Executive summary
Banks and other financial institutions often operate numerous complex IT systems that have developed over their long history. Due to changes in the external environment and within the organization, some of these systems inevitably become legacy systems at some point. While they continue to be used, they are no longer adequate for providing high-quality and cost-efficient services.
In this case study, we share insights gained from more than 20 years of experience working with banks and other fintech sector clients in the EU and Switzerland. We focus on identifying legacy systems, analyzing their different layers, and creating an outlook for the next 5 to 10 years. This approach will help you determine the best strategy for ensuring the stability and growth of your business.
What is a legacy system?
A legacy system refers to a system or functionality that is still in use but does not provide the availability or quality necessary for delivering high-quality service.
Systems can become a legacy for various reasons:
- Lack of maintenance/support – The organization may no longer have technical partners or in-house staff to maintain the system, or those who are available may be unwilling to continue working on it.
- Licensing issues – The system may lack a valid license, the existing license may be too expensive, or the vendor may no longer support the product.
- Regulatory constraints – New regulations, such as GDPR or updated security requirements, may necessitate new solutions.
- Cost inefficiency – Certain functionalities may no longer be required at the same scale as before, making the system a financial burden for the organization.
- Mergers and consolidation – A system migration has become necessary due to the merger of two financial institutions, such as banks consolidating their operations.
Changes in international payments, such as the adoption of new currencies or fluctuations in currency exchange rates, can impact an organization’s legacy systems.
A system may become classified as a legacy due to external factors like maintenance or licensing issues or internal factors such as evolving business needs. Regardless of the cause, this situation always prompts a decision on the system’s future. The first step in this process is to conduct a thorough mapping of the legacy system.
How do you map a legacy banking system?
At Helmes, we employ various frameworks and tools to map legacy systems. The mapping process involves analyzing different layers, ranked from the highest level to the lowest:
- Functionalities / Business needs – What are the organization’s business needs? This includes identifying the services currently offered and those planned for the future. This is the highest-level layer of analysis. In some cases, we may find that there is no actual business need for the legacy system or that other functionalities can fulfill the same requirements.
- Data – What data does the legacy system provide, and where is it needed? This analysis helps us determine which data must be retained and which data can be discarded (for instance, we can archive historical data no longer required for service delivery).
- Applications – What functionalities do current applications provide? What data do they contain? How do they interact with other applications? Considering both current and future needs, we identify legacy applications that should be retained and those that can be consolidated or phased out, potentially migrating data to higher levels.
- Technologies – Are the legacy systems running on servers or in a cloud? We analyze the current situation and future alternatives here.
To map legacy systems, we utilize frameworks such as the Open Group Architecture Framework (TOGAF), the ArchiMate enterprise architecture modeling language, the As-Is and To-Be process mapping, and the MoSCoW prioritization scale.
At Helmes, we prioritize speaking our client’s language by using a combination of tools and frameworks that they are already familiar with.
Getting a perspective for the next 5-10 years
Mapping the system helps identify which business functions and data can be migrated. In some cases, it is necessary to keep parts of the system in place to minimize risks and costs. Once we define this part of the system, referred to as a legacy island (which is always kept to the absolute minimum), we can integrate it with other modern systems.
As part of the analysis, we conduct a five-year total cost of ownership (TCO) assessment. This includes outlining the technologies that need to be retained or introduced and estimating the related costs (including software, licenses, development and maintenance, hardware, and cloud services). The five-year forecast provides clients with the insights needed to make an informed decision about the system’s future.
Transforming legacy systems is essential for an organization’s long-term ability to provide sustainable services. Although legacy systems are inevitable, organizations can take proactive steps to manage their evolution. This includes determining which functionalities to develop, which to phase out, and assessing the associated costs.
Example: Migrating a legacy banking system to a cross-country platform
When migrating the legacy system of a country branch of an international bank to a cross-country platform, we began by mapping out the entire system, which consisted of more than 100 applications. We mapped the business functionalities, data, software, hardware, and best possible future architecture using the TOGAF framework.
We identified which business functions and data could be migrated and which applications could be phased out. Additionally, we determined that part of the core system needed to remain in place, as it was impossible to migrate certain functionalities or data.
We also provided a 5-year Total Cost of Ownership (TCO) analysis, which included a financial estimate covering software, licenses, development, and maintenance costs.
As a result of the project, critical data was successfully migrated to the cross-country platform. Historical data was stored in a “legacy island,” and a web layer was built to query data from it.
Our services and experience in the banking sector
Helmes has more than 20 years of experience delivering custom banking and payment solutions for banking and fintech clients in the European Union and Switzerland. We specialize in banking software, payment automation, and secure transactions. Our team has helped industry leaders modernize legacy systems, enhance financial security with public key infrastructure (PKI) solutions, and transform retail payments and self-checkout experiences.
Our services for banking clients include:
- Integration, migration, and development of fintech and banking systems
- Legacy systems analysis
- Critical online systems analysis
- Analysis across different layers:
- Needs and requirements
- Functionalities
- Data
- Technologies (software)
- Solutions (platforms, hardware)
- International directives and development needs analysis
- Defining, managing, and executing migration scope
- Identifying alternatives and creating a risk assessment
- Fraud detection and monitoring for fraud and anomalies
- Online systems monitoring
- Data management for business-critical systems
Work with us
Legacy systems pose a common challenge for financial institutions with long histories. Instead of completely eliminating them, it is essential to manage them proactively to maintain business stability and foster innovation. A skilled development partner can evaluate your legacy banking system and its requirements, identify potential risks, and provide financial estimates to help you determine the best path forward.
Helmes is a trusted partner for banks, fintech companies, and payment providers, including SEB Bank, Bonnfinanz, Autopay, and the Bank of Estonia. In addition to financial institutions, we also support global organizations like Airbus, Kuehne-Nagel, OECD, CERN, and Telia by delivering high-quality digital solutions that provide quick value. Our commitment to excellence is reflected in our customer Net Promoter Score (NPS) of 65+. Helmes offers flexible cooperation models, including team augmentation and dedicated software development teams. If you are seeking an experienced partner to transform legacy banking systems or to address other digitalization challenges, we’d like to hear from you.
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