Financial institutions: it is time to modernise infrastructure?

A guest editorial by by Vishal Dalal, chief executive officer for North America, Europe, and Asia at Pismo

For centuries, banking in the UK followed a straightforward model: deposits and withdrawals were recorded in a ledger, ensuring security and stability. In the past few decades, however, the pace of change has accelerated dramatically, and the tides of change are fast coming in. Shifting customer expectations and desires, evolving regulations, and the rise of new, fast-moving competitors have created the need for financial institutions to rethink their approach.  

As we move into 2025, the industry faces an inflection point. The speed of transformation is increasing, presenting both challenges and opportunities. For banks, modernisation is no longer optional—it’s a strategic imperative. Speed and innovation have climbed to the top of executive agendas, and at the heart of this transformation lies the core banking system. A modernised core isn’t just about keeping up; it’s about unlocking new competitive advantages, ensuring long-term resilience, and driving sustainable growth.

Modernising the core: a necessity, not an option anymore

Most traditional banks still use solutions created over several years or decades by different teams, with improper documentation and layers upon layers of patchwork development and implementation. These spaghetti architectures are complex, and the slightest change could exponentially increase operational risks multifold. When a regulatory change occurs or a new feature is developed, the entire system must be reviewed and tested, but the market (and competitors) won’t wait.

Now is the time for financial institutions to embrace innovation, as customer expectations and competitive pressures demand agility.

Banks should modernise their core systems to transform compliance into a strategic advantage. A future-ready, cloud-native infrastructure enables financial institutions to adapt quickly, reduce complexity, and create a more resilient, customer-centric business model.

Progressive evolution: the smart path forward

While modernising core banking systems is essential, a full-scale replacement is compared to a heart transplant—it is high-risk and disruptive. Recognising this, many traditional banks and Fortune 500 banks are taking a progressive-evolution approach, strategically upgrading their systems without disrupting services or jeopardising customer experience.

This step-by-step transition to a cloud-native core reduces migration risks, simplifies the adaptation to comply with new regulatory standards, and positions financial institutions better for long-term innovation. It enables them to keep up with customer’s demands and leverage them for a future-ready foundation and foreseen opportunities such as AI adoption. This evolution reflects a broader commitment to consumer protection, market stability, and transparency.  

Banks that embrace transformation—modernising their infrastructure, prioritising agility, and aligning compliance with innovation—will be the ones that thrive. Adaptability is the key to sustained success in an increasingly dynamic financial landscape.

Vishal Dalal is chief executive officer for North America, Europe, and Asia at Pismo. He joined Pismo in 2020 to spearhead their international expansion. He is a former McKinsey partner with more than 25 years of experience in core banking and card systems. Vishal also worked at Citibank and Barclays. He has an engineering degree and an MBA from the Indian Institute of Management, India’s top business school.

Image: Pismo

Guest Editorial This article was produced specially for Fintech Intel by an expert guest contributor.