The No-Regret Investment - Large Banks and Core Modernization

How Finxact can help the biggest players in the banking industry turn current trends into competitive advantages

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 an earlier blog we explored how the urgent need for core modernization is particularly acute among the largest banks, whose core platforms hinder their ability to innovate and compete. We turn now to the engines that make modernization not just desirable, but necessary.

Three trends are reshaping the banking landscape: AI-powered services, hyper-personalization and 24/7 instant payments. Together, they are redefining what customers expect financial institutions to deliver.

The challenge for the nation’s largest banks is this: the core systems they have relied on for decades do not allow them to drive these growth engines. The customized tech stacks these banks have assembled in an effort to accommodate customer and market demands are likely to exacerbate rather than solve the problem. 
 

Engine 1: Generative AI – Only as good as the data it can see

Generative AI has become one of the most powerful tools for reimagining customer service, product design and back-office operations. A report by Accenture predicts that by 2030, generative AI will be fully integrated into every aspect of banking¹, automating tasks and enabling seamless human-machine collaboration. McKinsey research shows banks that embed AI into engineering workflows are already seeing about ~40% productivity gains.²

But here’s the catch: AI is only as good as the data it can access. The cores that most really large banks rely on often provide only end-of-day snapshots or siloed datasets, leading to stale or incomplete insights that result in generic recommendations, frustrated customers and missed opportunities.

Finxact changes this equation by exposing 100% of its data model, including accounts, positions and ledgers, through secure APIs and real-time event streams. This gives AI agents clean, contextual and auditable data to power relevant recommendations, dynamic underwriting and explainable decision making.

Engine 2: Hyper-personalization – No longer optional

Netflix knows what you want to watch. Amazon suggests what you should buy next. Your bank should do the same with financial products and advice. Research by Boston Consulting Group suggests that personalized banking experiences can boost customer satisfaction by 20% and conversion rates by 30%³, and banks that excel at personalization have grown deposits 84% faster than peers.

Finxact enables this level of personalization with its multi-position, product-driven data model and Product Factory. Banks can configure and integrate differentiated offerings in real time, adding product attributes and custom rules without waiting for vendor code releases. Combined with Finxact’s event streaming architecture, personalization becomes a dynamic, always-on capability that delivers the right offer at the right moment.

Engine 3: Real-time payments – The end of banking hours

Instant payment rails like FedNow® and RTP® from The Clearing House are transforming money movement, making it possible to send and settle funds 24/7/365. Customers now expect wages, refunds and disbursements to post instantly, even at night or on weekends.

The batch-based core platforms still in use by the largest banks were not designed to support this reality. Batch posting and overnight reconciliation create risk and prevent banks from offering real-time services such as instant lending or gig worker payouts.

Finxact is purpose-built for real-time transaction processing, with a dual-entry ledger that posts in sub-seconds and natively supports ISO 20022 messaging. This foundation enables banks to meet real-time expectations, provide continuous liquidity visibility and layer on advanced fraud controls, unlocking new value-added services and strengthening customer trust.

Why this matters

AI, personalization and real-time payments are no longer future trends; they are table stakes. Banks that cannot support these capabilities risk losing relevance and revenue to faster, more agile competitors.

With Finxact, banks can meet these expectations today, powering innovation while staying compliant and operationally resilient.

AI, personalization and instant payments are table stakes, but they don’t have to be intimidating. Learn how Finxact enables banks to turn these trends into competitive advantages at Finxact.io.

1. “Banking: The Future Is Back – Top 10 Trends Shaping the Industry in 2025 and Beyond,” Accenture, 2024

2. “Extracting Value from AI in Banking: Rewiring the Enterprise,” McKinsey & Company, December 2024

3. “What Consumers Want from Personalization,” Boston Consulting Group, December 2024