Should Tech Modernization Include a Core Upgrade?

Legacy modernization is one of those perennial considerations for most established banks. Bank platforms have a fundamental impact on the effectiveness of a bank to achieve positive operating leverage, enable faster innovation, support delivery of a superior customer experience, and enforce compliance. Hence most executives will be interested in new or upgraded platforms that promise to deliver better performance across these areas.

However, there is a reason legacy modernization remains an ongoing, rather than solved, issue. Modernization competes for budget dollars and executive / organization time against other mandatory and strategic initiatives that often demand priority, deliver faster payback, or align more directly to specific needs of the business. Transformation complexities and risks often appear more daunting than short-term return benefits, and the temptation to continually put core platform upgrades into next year’s project list is strong. The question for many banks should be how long is this sustainable for, and when should banks really consider whether core migration should be part of a modernization plan?

Based on its expertise advising and working with banks, Oliver Wyman, Celent’s parent company has recently published an insight piece looking at this very question. Well worth a read – A Complete Guide to Modernizing Bank Technology: Three questions to guide your core upgrade decision identifies some key questions that banks should consider to explore options available and whether it is the right time to include a core upgrade as part of a bank’s technology modernization roadmap. A useful guide for banking executives planning modernization strategies.