Solving SA CIOs’ digital dilemma: transforming legacy systems from burden to bridge

South African chief information officers (CIOs), particularly those in sectors like banking and insurance, are grappling with a dual reality. On one side is the pressure to drive digital transformation, an inevitable response to changing customer expectations, fintech disruption, and new regulatory demands. On the other is the burden of legacy infrastructure: ageing systems that can’t keep pace with modern digital experiences.

This paradox lies at the heart of CIO anxiety. Digital is now the lifeblood of growth. Over 76% of African banks list digital transformation among their top three priorities. With more than 43-million internet users in SA and one-third of the population banking online, the demand for seamless digital engagement is undeniable.

Yet behind the sleek mobile apps and chatbots, many financial institutions are still running on multi-decade-old code, layered on fragile mainframes. Every new service — whether instant transfers, AI-driven insights, or compliance updates — must be awkwardly retrofitted. It’s a slow, costly process: some banks report it takes 12 to 18 months to launch a single product, with significant overheads in manual maintenance and on-premise hardware.

Outdated systems pose challenges 

Legacy systems don’t just hold institutions back — they actively drain them. Maintaining them absorbs up to 70% of IT budgets at some global financial institutions. Regulatory updates, security patches, and system integrations often require custom development in obsolete codebases. The result: spiralling technical debt that compounds over time.

These systems are also fundamentally inflexible. They create data silos, restrict interoperability, and hinder speed to market. Insurers in particular face this challenge. Many lack the digital infrastructure to quickly launch new offerings, adapt to regulations, or maintain real-time customer engagement. High policy lapse rates — sometimes reaching 50% — are a consequence of poor user experience.

Security is another persistent concern. Outdated platforms often lack modern safeguards and vendor support, leaving institutions exposed. Compliance with regulations like POPIA is difficult when the underlying tech predates them. Alarmingly, 53% of enterprise apps are inadequately managed, presenting critical vulnerabilities.

Then there’s the human element. Legacy systems require expertise that is rapidly disappearing. Skilled professionals who understand mainframes or Java 8 environments are retiring, and training replacements is both costly and inefficient. Developers spend as little as 20% of their time on innovation, with the remainder spent on maintenance — widening the digital gap.

Modernise to compete 

Competition from cloud-native banks and fintechs heighten this tension. These agile players can launch quickly, iterate continuously, and meet modern demands with ease. They’re winning over mobile-first consumers with low-cost, highly personalised services.

SA’s leading financial institutions know they must respond. With 21-million South Africans actively banking digitally, incumbents are under pressure to modernise or risk irrelevance.

Many are pursuing hybrid approaches: moving some workloads to the cloud, investing in application programming interfaces (APIs), and partnering with fintechs. The CIO of a commercial bank reports cloud migration benefits like automated security and improved scalability. Yet even with R3.3bn spent annually on IT, transformation remains a slow march rather than a sprint. Legacy tech still looms large, forcing banks to carefully juggle uptime and modernisation.

Insurers grapple with tech limitations

Insurers face similar challenges — perhaps even more acutely. Historically reliant on paper-heavy, low-touch operations, they’ve had to pivot rapidly to digital engagement. New insurtech entrants offer instant quotes and personalised policies via mobile, setting a high bar for customer experience.

But incumbent insurers remain burdened by outdated systems that struggle with agility. Launching or updating products is cumbersome, while customer touchpoints remain weak. With compliance requirements growing more complex, legacy platforms — often lacking encryption and audit trails — pose major risks.

Insurers are eyeing Software as a Service (SaaS)-based insurance engines to leapfrog their tech limitations. However, core data migrations are complex and fraught with risk. In the meantime, the business case is urgent: rising claims, inflation, and customer churn demand swift action.

The CIO’s balancing act 

SA presents a unique digital paradox. It leads the continent in connectivity — with 112-million mobile connections and 72% internet penetration — yet CIOs must navigate economic constraints, regulatory complexity, and infrastructure challenges like power instability.

Local regulators push for innovation, such as open banking and payment modernisation, but also expect bulletproof compliance. CIOs face immense pressure to modernise securely and cost-effectively, while contending with tightening budgets and mounting risks.

The Covid-19 pandemic further exposed system fragility, accelerating the need for digital readiness. From e-commerce to digital IDs, the shift is irreversible. Yet CIOs are still forced to “patch the plane while flying it” — maintaining core systems while trying to transform them.

A smart path to modernisation

To escape this legacy trap, South African CIOs are turning to transformation partners like iOCO. With deep expertise in modernisation and managed services, iOCO helps enterprises evolve their systems safely and strategically.

iOCO’s “monolith-to-microservices” approach enables clients to break down rigid legacy applications into modular components, rearchitected for the cloud. This strategy frees up developer time, reduces costs, and allows faster deployment of customer-facing services.

Critically, iOCO wraps legacy functionality in APIs, enabling integration with modern apps and platforms even before a full migration. This allows banks and insurers to deliver digital experiences today while phasing out old systems over time.

Importantly, iOCO supports a pragmatic transition. Rather than a costly “rip and replace”, they help clients maintain mission-critical legacy investments while modernising incrementally. This lowers risk and ensures compliance with sector regulations.

iOCO also offers custom software development, tailoring applications for SA’s specific needs — from claims workflows to premium calculators. This ensures new tools align with both user expectations and legacy constraints.

Application support enables business

Beyond modernisation, CIOs must ensure operational continuity. That’s why iOCO provides Always On application support — a fully managed 24/7 service that handles deployment, monitoring, maintenance, and proactive troubleshooting.

This model reduces unplanned downtime, enhances security posture, and liberates internal teams to focus on strategic initiatives. Clients gain real-time visibility through dashboards and predictable support costs, allowing smarter budget allocation.

In practice, enterprises using Always On support report smoother rollouts, fewer disruptions, and better customer satisfaction. With legacy issues monitored and maintained by experts, CIOs can shift their focus to innovation and growth.

From burden to bridge

South African CIOs are walking a tightrope: balancing the push for digital transformation with the weight of legacy infrastructure that hinders progress. But with the right strategy and partners, transformation is possible without disaster.

iOCO’s approach — modular modernisation, custom development, and Always On support — helps CIOs convert legacy from a liability into a launch pad. As organisations build digital maturity, they gain the agility, security, and speed needed to compete.

The path forward isn’t about quick fixes. It’s about sustained, strategic evolution powered by trusted partnerships.

Written by:  Archie Marincowitz

Originally featured here