Case Study: Secure data migration and decommissioning legacy systems in banks ​

3 min read

Secure data migration and decommissioning legacy systems in banks​

Data migration in banking and finance is essential to modernise legacy systems and optimise growth opportunities. The trend from legacy systems, which requires extensive manual oversight, to cloud-based is accelerating. This shift from legacy systems towards greater digitisation means FI’s can focus on meeting consumer demands for flawless experiences and delightful customer service. 

Seamless data migration is a crucial part of banks and FI’s digital transformation of core banking systems but is complicated. The complexity of these projects is often underestimated, and it is not always easy to know where to begin. Moreover, depending on the chosen migration strategy, it can be lengthy process and require a step by step approach.

Secure data migration and decommissioning legacy systems in banks​

The experts at Näktergal Consulting have completed numerous data migrations projects over the years. These projects are from old legacy systems to newer cloud-based systems. Based on this experience we compiled some key challenges and best practices for data migrations projects. They include:

Reconciliation of data

A significant challenge with every data migrations project is that the source and target system often have different data formats and requirements. All data from the legacy system, both financial and non-financial, needs to be properly migrated to preserve data sanctity. The data needs to be converted and migrated in a secure and timely way from existing formats and functional rules to the formats and functional rules required by the target system. Complex business rules and large volumes of data make reconciliation a challenging task.

Decommissioning legacy systems

In data migrations projects which require the decommissioning of legacy systems, it is vital not to lose any data. It is essential to implement principles to store data while simultaneously preventing data loss. A Data warehouse is set up and ETL (extract/transfer/load) processes move information from one “soon to be decommissioned” system to the data warehouse environment. The ETL processes are generated from configuration, similar to how Data Warehouses are set up.

The decommissioning of legacy systems is an essential part of data migration. It enables banks and FI’s to retire outdated legacy systems by archiving the data and documents in those systems following regulations. Decommissioning a legacy system has several challenges, and this is why we approach it in a step-by-step process. 

Data loss prevention

Data migration is conducted in structured phases to prevent data loss. Only once all products and data have been successfully migrated should the old legacy systems be closed. This is the only way to handle all unforeseen migration challenges successfully.

Agility and keeping an open mind

The migration process rarely goes without a hitch. As every bank and FI uses different tools and stores data in different formats until the project begins, it is impossible to predict exactly what might come up. Understanding that each migration project has its challenges is essential. There are always solutions, but keeping an open mind and taking an agile approach means smoother resolution.  

Mapping data

Data in a legacy system will not match perfectly with a new system because the systems are built differently. However, old data might be required for reporting, data science or improving scoring models. It is possible to store all data from the old data from the system in a data warehouse, and it can be consolidated with other data sources.

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Source data quality

The quality of the data in a migration project is crucial to success. Some legacy systems have data quality issues that present a challenge. Data quality issues found in legacy systems are one of the biggest reasons for delays. Usually, banks and FIs are unaware of data quality issues before starting a core banking transformation. These data quality issues must be identified early on to prevent target system failures.

From defining a migration strategy and mapping the transformation journey to delivering data converted to the new system, Näktergal Consulting can help you achieve a seamless data migration. 

TL;DR:

The importance of data migration from legacy to cloud-based systems is accelerating and is a crucial component of a bank’s digital transformation journey. Mapping out a data migration strategy is essential to avoid data loss, formatting issues and data quality issues.

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