Industry Insights: Disruption as a Way of Life
Sidestepping the Legacy Barrier
Legacies are great in wills, especially if you’re the heir. For organizations in the midst of sweeping change, legacy technologies and practices become serious hurdles in the path to success, or even survival.
Consider the breakup of the former AT&T system if you know, or perhaps remember, its history. Once a monopoly, “Ma Bell” was eventually broken up so the marketplace could be opened up. Today’s AT&T bears little resemblance to its predecessor.
Massive waves of experimentation, change, and even failure marked the communications industry’s struggle to adapt, and the decades since have seen foundational disruption in industry after industry. Financial services is right in the middle of its own transformation.
There’s no way to know how it will all turn out.
Traditional FIs—banks and credit unions—have a (narrowing) window of opportunity to get in front of the race. Many are responding resolutely and innovatively. But all are facing multiple hurdles posed in large part by their own history of success. That is to say, by their own entrenched business models, siloed organizational structures, traditional practices, and perhaps especially their legacy technologies.
When you’ve spent decades, and sunk huge investments, in building your way of doing business, it’s just plain hard to see the elements of your past success as hurdles to your future success. The good news is that, more than ever, people and businesses need financial services, and require stability and security. In every other respect, it’s time to reconsider everything. It’s not just a race against more competitors, it’s also a new racecourse. Double hurdles.
We see signs across the industry press of how FIs are working to meet these challenges. Here are a few we think are worthy of your time:
Just Do It: The Bank of the Future Doesn’t Include Excuses. Financial Brand. This article recognizes how the intersection of new technologies, delivery channels and competitors predict a very different future for the financial services industry. But it pulls no punches in citing systemic belief systems “so ingrained that bankers won’t, or in some cases can’t, see past them.” By the way, we at Alogent vote for can’t—our thousands of clients are among the most willing to adopt new perspectives.
Back-office upgrades key to customer-focused banking, survey finds. American Banker. A new study by Accenture shows that 40% of respondents said that “the limitations of their legacy systems are among the top three impediments to digital transformation.” Notably, this reflects a change in strategic priorities from compliance and cost management (hear the parallel to AT&T?), to improving the customer experience.
Consumers Want An Experience That Legacy Banking Systems Can’t Deliver. Financial Brand. Excuse what looks like repetition, but we can’t help recommend this leading industry publication’s analysis of the same new Accenture study. Among other things, it reports that, “Nearly 80% of bank operations leaders say their organization’s existence could be threatened if they don’t update technology to be more flexible and capable of supporting rapid innovation.”