By Evan Sparks
One thing banks and their technology providers have learned over the past several decades is the challenge of so-called “big bang” or “lift-and-shift” modernization efforts, where a whole core platform or other critical bank system is modernized at once.
What banks and technology providers are working toward is a concept called “progressive modernization.” Regions Financial Corporation, based in Birmingham, Alabama, has been engaged in a multiyear modernization process with core provider Temenos. The bank has already launched a new mobile platform and will deploy commercial lending later this year and plans to deploy core deposits next year, says Paul Weiss, chief transformation officer at Regions.
Mascoma Bank in New Hampshire, is nearing completion on a sequential migration off of a legacy core to a new headless core environment. Clay Adams, president and CEO of the bank, says progressive modernization is “de-risking the process by doing one thing at a time, as opposed to everything over the course of a weekend.”
Of course, bankers need to “pick your poison,” Adams says — progressive modernization involves constant change, which is its own kind of challenge. And the initial pivot from a legacy environment to a progressively modernized core requires extensive and comprehensive planning, Weiss says. Banks need “very robust change management” to make the jump work. Regions also called on “bubble staffing” in several areas to handle the needs of running the bank while managing the pivot in modernization.
As Will Moroney, chief revenue officer at Temenos, puts it, “that risk appetite [for big bang transformations] is not there for the CIOs. When you go in a progressive manner, what you do is you reduce the risk, but you do bring in some complexity on the coexistence.”
Progressive modernization has enabled Mascoma Bank to move into an environment where it can pick “best-in-class fintech offerings and combine them into a tech stack that allows us to plug things in and out more easily. We’ve deprecated a lot of services from our legacy core environment and are migrating sequentially into other services, starting with the ancillary ones and now moving into the core.”
This approach to modernizing core platforms helps banks spend less time and money on managing systems. Adopting a software as a service model means “we don’t spend our time operating the platform,” Weiss says — the bank can focus on, well, banking. He also cites the benefits of Temenos’ ongoing R&D and investment in the core and related products, with a “feature set that gets richer every year.” The path of progressive modernization better facilitates continuous upgrades, he says, rather than waiting for new product features and upgrades to batch at longer intervals.
“We’re in a very rapidly changing marketplace, and as clients’ needs evolve, for us to stay as close to our customers as we need to be and want to be, we have to have a back end that is flexible enough that we can configure rather than having to code it, and that we can then integrate that with our digital and branch platforms to deliver that to clients very quickly,” says Weiss.
