DEFINITION
Legacy System
A legacy system refers to software or hardware that has become outdated in some way. In the context of software, a legacy system might be a core banking system that isn’t compatible with modern operating systems, that can’t fully integrate APIs, and requires a lot of middleware and patches in order to stay functional. An example of legacy hardware can be a mainframe, as it generally can’t compete in terms of cost, maintenance, or scalability with modern cloud hosting options.
With all of that being said, legacy systems aren’t obsolete per se. In fact, the banking industry specifically still relies on legacy software and hardware such as mainframes. This is due to the complexity involved with legacy systems modernization.
Synonyms
Outdated systems
Acronyms
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Synonyms
Outdated systems
Acronyms
–
Examples
A bank still relies on software made in the 90s in order to log and keep track of customer data. Although the software has been patched many times, the process is largely still manual, requiring the bank staff to type in all customer data and being very error-prone. This software, along with all of the customer data is also stored on an old mainframe. Due to the limited hardware and a lack of space for another mainframe, the bank struggles to efficiently scale up their business.
In contrast to this legacy system, we can observe a modern neobank that is digital-native, can easily scale up due to the cloud infrastructure, utilizes fully automated data collection and offers additional convenience such as mobile banking and eKYC.
FAQ
What is legacy software?
Legacy software is outdated software that relies on technologies, programming languages, and/or tools that are no longer widely used or available. For example, an application that was made compatible with Windows XP but requires a lot of middleware to properly function on modern Windows versions or on macOS.
Why are legacy systems still used?
Depending on the industry, business, and their goals, the reasons for sticking with legacy systems will differ. Common reasons are the cost of setting up new systems and retraining staff, migrating key data and ongoing projects, as well as security concerns.
What is the problem with legacy systems?
Legacy systems can come with a plethora of different issues. For example, incompatibility with new technologies, no ongoing support, security issues, worse performance, difficult maintenance, and so on.
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