Over the past three years, the team at Zeta has engaged with hundreds of leaders from over 50 card issuers across America. During these conversations, recurring questions emerged about managing portfolios on legacy systems, migrating to modern card programs and understanding the perspectives of other card executives. These themes are addressed in a comprehensive report by Zeta and Datos Insights titled “Card Program Evolution: Escaping the Legacy Card Tech Hamster Wheel,” where they conducted an in-depth study involving a dozen executives managing significant card programs.
Key Takeaways from the Report
The report defines four stages of card tech modernization, highlighting the evolution from legacy-dependent systems to fully modern infrastructures.
In Stage 1: Legacy Dependent, innovation is slow and reliant on processors, with customer experience (CX) limited to banker interactions or basic mobile apps. Data access is poor and slow, and costs are high for both service and maintenance. Transitioning to Stage 2 is achievable through incremental technological changes, but creating a significant impact requires more extensive modernization.
Stage 2: Legacy with APIs or Sidecar Programs sees slightly faster innovation, though control over the roadmap remains limited. CX lags behind leading programs, data access is still limited and costs are reduced but may require parallel systems. Remaining in Stage 2 exposes issuers to significant compliance and regulatory risks.
In Stage 3: Modernized with Some Legacy, innovation occurs mostly in-house, except where legacy-dependent. CX can be personalized with some AI capabilities, real-time data access is available but limited in scope and costs are lower except for legacy maintenance and changes. Moving into this stage is particularly challenging due to the complexity of legacy systems.
Stage 4: Fully Modern represents a state where almost all innovation and changes are handled in-house. CX is highly personalized and predictive, leveraging maximized AI capabilities. Real-time data access is available across internal and external streams, and costs for CX and maintenance are low with simpler billing structures. Access to data is crucial for transformation, which is difficult to achieve without modern technology.
Transitioning through these stages reveals that AI has the potential to be transformative, requiring platforms that support real-time data access and rapid iteration of customer experiences. Breaking down the shift to modernization into stages is recommended for most financial institutions since extensive changes are required across various organizational areas.
Challenges and Risks of Legacy Platforms
Bankers face several challenges and limitations to their card programs when they are stuck in their legacy systems. There are six primary risks associated with maintaining legacy platforms. Consumers today need their demands met with key features that provide transparency, control, immediacy and intuitive interactions from their financial institutions. Another risk of staying in a legacy system is the decline of COBOL programmers, which requires very complex coding and poses significant risks for reacting to regulations and managing portfolios. With the rise of AI, there will be new demands for more flexible platforms. Additionally, real-time processing has already begun replacing batch processing as the default. Branch networks have become less competitive, which means digital incumbents are increasingly challenging traditional institutions. Lastly, regulatory changes add complexity and risk, diverting time from innovation.
Functionalities of Next-Gen Processing Platforms
Next-generation processing platforms offer several key functionalities that address these challenges. Cloud-native solutions provide significant advantages over cloud-based ones. An API-first approach ensures easier implementation and faster development. Real-time data access is ranked as the top benefit by bankers. Low-code/no-code design enables staff to develop solutions without technical expertise, while a microservices architecture increases flexibility, scale, and speed to market. Modern user interfaces reduce training needs with intuitive navigation, and modern programming languages address the shortage of COBOL programmers. Broad card program controls allow issuers to make in-house changes, minimizing change requests and enhancing control over the product roadmap.
Initiate the Modernization Journey
Modernizing card programs is a complex but necessary journey for financial institutions to remain competitive and meet evolving consumer demands.
These four stages of modernization serve as a roadmap for issuers to navigate this transformation, leveraging modern technology to enhance customer experiences, improve efficiency and stay ahead in a rapidly changing landscape.
Staying at the initial stages poses significant risks, including the inability to handle diverse payment types and compliance challenges. The frustration of migrating between legacy platforms and the limitations they impose underscore the need for comprehensive modernization. But as financial institutions move through this journey, each stage unlocks significant benefits.
Fintechs are using modern issuance platforms to innovate by reimagining cards as products, business models and data engagement layers. Additionally, banks in the corporate card space are embracing modern technology to stay competitive, allowing fintechs to develop capabilities around their cards.
This decentralized innovation enables rapid iteration and interaction with other systems, providing significant benefits.
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Gary Singh, President, North America at Zeta.
Gary Singh is the President, North America at Zeta. A 20+ year silicon valley industry veteran, Gary has an extensive knowledge about the fintech industry and holds multiple patents in the mobile and wireless industry. At the core, Singh is a business and product guy, who understands how to build and take new and innovative products and services to disrupt status quo markets. Prior to joining Zeta, Singh was the Chief Revenue Officer at Ondot Systems. He has also held executive level positions at Obopay, Nokia Financials Services and Aruba Networks. He comes with over a decade of experience at Zebra (through multiple acquisitions — Motorola Solutions enterprise division and Symbol technologies), where he helped pioneer the WiFi market to automate supply chain operations. At Zeta, Singh is responsible for the company’s go-to-market, operations, growth and overall financial performance in North America.
