Core Modernization as the Foundation for Embedded Finance at Scale

Why Core Modernization is Essential for Embedded Finance

Embedded finance is rapidly transforming the financial services landscape, enabling banks to deliver products and services directly within the digital journeys of non-financial partners—be it e-commerce platforms, ERP systems, or industry-specific software. The promise is clear: seamless, context-rich experiences for end customers, new revenue streams for banks, and deeper, more strategic partnerships across industries. However, the ability to deliver embedded finance at scale is fundamentally constrained by the limitations of legacy core banking systems.

Many banks have launched pilot embedded finance initiatives, but few have managed to scale these into profitable, multi-partner ecosystems. The reason? Legacy technology stacks are simply not built for the speed, flexibility, and modularity that embedded finance demands. 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 Four-Step Modernization Journey

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

Articulating the business case for modernization, not just as a technology upgrade, but as a strategic enabler for new growth (including embedded finance).
Aligning leadership around the need for change, the benefits of modern capabilities, and the risks of standing still.
Assessing 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

Building foundational elements (cloud, data, DevSecOps, vendor integrations).
Launching with an initial partner or product, focusing on real-world feedback and continuous iteration.
Managing 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.

The Pitfalls of Legacy Systems in Embedded Finance

Legacy core systems are a major barrier to scaling embedded finance. They are:

Siloed and Monolithic: Making it difficult to expose services via APIs or integrate with partner platforms.
Slow to Change: Product development cycles are too long to keep pace with digital-native partners.
Costly and Risk-Prone: Workarounds and customizations increase operational risk and make compliance more complex.
Data Fragmented: Inhibiting real-time analytics, personalization, and efficient regulatory reporting.

Without modernization, banks face unsustainable costs and complexity as they attempt to serve multiple partners, each with unique technology stacks and customer needs.

The Prerequisites for Embedded Finance at Scale

To deliver embedded finance efficiently and at scale, banks need:

Cloud-Native, Coreless Architectures

Decouple core banking functions from partner-facing experiences.
Enable modular, composable services that can be orchestrated for different partners and use cases.
Support rapid scaling and resilience, with the flexibility to add or swap components as needed.

Robust, Multi-Tenant APIs

Provide secure, compliant, and developer-friendly integration points for partners.
Allow multiple partners to consume services from the same endpoints, reducing the need for bespoke builds.
Accelerate onboarding and ongoing servicing, supporting efficient customization (“efficient customization”) for diverse partner needs.

Modern Data Platforms

Centralize and standardize data, enabling real-time analytics, personalization, and proactive risk management.
Simplify regulatory compliance and reporting through automated controls and policy-based enforcement.
Fuel AI-driven insights and product innovation.

Agile, Cross-Functional Delivery Models

Organize teams around partner and customer outcomes, not just technology deliverables.
Empower rapid iteration, test-and-learn approaches, and continuous improvement.
Foster strong relationships with fintechs and technology partners as strategic collaborators.

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

Launch a BaaS-first SME bank in just nine months, orchestrating 22 fintech partners on a cloud-native, API-driven platform—enabling rapid onboarding and fully automated operations.
Support a strategic joint venture in Southeast Asia, delivering a platform-as-a-service that combines banking and non-banking services for millions of customers, leveraging modular architecture and real-time data.

The Publicis Sapient Core Modernization Playbook

Our playbook provides a proven, four-step approach to core modernization, tailored to the needs of banks seeking to lead in embedded finance. We bring:

Deep expertise in strategy, technology, and partner ecosystem management
Stress-tested methodologies and accelerators for rapid delivery
A track record of helping banks move from pilot to enterprise-scale embedded finance

Ready to modernize your core and unlock the full potential of embedded finance? Explore our Core Modernization Playbook or 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.