Mastering the Modernization Maze: Navigating Risk in Core Banking Modernization

Core banking modernization is no longer a question of "if" but "how"—and, crucially, "how safely." As banks face mounting pressure from digital-first competitors, evolving customer expectations, and ever-tightening regulatory demands, the risks of modernization loom large. Yet, with the right approach, these risks can be systematically identified, managed, and mitigated—transforming risk from a barrier into a catalyst for lasting change.

Understanding the Risk Landscape in Core Modernization

Modernizing the core is a high-stakes endeavor. The complexity of legacy systems, the scale of investment, and the criticality of banking operations mean that failure can have far-reaching consequences—technical, reputational, regulatory, and operational. To master the modernization maze, banks must first recognize the full spectrum of risks:

1. Technical Risks

System Stability & Resilience: Legacy and new systems must coexist, often for years. Stability, resilience, and scalability are paramount.
Security & Data Integrity: Unauthorized access, cloud security, and data quality issues can threaten both compliance and customer trust.
Integration & Customization: Excessive customization or integration challenges can introduce technical debt and slow progress.
Emerging Technologies: Adopting new tech without sufficient expertise can create unforeseen vulnerabilities.

2. Reputational Risks

Customer & Colleague Access: Disruptions can erode trust and damage the brand.
Product & Service Quality: Delays, outages, or poor performance can impact satisfaction and market perception.
Data Breaches: Loss or compromise of sensitive data can have lasting reputational and financial consequences.

3. Regulatory Risks

Compliance: Jurisdiction-specific and financial regulations are constantly evolving. Non-compliance can result in fines, sanctions, or operational shutdowns.
Data Privacy: Handling and protecting personal data is a moving target, especially with cross-border operations.

4. Planning & Execution Risks

Siloed Strategies: Fragmented approaches create business and technical debt.
Change Management: Shifting ways of working without adequate capability building can stall progress.
Migration Failure: Poorly planned migrations risk data loss, service disruption, and regulatory breaches.
Communication Gaps: Inadequate communication can undermine stakeholder buy-in and program momentum.

A Step-by-Step Approach to Risk Governance and Mitigation

Publicis Sapient’s experience with leading banks worldwide has shown that risk management must be embedded throughout the modernization lifecycle. Here’s a practical, actionable framework:

1. Establish Fit-for-Purpose Governance

Centralized Early, Federated Later: Start with a centralized governance structure for coordinated planning and design. As teams mature, shift to a federated model, empowering feature teams while maintaining oversight.
Transformation Management Hub: Use a central hub to coordinate strategy, architecture, capability building, and value capture. This ensures a unified view of progress and risk.

2. Prioritize Migration Planning

Migration-First Mindset: Make migration strategy central to the business case and roadmap. Choose the right approach—big bang, parallel run, or coexistence—based on risk appetite, customer impact, and technical readiness.
Early Roadmapping: Define transition states and value-release milestones up front to keep the program focused and aligned.

3. Agile, Proactive Risk Management

Shift-Left Risk Identification: Embed risk and compliance experts in cross-functional teams from the outset. Use agile backlogs to surface and address risks early.
Automated Risk Dashboards: Leverage real-time, data-driven dashboards to monitor risk at both feature and program levels, enabling rapid response.

4. Automate Controls for Quality and Speed

Continuous Integration & Deployment (CI/CD): Embed automated code reviews, security testing, and compliance checks into the delivery pipeline.
Real-Time Monitoring: Track value, quality, and risk metrics continuously to enable rapid unblocking and course correction.

5. Talent Management and Capability Building

Upskill & Retain: Invest in upskilling existing staff and attracting new digital talent. Create clear career paths and foster communities of practice.
Strategic Partnerships: Leverage external partners to fill skill gaps and accelerate delivery, while building internal capability for long-term sustainability.

6. Communication and Change Management

Comprehensive Communication Plan: Map stakeholders, select appropriate channels, and maintain a regular cadence of updates.
Feedback Loops: Use surveys, focus groups, and dashboards to measure communication effectiveness and adapt as needed.

Practical Checklists for Risk Mitigation

Risk Identification Checklist:

Have all technical, reputational, regulatory, and planning risks been mapped?
Are risk owners and mitigation actions clearly assigned?
Is there a process for regular risk review and escalation?

Migration Planning Checklist:

Is the migration strategy aligned with business value and risk appetite?
Are transition states and rollback plans defined?
Is there a clear data migration and reconciliation plan?

Talent & Capability Checklist:

Are critical skills and knowledge gaps identified?
Is there a plan for upskilling, hiring, and partnering?
Are change champions embedded across the organization?

Communication Checklist:

Are objectives, audiences, and channels defined?
Is there a calendar for regular updates?
Are feedback mechanisms in place?

Lessons from the Field: Publicis Sapient in Action

OSB Group: By building a greenfield core banking platform with a phased migration and robust governance, OSB Group achieved 90% straight-through onboarding and rapid product innovation—while minimizing risk and disruption.
Leading Thai Bank: In just 12 weeks, a new digital platform was delivered by leveraging agile teams, automated controls, and a coexistence migration strategy, enabling rapid adaptation to market and regulatory changes.

Why Publicis Sapient?

With decades of experience, proven methodologies, and a global network of technology partners, Publicis Sapient is uniquely positioned to help banks de-risk their modernization journey. Our frameworks, accelerators, and hands-on expertise ensure that risk is managed—not just monitored—at every step.

Ready to Navigate the Modernization Maze?

Core banking modernization is complex, but with the right risk governance, migration planning, talent strategy, and communication, it can be delivered safely and successfully. Let Publicis Sapient help you turn risk into opportunity—and build the resilient, future-ready bank your customers and regulators demand.

Contact our experts to start your risk-smart modernization journey.

For more information, visit www.publicissapient.com

This guide is based on Publicis Sapient’s extensive experience and recent client successes in core banking modernization. All frameworks and recommendations are grounded in real-world delivery and industry best practice.