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A Modular Approach to Bank Modernization

Sep 2021

Today’s customers have come to expect highly personalized experiences from organizations they interact with online, especially the banking institutions they work with to manage their money.

However, many established regional banks and credit unions are still operating with legacy technology systems that simply can’t meet customer needs without a radical (and costly) overhaul. In fact, 43% of banking systems are still based on COBOL, which is a 60-year-old programing language that predates the era of cloud and mobile banking by half a century.

This is why modular banking is rapidly becoming the preferred approach for established organizations that want to modernize their offerings – and do it quickly.

Modular Banking: What It is and How It Works

Modular banking is an approach that allows banks and credit unions to tap into the broader fintech ecosystem for services such mortgage lending, stock trading, non-traditional payment processing and more.

Through modular banking, a bank serving small business customers, for example, could opt to integrate an industry-leading accounting software, or enable customers to make and accept payments through partners such as PayPal or Stripe. Think of modular banking as an online marketplace where banks and credit unions of any size can select the services they want to offer their customers, run those service on top of their core banking platform, and make them accessible from their website or mobile app.

While some banks might consider the disruptive fintech startups that providers to be competitors, their rich service offering makes them worthy collaborators as well — and for multiple reasons. First, changes in how people live and work resulting from the global pandemic are only increasing the demands on banking institutions. Customers no longer choose a bank because it has a local physical branch, but because it offers the means to access their financial information and carry out transactions instantly, securely, and from whichever internet-connected device they are using.

Second, this method of modernization is vastly more affordable and less risky for banks than undertaking a complete core conversion, which would require moving all account data and integrations from one platform to another. With a modular approach, banks of all sizes get to keep their existing systems while continuously building upon them by way of a hybrid approach to IT and infrastructure management. It’s a safer way to digitize their offerings, leverage the power of artificial intelligence (AI), machine learning and the internet of things (IoT), and remain relevant moving forward.

Infrastructure Requirements for Financial Services Organizations

Delivering a highly personalized, best-in-class online experiences requires an automated, responsive and robust IT infrastructure. Banks, credit unions and fintech providers alike rely on Panduit for the hybrid solutions that enable customer-centric and information rich operations.

Visit our website to learn more and download our e-book to find out the three key trends driving financial services IT transformation..


Jennifer Vallarautto