What is Tech Debt?
Tech debt is the idea that when a business uses the easiest tech solution instead of the best tech solution, they’re creating a technology debt that’ll need to be repaid in the future. This means that companies who have accumulated tech debt are often weighed down by technology that slows down their agility and impacts their growth potential.
Tech Debt in the Financial Services Industry
Let’s look at the story of a financial services company that started out three years ago. Like many startups, it needed to launch quickly, so it used a combination of simple technology developed in-house and some manual steps to get the job done. Once the product was live, the business experienced a period of rapid growth which placed a heavy burden on the technology underpinning the product. The company quickly realized that it couldn’t grow any more with its existing set-up.
This isn’t the only company that finds itself in this situation; in fact, tech debt is increasingly common in growing fintechs as well as in the large banks who are famously beset by the challenges of legacy IT. Startups aren’t expected to have this problem because they’re new and began in the technology era; they’re seen as nimble and able to deliver value quickly. However, in reality, business decisions, and IT decisions that go with them, set companies on a course, and if that course needs to change, the business can only pivot as quickly as their technology can be turned.
The Growing Interest on Your Technology Troubles: Paying the Bank of Tech Debt
Just like any other type of debt, there’s always a cost to borrow. While the cost to future technology development is obvious, it’s the growing interest on your business that is often the bigger problem. Financial services businesses operating any kind of digital service rely on technology for agility, flexibility, and scalability. When your technology is broken or in debt, all parts of your business suffer.
Breaking Down Walls – How to Tackle Tech Debt
To address the limitations of traditional conference venues, new venues are built with partition walls that can be added or taken away depending on the type of event and number of people. This makes them more flexible, scalable, and profitable.
It’s not so very different to the tech debt issue. In the past, companies, including those in credit and lending, payments and eCommerce, opted for hard-coded systems to perform certain functions. These systems will scale up to a point, and beyond that, everything has to be done manually. Making changes to the systems takes weeks or months.
Companies setting up now can’t opt for this approach anymore and those already struggling with a tech debt can’t afford to not plug their IT gap or they will struggle to compete. Instead, these companies need to invest now (rather than invest more later) in ‘partition-wall-like’ technology that will grow with them and adapt.
In a digital world where the cost of tech debt is more than just a tech problem, businesses need to look for their ‘partition’ technology. Only with scalable and flexible solutions will financial services businesses tackle tech debt and be prepared for the future.
Many companies, including those in financial services, are grappling with tech debt. To stay competitive, companies need to invest in scalable and flexible technology solutions that can adapt as their business needs change. By doing so, they will be better prepared to tackle the challenges of the future.