Insight

FinTech Innovation with Legacy Integration

Get the best of both worlds with cloud solutions.

December 20 2016

The fintech (Financial Technology) revolution is building up steam. When we all thought PayPal was neat, but niche, fintech wasn’t threatening any entrenched players. Today, major banks worry they might become just a place to store money and those "niche players" are the ones helping consumers meet their financial goals.

Banks have a lot going for them to stay ahead of fintechs. They have capital. They understand consumers. They certainly have enough customers to be able to see trends emerging from their immense data sets. But they also have legacy systems that aren’t easy; not that you’d want to make connecting to primary banking systems trivial.

Robust tech is essential to innovation

Fintech is built on leveraging A2P (application-to-person) connections so customers can do things like check account balances, pay bills, and transfer money around from their phones. Mobile banking has been making strides in recent years with mobile apps, USSD, and 2-Way SMS creating new ways for banks to connect with customers. Even taking a picture of a cheque to deposit it into your account, it answers the question of why do I need to bring the cheque to the bank, don’t you just need to see it?

However, banks are still just connecting in the same old ways they always have, except through a smartphone instead of a teller. So far banks have been finding ways to streamline banking and reducing the need for people to transact business, now they need to start innovating.

To innovate banks will have to jump the technology queue and connect their systems to modern APIs, but there’s that risk again. This is where a hybrid solution that combines a secure hardware platform and a cloud-based messaging infrastructure comes in to give you the best of all the worlds. When you have secure hardware on-premise you are able to control and monitor the connections to internal systems very closely, while still allowing message and data flow to robust APIs.

Future-proof with APIs and the cloud

The challenge with trying to catch up to small, nimble fintechs is that they don’t have to worry about legacy infrastructure or picking the wrong technology. Fintechs using new APIs know their decisions are safe for the foreseeable future. Without legacy hardware and software to worry about, they can pivot much faster than a bank can.

But banks have depths of resources that fintechs could only dream about. So how to do deal with legacy systems, but make sure you have room to grow: you leverage the same APIs fintech do, except these APIs are more flexible than anything a fintech would think of building.

And that’s fintech’s weakness.

When you build an on-premise solution designed to connect to legacy systems you are already well aware of the risks of not planning for the future. Which means you build a system that doesn’t just connect to the now, it keeps options open to connect to the later as well. None of us know where things are going. Except that our future is going to be tied to mobile devices tapping into more and more data.

If there is anything banks have a lot of, it’s data. So imagine offering customers dynamic accounts that adapt to their changing needs. Customers won’t think about looking for other banks for other products or even switching. If you can use data and AI to understand your customers, you can offer them solutions for problems they don’t know they have yet.

And you can’t build that kind of system if all you do it simply connect systems to single purpose apps (replace a teller) or SMS (give me my balance). You can only achieve that kind of innovation when you have a platform that supports it from the start.

Let us show you the future

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