Lately, there has been a lot of talk about legacy modernization or the need to upgrade legacy systems. The ongoing pandemic has emphasized the increased need for tech modernization and innovation for banks and other financial institutions over any other vertical.

Are legacy systems in sync with the digital payments?

From barter system to digital wallets, the world of payments has had massive shift over so many decades. Discussing the current scenario, the concept of social distancing and the need to drive personal safety has given rise to a number of questions for businesses. One such question for the banking industry remains, can legacy systems handle digital payments? Will it give rise to any security challenges? and so on.
Hence, it is evident that the banks that do not keep up with the modernization may eventually lag behind in the race against supremacy. Currently, digital payments have evolved into several options like Buy Now Pay Later, wallets, quick mobile transfers, etc. In order to keep systems, operations, and technology up to speed, legacy transformation has become the need of the hour. Here are the disadvantages of legacy systems for digital payments:


The millennials and Gen Zs dislike delayed payments and are not interested to wait in long queues to get hold of their own money. They expect instant payments with instant confirmation. Digital payments are the result of this innovation and worldwide, it has made its position strong. However, due to the disadvantages like slow processing time, inaccuracy, etc., legacy systems stand as a hindrance, leading to customer dissatisfaction.


For any financial institution, the two key priorities are customer satisfaction and increased ROIs.With high maintenance cost, legacy systems ensure to keep banks and other financial organisations in a financial bind due to high ROIs.

This is because the emerging technologies are built aiming for maximum ROIs, but they are not fully supported by legacy systems. These tech disruptors also contribute to advancements like instant payments, etc. Legacy systems clearly hinder banks to leverage such customer-focussed offerings.


Technical disruptors in banking are a common thing and it is specific to the consumer interests, including digital payments. With increased trends and competitions like social payments, banks are forced to up their game, and legacy core stands as a major hindrance.

From cloud computing to APIs, the land of payments is seeing a lot of prosperity. However, legacy core is less compatible withthese enhancements hence, banks are struggling to leverage technologies.

4.Flexibility and scalability

Let’s take into consideration, that the legacy core of your bank was built based on the technology that is nearly two decades old. With rapid technological advancements that we have seen, these legacy systems will certainly be slow and less resilient, thereby incapable of keeping up with the modern times and supporting tech evolution. However, with the future of banking systems taking a cloud-forward approach, modern enhancements like cloud computing, are designed to facilitate faster time-to-market with frequent releases.

Also, over the last decade, digital payments have seen a steep rise in user transactions. In the future, this number will only go up, and legacy systems that are sustaining on old technologies will struggle to face the increasing volume.

5.Maintenance cost

If legacy systems are not timely updated, maintenance cost will increase due to the obsolete nature of the technologies. The overheads that cause a rise in expense may include: extending support systems, tech experts who have the knowledge of old technologies and many more. With SaaS products facilitating financial operations with much lesser cost, banks must take on legacy transformation as a priority.

6.Core architecture

Legacy core is basically designed as a monolithic architecture considering traditional payments were slow, lengthy, and susceptible to human errors. However, the origin and rapid improvement of digital payments have taken customers by surprise with its speed and precision.

Digital payments work based on microservices architecture that facilitates faster product releases with increased resiliency. However, banks are still struggling to ensure seamless payments, due to the legacy core architecture that fails even if a single component has any issue.

7.Middle-ware functionality

Most banks have understood the disadvantages offered by their legacy core to adapt to instant payments. However, instead of transforming the core, most banks consider designing advanced middle-ware that compensates for the core architectural defects. If done right, all ends well with no worries. If not, banks might be vulnerable to cyber risks causing additional discrepancies.

Recommended Read: TPH Implementation for a Bank in Sri Lanka

Next step for financial organisations

Thinking the millennial and zoomer way, digital payments can become their favourite. However, one cannot ignore the primitive aspect of payments, i.e., security. In order to ensure a sturdy wall against cyber-attacks, banks need to embrace legacy transformation. Some banks are still thinking of continuing with their legacy core and we do not think of it as a complete hindrance considering the current times. However, if banks are aiming at future trends and disruptors, they ought to leave their legacy systems behind.