Coremodernisation:Enhancing

thedigitaltransformationoffinancialinstitutions

September2024

PwCCoremodernisationendstageoffacilitatingdigitalbanking

Foreword

Therapidadoptionofdigitaltechnologyinthefinancialservicessectorhaschangedthewaycustomersinteractwithbanksandotherfinancialservicesproviders.Banksserveadiversesetofcustomersegments,withafocusonexperience,simplification,costandcompliance.Today,theavailabilityoflargecorpusofdatawithdigitalpublicinfrastructure(DPI),adoptionofcloud

technology,availabilityofnewageinfrastructureandartificialintelligence(AI)hasprovidedtherightimpetusforbanks

transformtheircustomerexperiencedelivery.

Indiaisavastanddiversenationandprovidingbankingservicesforsuchalargepopulationisatremendouschallenge.To

ensuresmoothoperationsthroughoutthecustomeracquisitionlifecycle,banksneedtoinvestinmultipletechnologiesand

platformswhicharecriticalforprovidinghasslefreeservices.Corebankingisonesuchtechnologicalplatformwhichcontrolstheentirebankingservicesecosystem.CoremodernisationhasevolvedasanimportantmethodforthedigitaltransformationofbothglobalandIndianbanks.

Thisthoughtpaperdelvesintotheneed-impact-roadmapofcoremodernisation,itsimportanceforbanksandhowitcanhelp

theminaddressingcustomerneeds,meetingcompliance

requirementsandaligningwiththeirbusinessgoals.

Wehopethatyouwillfindthepapertobeaninterestingandinsightfulread.

RajdeepSaha

Partner,FinancialServices–Advisory

PwCIndia

3|PwCCoremodernisation:Enhancingthedigitaltransformationoffinancialinstitutions

CoremodernisationTheendstageoffacilitatingdigitalbanking

5|PwCCore:Enhancingdigitaltransformation

Contents

01

Introduction

06

02

Digitaltransformationinthefinancial

servicessector

08

03

Coremodernisationinbanksandfinancial

institutions:Astrategicimperative

12

04

Keybenefits

22

5|PwCCoremodernisation:Enhancingthedigitaltransformationoffinancialinstitutions

01

Introduction

IndiahassetambitiousgrowthplanstobecomeaUSD35trillioneconomyby2047.1Sincethebankingandfinancialservices

industryplaysasignificantroleinthisgrowth,itneedstogrow20xtoachievethecountry’sgoals.2Thefinancialservicessectoris

currentlyexperiencingrapidchangeswithdigitaltransformation

playingakeyroleindrivingsuccessforbanksandfinancial

institutions.Technologicaladvancements(e.g.blockchain,artificialintelligence(AI),cloudanddigitalpublicinfrastructure),changingcustomerexpectationsandregulatorydevelopmentsaredriving

thefinancialservicessectortoreconsidertraditionaloperationalmodelsandadoptnew,innovativesolutions.Centraltothis

transformationistheneedtomodernisecoreplatforms,which

formsthefoundationofafinancialinstitution'sITinfrastructureandenableseamlesstransactionexecution,customeraccount

managementandfinancialservicedelivery.

Financialinstitutionsarefacingsignificantchallengesrelatedto

theircoresystemduetorapidgrowthinloanactivity,expansionofclientbaseandanincreaseinpaymenttransactionvolumeswhichreinforcestheneedforcoremodernisationoftheirsystems.Banksarefindingitdifficulttoinnovateandquicklyadapttomarketneedsduetoinflexibilityoflegacysystems,highmaintenancecosts,andrestrictedscalabilityofoutmodedinfrastructure.Asaresult,newcoresolutionsbuiltonarchitecturalprinciplesaregaining

popularityamongfinancialinstitutionsbecausetheyprovide

enhancedflexibility,robustness,scalabilityandsecurityfeatures.

1.

.in/PressReleasePage.aspx?PRID=2007105

2.

/industry/banking/finance/financial-services-sector-must-grow-20x-for-india-to-reach-30-trillion-gdp-says

-report/articleshow/113114764.cms?from=mdr

6|PwCCoremodernisation:Enhancingthedigitaltransformationoffinancialinstitutions

Coremodernisationisastrategicinitiativewhichcan

improveafinancialinstitution'scapacitytocompeteinthedigitalera.However,theprocessrequiresawell-

structuredchangemanagementplansincemerely

adoptingtechnologywillnotsufficeandtheemployeesshouldbetrainedtooperatethemoderntechnologicaltools.Financialinstitutionscanautomateprocedures,optimiseoperationsandoffercustomised,real-time

servicestomeettheevolvingdemandsofmodern,

digitallysavvyconsumersandbecomemoreresilientandscaletheiroperationsforfuturebusinessgrowthbyadoptingcutting-edgecoresystemsandplatforms.Furthermore,byenhancingcybersecuritymeasures

andadheringtolegalregulations,thesecontemporarysolutionssafeguardtheinstitution'sintegrityandfosterconsumertrust.

Variousstrategies,includingcorelessarchitecture,

hollowingoutthecoreorexternalisingcomponents,

andupgradingthecorebankingsystem,canbeused

forcoremodernisation.Financialinstitutionshaveto

reconsidertheirenterprisedesignandidentifythemaingoalsofmodernisation.Sinceeachbankwillhave

differentrequirements,itisimportanttothoroughly

considertheuniquecircumstances,strategicobjectivesandrisktolerancebeforeadoptingthecore

modernisationstrategy.

Thispaperfocusesontheintricaciesofthefinancial

servicessector'sdigitaltransformationwithafocusonthemodernisationofkeyplatformsandprocesses.Italsodiscussesthecurrentchallenges,market

dynamicsbehindmodernisationeffortsandthevariousapproachesforimplementingnewcoresystemsandplatforms.Bylearningmoreaboutcoremodernisation,financialinstitutionscanmakeinformeddecisions

whichcanenhancetheiroperationalefficiencyandsetthemupforlong-termsuccessinthedigitalera.

7|PwCCoremodernisation:Enhancingthedigitaltransformationoffinancialinstitutions

02

Digitaltransformationinthefinancialservicessector

Inthelastdecade,Indiasbankingindustrywitnessedasubstantialtransitionfromofferingtraditionalservicestodigital

bankingservices.Theadventofautomatedtellermachines(ATMs)andinternetbanking,whichsignificantlyincreasedtheaccessibilityofcrucialbankingservices,markedthebeginningofthisshift.Aanothersignificantadvancementwasmadewiththelaunchoftheunifiedpaymentsinterface(UPI),whichallowsinstant,real-timeinter-banktransactionsviamobiledevices.Furthermore,thegrowingcooperationbetweenbanksandFinTechstopoolresourcesandprovidecreative

financialsolutions.Thesecollaborationsareessentialforgrowingoperationsforcateringtoawiderclienteleandminimisingcosts.Figure1illustratestheloanconsumptiongrowthtrendsinIndiainFY18andFY24.

Totalretailloan

USD330

15%

USD758

billion

CAGR

billion

FY18

FY24

147%

CAGR

UPItransactionvolume

5.4billion

145billion

FY18

FY24

Figure1:GrowthtrendsofkeyfinancialtransactionsinIndia(FY18andFY24)

Digitalretailpaymenttransactions

15billion

50%

CAGR

170billion

FY18

FY24

Totaldeposits

USD1.8

3%

USD2.1

trillion

CAGR

trillion

FY18

FY24

Source:

.in/PDF/npci/knowledge-center/partner-whitepapers/The-Rise-and-Evolution-of-India

's-Digital-Finance.pdf

8|PwCCoremodernisation:Enhancingthedigitaltransformationoffinancialinstitutions

DigitalretailpaymenttransactionshaveexperiencedadramaticincreasefromUSD15billioninFY18toanimpressive

USD170billioninFY24.3Thisnotableexpansioncanbeattributedtodevelopmentsinpaymenttechnologiesand

systems,whichhassignificantlyimprovedtheeffectivenessandscopeofdigitalfinancialtransactions.TheIndianbankingsector’stotaldepositsreachedapproximatelyUSD2.1trillionasofMarch2024,whichisasubstantialincreasefromUSD1.8trillioninMarch2018.4India'seconomicgrowth,digitisation,riseinunsecuredloans,governmentinitiatives,rising

consumerspendingandinnovativefinancialproductsarethemaindriversofthecountry'sretailloangrowthandfortheincreaseinUPItransactionvolumesfromFY18toFY24.

Keytrends

SomeofthekeytrendswhichareemergingintheIndianbankingandfinancialinstitutionssectorare:

EvolvingFinTechlandscape

TheFinTechsectorinIndiaisexpectedto

growatanaverageof31%from2024to2029andwillreacharoundUSD420billion.5Theextensiveuseofdigitalloans,digitalpaymentplatformsandmobile

walletshasurgedbankstomodernisebasicbankingsystemsinordertohandlelargevolumesof

transactionsinrealtime,whiletheemergenceofopenbankingandapplicationprogramminginterface(API)integrationisencouragingacollaborativeecosystem,necessitatingtheneedforflexibleandscalablecoreinfrastructure.BanksarecollaboratingwithFinTechinstitutionstoleveragetheirtechnologicalexpertise

anddevelopaffordableproducts.

02

Evolvingcustomerexpectations

Theneedforanintegratedexperienceforthe

consumerthroughvariouschannels(e.g.socialmedia,web,mobile,branches,kiosksandonlinebanking)

gaverisetothedemandforanupdatedandcohesivecorebankinginfrastructure.Customers'expectationshavechangedovertimewhichmakesitnecessaryforbankstohyper-personalisetheirofferingstocatertoawiderangeofcustomers.

01

Newproductsandchannels03

Newfinancialproductsandserviceslike

buynow,paylater(BNPL),omnichannelexperiences,self-servicejourneys,real-timepaymentinfrastructurelikeUPIfornon-smartphones,andsuperappsare

gainingpopularity.InIndia,UPIwillaccountfora

significantportionofdigitalpayments,withavalueofINR455trillion.6

APIconnectivityandcloud-basedmodulardesignsaremakingitpossibleforbankstoworkseamlesslywithFinTechorganisationstocreateafinancialservices

ecosystemforintroducingnewservicesandproductsandscalinginnovationwithoutdevelopingthese

solutionsthemselves.

5.

/economy/ondc-clocks-68-m-transactions-e-commerce-must-innovate-to-widen-reach-economic

-

survey/article68431908.ece)

6.

/sites/rahulrai/2023/01/26/how-ocen-is-democratizing-credit-access-in-india/

9|PwCCoremodernisation:Enhancingthedigitaltransformationoffinancialinstitutions

04

Digitalpublicinfrastructure(DPI)andopenbanking

Theexchangeoffinancialdataacrossinstitutionshasincreasedthedemandforprovidingclientswithspecial

services.Financialservicesinstitutionsmaynowperformtasksincludingtradetransactions,currencyconversions,

centralisedaccountadministration,andtransactionaldatasharingwithDPIandopenbanking.Withtheintroductionofunifiedlendinginterface(ULI),OpenNetworkforDigitalCommerce(ONDC),OpenCreditEnablementNetwork

(OCEN)andAgriStack,DPIhasmadetremendousprogressintherapidlychangingfinancialservicessector.

DPIandopenbanking.Withtheintroductionofunifiedlendinginterface(ULI),OpenNetworkforDigitalCommerce

(ONDC),OpenCreditEnablementNetwork(OCEN)andAgriStack,DPIhasmadetremendousprogressintherapidlychangingfinancialservicessector.

Figure2:ComponentsofDPI

DPIs

DigitalIDs

Aadhaar

UPI

Payment

FASTag

Dataexchange

Accountaggregator

OCEN

Digitalnetwork

ONDC

Source:PwCanalysis

Byestablishingaconsolidatedplatformforcreditaccess,ULIimprovestheefficiencyoflending.Throughthisplatform,borrowersincludingmicro,smallandmediumenterprises(MSMEs)inruralareascanquicklyestablish

connectionswithvariouslendersbyusingintegrateddatasourceslikee-KYCandAadhaar.ONDChasrevolutionisede-commerceandfacilitatesover68milliontransactionsbybringingbuyers,sellers,andserviceproviderstogetheronasinglenetwork.7Whencombined,theseplatformsoffersolutionswhichfacilitateinclusion,andenhanceefficiencyandtransparencyacrossarangeofindustrieswhichcanacceleratethecountrys

economicgrowth.

Improvingclientexperienceandoperationalefficiencyrequiresintegrationofcutting-edgetechnologieslikeblockchain,cloudcomputingandAI.However,thescalability,adaptabilityandintegrationcapabilitiesoftraditionalcoresystems

arelimited.Inordertoefficientlymeetthechangingneedsoftheindustryandkeepupwithtechnological

improvements,itisessentialtoupgradethearchitectureofbankingsystems.Toadopttherightcoremodernisationstrategy,theseniorleadershipofbanksandfinancialservicesorganisationsshouldconsiderthefollowingquestions:

Howdoesthecurrentbusinessmodelalignwiththeemergingtechnologiesandmarkettrends? 回Howaretherisksbroughtonbytheobsolescenceoftechnologybeingmanaged?

Ismyorganisationalarchitecturescalableandrobustenoughtomeetthedemandsofthedigitalageforgoodsandservices?

回Ismypresentcoreplatformalignedtocurrentmarkettrendsandgrowthaspirations?

7.Source:

/economy/ondc-clocks-68-m-transactions-e-commerce-must-innovate-to-widen-reach-economic

-survey/article68431908.ece

10|PwCCoremodernisation:Enhancingthedigitaltransformationoffinancialinstitutions

CoreEnhancingthedigitaltransformation

11|PwCCoremodernisation:Enhancingthedigitaltransformationoffinancialinstitutions

03

Coremodernisationinbanksandfinancialinstitutions:Astrategicimperative

Legacysystemshindertheadoptionofnewtechnologiesduetohighmaintenancecostsandcomplicated,isolateddesign.Modernisationoffersaworkablelong-termstrategybydeliveringadaptable,secureanduser-friendlyplatformswhichcansatisfytheregulatoryrequirementsandenhancecustomersatisfaction.Therefore,banksmustupgradeorreplacelegacysystemsthroughcoremodernisationtoremainflexibleandcompetitiveinanevolvingdigitalbankinglandscape.Figure3providesadetailedviewofthekeychallengesforbanksandfinancialinstitutionswhichcanbeaddressedbyadopting

coremodernisation.

12|PwCCoremodernisation:Enhancingthedigitaltransformationoffinancialinstitutions

Figure3:AddressingfivemajorchallengesforIndianfinancialinstitutionsthroughcoremodernisation

Enhancedresilience

?Continuousavailability:Ensuressystemuptimewithhighavailability,crucialforreal-timetransactions.

?Faulttolerantdesign:Distributesworkloadsacrossmultiplenodestomanagefailureswithoutsystem-wideimpact.

Optimisedperformance

?Effectiveloadbalancing:Employsadvancedtechniquestopreventanyserverfrombecomingaperformancebottleneck.

Theimpactofcore

modernisation

Adaptablesolutions

?Adaptivedesign:Supportsmodernapplicationrequirements,includingevent-drivenarchitectures.

?Rapiddeployment:Facilitatesquickconfigurationandlaunchofnewproductsandservices.

Increasedagility

?Increasequickmarketentryfornewproductsandservices:

Reducesproductreleasetimelinessignificantlyfrommonthstoweeks.

?Frequentupdates:Enablesfrequentupdatesandimprovesresponsivenesstomarketdemands.

Enhancedscalability

?Dynamicresourcemanagement:Efficientlymanagespeakread/writetrafficwithauto-scalingcapabilities.

?Leveragesmicroservices:Utilisesmicroservicesforimprovedscalabilityandresourceallocation.

Source:PwCanalysis

13|PwCCoremodernisation:Enhancingthedigitaltransformationoffinancialinstitutions

Traditionalbanksareundertremendouspressuretomodernisetheiroperationssincelegacybankingsystemsare

interdependentwhichcanleadtobottlenecksandcausedelaysintheintroductionanddevelopmentofnewproducts.Ontheotherhand,currentcloud-native,standardisedplatformsenableefficiencyandagilityviaDevOpsandautomated

testing.Sinceoldsystemsareincompatiblewithcontemporaryoperatingsystemsandprogramminglanguagesandrelyheavilyonhard-codedbusinessruleswhichcomplicatemodernsystemintegration,managinglegacysystemsbecomesmoreandmorechallenging.LargetechnologyandFinTechcompanies,whichcanprovidenewfinancialservicesand

implementchangesmorequickly,arealsoputtingpressureontraditionalbankstomodernisetheirprocesses.

Furthermore,bankshavetoupdatetheircoresystemstostaycompetitiveandadheretotheregulationssetbyregulatorybodies.Tohighlighttheimportanceofmodernisation,theReserveBankofIndia(RBI)hasestablishedregulatory

measurestoimprovetransparency,centraliseinformationandstreamlinebankingoperationsandalsopublishesregulatoryandcompliancereportsonregularbasis.Figure4illustratesthefourkeycomponentsofthecore

modernisationprocess.

Figure4:Keycomponentsofcoremodernisation

Coremodernisation

Enterprise

architecture

redesign

Core

Change

management

Technology

executionpath

modernisationstrategy

Source:PwCanalysis

Coremodernisationstrategy

Tostaycompetitive,boostoperationalefficienciesanddeliversuperior

customerservice,centralbankingsystemsneedtoupgradetheirtechnology.Beforebankschoosethemodernisationplanfortheirorganisation,theymustconsiderafewimportantpoints.Banksmustconductacomprehensive

evaluationoftheirexistingprocedures.Banksshouldevaluatetheircurrentcoresystems,lookatperformanceindicators,businessprocesses,and

conductastrengths,weaknesses,opportunitiesandthreats(SWOT)analysistodeterminethebenefitsanddrawbacksoftheircurrentsystems.for

establishingfuturestrategieswhichincorporatesinnovativetechnologicaltrendslikeblockchain,AI,cloudcomputingandquantumcomputingandisalignedtothebank'sstrategicobjectives.

Aphase-by-phaseroadmapwithspecificobjectives,designandarchitecturalprinciples,timetables,resourceallocationandkeyperformanceindicators

(KPIs)mustbedevelopedtotracktheimplementationprogramme’sprogressandsuccess.Collaboratingcloselywithspecialists,regulatorybodiesand

technologyproviderscanprovidevitalinformationandsupport.

Anothercrucialfactorforcoremodernisationischoosingtherighttechnologyandarchitecture.Banksshouldtakeintoaccountthescalability,resilience,

flexibility,securityandintegrationcapabilitiesoftechnologywhiledesigningamodular,composable,microservices-basedarchitecturewhichsupports

continuousandagiledeliverymethodologies.Manyprivate,publicandhybridcloudsolutionsserviceprovidersofferscalable,cost-effectiveoptionsfor

bankswhichtheycanchoosefrombasedontheirorganisationalneeds.

14|PwCCoremodernisation:Enhancingthedigitaltransformationoffinancialinstitutions

Thefoundationofcoremodernisationisanauthentic,verifiabledatarepository.Therefore,datagovernanceregulations

mustbeimplementedtoensurethatthedataissecureandthatthedatatransferprocesscomplieswithregulatorystandards,allowingforasmoothtransferofdata.

Aneffectivechangemanagementplanisessentialforaseamlessshiftfromlegacysystemstoacontemporarycore.A

comprehensivechangemanagementplanwhichincorporatesstakeholdercommunication,traininginitiatives,andsupportsystemscaneffectivelymanageculturalandoperationalchanges.Someofthepointswhichbanksmustconsiderwhileplanningthecoremodernisationstrategyare:

Timelineandduration

Evaluation,design

andplanning,

implementation,

testing,validationandmonitoringthe

processes.

Strategicalignment

Verifythattheprojectisalignedtothe

strategicobjectivesofthebanksupported

byawell-defined

governancestructureandclearlydefinedperformance

indicators.

Technologystack

Developstrong

vendorrelationshipsforscalability,

adaptabilityandsecurity

ofthecore

modernisationprocess.

Budget

Acomprehensivecost-benefitanalysis,initial

investments,continuingoperationalexpendituresandcontingencybudgetforthecore

modernisationprocess.

Riskmanagement

Determinepossiblerisksanddevelopplansto

mitigatethemasperthecybersecurityand

regulatory

compliancerequirements.

Changemanagement

Conducttraining

programmesforupskillingtheworkforce.

15|PwCCoremodernisation:Enhancingthedigitaltransformationoffinancialinstitutions

Enterprisearchitecturedesign

Developingadetailedbankingarchitectureisimportantforimplementingcoremodernisation.Arobustarchitecturedesignnotonlyfacilitatesongoingoperationsbutalsoestablishesthegroundworkforfutureexpansion,adaptabilityandcreativity.Itprovidesflexibilitytoadapttonewrequirements,alterationsinregulationsanddevelopmentsintechnology.Another

crucialaspecttoconsiderwhileredesigningthearchitectureisresilience,whichguaranteescatastropherecoveryand

businesscontinuitybyreducingdowntimeandserviceinterruptions.Furthermore,astrongarchitectureguarantees

regulatorycomplianceandimprovessecuritytosafeguardsensitivefinancialdata.Italsosimplifiesprocesses,reducesredundanciesandenhancestheoveralleffectivenessoftheoperations.Figure5providesanoverviewofthearchitectureforbanksandfinancialinstitutions.

Figure5:Asuggestedapproachfortheenterprisearchitectureofbanksandfinancialinstitutions

Businessstrategicdirection

Strategicobjectives

Vision

Mission

Target

enterprise

architecture

blueprint

Technologytrends

Regulatorychanges

Currentstate

Enterprisearchitecture

Business

Integration

Security

Application

Programmegovernanceframework

Dataand

Infrastructure

information

ITservicecatalogue

ITsourcing

IT

IT

capabilities

governancemodel

ITdeliverymodel

ITorganisationalstructure

Business

andIT

roadmap

and

implementationplan

ITprocesses

Historic/existingtechnologyroadmaps

Source:PwCanalysis

Thecoremodernisationmodelchosenbytheorganisationmustbealignedwiththearchitectureofthebanksothattheycanseamlesslyworkinunison.Toguaranteethatmodernisationinitiativesresultinmeasurablecommercialvalue,the

architecturemustbeinsyncwiththebank'sstrategicgoals,whichmayincludeboostingcustomerexperience,increasingoperationaleffectivenessanddevelopingdigitalcapabilitiesacrossvariousfunctions.

Whethermodernisationisachievedbycoreversionupgrades,corehollowing,orcorelesstechniques,thearchitecturaldesignshouldbedevelopedinamannerwhichcanfacilitateallofthesemodels.Thearchitectureshouldsupport

upgradeswithminimaldisturbanceandamodulardesignwithstrongmiddlewareisnecessarytointegratespecialisedplatformsanddetachnon-corefunctionstohollowoutthecore.

16|PwCCoremodernisation:Enhancingthedigitaltransformationoffinancialinstitutions

Approachesforimplementingcoremodernisation

Someofthestrategieswhichcanbeincorporatedintoabank’soverallgoalstoimplementcoremodernisationandensurethatalllegacysystemsareupgradedwithinthebudgetsetasideforthisendeavourare:

Corerefresh/upgrade

Inordertoderivethebestpossibleoutcomesofbusinessendeavours,itisimportanttoupgradethecurrentcorewiththelatestcoreversion.Anadvantageofthisapproachisthatitprotectscurrentsysteminvestmentsandreducesdisturbancessincetheexistingworkflowsandprocessesareintact.Italsoenhancesdatasecurityandimprovestheperformanceofthebank’soperations.However,therearestillissueswiththisstrategysuchasrelianceonthevendor'supgradecycleand

capabilitiesandtheinabilitytoaddressalltheissuesofthelegacysystem.Thetwoapproachesforimplementingcorerefresh/upgradeare:

01Thebig-bangapproach

Thismethodinvolvesathoroughupdateofthecompletecoresysteminasingle,well-plannedeventwhichisusually

plannedduringscheduleddowntime.Comprehensivesimulationrunsarenecessarybeforeimplementationtoidentify

possibleproblemsandensurethatthesystemisready.Acomplexfall-backplanwhichincludesrollbackprocedures,databack-upsandataskforcewhichmanagestheimportanttaskofhandlingemergenciesisessentialforthebig-bang

approach.Customerdatasafetyisoftheutmostimportanceandstrongencryption,strictaccessrulesandreal-time

monitoringisnecessarytopreventdatabreaches.In-depthtesting,includingstressandsecurityassessments,isalso

necessarytoguaranteethatthenewsystemcanmanagereal-timedatawiththehighestlevelofefficiencyandsecurity.

02Phasedapproach

Accordingtothisstrategy,thecoresystemshouldbeupgradedgradually,insegments,eitherbybranch,lineofbusiness(LoBs),orclient.Bylimitingmodificationstomoremanageable,smallerunits,thisstrategyreducesrisksandsimplifiesproblemidentificationandresolution.Abankmay,forexample,startwithonebranchoroneLoB,carefullytrackthe

resultsandgraduallyrollouttheupdatetoadditionalbranchesorbusinessunits.Sincemaintainingtheintegrityof

consumerdataiscrucial,eachstageofthephasedapproachshouldincludestrongencryption,strictaccesscontrolsandfrequentaudits.Byallowingongoingfeedbackanditerativemodifications,thisphasedrollouthelpsinminimising

disruptionsandensuresamoreseamlesstransition.Italsofacilitatesanincrementaltrainingprogrammeforemployeesandclientswhichmakesiteasierforthemtoadapttothenewwaysofworking.

Theseapproachesofferdistinctpathwaysforcoremodernisation,eachwithitsownsetofadvantagesandchallenges.Theselectionoftheappropriatestrategyforeachorganisationisbasedontheorganisation'srisktolerance,resourceavailabilityandspecificmodernisationgoals.

17|PwCCoremodernisation:Enhancingthedigitaltransformationoffinancialinstitutions

17|PwCCoremodernisation:Enhancingthedigitaltransformationoffinancialinstitutions

Hollowing/externalisation

Movingspecificfunctionsandhigh-volumeprocessesoutsidethecoresystemtospecialisedexternalsystemsisknownashollowingorexternalisation.Inthisapproach,thecoresystemexperienceslesschangewhichcanreducetherisks

sinceitfocusesonspecificfunctionsandimprovestheperformanceandscalabilityoftheoverallsystem.Italsofacilitateseasierintegrationofnewtechnologiesandservicessinceitprovidesflexibilityofonlymovingspecificfunctionsou