3 essential strategies to simplify IT modernization for banks

Financial institutions typically build their IT systems yearly with a focus on new applications, seldom replacing or sunsetting outdated ones. This creates a highly complex IT environment that is difficult to manage, with IT costs growing more and more during the maintenance phase. With the expense and time required for comprehensive migration projects, more institutions are considering alternative ways to achieve IT modernization.

How can banks overcome challenges to modernize a slew of banking applications acquired over decades? Here are three ways you can simplify your IT modernization strategy.

1. Take the long view

IT modernization is a multiyear journey that requires a structured, planned setup and thinking in a cycle of seven to 10 years. While this may sound like a long time, many core banking or ERP systems have a history of 30 to 40 years. There are some e-banking front-end systems now entering 10 or even 15 years of continuous use.

Approaching IT modernization with the long view in mind also allows time to justify technology investments, like the cloud and AI. Since not everything can happen in parallel due to time, resource and budgetary restrictions, patience and a smart transformation plan are key.

2. Get buy-in from stakeholders

To keep a seven to 10-year IT modernization journey on track, it’s essential to keep stakeholders engaged by helping them understand how every technology investment contributes to the overarching goal. Transparency is important throughout the journey.

A key performance indicator cockpit or objectives and key results are tools you can use to measure the success of your undertaking. By providing high-level updates and activity summaries, you can help stakeholders understand all the players and factors involved. This also allows you to highlight how dependencies are managed and illustrate progress along the way.

3. Enlist an enterprise architect

The enterprise architect (EA) plays a key role in IT modernization, combining knowledge of business and IT along with a structured approach that defines the deliverables for each step.

By bridging communication across multiple projects throughout the transformation, the EA keeps all stakeholders in the loop, including project and program managers. This reporting then cascades up to C-level management for further buy-in.

With a full understanding of the enterprise and business model, the EA helps stakeholders understand the full scope of IT modernization priorities and the positive impact it will have.

Collaboration and communication are key

IT modernization is a shared endeavor that requires close collaboration between business and IT teams. As with most IT projects, many departments are involved. Finance plays a critical role in calculating the business cases that justify ongoing IT investments.

Communication is crucial throughout the process to keep all teams and stakeholders motivated. By taking the long view, getting buy-in from stakeholders and enlisting an enterprise architect, you can simplify and successfully drive your bank’s IT modernization journey.

Read the white paper for more info: Modernize to Mobilize – A cleaner, clearer banking IT landscape through cloud and AI.

Read more from this two-part series:

Part 1 - 3 steps to IT modernization in banking