Industry Deep Dive: Core Modernization for Mid-Tier and Challenger Banks—Accelerating Transformation with Limited Resources

The Modernization Imperative for Mid-Tier and Challenger Banks

Mid-tier and challenger banks are at a pivotal crossroads. The digital banking revolution, once the exclusive domain of global giants, is now a necessity for every institution seeking relevance and growth. For these ambitious banks, legacy technology, mounting regulatory demands, and the relentless pace of customer expectations create a unique set of pressures. The question is no longer if core modernization should happen, but how quickly and effectively it can be achieved—especially with leaner resources and less margin for error than their larger counterparts.

Unique Challenges and Opportunities

Unlike top-tier incumbents, mid-tier and challenger banks must balance agility and innovation with cost efficiency and risk management. They face:

Agility Demands: The need to launch new products and services rapidly to compete with fintechs and digital-first banks.
Complex Compliance: Navigating increasingly complex regulatory requirements with robust, auditable, and flexible systems.
Customer Expectations: Delivering seamless, personalized, omnichannel experiences at speed.
Cost Constraints: Maintaining and patching legacy systems is expensive and stifles innovation, making modernization both a necessity and a challenge.

Yet, these constraints also create opportunities. With the right approach, mid-tier and challenger banks can leapfrog legacy limitations, outpace larger rivals, and deliver differentiated customer experiences.

Accelerating Modernization: Proven, Resource-Efficient Approaches

Publicis Sapient’s approach is tailored for banks that need to move fast without compromising on quality or compliance. Our methodologies, accelerators, and deep partnerships with leading fintechs—including Thought Machine and Mambu—enable mid-tier and challenger banks to modernize their core and launch new platforms in record time.

1. Embrace Cloud-Native, Composable Platforms

Cloud-native core banking platforms such as Thought Machine and Mambu are game-changers for mid-tier and challenger banks. Unlike traditional monolithic systems, these platforms offer a composable, API-first architecture that allows banks to assemble best-of-breed components tailored to their needs. This flexibility enables:

Launching new digital banks or products in as little as nine months
Rolling out new features and services up to five times faster than before
Scaling securely and compliantly, with built-in support for local regulations

By leveraging SaaS-based platforms, banks avoid heavy upfront investments and ongoing maintenance costs, freeing up resources to focus on customer experience and growth.

2. Accelerate with Proven Methodologies and Accelerators

Transformation is complex, but it doesn’t have to be slow. Publicis Sapient’s SPEED approach and proprietary accelerators help banks move from idea to launch at breakneck speed. By assembling multidisciplinary teams—combining strategy, technology, UX, and creative expertise—and working in agile sprints, we help clients:

Identify and prioritize customer pain points
Rapidly prototype and test new solutions
Integrate new core platforms with existing systems, minimizing disruption

This approach was exemplified in our work with a leading Thai retail bank, where we delivered a full-scale digital transformation—including a new business model and robust technology foundation—in just 12 weeks. By building on Thought Machine’s core banking platform and leveraging agile delivery, the bank was able to launch a unified digital experience that adapts quickly to market changes and evolving customer expectations.

3. Leverage the Power of Ecosystem Partnerships

No single technology or provider can address the full spectrum of needs in today’s banking environment. That’s why Publicis Sapient brings together a curated ecosystem of best-in-class partners—including Mambu, Thought Machine, Form3, and Snowflake—to deliver holistic, future-ready solutions. These partnerships empower mid-tier and challenger banks to:

Modernize payments and core banking infrastructure
Harness data for real-time insights and personalized engagement
Scale securely and compliantly in the cloud

Our deep relationships with leading fintechs and cloud providers ensure that clients benefit from the latest innovations—without the risk and complexity of going it alone.

4. Navigate Regulatory and Legacy Constraints with Confidence

Mid-sized banks often face the dual challenge of navigating complex regulatory environments and integrating new platforms with existing legacy systems. Publicis Sapient’s proven methodology addresses these hurdles head-on:

Regulatory Alignment: We ensure all solutions meet local compliance standards, from data residency to customer privacy.
Legacy Integration: Our accelerators and IP enable seamless integration with existing systems, minimizing disruption and risk.
Agile Delivery: By fostering a culture of experimentation and continuous improvement, we help clients test, learn, and iterate at speed.

Practical Tips for De-Risking Migration and Managing Coexistence

Core modernization is inherently complex and involves risk, but these can be proactively managed:

Start with a Clear Vision: Define your business goals and customer outcomes. Modernization is not just a tech upgrade—it’s a business transformation.
Embrace Coexistence: Avoid risky “big bang” migrations. Run legacy and new cores in parallel, gradually migrating products and customers to minimize disruption and ensure business continuity.
Leverage Proven Accelerators: Use frameworks and accelerators to reduce time-to-market and avoid common pitfalls.
Prioritize Data: Ensure data is accessible, normalized, and ready for real-time use—unlocking the potential for AI-driven insights and personalized experiences.
Partner for Success: Work with transformation partners who bring deep industry knowledge, regulatory expertise, and a robust ecosystem of fintech collaborators.
Automate Controls: Use real-time, data-driven decision-making and automated testing to ensure quality, speed, and compliance.
Upskill and Manage Talent: Invest in upskilling existing staff and attracting new talent to support new systems and ways of working.
Communicate Frequently: Maintain momentum and engagement across the organization with clear, consistent communication about the transformation journey.

Real-World Impact: Case Studies in Rapid Transformation

A Leading Thai Retail Bank: In just 12 weeks, Publicis Sapient helped a major retail bank unify all account types and empower customers to manage their finances seamlessly. By leveraging Thought Machine’s cloud-native core and agile delivery, the bank now enjoys rapid product innovation and a platform built for future growth.
OSB Group: OSB Group, a leading UK specialist lender, partnered with Publicis Sapient to build a greenfield core banking platform powered by Mambu and a suite of fintech tools. Within 12 months, the new platform launched, delivering 90% straight-through onboarding, 13 self-service options, and real-time customer insights. The result: a scalable, customer-first foundation for future growth, improved operational efficiency, and a significant boost in deposits.
Composable Banking with Mambu: By integrating Mambu’s SaaS platform, banks across APAC have been able to assemble tailored, composable architectures that meet local needs and regulatory requirements, launching new digital propositions in record time.

Balancing Agility, Compliance, and Cost Efficiency

Mid-tier and challenger banks must strike a careful balance between moving fast, staying compliant, and managing costs. The most successful transformations:

Adopt Agile Delivery Models: Cross-functional teams, iterative releases, and continuous feedback accelerate value and reduce risk.
Embed Compliance by Design: Automated controls and continuous monitoring ensure regulatory requirements are met from day one.
Optimize for Cost Efficiency: Modular, cloud-native architectures reduce operational overhead and enable rapid scaling without heavy upfront investment.

Why Publicis Sapient?

With over 30 years of digital innovation experience, 100+ financial services clients, and a network of 40+ technology partners, Publicis Sapient brings unmatched expertise to core modernization. Our customer-centric approach, proven methodologies, and deep industry knowledge make us the partner of choice for mid-tier and challenger banks seeking to:

Modernize their core efficiently and cost-effectively
Accelerate time-to-market for new products and services
Harness data and AI for real-time insights and personalized experiences
Compete—and win—against larger incumbents

Ready to Accelerate Your Transformation?

The future of banking belongs to those who can adapt, innovate, and put the customer at the center of everything they do. Whether you’re looking to modernize your core, launch new digital products, or build a data-driven organization, Publicis Sapient is your partner for what’s next. Connect with our experts to discover how we can help you build the bank of the future—faster, smarter, and tailored to your market.

Publicis Sapient is a digital business transformation company. We partner with global organizations to help them create and sustain competitive advantage in a world that is increasingly digital. Our SPEED capabilities—Strategy, Product, Experience, Engineering, and Data—enable us to deliver meaningful impact for banks of all sizes.

www.publicissapient.com

This page is based on real-world transformation programs and deep industry expertise, providing actionable guidance for mid-tier and challenger banks embarking on core modernization.