The Single Biggest Threat to Banking


December 13, 2016

What is the single biggest threat to the financial services industry?

Agreement Express CEO Mike Gardner has publicly stated (most recently, in The Globe and Mail) that the biggest threat to banking and financial services is the legacy systems that prevent organizations from iterating and adapting to changing environments and customer expectations.

This is a perspective that Agreement Express was founded on, as we recognized the need for traditional financial institutions to be equipped with agile technology that would allow them to service their customers at a higher level, and operate more efficiently with cloud-based technology to iterate on an ongoing basis. What does ‘agile’ mean?

A way of managing a project or system in which the team can respond to unpredictability, such as changes in rules or trends, with incremental, iterative work cadences and empirical feedback. Not a traditional sequential development. This “danger of legacy systems” perspective has struck a chord (with some controversy) in the financial services community, with several of the top fintech experts weighing in on the IBM Banking and Financial Markets blog to discuss our thesis.

Here are some of our favourite fintech insights from the IBM blog, as posed by some of the top fintech experts in the world when asked, “Are legacy systems the biggest threat to financial institutions?” We look forward to continuing this conversation with incumbents, fintechs, and industry influencers as we all seek to progress financial services together.


Sam Maule, Head of Digital and FinTech at NTT Data Consulting, Inc.

“You have to address not only the tech part, but also the people. Until a company holistically addresses the legacy problem, then digitalization is simply a pipe dream.”

Sam argued that the legacy problem goes deeper than technology, extending into the way organizations think, manage risk, and manage their people.

In order to succeed, traditional institutions need to form a strategy for how their technology stack and talent pool will be poised to compete with modern fintech companies. These two factors must be combined for long-term market dominance.


Spiros Margaris, Founder, Margaris Advisory

“The simplest theoretical way to solve that problem is to buy a challenger bank and slowly migrate customers to a new, continuously evolving infrastructure. Once migration is done, close the old bank. However, realistically, that approach is hard to do, takes a lot of time and requires excellent management skills and great leadership—something that I do not see in many incumbents.”

Spiros argues along similar lines, identifying a possible way forward for banks (partnering with or acquiring modern technology) that is hindered by the lack of individuals who will prioritize technology projects in a meaningful way.


John Waupsh, Author, Bankruption: How Community Banking Can Survive Fintech

“If legacy systems were their biggest threat, banks would flourish over the next several decades by swapping a legacy infrastructure for a fancy new platform. The truth is that while legacy architectures, point-solution integration and data management are massive challenges to banks today, and they should be addressed, these challenges are symptoms of an even bigger problem.”

John continued a theme of “symptom of a bigger problem” thinking, identifying that legacy architecture and point solutions are indicative of legacy thinking. Leaders of traditional institutions hold the power and influence necessary to make wide-scale changes that can shift an institution toward agile thinking.


Financial institutions that are trying to compete in a new era of fintech are being held back by more than just legacy technology. In order to succeed, traditional institutions need to adopt an agile mindset that allows them to intelligently collect data, act on those insights, and iterate their technology and business on an ongoing basis.

The world is changing. When banks are unable to change with it, they become their own worst enemy.

Want to learn more about creating an agile technology framework for your organization? Watch a recording of our latest webinar with CEB TowerGroup.