Core Modernization as the Foundation for Embedded Finance at Scale

Unlocking the Next Wave of Banking: Why Modernizing the Core is Non-Negotiable

Embedded finance is redefining the future of banking. By integrating financial products and services directly into the digital journeys of non-financial partners—such as e-commerce platforms, ERP systems, and industry-specific software—banks can unlock new revenue streams, deliver seamless customer experiences, and forge deeper, more strategic partnerships. Yet, while the promise of embedded finance is clear, the path to delivering it at scale is anything but simple. The primary barrier? Legacy core banking systems that were never designed for the speed, flexibility, and modularity that embedded finance demands.

Many banks have successfully piloted embedded finance initiatives, but few have managed to scale these into robust, multi-partner ecosystems. The reason is straightforward: legacy technology stacks are siloed, monolithic, and slow to change, making it nearly impossible to efficiently onboard partners, iterate on products, or ensure compliance across diverse use cases. To move beyond isolated pilots and bespoke integrations, banks must modernize their core—laying the digital foundation for scalable, partner-ready embedded finance.

The Limitations of Legacy Systems for Embedded Finance

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

Siloed and Monolithic Architectures: These systems make it difficult to expose services via APIs or integrate with partner platforms, resulting in slow, costly, and brittle integrations.
Slow Product Development Cycles: Legacy technology cannot keep pace with the rapid iteration cycles of digital-native partners, leading to missed opportunities and frustrated stakeholders.
High Operational Risk and Cost: Workarounds and customizations increase operational risk, complicate compliance, and drive up costs as banks attempt to serve multiple partners with unique requirements.
Fragmented Data: Disparate data silos inhibit real-time analytics, personalization, and efficient regulatory reporting—key requirements for embedded finance at scale.

Without modernization, banks face unsustainable complexity and cost as they attempt to serve a growing ecosystem of partners and end customers.

The Architectural and Operational Requirements for Scalable Embedded Finance

To deliver embedded finance efficiently and at scale, banks need to embrace a new set of architectural and operational principles:

1. Cloud-Native, Coreless Architectures

Decoupling: Separate core banking functions from partner-facing experiences, enabling modular, composable services that can be orchestrated for different partners and use cases.
Scalability and Resilience: Cloud-native platforms support rapid scaling, resilience, and the flexibility to add or swap components as needed.
Future-Proofing: Modular architectures allow banks to adapt quickly to new business models, technologies, and regulatory requirements.

2. API-First, Multi-Tenant Platforms

Robust APIs: Provide secure, compliant, and developer-friendly integration points for partners, enabling multiple partners to consume services from the same endpoints.
Efficient Customization: Support efficient customization for diverse partner needs without resorting to bespoke builds for each integration.
Accelerated Onboarding: Streamline partner onboarding and ongoing servicing, reducing time-to-market for new embedded finance offerings.

3. Modern Data Platforms

Centralized Data: Standardize and centralize data to 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 customer engagement with AI-powered analytics.

4. Agile, Cross-Functional Delivery Models

Outcome-Oriented Teams: Organize teams around partner and customer outcomes, not just technology deliverables.
Continuous Iteration: Empower rapid iteration, test-and-learn approaches, and continuous improvement.
Strategic Collaboration: Foster strong relationships with fintechs and technology partners as strategic collaborators, not just vendors.

Practical Guidance for Building Partner-Ready, Multi-Tenant Platforms

Banks looking to scale embedded finance should consider the following practical steps:

Start with a Clear Strategy: Define commercial objectives, target segments, and partnership models for embedded finance. Align the modernization roadmap to these goals.
Design for Scale from Day One: Build modular, API-first platforms even if initial use cases are narrow. Avoid bespoke integrations that cannot scale across multiple partners.
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.

Success Factors and Pitfalls to Avoid

Success Factors:

Strong leadership alignment and a clear business case for modernization as a strategic enabler for embedded finance.
A future-proof, cloud-native, API-first architecture that supports modularity and rapid scaling.
Robust data and compliance foundations to support real-time analytics and regulatory agility.
Agile, cross-functional teams focused on partner and customer outcomes.
A culture of continuous learning and iteration, leveraging real-world feedback to refine offerings.

Pitfalls to Avoid:

Treating modernization as a one-off technology upgrade rather than a business transformation.
Over-customizing solutions for individual partners, leading to unsustainable complexity.
Underestimating the importance of data quality, compliance, and partner experience.
Failing to build for scale from the outset, resulting in costly rework as the ecosystem grows.

Real-World Examples: From Pilot to Enterprise-Scale Ecosystems

Banks that have embraced core modernization as the foundation for embedded finance have achieved:

Rapid Launches: Building a BaaS-first SME bank in just nine months, orchestrating over 20 fintech partners on a cloud-native, API-driven platform—enabling rapid onboarding and fully automated operations.
Ecosystem Expansion: Supporting strategic joint ventures in Southeast Asia, delivering platform-as-a-service models that combine banking and non-banking services for millions of customers, leveraging modular architecture and real-time data.

These examples demonstrate that with the right foundation, banks can move from isolated pilots to enterprise-scale embedded finance ecosystems—unlocking new growth, efficiency, and customer value.

The Publicis Sapient Advantage

Publicis Sapient brings deep expertise in strategy, technology, and partner ecosystem management, with stress-tested methodologies and accelerators for rapid delivery. Our proven four-step modernization playbook—ambition, mobilization, platform proof, and progressive scaling—has helped leading banks move from pilot initiatives to enterprise-scale embedded finance.

Ready to modernize your core and unlock the full potential of embedded finance? Connect with our experts to start your journey and explore how Publicis Sapient can help you build the partner-ready, scalable platforms that will define the next era of banking.

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.