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by Raghu Radhakrishnan, CEO & Managing Director of TmaxSoft India

The most successful and competitive businesses in the world are digital. Think of Amazon, Uber, Google, Tesla, and Rocket Mortgage. They use the latest technology to reach customers, develop products, monitor sales and transactions, analyze data, and more. As more businesses go digital and more fintechs shake up the financial services industry, it’s impossible to picture any financial services firm beating competitors without a digital overhaul.

Banking and finance today require agility, or the ability to respond quickly when the market changes or a disruptor enters the field. Fintech startups and your savviest competitors are winning customers by delivering what they want—fast. They use the cloud, modern architectures, platforms as a service, NoSQL databases, containers, data lakes, and microservices to provide the fast, high-performance engagement customers expect.

So, 20th-century solutions such as on-premises mainframes, data centers, data warehouses, relational databases, and software, long the backbones of finance, now hold financial services firms back. For the agility you need to win and keep the hearts and minds of your customers, it’s time to consider giving your older technology a rest and creating a modern architecture and applications. Here are four steps you can take to get there.

1. Fire up your CXOs – so they want to be involved

Going digital and providing customers with frictionless financial services experiences requires investment in modern technology, environments, and architecture. If you don’t have buy-in or sponsorship from your CXOs, you won’t get very far. Any kind of major transformation must start from the top, and it can’t just be lip-service.

Start by educating your CXOs on the digital forces that will disrupt revenue streams and competitive advantage and share how being agile can keep them on top. Give them practical examples and share competitive research. CXOs must express enthusiasm for digital customer experience and back-end initiatives, and if they’re equipped with thoughtful research and proof points, they can do it.

When it’s time to get started, they must make it clear that it’s the way forward for your financial services enterprise. And they must emphasize that those who oppose it will run into problems. Then they must wholeheartedly embrace changing organization culture to ensure its success.

2. Break free from your mainframe

Mainframes still run the core business systems of more than 60% of the world’s largest financial services firms. Yet, there is no bigger headache than a mainframe that is decades old. It’s slow, workloads are difficult to balance, and workarounds and patches that have been applied for years hurt performance. Many of the programmers who can maintain them are retiring or moving elsewhere. Yet rewriting all the applications, ripping and replacing mainframes, or trying to write mission-critical systems from scratch is impractical and can take years. In some cases, it’s a herculean task and in others, it’s almost impossible.

So, how does your financial services firm break free from these headaches? The most pragmatic answer to this question is to rehost your mainframe applications in an open environment or on the cloud so that the workload and strain on the mainframe is reduced. You can do this several ways. You can reduce MIPS (millions of instructions per second). You can move mission-critical and core applications off the mainframe onto new hardware or the cloud. You can convert legacy applications and mirror their data structures onto an open system or cloud platform, as well.

What does this look like? Here’s an example. The portfolio management system of one of the world’s largest credit companies used to run on a mainframe that had 1700 concurrent users and processed 3.5 million transactions a day. After rehosting, the credit company reported 100% faster processing, a decrease in annual run costs of 66%, and an application footprint decrease of 78%. The new rehosted platform also supports cloud and service architecture innovation.

3.  Don’t leave your legacy – modernize it

In life, but not technology, the term “legacy” has good connotations, usually indicating something valuable that has been inherited from a family member, after having been passed down for generations. In IT, it’s viewed as something bad. But is it really bad? There’s a reason there are 50-year-old mainframes powering the world’s largest financial services enterprises; they have had amazing staying power. That’s a type of legacy. But just as you can refinish or repurpose an antique so that it fits in a modern home, you can also optimize legacy applications so they fit in the modern world.

Start by moving legacy applications onto the cloud and re-platforming them so that they can be transformed or rewritten as modern applications that deliver business agility, better performance, and lower costs. Next, deploy a flexible, high-performance, reliable and available RDBMS that runs on the cloud and not in an on-premises data center. Finally, migrate your legacy databases to the cloud. That last step is probably the hardest for financial services firms because of regulations and concerns about unlawful and fraudulent access to confidential and personal data. In some cases, there will be databases that can’t be deployed in the cloud. But for many, AWS and Microsoft Azure have made great strides in securing financial data in their cloud deployments.

4. Go all the way – to the cloud

The best way to enable agility and flexibility is through digital transformation on the cloud. Your bank or financial services firm should stop relying on mainframes to run your core business systems because this is just not efficient anymore.

You need to get out from under the strain of maintaining on-premises data centers by moving traditional infrastructure to the cloud. Many of the world’s backends are a combination of mainframes, relational databases, transaction monitors and J2EE Application Servers, and moving them to the cloud and re-platforming or rewriting them will result in greater agility and flexibility.

How TmaxSoft can help

Mainframe rehosting in the cloud and infrastructure modernization offered by TmaxSoft OpenFrame and our other solutions—Tibero, JEUS/WebtoB, and Tmax—provide the performance, speed and availability needed to complement the demands of banking and financial services in the 21st century. The applications that are migrated to the cloud run in a modern architecture, so your bank or finance firm is more agile and competitive with a platform for future growth. Operating systems in rehosted mainframes are open, and they integrate with the new technology required to achieve a competitive edge in the financial services marketplace.

Not only are there cost savings, but you gain greater flexibility, which can drive and deliver instantaneous, highly personalized experiences similar to those on mobile devices to customers, brokers, and branches. There is no negative impact on the enterprise or on the measures already in place to address regulatory compliance and data security, and it requires minimal training.

To learn more, read our industry brief, Why Mainframe Rehosting for Financial Services is a Sound Investment.

About Raghu Radhakrishnan

Raghu Radhakrishnan is the CEO & Managing Director of TmaxSoft India. With more than 27 years of sales and marketing experience in the IT industry, he drives global enterprises to adopt TmaxSoft technologies and help them solve their perennial problem of high cost of ownership. He joined TmaxSoft in 2015 and has held senior level positions with IBM, Modi Olivetti and Digital. He holds a degree in Mechanical Engineering from PSG College of Technology, Coimbatore, India.