Modernizing banking technology can be as daunting a task as it is essential. A successful bank technology modernization strategy should include a comprehensive look at all of a bank’s technological needs — from front-end channels like teller or digital banking to loan origination, risk and fraud management to core systems. If you have not yet thought about laying out a broader technology modernization strategy that is tightly linked to business strategy, needs, and outcomes — you should.

As banks move through their technology modernization journey, the question of a core banking upgrade will arise. A modernization plan should be thoughtfully considered to ensure the update comes at the right time for the bank and its goals. As a bank goes through its technology planning, there are three questions that can help determine whether or not core migration should be a part of this modernization plan:

• Is our core inhibiting our current business and operations?

• Has the market changed, and do we need to upgrade our core to meet market needs?

• What can we do now to prepare for the future?

Core modernization is a generational challenge for many banks, as an update to core technology will impact nearly all of a bank’s processes and systems, including most of its employees from bankers and tellers to operational staff. This can lead to a tendency in the industry to delay core modernization, with bank leaders continuing to push off the upgrade given near-term priorities, resources consumed, and risk of business disruption.

Yet core banking systems are a key enabler to the sustainability and growth of a financial institution. Depending on the strategic goals of a bank, modernizing the core technology can support increasing the speed to market for new and more innovative products and services, streamlining compliance, operating with lower costs and greater efficiency, and being able to compete with larger financial institutions or fintechs. We believe that at any given time up to 5% of banks are looking to migrate to a different core system provider (processing and digital) in the upcoming 18-24 months.

This point of view will walk you through these three questions to help you think through the options for your bank and if now is the right time for a core upgrade as part of your technology modernization roadmap.