Why do financial institutions still rely on Gen-based applications?

Gen-based applications remain mission critical for many insurers because they underpin core operational systems that have evolved over decades. At the height of its adoption from the late 1980s and into the early 2000s, Gen (formerly CA Gen, COOL:Gen) was widely used to build large-scale, transaction-heavy applications that supported essential services. Today, vital functions such as policy administration, claims processing and underwriting workflows in insurance, as well as payment processing and credit assessment in banking, often continue to run on Gen-based applications.

Over time, complex business rules, such as claim acceptance criteria or coverage eligibility thresholds for insurers, and credit eligibility or transaction limits for banks, have been embedded directly into these systems. These critical standards have been refined across more than 30 years, whilst becoming tightly interwoven with Gen-based apps. As a result, decades of institutional knowledge are completely dependent on Gen, which sits at the heart of day-to-day operations for many financial institutions, quietly powering critical processes that support millions of customers.

For financial institutions, what are the main challenges associated with Gen-based apps?

The financial services industry of today bears little resemblance to the period when Gen was at its peak. Progress has been both rapid and profound. In the 1980s, large UK banks typically managed tens of billions of pounds in assets. Today, HSBC alone holds more than £2.3 trillion. The insurance market has expanded just as significantly, with global premium volumes and values rising from billions to trillions of pounds.

Technology has progressed at a similar pace. In the last two decades alone, cloud computing has become ubiquitous, reshaping how applications are designed and operated. Modern architectures and cloud-native technologies have been developed in tandem, providing even greater flexibility and speed. Capabilities such as real-time payments, instant policy assessments and AI-driven decision-making are increasingly viewed as the bare minimum by FS institutions and their customers.

But Gen-based applications have struggled to keep up with this revolutionary period of change. The underlying Gen development platform has not seen a major update for more than a decade, leaving banks and insurers reliant on rigid systems that cannot easily integrate with contemporary cloud platforms or AI technologies. These applications are also becoming more costly to maintain over time. They lack the responsiveness required to launch new products, enhance services or adapt quickly to regulatory change. Systems once regarded as future proof are now placing strain on financial organisations, increasing operational risk and limiting innovation at a time of relentless competition.

What factors have prevented financial services organisations from modernising Gen?

A shortage of specialist skills is the core issue. The generation of developers who originally built and maintained Gen systems has either retired or moved to newer tech, while fresh entrants to the workforce typically lack the training and experience needed to manage or modernise them. The difficulty extends well beyond technical complexity. Over time, Gen-based applications have become tightly bound to critical business rules, meaning the technology and operational logic have become inseparable. Without a detailed understanding of both, modernisation can undermine – or even eradicate – decades of business intelligence. The Gen product’s intricate T&Cs also limit organisations’ ability to migrate off the platform.

Without specialist Gen-based modernisation expertise, many banks and insurers that have attempted to modernise Gen-based systems have either failed and reversed course or committed to multi-year transformation programmes costing millions of pounds. These cost and complexity hurdles have driven most others to avoid wholesale change. Especially as many Gen-based applications remain stable, even if constrained and increasingly difficult to maintain. So, many institutions have taken the view that it is safer to leave these imperfect systems in place.

However, that position is becoming harder to sustain. The financial services sector has reached a tipping point where brushing Gen-based apps under the carpet is no longer acceptable. There is broad recognition that these systems are unsustainable and must be modernised, as the cost implications simply can’t be ignored any longer.

What’s the ideal process for banks and insurers looking to overhaul Gen?

Viewing Gen-based transformation as a single, all-encompassing project is totally impractical. Modernising decades of accumulated logic and engineering is extremely resource intensive and very complex. Banks and insurers should implement a structured, incremental transformation strategy that enables them to build momentum, reduce their dependence on legacy technologies gradually, and integrate AI and automation to drive operational efficiency and measurable progress. Financial institutions have several options when it comes to modernisation strategies, grouped into the five Rs.

One option is rehosting, effectively migrating a Gen-based application to an alternative infrastructure, such as physical, virtual or cloud environments, without making changes to its functionality, features or code. Or financial institutions could refactor their app – rewriting it into modern, maintainable code that is better suited to cloud, on-premises, or hybrid environments. They may look to revise the application code, helping to remove the technical debt associated with Gen and improve the apps overall performance. These are all more incremental methos, but could prove to be insufficient, depending on the modernisation project’s goals and objectives. In which case, organisations might opt to redesign the application entirely, ensuring it is optimised for integration with technology platforms and modern financial processes. The final choice is to replace Gen-based applications with modern solutions that are able to withstand regulatory pressures, support innovation in product development, and meet the required standards of customer experience.

Whichever approach is taken, starting down the road to Gen modernisation must be the priority for banks and insurers. Continued delays will leave organisations anchored to outdated systems, while competitors race ahead with modernised applications designed to meet the expectations of today’s market, and the demands of the future.