Mainframe Modernization for Retail Banking
A strategy for modernizing mainframe systems to meet the needs of modern retail banking.
- Competitors are winning customers with new products and services. Competition is accelerating. Existing and new competitors are innovating using leading edge hardware and software.
- Your legacy mainframe seems poorly suited to support new products and services. Outdated mainframe hardware, software, and development practices make it increasingly difficult to maintain your mainframe, let alone address new competition.
- You are questioning your mainframe’s future. As COBOL and assembler talent disappears, hardware maintenance costs increase and old software development methodologies impede innovation, and banks are questioning their mainframe investments.
Our Advice
Critical Insight
Mainframes are ideally suited to modern banking, and recent innovations in mainframe technology make them uniquely suited to the present and future challenges of the banking industry. Benefits include unmatched transaction processing capabilities, real-time native data encryption, large-scale data handling, and cost competitiveness resulting from the centralized nature of mainframes.
Impact and Result
Mainframe systems are more relevant than ever in modern retail banking. They are ideally suited for modern banking, and recent innovations in mainframe hardware and software are helping to combine the inherent advantages of mainframes with modern architecture, development environments, software tools, and development methodologies. A modernized mainframe system featuring microservices and APIs can become a source of competitive advantage. Strategic investments can particularly transform your mainframe into a source of competitive advantage over smaller competitors.
Mainframe Modernization for Retail Banking
Addressing Critical Challenges of Legacy Systems to Deliver Modern Products and Services
Analyst Perspective
Technology innovation is driving and reshaping the financial services market. Traditional banks are modernizing, a new generation in fintech is evolving, and non-branch-based neobanks are emerging. The market is getting more competitive.
Regulations are adding pressure to traditional banks. These banks are highly regulated with new and more complex requirements being added. Many fintechs and neobanks are not subjected to the same level of regulatory oversight, offering competitive advantages.
Innovation in retail banking is focused on improving customer experience and product design, primarily driven by improving convenience, making products and services accessible across electronic channels, and personalizing the experience. The global COVID-19 pandemic has necessitated the movement toward digital channels and accelerated innovation.
Banks are struggling with the pace of innovation. Legacy technologies were often built upon rigid mainframe systems that were not designed for modern, real-time products and services. Mainframes often relied on batch processing. They were built around products, services, and workflows that would accumulate and be processed at the end of day. Customers now expect their banking to occur instantly. Risk Management and Fraud Prevention look for instant interconnectivity too.
These factors are forcing traditional banks to make difficult decisions about what to do with their existing technology. Much of the advice about mainframe issues does not consider the unique nature of modern banking. A new approach is required to address the unique needs that support the volume and speed required for modern financial transactions.
Info-Tech’s Retail Banking Mainframe Modernization report provides an overview of the challenges and offers key insights and practical recommendations for your bank to modernize and compete using the latest developments in mainframe technology.
David Tomljenovic
MBA, LL.M CIM
Principal Research Director, Financial Services Industry
Info-Tech Research Group
Executive Summary
Your ChallengeCompetitors are winning customers with new products and services. Competition is accelerating. Existing and new competitors are innovating using leading edge hardware and software. Your legacy mainframe seems are poorly suited to support new products and services. Outdated mainframe hardware, software, and development practices make it increasingly difficult to maintain your mainframe, let alone address new competition. You are questioning your mainframe’s future. As COBOL and assembler talent disappears, hardware maintenance costs increase, and old software development methodologies impede innovation, banks are questioning their mainframe investments. |
Common ObstaclesMainframe hardware and software is becoming more difficult and expensive to maintain. Legacy mainframe hardware is becoming increasingly expensive to support in its current state. COBOL and Assembler developers are becoming more rare. Monolithic code bases are restricting innovation. Legacy mainframe software and development practices are impairing innovation. The pace of banking transactions continue to accelerate. End of day settlement is being displaced by instant payments that are facilitated by high availability, real-time systems. An entirely new software stack is required to power this transition. Software tools and methodologies also need to change. |
Info-Tech’s ApproachMainframes are ideally suited for modern banking. Recent innovations in mainframe hardware and software are helping to combine the inherent advantages of mainframes with modern architecture, development environments, software tools, and development methodologies. Modernizing your mainframe will deliver the best hardware and software solution. Mainframes are unrivaled in transaction processing capabilities, large scale data handling, and security. These are essential capabilities upon which to build a modern bank. Modern mainframe systems can become a source of competitive advantage. Strategic investments can transform your mainframe into a source of competitive advantage, especially versus smaller competitors. |
Info-Tech Insight
Retail Banking is being transformed by accelerating competition, especially from startups which have no legacy infrastructure. New products and services are required to stay relevant with changing customer demographics and preferences. Legacy mainframe hardware, software and development methodologies are holding banks back and causing them to reconsider their mainframe investments. However, recent innovations are allowing banks to modernize their mainframes and transform them into purpose-built systems that can become sources of competitive advantage.