The banking industry is at a critical crossroads. For decades, banks have relied on core systems built for a different era, an era defined by its batch windows, siloed data and monolithic control. These platforms were adequate when banking was slower, more predictable and less digital. But today’s reality is vastly different: Instant payments, heightened customer expectations, embedded finance and AI-powered services are now the norm.

Legacy systems simply weren’t designed to keep pace. With these systems, product launches take months instead of days. Integrations are costly and brittle. Real-time data is hard to access, making it difficult to deliver personalized offers or fuel AI workflows. Every year, a growing share of IT budgets is spent just “keeping the lights on,” leaving little room for innovation.

This is no longer just an operational headache; it’s a business risk. Analysts predict that over the next five years, 30%–50% of today’s retail banks could disappear if they fail to modernize and innovate.¹ Competitors with modern technology stacks can spin up products faster, delight customers with personalized experiences and monetize new payment and data opportunities in ways that batch-bound banks cannot.
 

The Case for a New Core

Core modernization is no longer about a technology upgrade; it’s about survival and growth. Banks can gain a competitive edge with a platform that is:

• Cloud-Optimized: Built to scale elastically, deploy updates continuously and operate at tier-one scale without custom infrastructure

• API-First and Data-Open: Exposes 100% of data models (accounts, positions, ledgers) through secure APIs and event streams, enabling real-time visibility and integration with fintech ecosystems

• Extensible: Lets banks design and differentiate products, not just configure templates, so they can compete on innovation

• Resilient and Compliant: Meets growing regulatory expectations for operational continuity, auditability and transparency
   

Why Finxact

Finxact was purpose-built to meet these needs. It’s not a slightly better version of a legacy core; it’s a complete reimagining of what a core should be. Finxact’s dual-entry ledger and its fully exposed data model feed real-time insights to AI engines, fraud monitors and customer engagement platforms.

By replacing technical bottlenecks with a composable, cloud-native platform, Finxact transforms the core from a cost center into a growth engine. Institutions using Finxact are already operating at scale with more than 35 million positions in production and are launching new products in days, not quarters.
 

The Road Ahead

Core modernization is no longer a project to be budgeted “someday.” It’s the foundation for relevance in a market that moves faster every quarter. The next five years will determine which banks thrive and which fall behind.

In the next installment of this series, we’ll explore the three biggest engines driving modernization today: AI, personalization and real-time payments, and why they are forcing banks to act now.

Modernization is no longer optional; it’s the foundation for relevance. See how Finxact powers transformation and explore what a modern core can do for your bank at Finxact.io.
 

1. “Glacial Innovation Rates Must Thaw Fast or Retail Banks Face 2030 Failure,” Boston Consulting Group, April 2024