Latest news with #legacysystems
Yahoo
2 days ago
- Business
- Yahoo
Breaking free from legacy: unlocking growth in wholesale finance
In the ever-evolving financial services landscape, many wholesale finance companies find themselves refocusing their efforts and resources to remain competitive. A significant number of these firms are still reliant on legacy technology systems, which pose substantial challenges that can hinder operational efficiency, customer service and even risk control. As they get left behind, companies risk missing out on opportunities that modern technology offers. Embracing innovation is crucial for overcoming these hurdles and thriving in a fast-paced marketplace. Why companies cling to legacy systems and what that means There are several reasons that companies are hesitant to upgrade, including financial commitment, the fear of change/embracing new technologies, overall business priorities and business disruption. Leaders often hesitate to upgrade because the costs, disruptions and complexities are perceived to outweigh the benefits. However, these outdated technologies and poor business processes can lead to numerous challenges and risks that can hold back business growth and returns, including: Inability to meet customer expectations: Today's stocking customers expect seamless, real-time data that leads to meaningful interactions. Legacy wholesale systems can struggle to provide information in the format and via the medium customers prefer – whether via phone, online, mobile, social media or other channels – leading to dissatisfaction and lost business. Data integration challenges: Integrating information from multiple sources, such as suppliers, customers and third-party data, becomes complex and cumbersome with outdated systems, causing decision-making delays. The wholesale system's adaptability must be able to cope with new requirements, including compliance, reporting, complex customer structures and incorporating technological advances (e.g. AI). Operational Inefficiencies: Reliance on manual tasks and workarounds leads to what has been described by some funders as 'spreadsheet hell', with multiple tasks being taken out of the online system and processed manually on spreadsheets. This leads to vital processes being managed offline, risking errors and miscommunication. These inefficiencies can hinder scalability, increase costs and negatively impact employees with repetitive tasks. Risk management gaps: As fraud and attempted fraud become more prevalent, the common response is often to throw more resources at the problem – manually analysing data to identify occurrences. This pushes up costs, but is still too slow to adapt to changing fraud techniques and can also delay and inconvenience genuine borrowers. Data security and compliance issues: Older wholesale systems may not meet today's stringent data security standards, putting sensitive information at risk. Frequent spreadsheet sharing containing critical data can lead to vulnerabilities and compliance violations. Seize opportunities Wholesale finance companies transitioning from legacy systems to modern technology can enhance their offerings to dealers, strengthen risk management and enable them to address the evolving demands of the market. One significant benefit of this transition is the ability to scale at lower costs, as automated processes reduce the need for extensive labour and manual intervention, allowing firms to expand operations efficiently. Embracing modern technology in the wholesale space allows access to new industry norms such as faster payments, enhancing cash flow and customer satisfaction through real-time processing and payouts. Companies will also experience better accuracy by leveraging advanced data analytics and automated systems, which reduce human error and ensure that financial transactions are precise and reliable. Risk management can be enhanced with embedded AI tools capable of validating dealer documentation at speed – ensuring complete oversight of funded assets without diminishing service quality. There's no need to increase headcount either. Additionally, integrating new wholesale systems with Customer Relationship Management platforms allows for a unified view of customer interactions and data, enhancing relationships and service quality. This reduces the need for dealers and lenders to manually key in tasks, streamlining workflows and freeing employees to focus on higher-value activities, ultimately driving productivity and growth. The 'wow factor' for customers should not be overlooked. Modern technology, displayed on devices used throughout the day by dealers, will be more attractive both from a look and feel as well as availability. PC/laptop-only applications are very quickly becoming a reason for dealers to look elsewhere. Beyond cost to collaboration and innovation When selecting technology suppliers, companies should focus not only on cost, but also on cultural fit and commitment to long-term support. It's worth keeping in mind that a supplier that prioritises a partnership approach with active account management is more likely to drive continuous improvement. In business, there are examples of companies continuing to do what they have always done, only to be overtaken by new entrants and competitors that have modernised their offerings to be class leading. The old adage of 'if it ain't broke, don't fix it' could not be more inappropriate in technology. Whilst the threat of disruption to existing business can be a substantial drawback when considering change, if the change is managed well, the promise of efficiencies, a better experience and greater productivity can far outweigh that drawback. For wholesale finance companies, embracing modern technology is no longer a choice, but a necessity to avoid being left behind. Shifting away from legacy systems and investing in advanced solutions can help streamline operations, enhance customer satisfaction and position businesses for sustainable growth. Organisations can transform their challenges into opportunities by taking proactive steps to modernise, driving both profitability and success in an increasingly competitive market. Explainer: what is wholesale financing "Breaking free from legacy: unlocking growth in wholesale finance" was originally created and published by Leasing Life, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Yahoo
2 days ago
- Business
- Yahoo
Instant payments are the new standard: Can banks keep up?
Ten seconds. That's all it now takes to move money across the eurozone under the SEPA Instant Payments (SEPA IP) initiative. Around the clock, every day of the year, batch processing has become a thing of the past. SEPA Instant Payments has been around for eight years, and with compliance deadlines looming, transformation is accelerating across EU institutions. October's requirement for outbound instant eurozone payments is a major catalyst. Yet there's still a gap between regulatory requirements and operational reality as many European banks are struggling with legacy infrastructure limitations, inconsistent user experiences, and incomplete 24/7 processing capabilities. Meanwhile, non-EU banks are under mounting pressure to keep pace with rising expectations, and modernise their outdated systems. While non-EU banks may have more time on paper, with the EU giving non-eurozone banks until 2027 to comply with SEPA IP for both sending and receiving payments, that breathing space could be a false comfort. Regulatory lag shouldn't be mistaken for strategic leeway – customer expectations are already shifting, and the clock is ticking. Engineering the leap to instant Legacy systems were never designed for instant payments. Historically, banking systems operated comfortably on batch processing schedules - downtimes were predictable and maintenance windows were scheduled. Then SEPA IP came along and eliminated such luxuries, mandating a constant readiness that legacy systems cannot sustain. Unfit technology isn't the only problem non-EU banks face. Their infrastructure often sits in distant time zones, designed for settlement during their own domestic business hours. Banks now have two gaps they must bridge: the tech chasm between current legacy abilities and where they need to be, and the geographical divide between business and customer. They must work out how to bridge them without sacrificing day-to-day service. Minor tweaks to legacy systems are inadequate. Ripping out old infrastructure and replacing it with a modern core is largely unworkable, despite any long-term benefits. So, it's an incremental approach that will help banks bridge these gaps. Incrementally aligning legacy systems with SEPA IP's 24/7/365 model should be an immediate priority for non-EU banks, allowing them to swiftly meet regulatory deadlines and increased customer expectations without major disruption. Liquidity at the speed of now Another consideration for non-EU banks is how real-time transactions fundamentally alter liquidity management. Traditional liquidity frameworks, established around batch processes and fixed settlement windows, now face obsolescence. Yet many banks are still managing liquidity with manual processes and spreadsheets. This won't work with SEPA IP. Under this new system, liquidity needs are immediate and continuous - demanding dynamic management that legacy systems were never designed to accommodate. Banks need to be able to predict and manage liquidity in real-time. Accurate, instant forecasting is crucial in minimising operational risks and avoiding costly liquidity shortages. Automation and analytics tools can be of huge assistance here: a sophisticated analytics platform can provide real-time visibility into liquidity positions and automation technology can instantly reposition funds in response to transactional demands. A further step financial institutions should take is restructuring their treasury operations. They need to ensure these operations are aligned more closely with instantaneous payment flows so they don't slow things down. Such changes, combined with the steps above, allow banks to move from sluggish legacy processes to active, real-time liquidity management that enables banks to boost operational efficiency, significantly reduce system risk exposure, and respond swiftly to changing market dynamics. Rebuilding for real time To deliver true instant payments, banks must do more than patch legacy systems – they need to re-architect for speed. That starts with moving away from monolithic infrastructures in favour of agile, modular platforms built to natively handle ISO 20022 – the global standard underpinning SEPA IP. ISO 20022 doesn't just improve compatibility; it unlocks rich, structured data that powers better fraud detection, customer insights, and cross-border automation. Banks that are able to harness this data will be well-positioned to launch value-added services and enhance the customer experience across every transaction touchpoint. Cloud computing is another critical enabler. Data indicates 25% of banks are still exploring cloud options in 2025, remaining mainly on-premises. Cloud adoption brings the flexibility and resilience needed to scale in real-time, handle unpredictable payment volumes, and reduce latency. Combined with APIs that streamline communication between internal systems and external channels, cloud deployment lays the foundation for more dynamic, responsive banking. 25% of banks are still exploring cloud options in 2025, remaining mainly on-premises. Cloud adoption brings the flexibility and resilience needed to scale in real-time, handle unpredictable payment volumes, and reduce latency. Combined with APIs that streamline communication between internal systems and external channels, cloud deployment lays the foundation for more dynamic, responsive banking. Some non-EU banks have tried starting with a "thin layer" approach, building ISO 20022-compliant gateways to mediate between legacy core systems and the SEPA IP network. This has had limited success, because SEPA IP is about more than just ISO messaging, it requires instant 24x7 clearing and settlement capability, which legacy systems do not have. Competitive leaders have gone further, taking the SEPA mandate as a challenge to introduce native real-time 24x7 components into their payments infrastructure, accelerating both innovation and compliance. Instant isn't optional SEPA IP is more than a compliance deadline – it's a signal that the rules of banking have changed. Speed, data, and seamless infrastructure are now the baseline. Banks that cling to legacy systems risk falling behind, regardless of their location or timeline. The 2027 deadline for non-EU institutions may seem distant, but in a world where customers expect immediacy, the time to act is now. Nadish Lad is Managing Director and Global Head of Strategic Business at Volante Technologies "Instant payments are the new standard: Can banks keep up?" was originally created and published by Electronic Payments International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
