Digital Transformation Consulting

Leading banks faced significant challenges due to outdated, legacy payments IT systems that limited their ability to quickly and affordably meet evolving customer demands for innovative payment solutions. These banks struggled with technical debt, particularly in their application integration layers and core payments platforms, which hindered agility and responsiveness in deploying new payment features. Additionally, many lacked a mature digital core capable of supporting continuous modernization and swift adaptation to market and regulatory changes, putting them at risk of losing market share to fintech and bigtech competitors who deliver more value-added services.

To address these issues, the banks adopted a reinvention strategy centered around building a modern digital core for payments, comprising integrated digital platforms, a robust data and AI backbone, and a secure, cloud-first digital foundation. They focused on building all components equally, especially investing in intelligent application integration through AI, automation, and dynamic orchestration, which 85% of leading banks prioritized to enhance agility. The strategy included incremental investments rather than large, one-off projects—51% of leading banks favored this approach—to enable continuous modernization aligned with regulatory and customer demands. They also targeted high-tech debt areas such as application integration and core payment platforms, allocating approximately 15% of their IT budgets to tech debt remediation to balance reducing legacy burdens with investing in future growth.

Furthermore, these banks leveraged generative AI to automate manual processes, augment human tasks, and enable hyper-personalized payment experiences. Leading institutions had already automated 40% of manual tasks and augmented 39%, using AI to improve operational efficiency and fraud detection. The results of this reinvention were tangible: banks with a strong digital core and modernization efforts experienced a 2% increase in their payments operating margin—defined as the difference between revenue growth and operational costs—between 2023 and 2025, translating into an estimated $14 billion of additional benefits. This strategic transformation allowed them to accelerate new payment offerings, enhance resilience, and capitalize on emerging revenue streams in a competitive, fast-changing payments landscape.