Why do financial institutions lag when it comes to tech?
When entering the field of financial services, recent college grads quickly learn that the technology available to them is antiquated, to say the least. In fact, the largest financial institutions in the world still run on ancient IBM mainframes. While modern technology like machine learning and analytics are transforming the business landscape across industries, it seems that the financial industry is lagging far behind. Why is that?
It’s not our fault!
Most large financial institutions are locked in to the legacy technology that’s been in place for decades because they face extremely difficult challenges to replace it. These institutions live and die by the brand tenants of trust and security and any initiative that has actual or perceived risks to either of those attributes demands careful conservative consideration.
Upgrading the technology would be disruptive and has inherent execution risk as many of the legacy systems are tightly coupled and inflexible. So many people rely on the technology each day that taking it offline to upgrade would cause major headaches downstream. Also, the technology, while antiquated, meets regulatory and compliance requirements – both a blessing and a curse. With hundreds of thousands of workflows (including compliance) depending on that mainframe any delay or execution error could cause serious issues for a financial institution and its customers.
Additionally, updating the technology would be expensive. Upgrading a project of this scale would cost tens, if not hundreds of millions of dollars. When you take into account development costs, hardware, software and man hours, undertaking a project of this size is daunting to say the least.
And finally, these upgrades would be time consuming. Even if you can get the budget for this kind of project, implementations of this stature never go exactly as planned and more often than not, take longer than estimated. Considering downtime and end-user disruption, this type of project becomes daunting. Unless there is a serious and pressing need for updates, they usually fall by the wayside.
In general, financial institutions aren’t yet convinced that the risk of updating their back-end technology will be worth the reward. Basically, why fix what isn’t broken?
Where do we go from here?
To be clear, we’ve seen a lot of real and exciting advancements in financial technology recently. But with significant challenges to upgrading the back-end technology that powers financial institutions, most of these developments have been aimed at improving consumer experiences or at replacing traditional institutions with companies that are built with a technology-first mentality. But increased competitive pressure from startups has led many large institutions to realize that if they don’t innovate now they won’t be around to see the future of finance.
There needs to be an easier way to build the next generation of financial applications – a way that lowers the risks of implementing new technology, while providing a clear and quick reward. That’s where Elsen comes in.
Elsen’s unique and proprietary technology gives financial institutions a platform to easily build modern, intuitive and web-based applications that are capable of crunching massive amounts of financial data at blazing speeds. Rather than trying to displace institutions with new technology, Elsen empowers them to build applications that anyone can use – from millennials to baby boomers. It also integrates seamlessly into existing infrastructure to add functionality and speed without major hardware upgrades.
The opportunity to revolutionize fintech is there, and with Elsen’s platform-as-a-service, and its proprietary programing language, Warp, it is easier than ever for financial institutions to build cutting edge proprietary tools and/or develop new offerings for their customers with very little execution risk. The Elsen nPlatform empowers financial institutions to harness vast quantities of data to make better decisions and quickly solve the most complex problems effortlessly.