The Intersection of Web3, Digital Assets, and Core Banking Modernization: A Practical Guide for Banks

The financial services industry is undergoing a seismic shift. The convergence of Web3 technologies, digital assets, and the imperative to modernize core banking systems is redefining what it means to be a bank in the digital era. For CIOs, CTOs, and transformation leaders, the challenge is no longer about recognizing the opportunity—it's about navigating the technical and organizational complexities of integrating blockchain and digital asset capabilities with legacy systems, all while managing risk, compliance, and operational resilience.

Why Web3 and Digital Assets Matter for Banks

Web3 represents a new paradigm: decentralized, user-centric, and built on blockchain. For banks, this means the potential to:

As institutional adoption accelerates, banks are moving beyond experimentation. They are launching digital asset custody, staking services, and tokenized securities platforms—often in partnership with technology providers and fintechs. The goal: to serve both traditional and emerging client needs, from institutional-grade crypto custody to blockchain-based settlement of securities.

The Technical and Organizational Journey: Hollowing Out the Core

The path to Web3 integration is not a leap, but a journey—one that often begins with the process known as "hollowing out the core." For decades, banks have relied on monolithic core systems that bundle product ledgers, payments, customer data, and onboarding into a single, tightly coupled platform. While robust, these systems are inflexible, costly to maintain, and ill-suited to the demands of real-time, composable digital services.

Hollowing out the core involves progressively extracting key functions—such as payments, customer data, and onboarding—from the monolith and placing them into modular, API-driven platforms. This enables banks to:

This approach, often described as composable or coreless banking, is now a mainstream strategy among leading institutions. It allows banks to modernize incrementally, reducing risk and cost while laying the groundwork for Web3 and digital asset integration.

Practical Steps to Enable Web3 Services

  1. Modernize Core Systems for Interoperability
    • Extract critical functions from legacy cores and expose them via APIs.
    • Implement data platforms that provide real-time, trusted access to customer and transaction data.
    • Adopt cloud-native, SaaS-based core banking platforms where appropriate, enabling agility and scalability.
  2. Build Institutional-Grade Digital Asset Infrastructure
    • Partner with providers of secure, compliant custody and staking solutions for digital assets.
    • Deploy blockchain-based platforms for tokenized securities, ensuring legal and regulatory equivalence with traditional assets.
    • Leverage permissioned and public blockchains as appropriate, balancing transparency, privacy, and control.
  3. Orchestrate Ecosystem Partnerships
    • Integrate third-party fintechs for specialized services (e.g., KYC, AML, payments, invoicing) via open APIs.
    • Participate in industry consortia and regulatory sandboxes to shape standards and accelerate adoption.
  4. Manage Risk, Compliance, and Operational Complexity
    • Engage proactively with regulators to ensure compliance with evolving digital asset and blockchain regulations.
    • Implement robust controls for data residency, privacy, and security—especially when leveraging cloud and blockchain.
    • Invest in change management and talent development to build the skills and culture required for Web3 innovation.
  5. Pilot and Scale Web3 Services
    • Start with targeted pilots—such as digital asset custody, tokenized lending, or decentralized identity—while maintaining strong risk controls.
    • Use rapid experimentation to validate business cases and customer demand before scaling.
    • Continuously iterate, leveraging feedback and analytics to refine offerings and operations.

Lessons from the Front Lines

Banks that have successfully embarked on this journey share several common traits:

The Road Ahead: From Experimentation to Scale

The journey to Web3-enabled banking is just beginning. As banks move from pilots to scaled implementation, success will depend on:

Banks that embrace these imperatives will not only keep pace with digital-native challengers but also unlock new sources of growth, efficiency, and customer value.

How Publicis Sapient Can Help

Publicis Sapient brings deep expertise in digital business transformation, core modernization, and Web3 enablement. We partner with banks to:

Connect with us to discover how we can help your institution experiment, implement, and thrive at the intersection of Web3, digital assets, and core banking modernization.

Publicis Sapient: Building the future of financial services, together.