Core Modernization as the Foundation for Embedded Finance at Scale

Why Core Modernization is the Prerequisite for Embedded Finance

Embedded finance is redefining the future of banking, enabling financial products and services to be delivered directly within the digital journeys of non-bank partners—whether that’s e-commerce platforms, ERP systems, or industry-specific software. This shift promises seamless, context-rich experiences for end customers, new revenue streams for banks, and deeper, more strategic partnerships across industries. Yet, while many banks have piloted embedded finance initiatives, few have managed to scale these into robust, multi-partner ecosystems. The primary barrier? Legacy core banking systems that simply cannot support the speed, flexibility, and modularity that embedded finance demands.

Legacy technology stacks are monolithic, siloed, and slow to change. They make it difficult to expose services via APIs, integrate with partner platforms, or iterate products at the pace digital-native partners expect. As a result, banks face unsustainable costs and complexity when attempting to serve multiple partners, each with unique technology stacks and customer needs. To move beyond isolated pilots and bespoke integrations, banks must modernize their core—laying the digital foundation for efficient partner onboarding, rapid product iteration, and robust regulatory compliance.

The Technical and Organizational Barriers of Legacy Systems

Legacy core systems present several challenges for banks seeking to deliver embedded finance at scale:

Siloed and Monolithic Architectures: These make it difficult to decouple core banking functions from partner-facing experiences, limiting the ability to offer modular, composable services.
Slow Product Development Cycles: Legacy systems are not built for rapid change, making it hard to keep pace with the needs of digital partners.
Costly and Risk-Prone Operations: Workarounds and customizations increase operational risk and make compliance more complex.
Fragmented Data: Disparate data silos inhibit real-time analytics, personalization, and efficient regulatory reporting.

Without modernization, banks are forced into costly, one-off integrations that cannot scale, undermining the commercial promise of embedded finance.

Requirements for Scalable Embedded Finance

To deliver embedded finance efficiently and at scale, banks need to embrace a new set of technical and organizational capabilities:

Cloud-Native, API-First, Modular Architectures

Cloud-Native Platforms: Decouple core banking functions from partner-facing experiences, enabling modular, composable services that can be orchestrated for different partners and use cases.
API-First Design: Provide secure, compliant, and developer-friendly integration points for partners. Multi-tenant APIs allow multiple partners to consume services from the same endpoints, reducing the need for bespoke builds and accelerating onboarding.
Modular Components: Support rapid scaling and resilience, with the flexibility to add or swap components as needed.

Modern Data Platforms

Centralized, Standardized Data: Enable real-time analytics, personalization, and proactive risk management.
Automated Compliance: Simplify regulatory compliance and reporting through automated controls and policy-based enforcement.
AI-Driven Insights: Fuel product innovation and operational efficiency.

Agile, Cross-Functional Delivery Models

Outcome-Focused Teams: Organize teams around partner and customer outcomes, not just technology deliverables.
Rapid Iteration: Empower test-and-learn approaches and continuous improvement.
Strategic Partnerships: Foster strong relationships with fintechs and technology partners as collaborators, not just vendors.

The Four-Step Modernization Journey for Embedded Finance

Publicis Sapient’s experience shows that successful core modernization—and, by extension, scalable embedded finance—follows a four-step journey:

1. Ambition: Define the North Star

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. Mobilization: Set Up for Success

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: Deliver and Learn

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. Progressive Scaling: Expand and Sustain

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.

Practical Guidance and Success Factors

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.

Real-World Impact: Case Studies

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.
Strategic Joint Venture in Southeast Asia: Delivered a platform-as-a-service that combines banking and non-banking services for millions of customers, leveraging modular architecture and real-time data.

Why Publicis Sapient?

Publicis Sapient brings deep expertise in strategy, technology, and partner ecosystem management, with stress-tested methodologies and accelerators for rapid delivery. Our track record includes helping banks move from pilot to enterprise-scale embedded finance, unlocking new growth and operational efficiency.

Ready to modernize your core and unlock the full potential of embedded finance? Connect with our experts to start your journey.

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.