Article
MAR 18 2025
The most important step in modernizing banking tech systems comes before updating software or installing new hardware: figuring out how the upgrade can accelerate the business’s long-term strategy. Next, financial institutions need a provider that invests in progressive core improvements.
Core modernization isn’t a topic you’re likely to find trending on social media: It doesn’t have the high-tech buzz of AI-powered fraud prevention tools or real-time payments, for example, even though it might be required for both.
A financial institution’s core operating system is essentially its heart and lungs, undergirding the entire business by processing daily transactions and updating financial accounts and records.
Its power and flexibility determine not only which services a financial institution can offer but also their breadth and effectiveness. Despite that, updating the core doesn’t need to be a daunting task, one that devours time and resources. The keys to success, experts say, are working with a provider that invests in progressive modernization and basing decisions on well-crafted business plans.
That means considering not only how an upgrade might support a unique strategy, such as delivering personalized financial wellness capabilities, but also determining how to leverage that strategy to meet a business imperative: reaching a younger market, for example.
The key question: What’s your institution’s growth strategy?
“Smaller financial institutions today can access the same technological capabilities as larger organizations, but leveraging them successfully requires a strategic approach. This means identifying what business challenges those capabilities can help solve, which market segments they can help reach, and which strategic growth goals they can help achieve,” explained Dudley White, president of Core Account Processing Solutions at Fiserv. “We view our role as expanding far beyond providing the technology. It’s our goal to walk alongside financial institutions as they explore new strategies and equip them with everything needed to grow successfully.”
Fiserv prioritizes the ongoing evolution of core account processing, building in adaptability that not only allows integration with today’s state-of-the-art technologies but also accommodates future innovations. Fiserv invests, consistently and carefully, in ensuring its cores are:
- Open: Open application programming interfaces, or APIs, enable financial institutions to leverage the best technology solutions to support their strategy, including both Fiserv products and third-party applications of their choice. The open tech stack provides fintech developers with the tools and resources they need to integrate their products with Fiserv cores.
- Flexible: Heightened focus on cloud and microservices enables quicker integration, when needed, and the delivery of more enhancements with greater ease. Products designed with user-experience best practices help community banks and credit unions deliver high-touch service and perform day-to-day operations more efficiently.
- Supported: Fiserv has built a community of support services to ensure a true partnership is at the center of its client relationships. That includes relationship managers who oversee the entire relationship, account managers who are standing by to help with day-to-day operations and AI-enabled platforms, such as Client360, which answers questions in seconds and provides self-service tools and resources 24/7/365.
“These three guiding principles – open, flexible and supported – enable the institution to make incremental modernization decisions and continually refine its tech stack, make focused investments to improve competitiveness, accelerate growth and achieve other big-picture goals – all while being supported by a team of partners, ready to help,” White explained.
While the core’s role may be minimized in some ways as it becomes more open and flexible, its foundational role means having the wrong technology in place can limit a financial institution’s growth.
“The core needs to have the capabilities to support whatever growth strategy a financial institution chooses,” White said. “When deciding whether to modernize, the best starting point is answering questions such as, ‘What are you trying to solve?’ What have you heard from your customers or members around their needs and expectations? ‘What’s your market segment?’ and ‘What’s your growth strategy?’”
Core banking modernization keeps you competitive
Strategies for financial institutions may range from remaining intently focused on a local market to launching a separately branded digital branch to grow deposits, he added. Fiserv cores can support all of them, flexibly adapting to changing needs.
Whether modernization efforts are geared toward curbing costs or enabling expansion, mapping the business case for them – and the timeline for return on investments – is vital to making the best choice, White said.
“It can be tempting to focus on the latest advancement and think ‘We want to be real-time’ or ‘We want to have data as a service’ or ‘We want AI capability,’” he said. “The key is to focus on the outcome. You don’t want to launch an AI initiative without really solving a business problem.”
Overall, financial institutions are increasingly aware, he said, that they must adapt to keep pace with accelerating technological advances – and accompanying shifts in market demand.
For decades, many community banks and credit unions had been able to stick with the same core platform, sometimes depending on in-house experts who knew how those systems had been tweaked to meet operational necessities.
“There’s much broader awareness now, even at the smaller community institutions, that they need to modernize to stay competitive,” White said.
Having a flexible core can simplify the modernization process significantly, enabling financial institutions to pick and choose what they need when they need it.
Additionally, Fiserv has targeted investments in its core platforms to help financial institutions modernize their cores without going through a ‘big bang’ conversion that can require considerable time and resources. Making progressive updates enables financial institutions to receive the benefits of modernizing technology incrementally.
Plug-and-play tech upgrades
“Using a microservices approach allows you to work within an ecosystem where the modernization doesn’t necessarily have to happen within the core itself,” White said.
Open APIs permit the construction of a “fintech-, third party-enabled core that can orchestrate the modernization efforts,” he said. “We’ve curated relationships with many of these third parties and fintechs, which supports a progressive ‘plug and play’ approach.”
A microservices strategy also lets Fiserv deploy the same enhancements across multiple cores easily rather than building numerous systems for the same functions, such as loan servicing or deposits.
The company has also streamlined the process for migrating to one of its cores, building migration engines that automate key portions of the data mapping and conversion.
That addresses one of the highest priorities for financial institutions considering whether – and how – to modernize their core systems: minimizing disruption.
“Everyone asks, ‘How is this going to impact my customer or member experience?’” White said.
Indeed, financial institutions frequently try to use core modernization to improve the way they present themselves to the market. One example might be simplifying the interconnectivity of different technologies to create a streamlined experience across multiple channels – in the branch, on mobile or any other device.
Reducing friction for banking staff and those you serve
When using an online system to open new accounts, for instance, people don’t want to have to enter their address repeatedly. The system, ideally, should be capable of recognizing that the user’s vital information hasn’t changed and be able to port responses to the fields where they’re needed.
Sleek, modern interfaces that streamline processes are valuable perks for employees, too, since professional tools that have designs and functionality similar to those they use in their personal lives are easier to master. User-friendly systems, along with flexible training on those systems, help financial institutions attract top talent and onboard new employees more quickly.
This winning combo of intuitive systems reinforced by training is effective for helping banking staff build skills quickly, whether the financial institution is growing through a merger or acquisition, undergoing a core migration or generally looking to expand career advancement for employees.
“With our core modernizations, we’re really prioritizing training and education,” White said. “We’ve been mapping the transition for the users, identifying functions and demonstrating how they were performed on their old cores, then showing them how to perform the same tasks with the new core. It’s particularly helpful for showing users who might have been using systems or functions for 15 or 20 years to understand how the new system makes their lives easier.”
This training is delivered through Fiserv University, which offers a broad range of education and advisory services designed to help financial institutions build expertise and efficiency in their daily operations. While one-and-done training can lead to knowledge drain over time, Fiserv University enables ongoing education that leverages data to identify specific areas where banking teams can benefit most from reinforced learning.
Equally valuable in supporting a financial institution through a core modernization is the ability to learn directly from other organizations using the same technology, whether networking at user-led meetings or Fiserv-hosted events and advisory councils.
“Listening is so important to supporting financial institutions and empowering them as they pursue unique growth strategies,” White said. “As we continue our journey of core modernization, Fiserv teams look for every opportunity – big and small – to strengthen the feedback loop that helps guide iterative modernization efforts.”
