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If you're a CIO in the banking industry, odds are you've lost sleep over technical debt. How can you possibly innovate when you're constantly playing catch-up with the latest compliance and regulatory policy changes and struggling to retain and attract skilled workers? Not to mention, you're tackling these issues while also making sure your systems are secure, performing and leveraging the latest technologies. 

Application modernization can indeed help reduce technical debt for companies. Technical debt refers to the accumulation of outdated technologies, inefficient code and architectural limitations within an application or system that hinder development speed, scalability and maintainability. Technical debt can undoubtedly have significant negative business impacts, including:

  • System downtime
  • Slow performance
  • Security vulnerabilities
  • Long development and testing cycles
  • Inability to adapt to changing business needs
  • High maintenance and support costs

The cost of technical debt in banks can vary significantly depending on the size and complexity of the organization, the extent of the technical debt, and the specific problems it causes. While providing an exact figure is challenging, technical debt can have significant direct and indirect costs for banks. 

Seven ways that application modernization mitigates technical debt

  1. Updating technology stack: Legacy applications often rely on outdated programming languages, frameworks or infrastructure that can impede innovation and increase maintenance efforts. Modernization involves migrating to newer, more efficient technologies, leading to better performance, improved scalability and reduced technical debt.
  2. Refactoring and code optimization: During application modernization, code refactoring is often performed to improve the quality and maintainability of the codebase. This involves restructuring the code, removing redundant or outdated sections, and optimizing performance. By refactoring code, technical debt is reduced, making it easier to implement new features or fix issues in the future.
  3. Improved scalability and flexibility: Legacy applications may need help to scale effectively, resulting in performance bottlenecks or stability issues. Modernizing applications often involves adopting cloud-native architectures, microservices, or containerization, which enhance scalability and flexibility. Designing applications to scale horizontally and leverage cloud resources can minimize technical debt associated with scalability limitations.
  4. Enhanced security: Older applications may have security vulnerabilities due to outdated libraries, weak authentication mechanisms, or inadequate security practices. Modernization efforts can focus on reinforcing security measures, integrating modern authentication and authorization mechanisms, and adopting security best practices. Addressing security weaknesses reduces technical debt related to potential breaches or vulnerabilities.
  5. Streamlined development processes: Legacy systems often have complex and cumbersome development processes, making introducing new features or performing updates efficiently challenging. Application modernization typically involves adopting modern software development practices such as DevOps, continuous integration/continuous deployment (CI/CD), and agile methodologies. These practices improve collaboration, automate workflows, and enhance the overall development process, reducing technical debt caused by inefficient workflows.
  6. Reduced maintenance effort: Outdated applications often require significant maintenance and support, as the underlying technologies may have limited vendor support or lack documentation. By modernizing applications, organizations can utilize widely supported technologies with robust ecosystems. This reduces the effort required to maintain and troubleshoot applications, ultimately decreasing technical debt.
  7. Digital experience: Modernizing legacy apps improves the digital experience by incorporating modern design patterns and new interface technologies. Intuitive application design will reduce or eliminate the need for training and accelerate the adoption of internal and external applications. It can also reduce the cognitive load and mitigate employee and customer churn.

Application modernization tackles technical debt by updating technology stacks, refactoring code, improving scalability, enhancing security, streamlining development processes, and reducing maintenance efforts. Sleep well at night knowing your organization's applications are stable, flexible, scalable, performant and ready for the challenges of tomorrow with minimal technical debt.