Discussion has been heating up for a while in Australia, and globally, around core banking and the need to modernise to meet both ongoing customer demand and maintain compliance. The reality is most banks and lenders still run on legacy systems, and those systems quietly destroy value through inefficiency, friction, and missed growth.

The tension that banks and lenders are facing is that replacement carries risk. Completely replacing your core all at once – the “big bang” strategy – requires large upfront capital investment, years of planning and a freeze on all other innovation. Patching around the core with point solutions for origination, servicing or payments creates a different problem: fragmented and duplicated data, duplicated processes and growing vendor complexity. Either way, the cost of delaying change keeps rising, and it becomes increasingly difficult to unpick core functionality and migrate.

The good news is there are options to safely manage a Core Banking migration to provide industry leading capability and compliance. The “Nimo wrap-around” iterative program is one of these options, which I will address this later in this article.

The real cost of staying on legacy

What I have observed from my last 25 years of banking technology experience, is that the impact of staying on legacy core shows up in five ways:

1. Difficulty meeting customer experience expectations. Digital banking is now the norm. Customers expect real time servicing and intuitive self-service across the lifecycle. Legacy cores can’t deliver on these expectations, leading to poor customer satisfaction and missed opportunities to differentiate in the marketplace. Research I’ve seen is showing that previously loyal customers will leave if they cannot be provided the functionality they desire.

2. Inability to meet increasing regulation. For example, in Australia, there are constant changes, such as participation in the 5% deposit homeowners scheme or increasing participation within open banking in the next 12 months, and legacy environments struggle to meet those requirements without expensive workarounds. There are also increasing expectations around cyber security, privacy and ethical AI. As regulatory expectations lift, the operational and compliance risk of outdated technology grows with it.

3. Difficulty reducing costs and improving productivity. Competition continues to compress margins, which makes improving productivity and reducing operating costs even more important. Technical debt consumes a meaningful portion of IT budgets, and many lenders still rely on manual workflows. It is not uncommon to see loan assessment steps managed through excel spreadsheets and emails, with the same data entered multiple times across systems which is slow, error prone, not secure and hard to govern.

4. Slow innovation and new product launches. Launching or changing products on a legacy core often requires heavy customisation, which is time consuming and costly and impacts the ability for lenders to respond faster to changing customer needs and market conditions. Some banks and lenders try to solve this by running multiple core systems, which can speed up product launches but creates data silos and operational complexity, not to mention significantly increasing total cost of ownership.

5. Low scalability. The volume of digital banking transactions being processed is rapidly increasing. The 2025 Bank On It report by the Australian Banking Association and Accenture noted that Australians made $160 billion in payments with mobile wallets over the past year, a 28% increase on the year before[1]. Legacy systems often struggle to keep pace with this growth, especially when they rely on batch processing and manual reconciliation, or connectivity to 3^rd party internet banking systems.

The signals it is time

If you are experiencing one or more of the following, they are real indicators your core is becoming a constraint:

• Digital customer experience limited by back-end constraints
• Product changes or launches taking months, not weeks
• Unable to meet new compliance obligations within timeframes
• Fragmented data across siloed systems
• Staff relying on spreadsheets and manual reconciliations
• Security and compliance difficult to manage, with audit trails collated manually

The key risks in modernisation and how to manage them

Core modernisation has risks, but they are manageable with the right approach.

Data migration.

Data is critical. Data quality issues tend to surface late, and reconciliation gaps can disrupt servicing, payment scheduling, reporting and can even result in a failed migration. Mature programs reduce this risk through repeatable migration runs, automated validations, clear signoff gates, and parallel processing until equivalence is proven.

Product mapping and flexibility.

Some legacy products do not map cleanly. The risk is ending up with workarounds or keeping legacy systems alive for “special products”, resulting on ongoing cost and security risks.  This can be avoided through detailed early product mapping, scenario testing, and the use of a modern platform that supports configuration and controlled extensibility without legacy.

User training and adoption.

Core replacement is as much about staff change management as it is an operational change. Staff need early support to resist the temptation to rebuild their old inefficient processes into a new system through the design process, and to take advantage of the efficiencies of using a new platform. The programs with the best outcomes include operational change via engagement with executive sponsors, change managers, product owners and super users from day one.

Security and compliance.

During a core transition, there are more moving parts: old and new systems running side by side, new connectivity between systems and data being transferred. Cloud platforms like AWS strengthen protection using built-in security features and detailed activity logging and tracking, but it still needs to be set up and managed properly. What matters most is tight control over who can access what data, clear approval steps, rapid systems rollbacks, and strong records that prove compliance for audits. It is also worth considering a 3rd party governance partner who can assist the data migration for some organisations.

The implementation reality

Modernisation does not need to be a single, high risk event, or a series of bolt-ons that increase complexity over time. The industry is moving toward a more practical model:

• Cloud-native banking platforms that enable modern migration methods
• Modular delivery with measurable milestones
• Land and expand approaches that build confidence early and accelerate time to value, with a perpetual roadmap of desired and required capability
• Treating modernisation as an operating model shift, not just system replacement
• Working with partners who can carry integration complexity and design for regulated workflows

A logical path forward

A staged transition to a modern core is now one of the most practical ways to ensure continuity in operations while building the capability to compete tomorrow. We call this “Nimo wrap-around”.

Nimo is designed to align technology change with business reality: enabling lenders to modernise in stages, prove value early, and reduce legacy dependency without sacrificing continuity. We do this by wrapping Nimo around your current core and delivering proven iterative value against your opportunities or compliance requirements, providing an accelerated and safe approach with less risk and business disruption.

The goal with core modernisation should be to provide a platform that removes constraints, reduce operational risk, to enable scale and the organisation to evolve. So if your core is slowing product delivery, fragmenting data, and forcing manual workarounds, the decision is no longer whether to change, but how to change safely. And you do have options.

Nimo provides our own core banking solution, or you can seamlessly integrate it with your existing legacy system. You can modernise your legacy core into a ‘headless core’, enabling Nimo to smoothly process data for your staff and customers and offer the flexibility for a future transition to our advanced core.

With a 100% track record of successful deployments, Nimo delivers what we say we will. You get a proven, market-ready platform that delivers a leading customer experience and flexible technology capability, both today and into the future.

Chat with us today to find out more about our core banking capability.

[1] Bank on It Report 2025   

Peter Jones is a transformational FinTech leader with deep expertise across strategy, operations, regulatory compliance, and digital transformation. A former Mutual Bank CEO, he has led large-scale innovations for institutions including ANZ, Wesfarmers, ME Bank, and People’s Choice Credit Union. Peter has built and scaled national distribution networks, introduced digital-first strategies, and delivered interventions that enhance financial performance and reduce risk.

At Nimo, Peter drives industry change by fusing regulatory insight with cutting-edge technology to solve complex challenges. He holds an MBA and is a certified SAFe Scaled Agilist, known for his practical leadership in business transformation, change management, and high-growth enablement in financial services.