI industry
Since the last few years, the BFSI industry has seen many changes that demand revamping legacy systems. Today's customers expect banks to provide omnichannel experiences, which they receive from many digital-driven businesses. Unfortunately, many legacy systems have failed to optimize with new technologies and rising customer expectations. As they face many bottlenecks while leaving their legacy systems, some of them are as follows:
#1. Lack of omnichannel support
Customers want personalized experiences throughout their journey; therefore, banks must constantly analyze and predict client data to transact from anywhere and conveniently access information. The core of omnichannel banking is integration, and supporting these institutions necessitates channel switching without a fragmented client journey. Banks often struggle to provide omnichannel experiences due to a lack of resources, investment, data mining practices, integration, limited communication, and a segmented organizational structure, while traditional systems demand modernization.
#2. Lack of real-time data/data redundancy
With the shift towards using a centralized repository to hold sensitive data or information, several factors, such as the capacity to provide consumers with access to deposits and payments, impact bank redundancies. Legacy systems are unable to keep up with the increasing volume of data generated by transactions; therefore, modernization is required to optimize data and develop customer-centric strategies or to acquire insights and act in real-time. Furthermore, the open banking system has established itself as an API standard for sharing data and services, and banks are finding it challenging to recruit innovators while meeting client demands.
#3. Managing compliance and risk
Regulations and security compliances change often in the BFSI industry, and as a result of these changes, legacy systems frequently face challenges because they lack the capability to comply with the regulations. Such shortcomings create obstacles for banks to comply with these regulations. Banks having legacy systems are vulnerable to security breaches and cyber attacks, decreasing the reliability of banking applications. To summarize, banks often need constantly evolving systems to meet security requirements.
The approaches of application modernization in OutSystems
Over the past few years, FSPs have realized that legacy systems have reached their end-of-life(EOL) and do not support security, compliance, digital processes, and other issues. Therefore, OutSystems, a constantly evolving platform, has come up with three approaches to look out for application modernization through a low-code platform, OutSystems:
#1. Extending
Extending refers to building enterprise-level applications with new capabilities by extending the code. An organization considers extending the approach when the application needs to optimize and upgrade apps with new user interfaces and front ends that tap into your current systems. These can support new, customized processes and deliver updated user experiences via the web and mobile devices. You can seamlessly integrate data from multiple systems of record or facilitate the transfer of information between isolated systems, all without any impact on the base application. OutSystems is extensible with platform, environment, tools, and features to enable customers by:
- With pre-built templates, components, and modules, OutSystems Forge can help you speed up development time.
- Seamlessly integrate with legacy systems and existing databases.
- Easily integrate with the authenticator provider of your choice.
- Customize management consoles.
- Utilize APIs to integrate the deployment with existing DevOps and business processes.
- Businesses can deliver the experience on any platform (mobile device capabilities such as camera, GPS, or location and working offline)
#2. Refactoring
Refactoring means segregating/ decoupling the modern composable architecture of existing systems that allows you to innovate quickly and leverage cloud-native technologies. Microservices architecture helps in refactoring when monolithic systems' functionality is broken into small fragments to make it more reliable and scalable. An organization seeks refactoring when they need to drive more value from legacy systems without replacing them. With OutSystems, you can:
- Streamline processes in banking, such as tailored messages to customers, SMS alerts, email or push notifications, and OTP authentication.
- Integrates with legacy banking systems to gain real-time insights.
- Includes predictive maintenance applications and customer service portals to enhance the digital experience in the banking industry.
- Increase agility in a highly competitive market by optimizing processes.
- Accelerates steps of application lifecycle and deploys with a single click.
#3. Rebuilding
Rebuilding means building applications from scratch tailored to your unique business requirements. Through enterprise garde banking applications you can rebuild core systems through eliminating technical debt, avoiding risks, and complexity of commercial-off-the-shelf (COTS). After the pandemic banking industry faced a significant instability and led to digitization of most of the processes like loans, ATM pin generation without leaving homes. Hence, a business rebuilds applications when the technical debt costs are more and the legacy systems have passed the end of usability. OutSystems helps in rebuilding banking systems and applications through:
- Flexible tech stack that supports CI/CD approach.
- Improved user experience and easier access to client information.
- Powerful application with modernized customer experience, user experience and seamless integration.
- Increase productivity with a visual, model-driven approach.
- Reduces time to market and cost, enabling complex solutions to be delivered much faster.
- Advanced pre-built capabilities to ensure security and scalability.
Why does the BFSI industry modernize their legacy systems?
Banking and financial services face some of the toughest challenges with the volatile markets, squeezed profits, outdated technologies, and complex and shifting regulations. And most profoundly, legacy modernization is on top of mind. The FSPs seek to modernize their legacy systems by moving to the cloud platforms that automate manual efforts, saving time and cost. Let's dive into some of the key drivers that adversely affect the banking sector to modernize their applications:
#1. Customer Experience
Banks are often faced with the challenge of seamlessly integrating their branches, mobile applications, and customer service portals to delight their omnichannel experience. Along with this, banks often have stringent regulations and security checks, leaving them stuck to accelerate digital transformation. Hence, legacy modernization becomes the need of the hour.
#2. Security
Since banks deal with a lot of sensitive information and regulation changes, the legacy systems in the BFSI industry are not technically equipped. Therefore, modernizing these systems and applications leads to better integration of security measures across their ecosystem. Legacy modernization can increase protection against cyber attacks and the risk of data breaches.
#3. Digital competitiveness
Migrating to cloud platforms from on-premises legacy systems and harnessing technologies like AI, machine learning, and real-time analytics for enhanced customer experience, improved productivity, and better decision-making through legacy modernization in BFSI. Cloud-native applications also enable flexibility and scalability. Leveraging these technological advancements, you can enable core systems to support the features of banking platforms like GPS, camera access, offline capabilities, etc.
How OutSystems helps modernize applications for BFSI?
OutSystems, a leading high-performance low-code platform, has always been a top priority when considering application modernization. OutSystems provides tools, features, and pre-built integrations to deliver innovative banking applications. Here are some of the use cases that can be developed through OutSystems and modernize your applications:
#1. Offline capabilities/functionalities
In the mobile digital world, we take connectivity for granted. With the cellular coverage extension across the world, losing signal breaks the transactions, leading to unsatisfied customers. As BFSI industries are accelerating the development and digital experience, people are used to mobile banking on any device. Often, country-side areas or low network coverage areas in developing economies lead to declined or incomplete transactions, and that's when offline authentication comes into play. Offline capabilities help financial institutions grant access to complete transactions, check balances, pay bills, and message customer service while securing sensitive information through OTP authentication.
How does OutSystems help in offline capabilities in their banking applications?
- OutSystems provides offline capabilities with mobile apps, web apps, and PWAs.
- The pre-built UI elements and client-side logic help applications to run with no connectivity to the server.
- OutSystems defines the data model and manipulates data similarly on the server databases and the local storage.
- OutSystem implements offline data synchronization.
- REST APIs are automatically generated and exposed for the backend to enable the customer to send and receive data from the server.
#2. The digital evolution of insurance
Earlier, insurance agents were packed with a chunk of paperwork entailing a lot of calculations and generating quotations, but now they are backed by modern technologies. The employee and customer-facing portals can help get insurance processes done automatically and efficiently, saving time and effort. The modern system has replaced legacy applications with a more focused approach to automation, user experience, and personalized experiences. These innovative insurance applications help optimize workflows, improve service accessibility, and generate insights into customer behavior.
How does OutSystems help in digitizing insurance functions?
- OutSystems delivers and evolves insurance applications rapidly with visual, model-driven development of workflows, business logic, UI, data access, and security.
- OutSystems builds insurance portals and mobile applications for agent brokers by integrating core systems for seamless engagement, designing pixel-perfect interfaces, and configuring functionality for quote, bind, and collaboration with underwriters, portfolio views, and processes for digital signatures.
- OutSystems builds an insurance portal that provides scalability, security, and always on-apps with an intuitive interface and automated business logic.
Why Ranosys for application modernization?
Application modernization is the road ahead for FSPs to offer innovative digital solutions that customers expect. OutSystems, a high-performance, low-code development platform, enables your digital transformation initiatives to build powerful applications that enhance productivity and user experience to meet evolving customer expectations. As a leading OutSystems partner, we have assisted several FSPs in modernizing their applications, and we can accomplish your use cases, too. Connect with our certified experts to know how OutSystems can help you in application modernization.
