#Privacy: Financial services organisations are not prioritising compliance in their modernisation efforts

The 2020 Mainframe Modernisation Business Barometer Report reveals just 6% say it’s essential to modernise legacy systems to meet current regulatory and legislative demands

According to new global research from Advanced, just 20% of financial services organisations cite an inability to meet compliance and regulatory demands as their top reason for modernising mainframe based legacy systems. 

The 2020 Mainframe Modernisation Business Barometer Report surveyed business and technology employees working for large enterprises within the financial services industry with a minimum annual turnover of $1 billion across the US and Europe. 

The report revealed that just 6% of organisationals say it’s essential for them to modernise their legacy systems, in order to meet current regulatory and legislative requirements. These figures are concerning especially when the financial services industry is highly regulated. Just last year, during the last six months of 2019, the UK’s Financial Conduct Authority (FCA) imposed fines worth a total of £319 million for compliance.

“These findings are shocking given the regulations, such as the General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA), which have come into force over the last few years, comments Brandon Edenfield, Managing Director of Application Modernisation at Advanced. “It begs the question: have organisations become complacent?”

The report also discovered that over 95% of organisations feel that if they didn’t modernise theyr systems within the next two to three years, there would be either minor or no risks of non-compliance of security issues. 

Edenfield added: “Arguably, the industry would not want to admit there is a major risk, but there are clearly lessons to be learned. We know from TSB’s IT glitch in the UK in 2018, for example, that there have been a number of outages in banks, with critics blaming legacy systems. This demonstrates the consequences of organisations failing to modernise are huge.”

When respondents were asked what the ancillary consequences were to not  modernising legacy systems, 60% of financial services organisations stated there would be difficulty in integrating legacy systems with modern technology, followed 42% citing difficulty to recruit talenet, 38% stating reduced levels of customer service, and only 19% saying the inability to meet new regulations. 

Fortunately, 98% of organisations have active plans to move their legacy applications to the Cloud in 2020, which can help support compliance. These plans are likely driven by the benefits of enhancing business agilit and flexibility, in addition to attracting new generations entering the workforce who are expecting advanced technologies. Most important, the move could save IT infrastructures around £44 million. 

“As our world grows increasingly connected, organisations need to get more serious about modernisation. Many people today do their banking on their phones and tablets, hardly ever setting foot inside a branch. What’s more, for the majority of them, banking has become a completely digital experience. However, in almost every bank, once you get past the digital veneer of the customer facing applications, the systems are still the legacy transaction processing applications that have been driving the business for decades.

“If organisations are to adapt to customers’ digital habits, they need to consider legacy modernisation as the foundation. Those who fail to prioritise this shift risk falling behind their competition and significant revenue loss in the future.”

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