Definition: Legacy technologies are those that are no longer currently the mainstream or best-in-class, but still in use. This may be because they reliably carry out specialised functions, making them risky or expensive to replace, or because they have a large existing user base, making it difficult or impractical to migrate them to another platform.
Issues: Using and maintaining legacy technologies can mean that the technology is trusted and reliable. This has to be balanced against the expertise, time, effort and cost of keeping those technologies working effectively. As a well-known example, Microsoft’s I.E.6 web browser lies at the heart of many enterprise application solutions, making it extremely hard to develop new, more secure and advanced solutions around because of a need to maintain compatibility. In terms of financial systems for alternative and p2p financial services, legacy issues can have numerous impacts. There is a need to make sure that consumer users are able to use the services on their devices without updating software or hardware, especially when this is at their own cost for an as-yet tentative and fragile service that may be secondary to their normal financial practices. Many alternative services initially begin life as side projects, and there is a need to ensure that as these mature they are able to scale to larger services, that are reliable and secure, in a dynamic environment, in which legislative and regulatory issues emerge, new security threats arise, and auxiliary software and network services may change. Moreover, as alternative and p2p financial services mature over time, they may wish to change their service offering and business models to adapt to market conditions, and their better understandings of business and operational needs.
Conditions: Where old and new collide.
Interdependencies: Transparency and opacity; Information, metrics & user feedback; Regulation & financial ecologies.
Case examples: The £B CIC’s decisions around the technologies underpinning its services is shaped by the CIC’s limited financial resources and as a result the limited skills, expertise and time that grants them access to. They also maintain a duty to the £B members of upholding the values of the £B, in ensuring sustainability and inclusivity: there is a deliberate attempt to ensure that users who are unwilling to replace their mobile feature phones (i.e. non-smart mobile phones) are not excluded; for e.g., they may not wish to replace costly or environmentally damaging devices. The back office technologies in use reflect the relationships between the CIC and other bodies that share its financial ecology, e.g. the Bristol Credit Union, on which the CIC depends for administering the £B accounts, and the suppliers of the software (commercial and open-source) that they rely on, not all of which are current and interoperable. Some of these services require manual activation and others exist that the CIC are aware of, but have insufficient technical expertise to operate.
Zopa’s technology has remained largely constant since the firm’s founding in 2006, aside from standard hardware and software upgrading. Currently, this presents little potential problem for their existing business operations; however, this is not a taken-for-granted assumption. In the context of having to accommodate mobile devices now being adopted by users, this challenge may require significant effort. Zopa has already undergone changes in reducing its information and complexity, but the addition of new services, or variations on its financial offerings may require considerable architectural change to its technology infrastructure.
Design Solutions: Legacy platforms provide advantages as well as disadvantages; solutions will be context and problem dependent.
Implications: All: Legacy systems are often necessary parts of the ecologies of financial systems, especially where there are many external interdependencies, and they will need to be considered. For entrepreneurs and systems developers, designing for anticipated ideal or best-of-class environments may limit the user base; it will also mean that exporting systems to new settings is unfeasible. For financial strategists and managers: evolved business models commonly emerge as products mature, and extensible back-office system architectures and their software interdependencies have a critical role from an early stage in systems development. For regulators, there needs to be an awareness that smaller and emerging organisations in the alternative finance arena may have difficulties in adapting their systems around infrastructures that either they are not in direct control of, or have more limited resources than the major banks to address.
Digital Intermediary Exchange ‘Toolkit’ 