IT leaders in the finance sector share their digital transformation
Blog //14-02-2023

IT leaders in the finance sector share their digital transformation

by Tim Jones, Managing Director - Application Modernisation

It’s no secret that financial institutions rely heavily on mainframes. In fact, mainframes are used by 44 of the top 50 banks and are estimated to handle roughly 90% of credit card transactions. 

However, the pandemic catalyzed many to accelerate their modernization programs to improve their agility in the face of unprecedented demand for rapid horizontal scale. A recent survey of organizations around the globe that utilize mainframes found that 90% of IT leaders had modernized mainframe workloads within the past three years, while only 11% undertook modernization initiatives before 2020.  

We spoke in depth to several enterprise architects, application, and project managers within the Finance industry about their own mainframe modernization journeys to get their thoughts on everything from their organization’s strategic direction to challenges around mainframe modernization and the importance of digital transformation.

Is your organization planning to reduce its dependency on mainframe systems?

Application Manager, Financial Services business #1: “We are marginally ahead of our competitors in reducing our dependency on mainframe-based legacy systems; because of the lack of innovation, they restrain businesses from making changes to optimize day-to-day operations.”

Project Manager, Financial Services business #2: “There are no plans to reduce our reliance on the mainframe currently; in fact, it is at the core of our technological strategies due to its capacity to host our clients' databases. We have to maintain data for millions of transactions every second and due to the high availability architecture of mainframes, there is almost no downtime.”

What are the main drivers behind strategic modernization initiatives for you?

Application Manager, Financial Services business #1: “The main drivers are the simplification of processes and the cost savings associated with it. It is estimated a company can save close to one-third of its costs by migrating its mainframe-based legacy systems to the cloud.

Take the pandemic as an example - companies with existing cloud infrastructure pre-2020 were at an advantage because they could scale their operations. At the same time, their competitors’ servers were crippled due to excessive traffic.”

Which mainframe modernization approach is your organization using?

Application Manager, Financial Services business #1: “We follow a mixed approach of refactoring and rehosting.  With refactoring we don't have to rewire all the solutions we have derived from years of hard work. In some cases, we are better off with rehosting because creating a new infrastructure is more feasible.”

Project Manager, Financial Services business #2: We prefer using rehost/replatform, which basically lifts the data and shifts it to the cloud.”

Learn more about the different approaches to modernization.

Why are you using these approaches?

Application Manager, Financial Services business #1: “Refactoring takes advantage of the cloud platform. Though refactoring is a more time-consuming process, it has many long-term benefits such as simplifying the code, reducing complexities, improving maintainability, and making it easier to spot bugs and make further changes to the code. It has many long-term cost savings benefits too.”

Project Manager, Financial Services business #2: We have realized that the cloud is more than just technology. We store data and applications and access advanced software applications over the Internet. Cloud providers offer a variety of innovative products as services accessible through the platform, allowing banks to implement business and operating models to improve revenue generation, customer insights, and cost.”

What are the main challenges you have encountered so far with regards to mainframe modernization?

Application Manager, Financial Services business #1: “Scope creep and inadequate expertise. Also, another major challenge that organizations have faced is modernization program failures.” 

Project Manager, Financial Services business #2: Mainframe operations are difficult to move to the cloud due to their size, scale, and complexity. Companies are also dealing with the effects of an aging staff accustomed to mainframe technology. As a result, poor project planning, erroneous migration process decisions, and challenges during the testing stage necessitate substantial knowledge of the legacy system.”

How has mainframe modernization impacted customer service?

Application Manager, Financial Services business #1: Let’s take the classic example of the pandemic, where we had to deploy a remote workforce overnight. We had immense numbers of queries and transactions arising due to panic situations, and our servers were almost crippled. This resulted in delays and people losing faith in our business. We lost many customers due to this, but if we had completely modernized earlier, we wouldn't have had to deal with such delays and could have gained more customer confidence and provided them with better services.

Since then, we run a hybrid model and perform our tasks seamlessly, resulting in speedy redressals and better customer satisfaction derived from the modernization approach.”

Project Manager, Financial Services business #2: Customers use online and mobile banking to check account balances, make purchases, transfer money, and perform other banking operations. Over the past few years, there have been great concerns about downtime, which was unacceptable. With our collaboration with our partner, we were able to achieve net zero downtime.

Likewise, the mainframe is continually evolving to make it the safest, most resilient, and most dependable platform imaginable. Mainframes are costly, but they are built to handle massive workloads.”

How important is your organization's cloud strategy to the overall success of your business?

Application Manager, Financial Services business #1: “Cloud strategy is one of many essential things that will determine the overall success of our business to a major extent. It's not the most critical thing, but it is crucial.”

Project Manager, Financial Services business #2: It is proven to be a key aspect of our company's expansion. We can achieve a greater degree of data security, fault tolerance and disaster recovery, which clients need.”

How has the role of cloud providers shifted for your organization over the past three years?

Application Manager, Financial Services business #1: “Cloud providers are not just seen as technology providers but as valuable partners to consult, merge and grow business with. They play a vital role in scaling our business as they have simplified and structuralized our process by helping us in creating a platform with intuitive features to plan, track and achieve goals. We have come a long way with the support of cloud providers and have leveraged them because of machine-based learning, automation, and security.”

Project Manager, Financial Services business #2: We were working towards cloud migration before the Covid-19 outbreak, but it was more of a gradual and steady process, picking and choosing which elements of our operations to migrate. However, when the pandemic struck, it became more of a requirement. It became critical to act to keep a competitive advantage and guarantee that our clients were not confronted with any difficulties/challenges. Everything had to go online, from opening an account to any other bank services - small or big. The cloud made it easier to provide information and services to our clients swiftly.”

Does your organization have a specific multi-cloud strategy?

Application Manager, Financial Services business #1: Yes, we have a multi-cloud strategy, but we have different cloud providers for different use cases.”

Project Manager, Financial Services business #2: Yes, we have multi-cloud providers that provide a seamless and hassle-free customer experience.”

What do you see as the biggest opportunity and the biggest challenges in next few years?

Application Manager, Financial Services business #1: The biggest opportunity lies in AI and business transformation, by which we can reduce costs, process durations, and workforce deployment while being extremely productive and sustainable. The biggest challenge is data security and privacy.”

Project Manager, Financial Services business #2: I believe the biggest opportunity will be the hybrid cloud, as businesses can get the best of both worlds. They may scale further and quicker due to the public cloud's creative and adaptable services - and that’s without sacrificing the higher cost efficiency, faster response time, and regulatory compliance that comes with the private Cloud's advantages.”

The biggest challenge will be a lack of planning. If a company delays realizing the need for the cloud, it will be very difficult to plan and execute the whole procedure quickly.”

*Organizations interviewed were from the financial services sector, 10,000+ employees with global revenues of $5bn plus.

Our 2022 Mainframe Modernization Business Barometer Report summarizes key findings from a survey of organizations around the globe that utilize mainframes and generate annual revenues of more than US $1 billion. View the full report here.

How Advanced helped banking Giant BBVA moved from COBOL to Java

BBVA's primary objectives were to cut licensing costs of the mainframe and free up data trapped in an IDMS database.  BBVA decided to modernize two applications, both written in COBOL, ADSO/ADSA and Easytrieve. The target for the migration included Java and Oracle database.  BBVA wanted the new system to be an exact copy of old system, as the legacy application's business logic and user interface were satisfactory to the business.

Upon successful launch of the online and batch applications, overall system costs were cut significantly. Just considering direct license savings, BBVA project leaders predicted positive ROI for the entire effort would be achieved within two years. There was the additional strategic benefit of risk reduction around IDMS resources, which are expensive and difficult to find.

Our team of modernization experts has an unmatched history of project success, backed by the best tools available. If you would like to find out more about how we can help with your legacy modernization projects, please get in touch.

Tim Jones

Tim Jones


Managing Director - Application Modernisation

Tim has a track record of success in mission-critical Application Modernisation projects. He is renowned for helping organisations maximise their investment in critical legacy applications.

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