{"id":23099,"date":"2021-12-29T18:42:31","date_gmt":"2021-12-29T13:12:31","guid":{"rendered":"https:\/\/blog.aspiresys.com\/?p=23099"},"modified":"2025-05-22T13:11:06","modified_gmt":"2025-05-22T13:11:06","slug":"modernizing-core-banking-technology-without-risking-existing-business-capability","status":"publish","type":"post","link":"https:\/\/www.aspiresys.com\/blog\/banking-financial-services\/core-industry-solutions\/modernizing-core-banking-technology-without-risking-existing-business-capability\/","title":{"rendered":"Modernizing Core Banking Technology, Without Risking Existing Business Capability"},"content":{"rendered":"<p><span data-contrast=\"auto\">The influx of\u00a0Fintechs, innovative technologies, cloud banking, and sophisticated processes has taken the banking industry by storm. This has led to traditional and incumbent banks to rethink and realign their way of operating. Traditional banks are reinventing themselves to meet rapidly evolving customer expectations, to deal with constantly changing regulations, and to compete more effectively with pure digital challengers. Fueled by the pandemic, there is also a growing need for the modernization of <span style=\"text-decoration: underline;\"><strong><a href=\"https:\/\/ter.li\/j9ek1i\" target=\"_blank\" rel=\"noopener\">Core Banking Technology<\/a><\/strong><\/span> to support the \u2018new normal\u2019. Traditional banks recognize the importance of a seamless, personalized customer experience, leading them to embrace technologies like artificial intelligence to enhance the value they deliver to their customers. In order to change the bank, modernizing core banking technology has become a key strategic element.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:257}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Today customers are also very demanding, especially, the millennials and Gen Z who expect a lot from their banks. They expect their interactions\u00a0with their banks\u00a0to be round the clock, seamless and omnichannel. This kind of approach is more prevalent in\u00a0<span style=\"text-decoration: underline;\"><a href=\"https:\/\/blog.aspiresys.com\/banking-and-finance\/digital-banking-reimagined-neobanks-vs-challenger-banks\/\" target=\"_blank\" rel=\"noopener\"><strong>Neobanks\u00a0and Challenger banks<\/strong> <\/a><\/span>as they benefit greatly from a lower cost structure and more modern information technology architectures using cloud, artificial intelligence, and advanced analytics. However, traditional banks still having their legacy core banking systems are rapidly becoming inadequate to deliver this kind of customer experience.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:257}\">\u00a0<\/span><\/p>\n<h3><strong>A modern system backed by core banking technology provides:\u00a0<\/strong><\/h3>\n<ul>\n<li data-leveltext=\"\u00b7\" data-font=\"Symbol\" data-listid=\"6\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Support for Digitization through faster access to core system data<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u00b7\" data-font=\"Symbol\" data-listid=\"6\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Faster time to market for product and flexibility in pricing<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u00b7\" data-font=\"Symbol\" data-listid=\"6\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">A low-cost way to scale and operate core systems<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u00b7\" data-font=\"Symbol\" data-listid=\"6\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"auto\">Agile operating model<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u00b7\" data-font=\"Symbol\" data-listid=\"6\" aria-setsize=\"-1\" data-aria-posinset=\"5\" data-aria-level=\"1\"><span data-contrast=\"auto\">Real-time payments capabilities and\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u00b7\" data-font=\"Symbol\" data-listid=\"6\" aria-setsize=\"-1\" data-aria-posinset=\"5\" data-aria-level=\"1\"><span data-contrast=\"auto\">Open banking and ease of onboarding<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">Even with all these features that are the need of the hour, many banks are hesitant to undertake a multi-year modernization effort that could run costs in the millions. However, their hesitance is understandable and many perceive a modernization effort to be risky, prone to failure with significant cost overruns, complicating things further.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:257}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Still, modernization has to take place, in some shape or the other as eventually, legacy platforms are going to get expensive to maintain and the technical skills required to maintain legacy core platforms are going to get scarce.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:257}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Another aspect of core modernization strategy that banks must realize is that the core platform itself doesn\u2019t differentiate banks. Rather, it\u2019s the ability to deliver personalized experiences, value-adding data and insights, and ancillary services that extend from a modernized core that can make banks stand out.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:257}\">\u00a0<\/span><\/p>\n<h3><strong>Banks with legacy core banking systems have several choices when it comes to its modernization:\u00a0<\/strong><\/h3>\n<ol>\n<li data-leveltext=\"%1.\" data-font=\"\uff2d\uff33 \u660e\u671d\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Wrap the Core<\/span><\/b><span data-contrast=\"auto\">: Legacy code is difficult to change as there is poor documentation available, and a lack\u00a0of\u00a0technical skills specific to the legacy code. Also, mission-critical operations run on the core banking platform, so care must be taken in handling legacy code.\u00a0User interfaces of legacy core banking systems can be considered for modernization without replacing the back-end.\u00a0The legacy core\u00a0can be transformed\u00a0to modern digital banking core by wrapping it with a service layer and an\u00a0added\u00a0innovation layer.\u00a0Cloud native architectures and latest web technologies can be used to develop the new UI. Batch workloads can be re-engineered which will provide significant savings and APIs can be used for compatible integrations.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"%1.\" data-font=\"\uff2d\uff33 \u660e\u671d\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Complete Overhaul<\/span><\/b><span data-contrast=\"auto\">: For some banks, a complete transformation program that replaces the legacy core with a modern core banking technology is the best approach. Usually, the legacy system is connected with multiple applications handling different aspects of the business process. Depending on the size of the bank, the planning phase for this kind of modernization could last anywhere between 3 to 12 months, and the execution will require 12 to 24 months. It\u2019s critical to articulate interim deliverables, through Minimum Viable Products or proofs of concept, to ensure that there no surprises at the User Acceptance Testing (UAT) stage.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"%1.\" data-font=\"\uff2d\uff33 \u660e\u671d\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Progressive Modernization<\/span><\/b><span data-contrast=\"auto\">: A progressive modernization approach is particularly helpful for large banks dealing with a huge network of legacy systems and numerous banking applications catering to various business lines, capabilities, products, and processes. A progressive approach entails the rollout of a new system boosted by core banking technology through selectively modernizing modules over time based on business and IT needs. When the legacy IT stack is complex, progressive transformation helps ensure better allocation of resources and budgets and a safer outcome.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"%1.\" data-font=\"\uff2d\uff33 \u660e\u671d\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Greenfield Approach<\/span><\/b><span data-contrast=\"auto\">: A Greenfield Digital Bank operates in parallel to the legacy stack\u00a0of the existing traditional bank.\u00a0Greenfield combines the advantage of an existing\u00a0traditional\u00a0bank with the agility and cost base of a challenger bank. It can take as little as 90 days to set up a Greenfield Digital Bank. Greenfield delivers\u00a0a technology platform that is scalable, enables fully digital experiences, provides flexibility and can be iterated to meet the needs of both customers and the business users. The Greenfield approach allows for a low cost, agile infrastructure that can enable customer propositions and product innovation in a way that legacy infrastructure cannot.\u00a0For example,\u00a0<\/span><span style=\"text-decoration: underline;\"><strong><a href=\"https:\/\/resources.aspiresys.com\/assets\/60c85a52f433543f5baad2cd\" target=\"_blank\" rel=\"noopener\">a traditional bank in the Caribbean<\/a><\/strong><\/span><span data-contrast=\"auto\">\u00a0launched a digital challenger bank by building a modern technology stack on top of their existing core platform including sophisticated middleware, digital channels, and marketing platforms. The new challenger bank including all integrations was launched in roughly 6 months.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ol>\n<p><span data-contrast=\"auto\">Decisions to address the core banking technology modernization are never going to be easy but, it eventually needs to be done. The implementation of modern core technology and data infrastructure can yield significant value in the form of faster delivery of changes and improvements, increased cost efficiency, higher quality of assets, and stronger customer outcomes. However, banks need to assess their current core banking platform and determine how it needs to change, and how they should approach the transformation that will enable them to meet business and IT needs at a lower cost, and greatly increase their odds of success.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:257}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Learn more about\u00a0<span style=\"text-decoration: underline;\"><strong><a href=\"https:\/\/ter.li\/j9ek1i\" target=\"_blank\" rel=\"noopener\">Aspire\u2019s\u00a0Core banking solutions<\/a><\/strong><\/span> and services by getting\u00a0<\/span><span data-contrast=\"none\">i<\/span><span data-contrast=\"none\">n touch with us<\/span><span data-contrast=\"auto\">.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:257}\">\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: center;\"><button style=\"padding: 10px 20px; font-size: 16px;\" type=\"button\"><a href=\"https:\/\/ter.li\/ad1yip\" target=\"_blank\" rel=\"noopener\">How can we Help?<\/a><\/button><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The influx of\u00a0Fintechs, innovative technologies, cloud banking, and sophisticated processes has taken the banking industry by storm. This has led&#8230;<\/p>\n","protected":false},"author":192,"featured_media":37320,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4644],"tags":[3413,3347,660,2544,3414],"practice_industry":[4515],"coauthors":[767],"class_list":["post-23099","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-core-industry-solutions","tag-core-banking-systems","tag-core-banking-technology","tag-digital-banking-transformation","tag-neo-banks","tag-neobanks-and-challenger-banks","practice_industry-banking-financial-services"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.aspiresys.com\/blog\/wp-json\/wp\/v2\/posts\/23099","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.aspiresys.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.aspiresys.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.aspiresys.com\/blog\/wp-json\/wp\/v2\/users\/192"}],"replies":[{"embeddable":true,"href":"https:\/\/www.aspiresys.com\/blog\/wp-json\/wp\/v2\/comments?post=23099"}],"version-history":[{"count":1,"href":"https:\/\/www.aspiresys.com\/blog\/wp-json\/wp\/v2\/posts\/23099\/revisions"}],"predecessor-version":[{"id":37321,"href":"https:\/\/www.aspiresys.com\/blog\/wp-json\/wp\/v2\/posts\/23099\/revisions\/37321"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.aspiresys.com\/blog\/wp-json\/wp\/v2\/media\/37320"}],"wp:attachment":[{"href":"https:\/\/www.aspiresys.com\/blog\/wp-json\/wp\/v2\/media?parent=23099"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.aspiresys.com\/blog\/wp-json\/wp\/v2\/categories?post=23099"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.aspiresys.com\/blog\/wp-json\/wp\/v2\/tags?post=23099"},{"taxonomy":"practice_industry","embeddable":true,"href":"https:\/\/www.aspiresys.com\/blog\/wp-json\/wp\/v2\/practice_industry?post=23099"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.aspiresys.com\/blog\/wp-json\/wp\/v2\/coauthors?post=23099"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}