From Maintenance to Momentum - Large Banks and Core Modernization

The costs of not modernizing outweigh the costs of modernization.

Despite the complexity and risk of core transformation, many very large banks are questioning whether their existing core systems can carry them forward. These institutions have unique requirements and considerations for modernization compared with community and regional banks.

In earlier blogs, we explored why large banks are realizing they must modernize and examined the engines of change, including AI, personalization and real-time payments, that are making modernization urgent. Now, let’s talk about what may be the most compelling driver of all: the cost of doing nothing.

The weight of technical debt

For years, the nation’s largest banks have delayed core modernization by patching legacy systems, layering on middleware, and funding expensive “keep the lights on” initiatives. The result? According to McKinsey, 70% of a typical bank’s tech budget goes to maintaining existing systems, leaving only 30% for innovation.¹

This imbalance means slower product launches, higher compliance costs and fewer resources available to invest in new revenue-generating initiatives. Even minor feature updates can take months – a strategic liability in a market where fintechs launch innovations in weeks.

Boards and investors are starting to notice. Technology risk is now a board-level issue, and many institutions are being asked to show not just how much they are spending on tech, but how much of that spend is delivering measurable business outcomes. High technical debt with no clear modernization roadmap sends a signal of weak future-readiness.

How Finxact unlocks ROI

Finxact’s SaaS-consumption model replaces hardware investments, manual patching and overnight operations with a managed, cloud-optimized platform. That shift alone frees up budgets for higher-value initiatives.

Here’s how Finxact helps banks turn cost centers into growth engines:

• Lower ongoing costs: No more bespoke mainframe maintenance or custom patches; Finxact’s parameterized configurations and reusable components cut long-term upkeep

• Faster innovation: A modern CI/CD pipeline and microservices architecture enable zero-downtime releases, reducing time to market from quarters to days

• Improved compliance: A temporal data model and real-time audit trail can make regulatory reporting faster and less expensive

• Reduced risk: Active-active deployments and cloud-agnostic resilience keep services running even during outages or cyber events

These benefits compound: less money spent on maintenance means more money for product development, customer experience and growth initiatives.

From IT strategy to business strategy

Core modernization isn’t just about technology; it’s about positioning the entire organization for sustainable growth. By lowering the cost of change, large banks can respond to market opportunities faster, experiment with new products safely, and deliver better outcomes for customers and shareholders alike.

Free your team from maintenance mode and reinvest in growth. See how Finxact reduces technical debt and accelerates innovation at Finxact.io.

1. “Unlocking Value from Technology in Banking: An Investor Lens,” McKinsey & Company, 23 Oct. 2024.