With more than 25 per cent of back-office systems aged over 20 years old, the management of legacy technology is now a major growth opportunity for brokers and banks today, according to new research from the ValueExchange.
The international market research and benchmarking company has outlined how legacy technology can play a “crucial role” in a firm's ability to meet today’s regulatory and customer needs by tackling legacy technology silos — in a wider effort to underpin their future growth.
The ValueExchange, in partnership with S&P Global and Digital Asset, leveraged insights from more than 125 firms across the investment cycle in its recent “Transforming Legacy Tech" survey.
The survey highlights that currently only 3 per cent of derivatives platforms are capable of handling other asset classes, and 52 per cent of brokers have to run their processing systems on a local or country level, meaning that the case for addressing legacy technology silos is “compelling”.
Yet risks remain despite this opportunity, says the ValueExchange, with only one in every two firms opting to drive transformational change – instead of making minor changes to their existing infrastructures.
Despite recent and significant change in areas such as corporate actions, the legacy technology looks set to become more acute in areas such as settlements in the near future, the company outlines.
Barnaby Nelson, CEO of the ValueExchange (pictured), comments: “This survey highlights the critical role that legacy technology plays as both a challenge and an enabler for firms today. Managed badly, aging and inflexible systems look set to undermine efforts to improve settlement efficiency (in a T+1 and Central Securities Depository Regulation context) and to bolster operational resilience.”
However, he adds: “Managed well, legacy tech transformation can open up huge revenue opportunities for firms and underpin their growth. In an era of fierce competition for investments, firms face an urgent choice of which side of the line they want to be.”
