2026-05-03 14:00
publication
2026-05-03 14:00
The modernization of core banking systems, i.e. the central systems of banks, raises many challenges – from choosing between their modernization or full replacement to ensuring security and business continuity. However, this process is necessary because – as experts emphasize – the systems are already at the limit of their capabilities. They also require adaptation to new technologies.
– Core is primarily the heart of the bank, i.e. the transaction system ensuring consistency and auditability of all transactions and actions that the institution undertakes for the client. The way of defining core is key to determining in which direction the transformation should go – explains Grzegorz Pędzisz, director of the IT Department at Volkswagen Financial Services, in an interview with the Newseria agency.
Central systems of banks are responsible, among others, for: for maintaining accounts, executing transactions, calculating interest and servicing banking products. They provide customers and financial institutions with stable and smooth use of services, regardless of time and location.
– We modernize systems constantly. Every year we make changes, adaptations and various regulations. The question is what should be the view of the trading system in the next 15-20 years. We have found and developed core systems in banks for over 20 years. Therefore, they no longer fully meet all today's needs, and certainly not in the next 10 or 15 years, given such a dynamic market situation with new technologies and AI – says Grzegorz Pędzisz.
As Temenos analysts report in the report “Technology Trends Redefining the Future of Banking”, older core systems in banking are often monolithic. Components such as customer data, deposits, loans and payments are closely interconnected. As a result, there is a high risk of disruption to the entire system when updating one component. The progressive modernization approach allows banks to gradually break down the monolith by dividing components into independent systems connected through application programming interfaces and events.
– We need to introduce new technologies and draw a certain line of demarcation between what is core and what is functionality that should be included in satellite systems. This is what core replacement or development is all about to ensure such an ordered functional structure in the transaction system – says a representative of Volkswagen Financial Services in an interview during the Banking & Insurance Forum.
According to last year's global IBM study “The 94% core banking problem”, over the last decade banks have allocated huge funds to modernizing their core systems. This process was associated with many challenges for many of them, ranging from budget overruns and delays, through interruptions in system availability, security incidents, and ending with unsatisfactory investment results. 53 percent surveyed IT directors in banks indicated difficulties in resolving critical dependencies while changing the core. A change to one underlying application, such as a transaction processing module, can unexpectedly impact connected account management or reporting systems.
– This is a large ecosystem, connected to all other elements in the bank. Therefore, making a decision to replace or improve the system requires an in-depth analysis, transparency, and gathering all expectations in which direction we want to go, especially from the business side. Without transparency and in-depth analysis, a decision is practically impossible to make, emphasizes Grzegorz Pędzisz.
Half of the surveyed IT directors indicated that the approach to comprehensive modernization from start to finish had worked for them.
– For us, system security is the most important thing, especially when we are talking about the core system and the bank's ecosystem. Taking up the challenge of upgrading or replacing the system is a response to current needs related to security and new technologies, preparing for upcoming opportunities, including quantum computing, functionalities related to the ongoing digitization of processes or the implementation of new technologies related to AI – says the expert.
Artificial intelligence is therefore one of the catalysts for changes in bank transaction systems. According to the Volkswagen Financial Services expert, however, the technology will not be widely used in core systems.
– Core, as an audited system that must ensure full transparency of transactions for the customer, is unlikely to make extensive use of artificial intelligence solutions. Sooner, data collected in core banking can be successfully analyzed and used using AI tools. Of course, I would see a place to use such technologies in satellite systems and data, says Grzegorz Pędzisz.
