Why should the BFSI sector consider legacy system modernization?
As the world talks about digital transformation, something that insurance companies are struggling to cope up with is customer demands. Legacy systems are holding enterprises back from new-age technologies and transformation efforts. This is because these systems are old, complex and inflexible with the added problem of costly maintenance.
The Insurtech trends have shown the world a glimpse of what kind of changes cutting-edge technology can bring to the table. Real-time updates, quicker sales, faster claims processing, higher security, and most importantly customer satisfaction; the advantages are endless. For this, enterprises must move beyond decade old-technologies and legacy systems, and strategize on what next.
What next in IT modernization?
Most enterprises are not aware of the options available to overcome their IT challenges. In order to derive maximum value, it is necessary to fully understand and evaluate the available options before making a decision. Enterprises need to integrate their core systems with agile development features and real-time data access to maximize benefits.
There are 3 ways companies can go about their IT modernization:
- Legacy system modernization
- Building a new proprietary platform
- Buying a standard software package
The approach that an enterprise should take entirely depends on the outcome they are expecting. Each of these methods come with their own pros, cons and limitations. But, the reason many enterprises opt for legacy system modernization is because it is less disruptive. Enterprises would have made huge investments on these systems in the past and would prefer to go with a model that keeps their core infrastructure intact, with the ability to add new technology to build the gap. This means reaping the benefits of cutting-edge technology but not at the cost of drastic changes or higher risks.
Enterprises using legacy systems need a technology upgrade, but are largely okay functionally. So, many consider a modernization option — refactoring. Refactoring allows enterprises to upgrade their technology stack without affecting any of the business-specific features. This can sometimes be expensive and lag in terms of modern system integrations and data architecture that supports new-age tech.
To overcome this, some consider blackboxing. Here, the functionalities of the legacy system are rebuilt or implemented using current technologies while the core functionality is exposed as a service. This helps in modernization of back-end systems. This has its negatives as well, because it’s only a viable option for enterprises who have a well-maintained system and capabilities to maintain the system going forward.
That being said, legacy system modernization is still preferred because it’s cost effective, low risk, fast, and gets the enterprise to their desired level of upgrade.
What are the benefits of legacy modernization?
- Faster time-to-market: The ability to launch new products quickly and with ease. Quicker sales cycles as agents are better equipped and can have engagements that rate higher among customers.
- Elevated customer experience: Better agent interactions, quick support, faster claims processing and real-time updates rate high on customer satisfaction.
- Higher operational efficiency: IT modernization helps provide a 360-degree view, enabling enterprises to not just automate processes but organize workflows as well. New technology also helps agents and employees perform better, increasing the overall efficiency of the organization.
- Reduced IT expenditure: Modernization also brings down IT spend as it reduces complex configurations and decommissions older, high maintenance systems.
With an array of solutions designed exclusively for the BFSI sector, Neutrinos has helped enterprises with their legacy modernization efforts. For one of our clients (a leading insurance company), policy sales took 20 minutes per policy, and their system was not user friendly. We helped them with their legacy modernization which took just 6 months to go live, and today, sales on the new platform takes just 8 minutes! Other benefits include:
- Built in microservices to enhance performance
- User friendly UI that enables faster sales and easy navigation
- Reduced TCO
- Better agent coverage and productivity
For more information on the Neutrinos Technology Service suite, click here.