The evolving perspectives of card platform migration

At Tietoevry Banking, we’ve been tracking changing bank attitudes to systems transformation in three waves of research, conducted at regular intervals. This research reveals just how far most banks have come since the days of card-focused, on-premises systems no longer fit for purpose. 

Phase One: Growing Awareness of Benefits, Doubts Hold Some Back

The first wave of our research found more than three-quarters of banks (81.6%) were looking to outsource parts of their payments business over the following three to five years, including processing, fraud management, account management or card management. This first wave also showed most banks were comfortable with the concept of moving parts of their card operations to a Software as a Service (SaaS) model as a means of optimizing the operational efficiency, functionality and flexibility of their card platform.  

However, our research also told us that banks were concerned about their internal ability to set and manage Service Level Agreements (SLAs) with outsourcing providers, as well as their organization’s capability to adapt internal processes for outsourcing. At that time, fraud management and processing were the most frequently-outsourced requirements. In essence, our research showed that banks were becoming more aware of the power of cloud-based systems to meet their needs: at the same time, their awareness of how far external providers could help them deliver next-generation capabilities rapidly and securely was also growing. 

Phase Two: Benefits Clear, Need to Change Urgent 

Our second wave of research saw the emergence of a clear preference among banks for cloud-based SaaS solutions. Concerns about the security and privacy of cloud-based systems were being overcome, and banks were beginning to see the dramatic cost reductions and systemic efficiency gains that could be realized through outsourced SaaS arrangements delivered via the cloud. The urgent need to change was becoming evident, with almost two-thirds of banks recognizing that they had to change their systems, more than half (52%) of which were between 10 and 20 years old.  

This wave of research showed that concerns about internal capacity continued to trouble banks, with more than half (54.8%) recognizing they lacked the internal expertise to manage migrations and almost two-thirds (61.3%) reporting worries about project over-runs or failure if they attempted migrations without external partners. Banks also reported having to hire in former employees to help manage their outdated systems. Summing up this wave, we can see a clear realization on the part of banks that platform migrations could no longer be delayed, and that the path forward was clear: SaaS-based, cloud-native migration projects in partnership with external providers were the way to go. 

Phase Three: Finding the Optimal Approach 

As banks became more confident in adopting cloud and SaaS approaches, the question arose as to the optimal means of executing migration. Our third research exercise examined this question in detail, asking banks for their thoughts on optimal migration processes and, for the first time, engaging a panel of five institutions that had recently migrated their systems to learn more about optimal approaches to migration – whether to adopt a “big bang” approach that switches new systems over all at once, an incremental “step by step” change, or running new systems alongside old in a so-called “parallel run” approach.  

This research phase found that more than eight in ten banks were engaged in incremental modernization of their platforms, and that over half of these projects were being undertaken with an external partner. Our research also found banks to be more aware of and comfortable with the risks associated with a migration project – and were working with their external partner to help mitigate these risks. Modernizing component-by-component and focusing on the delivery of new services with flexible APIs was the most popular choice for banks as they become more experienced and comfortable with the concept of systems migration. 

Summing up, we’ve seen banks grow in awareness regarding the capacity of cloud-based SaaS systems to deliver powerful upgrades and modernization projects, not to mention rising bank confidence in working with external partners to create incremental, step-by-step improvements in their card system performance. In my colleagues Edgars Bremze blog [LINK], he looks at where banks stand today – and what I see happening next. 

To find out more about Tietoevry Banking’s capabilities in card platform migration, contact our experts