Integrating fintech solutions with legacy systems in large enterprises

Financial technology evolves at lightning speed. Streamlined payment processing, smarter lending, real-time analytics, automated fraud detection, and personalized recommendations help companies attract and retain today’s discerning, digitally savvy customers. However, embracing these tools isn’t simple for large enterprises due to the legacy systems they rely on.

While ageing systems fail to support modern APIs, cloud computing capabilities, or real-time data processing, they often remain indispensable for core business operations, creating a serious dilemma. If you innovate too quickly, you risk breaking what still works; move too slowly, and you miss out on the competitive edge fintech offers.

This is where integration saves the day, efficiently bridging the gap between the old and the new. In this article, we’ll take a closer look at the innovations disrupting the financial services sector, the common integration challenges enterprises face, and key strategies for successful fintech integration.

What are legacy systems and why are they still here?

Legacy systems refer to older software and hardware that are still in use, often because they continue to perform critical functions. Relying on legacy systems is quite usual in the financial services sector, and there are common cases of banks using legacy systems for over three decades.

Legacy systems are associated with high maintenance costs, security vulnerabilities, and compatibility issues. On top of that, they’re hard or even impossible to integrate with modern tools, slowing down digital transformation. But why are decades-old enterprise applications still in use?

Well, in fact, there are several reasons for that. First, many legacy systems run core operations like accounting, inventory, HR, or supply chain management, and replacing them involves significant risk and potential business disruption. Not to mention, despite being outdated, many legacy systems are stable and have been fine-tuned over years to meet the organization’s needs.

Second, they are often tightly integrated into the company’s workflows and connected to other tools, such as CRM software, enterprise resource planning (ERP) systems, inventory management platforms, and billing or payment gateways. Rebuilding or replacing them would require reengineering entire processes.

It’s also important to keep in mind that legacy enterprise systems often hold decades of valuable data. Data migration can be expensive or risky in terms of data loss and compliance.

Finally, legacy systems modernization requires significant time and cost, as it usually involves developing new software, training staff, updating documentation, and sometimes redefining workflows.

Fintech innovations enterprises are adopting

While legacy systems are often taken for granted internally, users today have high expectations for how financial services should function. They want seamless digital experiences, fast transactions, intuitive interfaces, personalized features, and even elements of gamification. And, let’s face it, companies that fail to meet those expectations risk falling behind their competitors.

To keep pace with ever-evolving customer expectations, enterprises are adopting a broad range of fintech tools, such as digital payment systems, lending platforms, personal finance apps, digital wallets, and robo-advisors. Moreover, modern tools like KYC and AML solutions help financial institutions stay compliant with regulatory requirements, which are getting stricter with every year.

However, the real value of these innovations depends on how effectively they are integrated into an enterprise’s existing technology landscape.

Common integration pain points

Integrating modern fintech solutions with existing enterprise systems comes with certain challenges, which slow down projects, increase costs, and, ultimately, impact overall success:

• Compatibility issues. It’s no wonder that most legacy systems weren’t designed to work with modern APIs or cloud services, making integration technically challenging.
• Data silos and inconsistencies. Critical data is often scattered across different departments and stored in outdated formats.
• Security risks. Integrating new tools with legacy infrastructure can expose vulnerabilities to cybersecurity threats, especially if encryption and authentication standards vary between systems.
• Scalability limitations. Legacy systems might perform adequately with low volumes but struggle to handle increased transaction loads or growing user bases after integration.

Key fintech integration strategies

1. API-driven integration

API-driven integration involves using Application Programming Interfaces (APIs) to create a standardized way for systems to communicate. Instead of forcing systems to connect directly, APIs act as controlled entry points for exchanging data and triggering operations.

Why it matters:

• APIs allow real-time data exchange without replacing core infrastructure.
• Many fintechs are built with API-first architecture, making this approach scalable and flexible.
• API-led approach enables enterprises to plug in new services (e.g., payments, identity verification) with minimal disruption.

Use case:

Integrating a digital payment gateway with an old ERP system using REST APIs.

2. Middleware and integration platforms

Middleware is software that sits between two or more systems and enables them to exchange information, even if those systems use different programming languages, data formats, or communication protocols. Integration platforms (especially cloud-based ones like iPaaS) take this a step further by providing a centralized environment to manage, monitor, and scale multiple integrations.

Why it matters:

• Middleware and integration platforms reduce the complexity of building and maintaining point-to-point integrations.
• They allow legacy systems to interact with cloud-based fintech tools using adapters, connectors, or pre-built integration templates.
• Integration platforms often include monitoring, error handling, and process automation features that improve reliability and visibility.

Use case:

A retail bank uses middleware software to bridge its old core banking system (which can’t handle modern APIs) with a fintech lending platform, translating outdated data formats and enabling smooth, real-time integration.

3. Data synchronization and ETL (Extract, Transform, Load)

This strategy is focused on moving and transforming data, rather than creating live system connections. Data is extracted from one system (often legacy), transformed into a compatible format, and loaded into another, such as a database, CRM, or analytics platform.

ETL is often used in reporting, compliance, and business intelligence, where up-to-date but not real-time data is sufficient. It’s also a good choice for slowly modernizing systems in phases.

Why it matters:

• Legacy systems often have outdated data structures, which must be transformed to work with modern apps.
• This integration approach helps unify customer data across platforms for better decision-making while ensuring compliance with data governance rules.

Use case:

A global insurance company uses ETL tools to regularly extract customer data from its legacy claims system, transform it into a modern format, and load it into a cloud-based fintech analytics platform for real-time insights and reporting.

4. Microservices architecture

Microservices architecture means breaking down legacy application architecture into smaller, independent services that can interact with fintech tools via APIs. Each microservice can be developed, deployed, and scaled independently.

Why it matters:

• Microservices architecture makes legacy application modernization gradual and less risky.
• It allows teams to deploy updates without impacting the entire system and encourages a modular, reusable approach.

Use case:

A bank decouples its customer onboarding process into microservices to integrate with third-party KYC providers.

5. Robotic Process Automation (RPA)

RPA allows systems that can’t be integrated through APIs or middleware to work together by mimicking human actions at the user interface level. It’s often used to bridge gaps between legacy systems and modern fintech platforms. RPA bots can copy data from one system and input it into another, trigger tasks, automate repetitive, rules-based workflows, etc. However, it’s important to realize that RPA doesn’t create a real-time or back-end data connection between systems. It’s rather a band-aid solution than an application modernization tool.

Why it matters:

• RPA saves the day when APIs are not available or systems are too old to modify.
• It speeds up repetitive tasks like data entry, reconciliation, and reporting.
• This approach can serve as a short-term bridge during larger integration projects.

Use case:

An insurance company uses RPA to copy claims data from a legacy mainframe into a new fintech dashboard.

6. Hybrid integration strategy

A hybrid strategy involves combining cloud-based and on-premise systems using a mix of tools and approaches, including APIs, middleware, ETL, and other tools. This approach is particularly useful during digital transformation projects, enabling a flexible, phased approach to enterprise application modernization.

Why it matters:

• Not all parts of a legacy system need the same approach.
• This modernization strategy offers flexibility to balance cost, risk, and speed of integration.
• It supports phased transformation without halting business operations.

Use case:

A retail bank connects its on-premise legacy application with new cloud-based fintech services, improving user experience.

Conclusion

While outdated enterprise technology can’t fully support modern business requirements, fintech integration is a smart way to leverage innovation without ditching systems organizations have been relying on for decades.DeepInspire is a fintech development company with 25+ years of experience helping enterprise organizations embrace innovation and bring complex digital initiatives to life. Our team can provide you with professional assistance in selecting and implementing the right modernization strategy. Contact us today to discuss how we can fuel your business growth.