If you’re in the financial services industry, you’re familiar with the dozens of whitepapers, trend reports, and news articles discussing the importance of legacy system modernization.
But “legacy modernization” as a buzzword doesn’t have to mean starting from scratch, rather it hints at the idea of bridging the divide between your existing legacy systems and the new ecosystem of apps that your customers demand connectivity to.
We’ve found that it’s helpful to think of this connectivity through a construction metaphor - an integration “bridge” that helps data move back and forth among your current infrastructure, your customers’ legacy (ERP) systems, and the “latest and greatest” apps that your users are consistently requesting from your CS team.
In theory, any skilled developer can build a brittle bridge of point-to-point connectivity between each business-critical application - whether it’s flexible, maintainable, and easy to adapt in the future is another question in and of itself.
According to BDO’s 2019 Middle Market Digital Transformation report, customers “will want to manage all their finances—not just one component—in one place, on the devices convenient to them. They will expect nothing less than real-time engagement when they need it. They will value simplicity, efficiency, and transparency.” But to achieve this reality, FIs need to offer myriad seamless integrations that connect to the applications customers need.
Banks’ widespread offerings (payments, lending, investment management, etc.) necessitate more. A better experience to retain customers, overcome fintech competition, and gain a future-ready technological edge.
PwC’s “Financial Services Technology 2020 and Beyond” report explains, “APIs require that financial institutions think differently about strategy… This is not just an issue for business strategists; it has clear technical implications for the teams who are responsible for doing the work.” As systems become more diverse and complex, FIs are forced to up their game via holistic data access.
Building More Bridges - Sustainably
You’re probably really happy with me at this point for telling you to do more with your integrations (sarcasm), but building better experiences for your customers doesn’t necessarily mean building one-off connections that require a large portion of your development team’s time to maintain. There’s another option - one-to-many integrations.
With one-to-many integrations, you map your data objects once to a canonical resource (such as our Finance Hub) and, via that multi-tenanted content, quickly connect to leading ERPs such as QuickBooks, NetSuite, & Microsoft Dynamics GP. One-to-many integrations offer both faster time-to-value and reduced LOE for your developers so your junior devs can take care of the integration work while others on the team focus on innovation.
The Maintenance Burden
But what happens when a bridge is broken and the data crossing the bridge (legacy <--> modern) can’t make it from one system to the other? Gaps in usability that necessitate hastened development work and hours on the phone assuring customers that a fix is ongoing.
You might have read about (or encountered) the very public dispute between Plaid and Capital One a couple of years ago. Using integration techniques that cause security concerns (screen-scraping vs API), or failing to offer robust, usable APIs are both characteristics of brittle bridges that make sharing data between legacy and modern systems difficult.
Not only did the collapse of this bridge eventually lead to integrations breaking (TurboTax couldn’t pull interest statements automatically for Capital One accounts this spring, frustrating my colleague on tax day…), but consider also the amount of rework needed behind the scenes to rebuild functionality customers have come to expect.
Sure, this FI vs. fintech battle is a public manifestation of how many banks feel about providing customer data access to fintech upstarts, but the public drama and backend hair-pulling & patching could have been avoided by building secure, multi-use integration ‘bridges’ (to our metaphor) from the start. Think about integration platforms as the people managing the bridge day-to-day to make sure nothing goes awry rather than the repair crew that comes in when cables start to snap.
Summing it Up
Financial institutions are in a unique position where one-to-many integrations can prove maximally beneficial in bridging the gap between existing and “new-to-them” systems. The need for connectivity to boost customer retention, gain a competitive edge, and provide a seamless experience is here to stay.
Learn more about how FIs and banks can overcome the gap in our latest eBook, “The Parable of the Bridge.”