In banking or finance, trust is the only thing you have to sell.” ― Patrick Dixon. An Accenture study of 900 companies revealed that a drop in trustworthiness cost organizations $180 billion in revenue over two years.
Technology today is at the core of every financial institution. Banks use core technologies such as data analytics to better understand their customers, personalize offerings and build trust. Today, technology is at the core of every organization, and banks are no different. The digital native customer of today wants to bank from anywhere, at any time, and this is driving banks to transform their banking products and manifest significant enhancements in their customer service.
Often, this warrants a core banking migration. A Core Banking Product migration is about the seamless movement of customer data, product contracts data, and other financial/nonfinancial data from the source system to the target system, such as Temenos Transact. It enables banks to improve operational efficiency, enhance customer experience, and reduce costs. However, data migration is one of the most challenging aspects of a core banking migration. Data is usually deeply rooted in multiple places and silos but is critical for the business. According to a Gartner Report, over 80% of data migration projects exceed their deadline or budget, while some have resulted in complete failure.
With accelerated digitization and technology becoming all-pervasive, data migration experts have invested in building migration accelerators & tools and specific methodologies, which in turn help improve migration projects’ success rate.
The suitable approaches to data migration
Data migration approaches depend on the size and business needs of the bank. Usually, smaller banks from Tier 3 to Tier 4 would adopt the Big Bang approach, and larger banks or Tier 1 or Tier- 2 banks would take the Progressive or Phased approach. Each has its pros and cons. But the key goals of data migration are to make the migration successful, faster, and more secure without compromising data quality.
Big Bang Migration: The big bang migration approach simultaneously migrates all data. This approach is risky; if it fails, it could result in significant downtime and business disruption. In general terms, Big Bang is appropriate for smaller, less complex customers. The risks of shifting the bank’s books and ledgers to a new system in one go are higher than a piecemeal approach. But the advantage of a shorter project is that it is cost-effective with additional effort for risk management to have business continuity. It would take up the existing system entirely from the Go Live date.
Phased Migration: The phased migration approach involves migrating data in stages. This approach reduces the risk of system downtime and business disruption and allows banks to test and validate each step of the migration process. The leading banks often adopt progressive migration –Tier 1 & 2. With lower risk and some early business benefits, it suits complex, large organizations. This approach does involve parallel maintenance of any existing client system. Expensive with less effort for risk management to have business continuity.
Migration Best Practices
To ensure a smooth data migration during core banking migration, banks must have a clear data migration strategy that includes the following:
- Planning and preparation: Careful planning and preparation are critical to successful data migration. It encompasses identifying the data, mapping it between legacy and new systems, and developing a detailed project plan.
- Data quality and completeness: Ensuring the migrated data is accurate and complete is critical. Cleaning and reformatting the data and performing data validation and reconciliation before and after the migration are vital parts of this process.
- Test-driven approach: Test-driven approach is a must-need strategy. It is testing the migration process thoroughly before moving to the production environment. It includes testing the data migration process, testing the data integrity, and testing the system integration.
- Incremental migration: The data migration process can be divided into smaller chunks, which can be migrated incrementally, allowing for a more manageable process and a lower risk of data loss or errors.
- Data Governance: Having a good data governance framework to ensure data is accurate and complete and to manage and track data quality issues during migration. It includes data encryption, data transfer permissions, a list of personnel with access to data during migration, and a universal compliance policy for the new system.
- Data Archival: Archiving data that would be redundant in the new system can help to reduce the data volume to be migrated and help improve system performance.
- Post-migration monitoring: Once the migration is complete, it is essential to monitor the system to ensure it performs as expected and to identify and resolve any issues that may arise.
Data migration needs to become a business-critical project.
Often, executives look at data migration as just another technology project. However, we are slowly seeing a shift in the banking and finance industry, with FIs and banks approaching data migration with a more strategic business lens. They strategically align data migration with an organization’s bigger technology/digital transformation plans. Data migration during core banking migration is, without a doubt, a complex and challenging process. It requires careful planning, execution, and testing to ensure data accuracy and completeness while not impacting the frontline customer experience and their transactions.
Banks and FIs must ensure a clear data migration strategy, risk management, and customer experience plan, being key pillars of any transformation journey. They must follow best practices, including proper planning and preparation, data mapping and quality assurance, testing and validation, and data security and privacy.
All this is achievable by leveraging the experience and skills of data migration specialists, adept with migration accelerators, tools, and methodologies specifically tailored to the needs of the banking world, covering both On-prem and SaaS/Cloud migration projects. A quick, secure, effective, and seamless migration can be achieved using world-class platforms with minimal disruption to daily operations while continuously refining and improving the process. It will help banks and FIs stay agile and accelerate their next in banking, no matter the quantum of data migration work in hand.
About the Author
Rajesh is a highly skilled data migration expert with two decades of experience in software design, development, data migration, and system integration. At Maveric, he specializes in working with Temenos software and delivering successful implementation projects globally. Experienced in leading high-performance teams, Rajesh is known for his expertise in driving projects from service and product development to successful go-lives. He is also known for his innovative, solution-focused thinking while deeply committed to delivering exceptional results.
Article Originally published in CXO Today