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Legacy core banking systems are typically platforms that are decades old that banks and financial institutions use to support their back-end infrastructure for services such us setting up new accounts, processing deposits and transactions, and initializing loans. Legacy banking systems often lack the features of newer financial technology, such as the ability to interface with other systems, and can often hinder the ability of traditional banks to quickly deploy new products and services.
Newer banks, such as online and challenger banks, are often deployed on cloud-based platforms. This allows them to take full advantage of everything technology (and a cloud platform in particular) has to offer in order to optimize their core platforms and allow for new services and experiences in reaction to customer demands. Banks that utilize cloud platforms often have more access to what customers want, either through a strong social media presence or by analyzing customer data that has been collected through their services. However, incumbent banks to do not have to continue to rely on legacy systems while newer entrants to the banking industry flourish. Instead, incumbent banks can undergo a digital transformation and step into a new age of banking services.
A digital transformation allows banks and financial institutions to migrate from legacy core banking systems to cloud-based platforms. Cloud platforms have many benefits for these institutions, including: