Transforming financial services: How innovation is solving key industry challenges

Did you know that global financial institution spending on outdated systems is expected to grow from $36.7 billion in 2022 to $57.1 billion in 2028? As financial services evolve, the increasing reliance on legacy systems will create roadblocks to growth, innovation, and customer satisfaction. To stay competitive, banks must prioritize modernizing their data infrastructure, and that starts with effective data migration.

Driving cost and operational efficiency

Legacy systems can become a liability for any industry, but in finance, the stakes are higher. To keep these systems running securely, institutions are draining valuable resources and impeding progress by maintaining existing systems. The alternative is to migrate to a hybrid or cloud-based system, reinvesting legacy upkeepcharges into areas that could deliver greater value to customers and stakeholders.

Companies can address inefficiencies by consolidating massive datasets. Throughout and after the migration, banks can reduce redundancies, streamline operations, and optimize cost-to-income ratios. NatWest, a leading bank in London, saved time and money after migrating their data. These savings were reinvested into forward-looking initiatives that improved service offerings, such as increasing the number of data science and innovation lab experiments to develop machine learning models bank-wide. This has increased the use of AI models in production across the bank, supporting employees and customers alike.

Creating unforgettable customer experiences

Today’s banking customers demand more than transactional relationships; they expect personalized, data-driven experiences. A recent survey revealed that 72% of customers prefer banks that tailor their services to individual needs, but achieving this level of personalization requires unified, actionable data.

If financial institutions can integrate siloed customer information into cohesive systems, they will better understand customer behavior and preferences. This insight will enable data-driven strategies that ultimately enhance engagement and loyalty. For instance, Westpac, one of the four largest banks in Australia, was able to implement advanced targeted personalization strategies after migrating their data. The migration allowed them to more easily discover customer insights and provide unique customer interactions by making data accessible to modern platforms with improved analytics capabilities for customer datasets.

Securing data and mitigating fraud risks

Data breaches are a top concern in every sector, but specifically within the financial industry. In 2024, around 65% of financial institutions globally reported being targeted by ransomware attacks, marking an incremental rise from 64% in 2023 and 34% in 2021. With the average data breach cost hitting $4.88 million in 2024, it is no surprise that financial institutions are bolstering their security measures everywhere. These incidents are not only financially detrimental but also have reputational consequences. One breach can undermine customer trust and often result in regulatory penalties that last in the public’s mind for years. As banks adopt new digital systems, security has never been more important.

Companies moving away from questionably secure, outdated systems should consider a migration partner. Manual migration is a high-risk approach to migrating data, often leading to data inconsistency, business disruption and high IT costs. At Cirata, we ensure that the data migration processes are conducted with the highest levels of security and compliance. By encrypting data transfers, integrating with enterprise security platforms, and supporting adherence to regulations like GDPR and CCPA, we safeguard sensitive information throughout the entire migration process.

A Future built on innovation

The financial industry is transforming, driven by the need for greater efficiency, customer-centricity, and security. Proper data migration sets the foundation for all these advancements, helping banks adapt to changing demands and capitalize on new opportunities in the coming year.

Cirata’s ability to tackle these challenges shows how innovative data solutions are shaping the future of financial services. By modernizing infrastructure, fostering stronger customer connections, and bolstering security, banks can pave the way for a future seamlessly integrating profitability with long-term growth. No matter what 2025 will bring, one thing is certain: banks that embrace data-driven transformation will set the standard for the next era of the industry. Get started on your migration journey and contact our experts at Cirata today.