Among the array of challenges facing Central and Eastern Europe (CEE)’s chief technology officers (CTOs) is the mother of all projects: the payments system migration. More than just another IT upgrade, these epic, career-defining undertakings are where operational resilience, compliance and customer trust intersect critically.
Compounding this is the dilemma many CTOs face in terms of “the struggle to find the right technology”, weighed against an acute understanding that what they implement right now might be outdated in fewer than five years.
In a bid to help banking tech leaders get to grips with these problems, Iliad Solutions sat down with Croatia-based financial ecosystem guru Božidar Pavlović, for a wide ranging chat on the pitfalls and prizes associated with banking system modernisation.
Setting the scene, Božidar, a Partner at AYMO Ventures, described how banks in this corner of Europe were among the first to modernise. However, there’s a fundamental issue with platforms designed in the 1990s, in that they were not built for the age of AI, instant payments and 24/7 smartphone banking.
Yet without urgent action to address these thorny issues, he says financial institutions risk being dragged into a spiral of obsolescence. So, what to do?
Five critical considerations for CTOs thinking about platform migration
Božidar says there are five things CEE CTOs need to consider when contemplating a payments system migration. These are:
The manual testing myth: Treating testing as an auxiliary, manual task is a major error, as only automated testing can provide the speed and accuracy required for modern, heterogeneous banking systems.
The specialist versus generalist vendor: The era of the generalist vendor has passed, and CTOs must now partner with specialists who understand the intricate plumbing of payment schemes.
The scope creep trap: Tech leaders should be wary of bundling too many digital transformation goals into a single migration, as failing to isolate the core project inevitably leads to overstepping timelines and budgets.
The virtualisation gap: “Testing in a vacuum” is a serious risk; virtualisation is essential to simulate real-world traffic and third-party scheme responses before a system goes live.
The knowledge transfer crisis: Teams that implemented legacy technology take vital undocumented knowledge with them into retirement, making it imperative to capture this “tribal knowledge” within an automated framework before they leave.
The points Božidar made were so useful that we decided to incorporate them into a special ebook titled The CTO’s guide to payments system migration: navigating Central and Eastern Europe’s unique modernisation challenges, which you can download for free here.
Case study in point: charting OTP’s payments system migration
While the theory of de-risking a migration is vital, it’s the results that matter.
A prime example of the strategic approach set out by Božidar is OTP Group, Hungary’s largest commercial bank. Serving over 11 CEE countries, the business faced the daunting task of migrating its card authorisation system to a new platform without interrupting daily operations for millions of customers.
But by implementing via the Iliad t3 platform – the same methodology advocated in our CTO guide – OTP Group brought itself migration outcome certainty.
The business achieved a 30 per cent reduction in regression testing time, the seamless simulation of real-world scenarios across multiple markets and zero-interruption delivery that protected the bank’s reputation during a critical transition.
Don’t leave your migration to chance
In summary, whether you are preparing to adopt ISO 20022 message standard or implement instant payment frameworks, the margin for error in this hyper-regulated age is zero.
The CTO’s guide to payments system migration provides a blueprint for CEE modernisation, offering a checklist for success that covers everything from vendor selection to post-launch governance.
And if you’re interested in the technical details of the OTP Group system migration, you can learn more here.