Cracking the code to core banking transformation.

Five key elements you need to know to get it right!

Published on: June 21, 2023

Share this page:

Want to learn more about ºneo?

Download product brochure.

3 min read


Undertaking a core banking system transformation is a formidable challenge, demanding significant time and effort. However, in today's fast-evolving digital landscape, such transformations have become imperative for banks and financial institutions to remain competitive.


In the present landscape, banks and financial services are embarking on a journey to embrace next-generation core systems, a critical step to ensure their relevance in the digital age. Yet, the process demands a meticulous and strategic approach.

Drawing from my experience as a customer success manager at Five Degrees, I have witnessed numerous core banking transformations. Such transformations demand thorough planning, precise execution, and vigilant monitoring to align with the business's goals and ambitions. In this blog post, I will outline five pivotal considerations, that I have observed in all the implementations I have assisted over these years. 

Understanding core banking transformation.

Core banking transformation involves more than just replacing outdated systems with advanced technologies. It's about streamlining operations, improving efficiency, enhancing customer experiences, ensuring compliance, and achieving sustainable growth. Despite the extensive focus on such projects over the past decade, the success rate of fully migrating to new systems remains relatively low, with only about 30 percent of transformations achieving this feat according to Mckinsey, This suggests that banks need to refine their approach. From my perspective, failures in core banking system transformations often stem from mistakes related to people, processes, or technology. These three factors significantly impact the outcome of such initiatives. Here are my five key elements to consider when embarking on this transformative journey.

1. Embracing the human element. 

Implementing a core banking platform involves more than just a technical transition. Its scope exceeds the pure technical implementation. As a first step to a successful core banking transformation is to involve stakeholders before and after the shift. A new core banking platform requires changes in business processes and people. To maximize the chances of success, you have to involve the company as a whole. One of the most effective ways is to set up 'train-the-trainer' sessions with key business stakeholders. These sessions, are useful to: 

  • Communicate effectively and transparently.

  • Include diverse perspectives from various levels and departments.
  • Implement change management strategies and provide support.

  • Empower stakeholders by involving them in decision-making.
  • Provide comprehensive training and ongoing support.
  • Celebrate milestones and successes to boost morale.
  • Gather continuous feedback for improvement.
  • Offer post-implementation support for a smooth transition.

 Click here to learn more about: The human element within digital transformations. 

2. Define clear objectives.

The cornerstone of any successful implementation is a clear vision. Define precise objectives and goals, ensuring a meticulously outlined scope. The absence of a well-defined scope remains a common pitfall in unsuccessful core banking implementations. A robust scope serves as a roadmap, aligning the project with the institution's overarching strategy, providing insights into the current infrastructure, and guiding resource allocation, timelines, and deliverables.

3. Plan intermediary milestones 

In the intricate landscape of core banking transformation, especially when integrating multiple applications, a structured approach is vital. Setting intermediary milestones within the execution plan serves as navigational markers, offering clarity amidst complexity. These milestones enhance transparency for stakeholders, facilitating effective progress tracking and enabling timely adjustments, informed decision-making, and the flexibility to seize opportunities as they arise.

4. Manage dependencies with foresight. 

Identifying and proactively managing dependencies is crucial. With numerous internal and external dependencies, it is important to pinpoint and effectively manage them throughout the whole execution process. Foresee external factors to avoid setbacks. For example, the availability of vendor APIs or testing slots at payment processors can cause significant delays and provoke frustration. Or a delayed go-live because you have missed the testing slot at your payment processor. Keep in mind that implementing a core banking system requires closely monitoring its performance and adjusting planning to ensure a smooth and successful execution. 

5. Adapt to your new core banking platform. 

Evaluate to which extent you can change your business processes to adapt to the features of your new core banking platform. In most cases, adjusting the business operations rather than customizing (integrating with) the banking platform is more efficient. Customizations can increase the time, risk, and expenses involved in the initial implementation and during subsequent changes and updates. Take time to align your business processes with your IT landscape instead of blindly changing your IT infrastructure to fit your current business processes. Remember that your legacy applications typically define your business processes and compliance guidelines.  As additional advice, I always highlight a significate misstep. Choosing vendors based on price rather than industry knowledge and tech experience within the core banking industry can lead to over-customization, complex interfaces, and knowledge gaps. Consider factors beyond cost to ensure a successful core banking system transformation.

Conclusion: Navigating the path ahead. 

In the realm of banking's digital evolution, core banking transformation stands as a formidable yet essential endeavor. As technology reshapes industry landscapes, the call for seamless operations, customer-centricity, and sustained growth echoes louder than ever. Guided by the principles of human engagement, strategic vision, milestone navigation, dependency management, and adaptable operations, banks can steer their transformation journey towards success. Though a guaranteed formula for a perfect core banking transformation remains elusive, adhering to these guiding principles significantly enhances the chances of a favorable outcome.

To learn more about how Five Degrees can support your core banking needs, feel free to reach out to us. 

Download our product brochure to delve deeper into our solutions, propelling your business toward a more agile and resilient digital future. Your core banking transformation journey may be intricate, but with collective expertise and steadfast commitment, it is a journey that promises growth, efficiency, and customer-centric success. 

About. paul bio

Similar resources