The terms modernization and digital transformation are often used interchangeably. After all, both involve the transformation of legacy systems.
However, there’s a difference between both the terms. And payment providers need to know it because what they choose would define their future business strategies. So, let’s first understand the difference between both of them.
Digital modernization involves upgrading the existing technologies and IT infrastructure to meet the changing demands of the market and customers. There would be no significant changes in the existing processes. The objective is only to optimize the existing processes, improve efficiency, and decrease costs.
Digital transformation, on the other hand, involves a complete re-imagination of the business. This would involve not just upgrading but a complete overhaul of processes, workflows, technologies, and skills. Emerging technologies such as artificial intelligence and blockchain will become a mainstay. The objective is to become completely future-ready, so even the core ideology of the business could change.
While the distinction is clear, it’s never an easy task to choose between modernization and digital transformation. There are various factors involved in selecting the right approach.
Let’s look at how to make that right decision.
Modernization vs. Digital Transformation – How to choose the right approach for payments?
Before deciding on the approach, let’s understand what comes under modernization and digital transformation.
Both approaches aim at improving the payment operations and increasing the ROI. The difference lies in the extent of changes.
To choose between modernization and transformation, providers need to ask themselves two critical questions.
If the current business need is to solve a problem such as optimizing slow processes like customer onboarding, then modernization could be the right way to go. However, transformation would be the right solution if the objective is to go completely contactless or branchless.
Although both approaches require the C-suite’s approval, the digital transformation would need more budget and expertise to complete the project successfully. Digital transformation requires a new skillset, so the C-suite should be prepared to hire people with new skills and train the existing staff in using the latest tools. If the C-suite has the resources and budget to make their business future-proof, they could consider investing in digital transformation.
The ultimate goal is to ensure that the product offerings are customer-centric and improves the customer’s experience.
Transitioning to the new system, process, or completely changing the system is not an overnight exercise. It needs careful planning and implementation.
At Verinite, we help payment providers with both digital transformation and modernization.
We combine our expertise, domain knowledge, technology prowess, and proven methodologies to build future-ready applications that will help the payment providers to meet their strategic goals.
To know more, contact us.