Top Three IT Challenges in Financial Services: What You Need to Know

Running an IT estate for the financial services industry? Make sure to steer clear of these three tech blockers. 

The first half of 2024 has proven difficult for financial services technology pros and the teams they support. Common IT challenges in the financial services industry like the need to modernize remain a constant concern, and external factors ranging from a shaky economy to headline-grabbing systems outages haven’t made things any easier.  

IT leaders keep moving forward in uncertain times by focusing their efforts on issues they can control. In an industry where costs are always a point of scrutiny, financial institutions are on the hunt for solutions that allow them to get more use from their current technology without slowing modernization efforts. That process starts with addressing issues that make your on-premises software too costly or technically difficult to keep active.   

Challenge 1: Achieving better TCO from current software  

When they bought their perpetually licensed software years back, banks and financial services companies justified the upfront costs based on the low TCO they would realize as they continued to use the products. Today, those same institutions often struggle to achieve that outcome due to several factors, including:  

• Escalating vendor software support costs. Support renewal costs go up with every new agreement and typically offer less in terms of coverage as time goes on, until eventually no support is available at any price. However, keeping active support is also a necessity (and, in many cases, a regulatory requirement). This leads many institutions to think paying more and constantly upgrading are the only options.  

• Difficulty and expense of achieving interoperability. Financial institutions spend significant chunks their IT budgets maintaining current software and preparing established systems to work alongside newly introduced software.  As with support costs, the lack of apparent options leads organizations to believe they must keep spending.    

• Software license audits and associated costs. Software license audits are a fact of life when financial institutions purchase software from megavendors like IBM. The associated costs can quickly drive up the total cost of owning on-premises solutions.   

The financial industry is risk-averse by default, and every wasted penny prevented or recovered in the current economic backdrop is another victory. It’s fair to say most would be happy to continue using the software they have if keeping it stable, supported, and maintained wasn’t just as challenging and costly as moving to an alternative – a blocker that is easier to avoid than many institutions might realize.  

Challenge 2: Sidestepping forced upgrades without stunting digital transformation 

Going without support isn’t an option for the software financial institutions rely on. When their current software moves to end-of-support (EOS) status, organizations often feel forced to surrender their current version just to make sure they have someone to call when things go wrong.  

Whether an individual product’s rollover to EOS is known in advance or it comes as a total surprise, like when Broadcom stripped VMware® software support from thousands of perpetually licensed products, planning out a viable reaction before the end of the current support agreement doesn’t just place serious time constraints on the process. It can also slow digital transformation plans by forcing customers into technology upgrade tracks that run contrary to their plans. 

When there is a nonnegotiable need to keep software supported, agreeing to an unwanted software upgrade and potentially disrupting the current IT roadmap feels like another unavoidable financial services IT challenge. But forced upgrades and spiking support renewal costs can be overcome by exploring support agreements beyond the typical terms software megavendors offer.  

Challenge 3: Finding the right people despite a widening skills gap 

Above-average reliance on existing technology and the need for constant uptime make financial institutions uniquely vulnerable to the ongoing IT skills gap. Supporting current operations, integrating common digital transformation projects like AI, and maintaining deeply integrated perpetually licensed software all require unique skill sets that can span generations. However, most new graduates aren’t coming out of university with deep mainframe experience. 

A solution to finance’s mission-critical IT challenges 

Independent software maintenance vendors like Origina enable companies to keep their current software for as long as they like without sacrificing their digital transformation plans or overcommitting funds to maintenance, security, or support. In the finance industry, that means providing easier solutions to long-standing issues at the foundation of most industry challenges. 

• Ongoing support for IBM®, VMware®, and HCL® software. The independent software maintenance vendor you choose steps into the role of primary maintenance and support provider. 

• A way to avoid forced software upgrades. Collaborating with an independent maintenance vendor allows you to keep your EOS software active and supported for as long as you need it, with no need to move to a newer version until your company is ready. Along with ongoing support for your EOS products, independent software maintenance vendors can help optimize your perpetually licensed products to work with the newer software you introduce elsewhere in the estate over time.  

• Access to hard-to-locate software skills. The longer a specific version has been part of your estate, the more difficult it is to find expert knowledge to support it.  Independent software maintenance vendors provide access to experts, most of whom have at least 15 years of experience working with that solution.   

As we move to the back half of a challenging year, organizations that figure out how to dump less of their IT budgets into existing software without slowing transformation plans or compromising on service quality give themselves the best chance at success.  

Want to learn more? 

Our e-book, “Future-Proof Banking and Financial Services IT: Navigating Enterprise Software Roadmap Complexities,” explores the challenges financial institutions face in handling software megavendors. It provides proven strategies to lower your IT spend without sacrificing innovation.  

Avoid software megavendor tactics that keep financial institutions overspending. Download the e-book.