Battling legacy tech in lending

December 17, 2020 – 4 min read

Play Video

Legacy tech is not only a challenge facing banks, but it is also a challenge for all tech companies – fintechs included. The rapid pace of technology – new programming languages and shiny fancy tools – means that what was cutting-edge three years ago can already be outdated. In this video Erik Bennerhult, CEO at Näktergal discusses the challenges of legacy tech and how to stay cutting-edge.

Battling legacy in fintech

We’re doing this to replace some legacy parts of our system.” said Andreas, our lead developer, at our latest company meeting. Our CMO, Sarah, quickly responded ”I thought we had the most modern system on the market. We’re on a mission to replace legacy systems, right? Now you’re telling me that our system is legacy???”

Now, this kind of interaction is part of what keeps us on our toes and gets us thinking. After all, to be innovative and to build an environment that fosters creative problem solving, we need different perspectives and for these perspectives to meet in open discussion. 

The conversation can be summarised simply by saying that as a fintech we always need to keep moving. Innovative tech today could be irrelevant and perhaps even be legacy in 5-10 years. We’ve all heard the debate about innovation in banks being stifled by legacy tech and whilst this may be true, we are also reaching a stage in the development of fintechs that legacy is becoming a challenge for some too. In this way, legacy tech is basically things deteriorating, when you lose the ability to make quick changes and perhaps even the knowledge of how to make required changes. 

Pride comes before a fall

As such, to avoid legacy it is essential to stay on your toes. Being unsatisfied with your code, products, the system is not bad a thing. In fact, it’s the opposite. Steve Jobs famously said, “stay hungry, stay foolish”, and this is fundamental. The moment we become content with the code, products, or system we’ve built is the moment we stop striving to build the next best thing. We become afraid of changing our perfect system or even worse, complacent that we have built the best possible system. And what was once a strength slowly turns into legacy. There is a simple mechanic here – consider your system flawed and you will strive to improve it. Consider your system perfect and you begin to stagnate.

Now, here comes the scary part: the value of a system or tech company is not in the code, or even the products. This will scare the hell out of of investors and board members that strive to make sustainable investments. Adding the value of the code would certainly feel like a safer investment.  But the reality is that the value of the company and its tech is not in the code. If you have a great team that produced top-notch code, it is possible to throw all the code away and rebuild it – perhaps making it even better than it was before.

Battling legacy is like constant gardening

On top of that, it’s not only that you can throw away the code, there comes a point, where you should – to replace it with newer code, incorporating the new things you and your team have learned since writing the previous version. Chances are that the world and tech have advanced too – changes in business requirements and available tech very likely has set the stage for a better way to build that thing today. In this way, coding is a lot like gardening. You need to constantly weed and prune, otherwise, it slowly decays. Although, I am not sure if I’d go as far as our CPO, Stig, who suggests that any code older than 18 months should always be thrown away and rewritten.

This brings me to my final point. That the team is the most important part of any company! Whilst some of us have become legacy and are old enough to have a healthy scepticism of the latest tech trends. This meets perfectly with the passion and knowledge of the latest tech of some of our rising stars in the team. These two sides together are part of what pushes us to keep making things better.

The goal as system builders is never perfection. Perfection is always beyond the horizon and believing that you can achieve it is harmful. The goal is continuous improvement.

But don’t just listen to us, lean in with your thoughts in the comments or reach out to me for a digital coffee.

 

Battling legacy TL;DR

Fintech’s always need to keep moving. What can be considered innovative or cutting-edge today could be irrelevant and perhaps even legacy in 5-10 years. So, it is essential to keep building and updating, to never reach a level of satisfaction with your code or system, because that is when you can start to fall behind. 

Subscribe

Get insights into the latest developments in a fast evolving industry with Näktergal’s newsletter.