They have been the mainstay of payments systems around the world over the last three decades. Today, however, financial institutions (FIs) we talk to are telling us that their legacy payments systems such as BASE24 Classic can no longer support their plans for the future. Facing uncertain upgrade paths, they are confronted with difficult choices as they seek to keep pace with changes in the industry.
At the heart of this issue is the fact that many legacy systems are no longer supported fully by their original vendors, forcing FIs to rely on third-party specialists to keep the heart of these ageing systems beating. Taking ACI’s BASE24 Classic as an example, we estimate in 90% or more cases, the vendor has little or no involvement in the ongoing management. This has led to deep customization, huge levels of complexity and reliance on third parties. As a result, customers of this product face continuing and escalating support costs, decaying functionality and no clear upgrade path that may offer the future performance and functionality they need.
Is doing nothing an option? Yes, but it’s expensive. Total cost of ownership is already high – and it will rise as support costs continue to increase and the specialist skills needed to keep these legacy payments systems functioning become scarce.
We know from our discussions with the marketplace that maintaining these legacy systems also keeps financial firms trapped in the past. Today, with new regulations and technologies driving rapid change in the industry, it’s essential to be able to make changes quickly and easily. Customers tell us that requests for changes typically take months to process – and that with no access to the source code or the programming expertise needed, it is difficult or impossible for them to make the changes themselves.
This issue is particularly urgent with today’s ever more demanding consumer. If incumbents are held back by their existing systems, fast-moving challenger FIs and other potential players, which don’t have legacy technology to worry about, will eat into their market share.
So why not change? Legacy systems are often highly customized, making the prospect of migration a cause for concern and difficult to sell to the board, especially when the switch is involved. And with question marks over upgrade paths from existing vendors, customers are faced with a dilemma: stay put and risk falling behind the market as costs escalate – or take what feels like a leap into the unknown and make the changes. It’s no surprise that many feel trapped.
BPC can offer a way out of this dilemma, with new approaches to both enhancement of existing systems and full end-to-end replacement. We will be publishing a more detailed paper on this shortly, covering our experience of the options, risk mitigation, business case approaches and common problems.
Our next blog post will explore the specific options for customers who want to explore adding new functionality while keeping their legacy system for now.
In the meantime, if you’d like to discuss the issues raised in this blog post please get in touch via the form below.