Why move to a modern banking system?

By Sam Everington, CEO

Ask any banking executive about the defining competitive differentiator in the banking industry today and the answer will almost certainly be: CX. Financial institutions that get this right are guaranteed higher rates of recommendation, enjoy an increased amount of account switches and are better placed to offer a broader range of products or services to their delighted customers.

It’s the reason many legacy banks have finally begun to overcome their fears around core bank replacement and started to embrace the digital transformation pioneered by challenger banks, by investing in core banking platforms such as Engine by Starling. By switching to the cloud-native, modular architecture enjoyed by neobanks, any bank can be more agile in response to customer feedback, seamlessly scale, or descale according to changes in demand or market conditions, and ensure that real-time services are available 24-7, with no downtime. These are all just some of the ways a modern bank can deliver a highly personalised customer experience that helps solve real customer problems.

Yet, while CX is indeed crucial, there are other strong arguments in favour of the switch to modern banking systems too.


The success of any business depends on its people, just as much as its technology. As any banking CIO will know, our industry is in the thick of a war for talent, particularly engineering talent. It’s been estimated that those charged with keeping legacy banking systems running only get to work on the exciting stuff for 30% of their time, with much of the rest of their schedule taken up with fixing issues. If you were an engineer at the top of their game, where would you prefer to be?

Top talent today wants to work with cutting-edge technologies and is drawn towards organisations that deploy agile principles. Cloud-native tech stacks are attractive to the most innovative among this number. They recognise that working with next generation core platforms frees them to focus on delivering new and innovative features. Banks that stick with (and struggle with) a legacy system will find it increasingly hard to attract new members of the team.

The bottom line

Switching to a next generation core banking system offers a reduction in IT operating costs of up to 50%. There’s also improved ROI, with the lowering of upfront costs that come with making changes to products and services. This money can be further invested into creating products that generate revenue and deliver new functionality. In all cases, this seems like a better investment than spending two thirds of an IT budget on patching up outdated systems. Plus, as everyone knows from news in recent months, there is a lot of M&A activity in the banking market. When looking at potential acquisitions, a bank with a more modern tech strategy is inevitably going to be more attractive.

Protection against attack

With an increasing amount of banking transactions being handled via digital channels, it is obviously crucial that banks maintain a secure system, while also considering the liabilities that could result from a data leak. As more software systems and data are integrated into a complex patchwork of systems, there has been an increase in attacks exploiting weak points in this complex architecture. Banks therefore need to ensure that their infrastructure is configured securely to protect from harmful breaches. The core banking platforms pioneered by challenger banks like Starling Bank, were born in the cloud and understand the potential challenges. Platforms like Engine, therefore, have extensive experience in creating a more secure framework, and an internal architectural simplicity to better enable an effective defence.

Access to real-time data

As every bank now knows, access to personal data gives us the edge. It enables us to rapidly adjust and enhance the customer experience through personalisation, and we are now seeing an acceleration of this in the concept of hyper-personalisation. As every legacy bank also knows, they are no longer playing on a level playing field when it comes to data. When account holders make purchases online, or send money through payment apps, transactions don’t close until the end of the day with many batch systems. Sure, banks have invested millions so it seems to customers like a transfer is processed instantaneously, and debited or credited to accounts, but the reality is different. As a result, crucial real-time data remains locked in legacy infrastructure and these banks are missing out on the potential benefits.

Open-banking ready

The new generation of financial services are built on partnerships. Customers want to be able to click through from their banks to readily access mortgages or loans, without having to go through an entirely unnecessary sign-up process with each new application. Most traditional banking systems can’t easily offer this third party connectivity, whereas new generation, core banking system architecture is open banking ready. This enables banks to easily collaborate with best of breed financial and non-financial partners to create interconnected services and multiple new revenue streams.

The drive towards an ever-better CX is here to stay, but the demand for speed, innovation and growth must be balanced by attracting, and keeping, the best talent, while maintaining a close watch on time and money. The only way to achieve this balance and gain the advantage in today’s highly competitive market is through modern core banking platforms which are built for developers, encouraging rapid innovation, while delivering new, faster functionality and improving the experience for everyone internally and externally.

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