Core Modernization Playbook

How to Effectively and Securely Modernize Your Bank, and Use Generative AI to Accelerate the Journey and Drive Continuous Innovation

The Core Modernization Conundrum in the Era of AI

There are three statements upon which almost every bank leadership team will agree:

Their current core technology stack is struggling to keep up with the rapid shift to the digital-first, seamless interactions their customers, colleagues, and partners expect.
Replacing these technologies is risky, complex, and expensive.
Banks need to proactively investigate the potential of AI and Gen AI to fuel their drive to continuous innovation and better business outcomes.

The shift to new technology is inevitable. Every year, banks are investing more and more time and money just to maintain the status quo. New regulations, rising digital expectations, and open banking are pushing legacy systems to the limit. Workarounds have made change riskier and more expensive. With increasing digital transactions, plus the rising customer expectations for personalized interactions and connected offerings, these challenges will get harder to overcome.

Key Statistics:

62% of banks report their solutions are reaching “end of life.”
39% note that people who understand legacy solutions are decreasing each year.
1 in 3 banks say their solutions are under strain, increasingly putting them at risk of failure.
70% are spending more to maintain rather than improve solutions.
55% of customers are expecting better, digital-first experiences.
44% see challengers rolling out more effective operating approaches.

(Source: Publicis Sapient Global Banking Benchmark Study 2022, RS2, 10x, Forbes Research – CxO Growth Survey, 2024)

The Need for Change

Solutions are reaching end of life.
Fewer people understand legacy solutions each year.
Solutions are under strain, putting banks at risk of failure.
Spending is focused on maintenance rather than improvement.
Customers expect better, digital-first experiences.
Challengers are rolling out more effective operating approaches.
A differential will emerge between AI and non-AI banks.
Slow change and go-to-market.

Replacing core systems is no easy task. In the past, the easiest way for a CEO or CIO to lose their job was to propose a core system transformation and then fail to deliver it. The success stories are far outnumbered by the failures: programs that overran, overspent, and ultimately failed to achieve real value.

But times have changed. New technologies—from cloud to new core banking solutions, to the surrounding ecosystem of SaaS solutions—have matured, been proven, and enable differentiated services. Modern technology—such as AI and Gen AI—is being used to drastically accelerate the pace of modernization and reduce risks. More progressive, iterative approaches to core modernization can significantly mitigate the transformation risks. Put simply, the time to transform is now.

Growth Accelerator

New sources of growth
Enhanced personalization to increase customer lifetime value
Ability to respond quickly to changing market or regulatory conditions
Automated and more efficient services
More effective colleague collaboration and satisfaction
Enhanced intelligence and decision making through data

Technology Resiliency

Moving off aging, costly, and risky legacy technologies
Reduced reliance on on-premise infrastructure
Significant improvement in technology run and change costs

The Bank of the Future: Data at the Center

A modern core banking system does one thing and does it well: product, ledger, and transaction management. The bank’s data is available in one place, released from the core for insights, AI, and servicing. An event-driven architecture enables better products and propositions by composing best-in-class capabilities along with the core. This architecture allows for long-term, strategic differentiation leveraging the latest technologies.

This is the architecture powering leading challenger and incumbent banks’ successful migration onto new modern platforms, including the work we have done for the fastest growing digital-only commercial bank in MENA.

New Progressive Modernization Approaches

New progressive modernization approaches can de-risk the transition from old to new platforms. New technologies and techniques can better enable this progressive transition, significantly de-risking the process while also enabling earlier value unlocks from the new strategic platforms.

Transition Stages:

T0: Legacy Core
- Engagement Channels → Middleware → Legacy Core → Downstream Systems (Reporting, Finance, GL, Data Warehouse)
T1: Route channels to either CBS, aggregate data for downstream
- Engagement Channels → Middleware → Multi-Core Routing → Legacy Core & New Core → Data Aggregation Platform → Downstream Systems
T2: Retire legacy
- Engagement Channels → Middleware → New Core → Downstream Systems

This pattern is being deployed by our incumbent banking clients globally, including the largest banks in the UK/EMEA, NA, and APAC.

The Goal: Maximize the Benefits of Core Modernization

Take a holistic perspective on how new core capabilities can transform your bank
Re-orient your architecture to put data and people, rather than core systems and products, at the center of your bank
Leverage new techniques and technologies to progressively shift from old to new platforms and de-risk the transition
Use AI solutions to accelerate modernization and embed AI in target-state design and implementation
Drive new ways of working to accelerate the pace of change while managing critical risks

The Bank of the Future is AI Enabled

Our AI/Gen AI solutions not only accelerate modernization, but also reimagine how banks can best serve their customers and operate their business in the future—from automating manual steps to intelligently answering customer queries. The opportunities are endless.

Example AI Enablement Across Key Business Areas of a Bank

Business Priorities

Customer and Colleague Journeys

Assisted touchpoints: Gen AI-powered virtual assistants enhance live interactions, providing real-time support to customers and colleagues.
Unassisted touchpoints: AI-driven self-service tools enable customers to resolve queries and complete tasks independently.
Customer onboarding: Automate onboarding with AI to streamline KYC, document verification, and account setup processes.
Customer servicing: Gen AI offers personalized, real-time support through chatbots and predictive service solutions.
Customer communications: AI delivers personalized, timely communication to customers across multiple channels based on their behaviors and preferences.

Business Lines and Products

Wholesale: AI optimizes pricing models and automates loan underwriting for large-scale corporate clients.
Wealth: Gen AI provides personalized investment recommendations and portfolio management for wealth clients.
Insurance: AI enhances risk assessment, claims processing, and fraud detection within the insurance space.
Private: AI-driven insights offer tailored wealth management solutions and exclusive services for private clients.
Retail and Business: Gen AI personalizes customer experiences, streamlines product recommendations, and automates servicing.
SME: AI assists SMEs with real-time financial insights, credit risk analysis, and personalized banking solutions.

Middle Office

Marketing: AI personalizes campaigns and optimizes customer targeting using real-time data and predictive analytics.
Strategy: Gen AI provides insights into market trends and competitor analysis to inform strategic decision-making.
Economic Intelligence: AI-driven models forecast economic changes and their potential impact on the bank and its SME clients.
Finance and Treasury: Gen AI automates liquidity management, capital optimization, and financial forecasting.
Risk: AI enhances risk assessment by predicting credit, market, and operational risks with real-time data analysis.

Back Office

Technology: AI optimizes IT processes, automates SDLC, and supports legacy system modernization.
Operations: Gen AI streamlines workflows and automates repetitive tasks for greater efficiency.
Legal: AI assists with contract drafting, legal research, and compliance monitoring to reduce manual workload.
People: Gen AI enhances recruitment, employee engagement, and performance analytics through data-driven insights.
Audit: AI automates auditing processes, ensuring real-time compliance checks and risk identification.

Accelerate the Core Modernization Journey with Sapient Slingshot

Sapient Slingshot gives you the ability to move off old solutions, accelerate modernization, and drive significant savings in time and spend.

Slingshot is:

An end-to-end Gen AI change and run ecosystem
Agents, context stores, and prompt libraries trained with Sapient knowledge, expandable to client’s context, to solve the most complex IT change problems
24,000 AI-skilled people exclusively dedicated to delivering results and driving change in our clients’ business

Key Benefits:

2x productivity per Feature Team
Reusability as default across the organization
Significant acceleration of speed, reducing time, spend, and risk of legacy modernization
Strengthen reliability and resiliency supporting increased pace of change
Rapid uplift of workforce to full-lifecycle engineers

Publicis Sapient is Here to Help

Our proprietary AI platform, Sapient Slingshot, drives enhancements in productivity, efficiency, speed, and quality. Blending advanced code generation with agentic AI and an enterprise-level code library, our engineers are able to create high-impact solutions—supporting everything from modernization to development and testing.

Slingshot features various AI agents that can automate complex development processes, drawing from a Publicis Sapient code repository to deliver industry-specific solutions rooted in our extensive client work.

Our agile engineers designed, built, and trained Slingshot with an internal instruction-tuned large language model that enables precise, high-quality results. They know the ins and outs and are equipped to harness its potential.

Publicis Sapient, powered by Sapient Slingshot, delivers:

Enhanced developer productivity
Fewer instances of human error
Automatic documentation and increased transparency
Streamlined development process
Expanded test coverage
Fewer code defects

Sapient Slingshot Key Features:

Extensive code library: An exclusive code library enriched with 20+ years of domain and industry expertise, a comprehensive IP catalog, and robust data models.
Proprietary AI agents: Specialized AI agents that can automate complex application processes within the SDLC.
End-to-end software engineering:
- Automated code generation and logic simplification
- Advanced code reviews, unit test support, and precise code accuracy
- Automated documentation and real-time assistance
- Seamless integration with project management tools, ensuring security and privacy

A Proven Approach to Core Modernization

A progressive, iterative approach to core modernization can help banks de-risk the journey, unlock value earlier, and accelerate the pace of change.

Step 1: Define the Vision, Business Case, and Roadmap
- Set the ambition and target state for the bank
- Build the business case and value model
- Define the roadmap and approach
Step 2: Design the Target Architecture and Operating Model
- Design the future-state architecture and data model
- Define the operating model and ways of working
- Select the right technology and partners
Step 3: Deliver the New Core and Migrate Progressively
- Build and deploy the new core platform
- Migrate products, customers, and data in waves
- Decommission legacy systems as you go
Step 4: Drive Continuous Innovation and Value Realization
- Embed AI and automation to accelerate value
- Continuously optimize and enhance the platform
- Scale new capabilities and business models

For more information, contact:

David Murphy – david.murphy@publicissapient.com
David Donovan – david.donovan@publicissapient.com
Abhishek Bhattacharya – abhishek.bhattacharya@publicissapient.com
Zachary Scott – zachary.scott@publicissapient.com

www.publicissapient.com

Publicis Sapient