Core Modernization Playbook: How Banks Can Successfully Transform Their Core Systems for a Digital-First Future

Modernizing core banking systems is no longer a distant ambition—it's an urgent imperative. As digital-first challengers and evolving customer expectations reshape the financial landscape, banks must move beyond legacy technology to deliver seamless, personalized, and agile experiences. Yet, the path to core modernization is fraught with complexity, risk, and organizational inertia. This playbook provides a step-by-step guide to help banks navigate the journey, avoid common pitfalls, and realize the full benefits of a modern, cloud-based, coreless architecture.

The Business Case for Core Modernization

Legacy core systems are struggling to keep pace with the demands of today’s digital economy. Maintaining these aging platforms is increasingly costly and risky, with workarounds compounding technical debt and stifling innovation. Meanwhile, new regulations, open banking, and rising customer expectations are pushing these systems to their limits. The result? Banks are investing more just to stand still, while digital-native competitors accelerate ahead.

Key drivers for modernization include:

Lower operating costs and optimized change investments
Faster time-to-market for new products and services
Personalized, omnichannel customer experiences
Real-time data streaming and automation
Flexibility to integrate best-of-breed solutions and partner ecosystems
Enhanced security, compliance, and resilience

Banks that modernize their core unlock new growth pathways, operational efficiencies, and the agility to respond to market shifts. Within the next five years, a clear divide will emerge between those that have modernized and those left behind.

Common Pitfalls in Core Modernization

Despite the compelling case, core modernization is notorious for its risks. Many programs falter due to:

Unclear or misaligned ambitions: Without a shared vision and leadership commitment, programs lose momentum.
Big-bang approaches: Large upfront investments with delayed value realization increase risk and erode stakeholder confidence.
Recreating the legacy: Simply replicating old processes on new technology misses the opportunity for true transformation.
Underestimating migration and integration complexity: Data quality, coexistence, and regulatory requirements can derail progress.
Lack of organizational readiness: Transformation is as much about people and culture as it is about technology.

A Four-Phase Approach to Core Modernization

To mitigate risk and maximize value, leading banks are adopting a progressive, iterative approach. Here’s how to structure your journey:

1. Confirm Your Ambitions

A successful program starts with a clear, organization-wide commitment to change.

Shape the case for change: Articulate the critical challenges, benefits, and ROI of modernization. Link the initiative to your bank’s north star vision.
Assess readiness: Evaluate organizational, cultural, data, and technology gaps. Understand risk, compliance, and migration complexities.
Secure leadership buy-in: Ensure the board and executive team are aligned, with clear accountability and a robust investment case.
Establish the right leadership team: Appoint transformation leaders with the authority, resources, and mandate to drive change.

Pitfall to avoid: Launching without a unified vision or underestimating the breadth of change required.

2. Mobilize the Program

Set up for success with the right people, roadmap, and architecture.

Build a cross-functional team: Combine business, technology, and operational expertise. Engage risk, compliance, and delivery partners early.
Define the product roadmap: Map customer, partner, and colleague journeys to technology and operational enablers. Prioritize iterative releases that deliver value early and often.
Design a coreless architecture: Embrace modular, cloud-native solutions. Select best-of-breed vendors and plan for seamless integration and migration.
Fast-track critical enablers: Stand up cloud infrastructure, align on API and data strategies, and shape the future operating model.

Pitfall to avoid: Over-investing upfront without value release, or simply replicating legacy systems.

3. Prove the Platform

Deliver a ‘pathfinder’—a customer-facing launch that demonstrates value and builds belief.

Shift into action: Mobilize agile, outcome-focused teams. Leverage best-practice enterprise agile methodologies and onboard solution providers.
Deliver the pathfinder: Focus on foundational elements, select initial customer segments for migration, and ensure robust risk, control, and regulatory compliance.
Manage coexistence: Establish a ‘model office’ to run new and legacy systems in parallel, with automated reconciliation and business readiness testing.
Iterate and learn: Use retrospectives to refine the roadmap, migration strategy, and reuse catalog for future releases.

Pitfall to avoid: Failing to launch due to over-complexity, or neglecting non-technical solutions like product rationalization to reduce migration risk.

4. Scale Progressively

Expand the platform and migrate in tranches, minimizing risk and disruption.

Expand the coreless platform: Prioritize new features and releases based on value, speed, and quality. Maintain feedback loops for continuous improvement.
Scale the modernization factory: Establish a dedicated team to manage ongoing migrations, decommission legacy systems, and optimize cost savings.
Sustain the change: Transition from program to business-as-usual, building the skills and culture needed for continuous enhancement. Maintain open communication and regulatory confidence.

Pitfall to avoid: Losing momentum due to poor communication or failing to sequence migrations appropriately.

Practical Tips and Risk Mitigation Strategies

Start small, scale fast: Use a pathfinder to prove value and de-risk the journey before full-scale rollout.
Embrace coreless, cloud-based architectures: Modular, API-driven platforms enable flexibility, partner integration, and rapid innovation.
Adopt agile delivery models: Cross-functional teams, iterative releases, and continuous feedback accelerate value and reduce risk.
Prioritize data quality and migration: Invest in automated reconciliation, data cleansing, and robust testing.
Engage the whole organization: Transformation is not just a technology project—align business, operations, and culture.
Communicate relentlessly: Keep stakeholders informed of progress, setbacks, and successes to sustain commitment.

Real-World Success: What’s Possible

Banks that have followed this approach have achieved:

Fully functional, cloud-native platforms in under a year
End-to-end automation and real-time data analytics
Seamless integration with fintech partners and external ecosystems
Rapid launch of new products and services, with measurable improvements in customer experience and operational efficiency

For example, one commercial SME bank built a Banking-as-a-Service platform in just nine months, orchestrating over 20 fintech partners and delivering fully automated operations. Another leading bank used a pathfinder approach to launch a new digital proposition, iterating quickly based on customer and partner feedback, and scaling to new segments with confidence.

The Benefits of Modern Coreless Banking

Lower costs: Automation and streamlined operations reduce overhead.
Faster innovation: Modular platforms enable rapid product launches and ecosystem integration.
Personalized experiences: Real-time data and flexible architectures support tailored offerings.
Resilience and compliance: Cloud-native solutions enhance security, scalability, and regulatory agility.
Future-proofing: Banks can adapt to new business models, technologies, and customer needs as the market evolves.

Ready to Start Your Core Modernization?

While the journey is complex, the rewards are transformative. With the right strategy, partners, and mindset, banks can move from legacy constraints to digital-first leadership. Publicis Sapient brings deep experience, proven methodologies, and a track record of delivering successful core modernization programs for leading financial institutions worldwide.

Let’s work together to unlock the full potential of your bank’s digital future.

Contact us to learn more about our SPEED capabilities—Strategy, Product, Experience, Engineering, and Data—and how we can help you modernize your core for the digital era.

www.publicissapient.com

This playbook synthesizes insights from global banking leaders and real-world transformation programs to provide actionable guidance for banks embarking on core modernization.