Core Modernization as the Foundation for Embedded Finance at Scale
Unlocking the Next Wave of Growth in Banking
Embedded finance is reshaping the financial services landscape, enabling banks to deliver products and services directly within the digital journeys of non-bank partners—whether that’s e-commerce platforms, ERP systems, or industry-specific software. The promise is compelling: seamless, context-rich experiences for end customers, new revenue streams for banks, and deeper, more strategic partnerships across industries. Yet, for most banks, the journey from pilot projects to scalable, profitable embedded finance ecosystems remains elusive. The primary barrier? Legacy core banking systems that simply cannot keep pace with the demands of modern, modular, and partner-driven business models.
Why Legacy Systems Hold Banks Back
Legacy core systems are monolithic, siloed, and slow to change. They were designed for a world of branch-centric, product-led banking—not for the dynamic, API-driven, and partner-centric world of embedded finance. As a result, banks attempting to scale embedded finance on legacy technology face:
- Siloed and inflexible architectures that make it difficult to expose services via APIs or integrate with partner platforms.
- Slow product development cycles that cannot keep up with digital-native partners’ expectations.
- High operational risk and cost due to workarounds, customizations, and fragmented data.
- Complex compliance and reporting as data is scattered and not easily accessible in real time.
Without modernization, every new embedded finance partnership becomes a bespoke, costly integration—undermining the very scalability and agility that embedded finance promises.
The Prerequisites for Embedded Finance at Scale
To move beyond isolated pilots and unlock the full potential of embedded finance, banks must lay a new digital foundation. The essential prerequisites include:
Cloud-Native, Coreless Architectures
- Decouple core banking functions from partner-facing experiences.
- Enable modular, composable services that can be orchestrated for different partners and use cases.
- Support rapid scaling and resilience, with the flexibility to add or swap components as needed.
Robust, Multi-Tenant APIs
- Provide secure, compliant, and developer-friendly integration points for partners.
- Allow multiple partners to consume services from the same endpoints, reducing the need for bespoke builds.
- Accelerate onboarding and ongoing servicing, supporting efficient customization for diverse partner needs.
Modern Data Platforms
- Centralize and standardize data, enabling real-time analytics, personalization, and proactive risk management.
- Simplify regulatory compliance and reporting through automated controls and policy-based enforcement.
- Fuel AI-driven insights and product innovation.
Agile, Cross-Functional Delivery Models
- Organize teams around partner and customer outcomes, not just technology deliverables.
- Empower rapid iteration, test-and-learn approaches, and continuous improvement.
- Foster strong relationships with fintechs and technology partners as strategic collaborators.
The Four-Step Roadmap to Scalable Embedded Finance
Publicis Sapient’s experience shows that successful core modernization—and, by extension, scalable embedded finance—follows a four-step journey:
1. Confirm Your Ambitions
- Articulate the business case for modernization as a strategic enabler for new growth, including embedded finance.
- Align leadership around the need for change, the benefits of modern capabilities, and the risks of standing still.
- Assess organizational readiness, data and technology gaps, and regulatory requirements.
2. Mobilize the Program
- Assemble the right cross-functional leadership and delivery teams.
- Design a future-proof, coreless architecture—leveraging cloud-native platforms, robust APIs, and modular components.
- Develop a clear, iterative roadmap that links modernization to tangible business outcomes, such as faster partner onboarding or new product launches.
- Fast-track critical enablers, including cloud infrastructure and API/data strategies.
3. Prove the Platform
- Build foundational elements (cloud, data, DevSecOps, vendor integrations).
- Launch with an initial partner or product, focusing on real-world feedback and continuous iteration.
- Manage coexistence with legacy systems, using automated reconciliation and model office constructs to ensure business readiness and regulatory compliance.
4. Scale, Progressively
- Accelerate migration from legacy systems through iterative releases, prioritizing high-value features and customer journeys.
- Establish a ‘modernization factory’ to support ongoing migration, capability expansion, and decommissioning of legacy systems.
- Embed new ways of working—agile, cross-functional, and outcome-focused—across the organization.
Real-World Impact: Case Studies
Banks that have embraced this approach have achieved:
- A BaaS-first SME bank launched in just nine months, orchestrating 22 fintech partners on a cloud-native, API-driven platform—enabling rapid onboarding and fully automated operations.
- A strategic joint venture in Southeast Asia delivering a platform-as-a-service that combines banking and non-banking services for millions of customers, leveraging modular architecture and real-time data.
These examples demonstrate that with the right foundation, banks can move from pilot to enterprise-scale embedded finance, unlocking new revenue streams and strategic partnerships at pace.
Practical Guidance for Success
- Start with a clear strategy: Define your commercial objectives for embedded finance, target segments, and partnership models. Align your modernization roadmap to these goals.
- Build for scale, not just launch: Design modular, API-first platforms from the outset, even if initial use cases are narrow. Avoid bespoke integrations that cannot scale.
- Invest in data and compliance foundations: Ensure data is accessible, high-quality, and secure. Automate compliance wherever possible to manage growing regulatory complexity.
- Adopt agile ways of working: Move away from traditional, siloed product development. Empower cross-functional teams to deliver, learn, and iterate at pace.
- Prioritize partner experience: Make onboarding, integration, and ongoing support as seamless as possible for partners. This is critical for attracting and retaining high-value relationships.
Why Publicis Sapient?
Publicis Sapient brings deep expertise in strategy, technology, and partner ecosystem management, with a proven track record of helping banks move from pilot to enterprise-scale embedded finance. Our stress-tested methodologies and accelerators enable rapid delivery, risk mitigation, and sustainable value creation.
Ready to modernize your core and unlock the full potential of embedded finance? Let’s start your journey to scalable, future-ready banking.
Publicis Sapient is the digital business transformation hub of Publicis Groupe, partnering with leading financial institutions worldwide to build the next generation of financial services.