A bank can’t just plug in a new core system and expect miracles. If old silos and processes stay the same, modernization will stall. This disconnect between technology and operations is one reason why only 48% of digital initiatives actually meet their business goals. 

Banks pour millions into core system upgrades only to see delivery dates slip, compliance gaps emerge, and advanced features go unused. The underlying workflows and team structures never changed, so the new technology’s potential goes unrealized. By contrast, banks that reinvent their operating model alongside the core modernization reap the full benefits. Teams become unified, processes get leaner, compliance is baked into every workflow, and new capabilities reach customers faster. Ultimately, new technology must be paired with new ways of working to deliver the speed, control, and business value that banks expect.

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“When technology and operations move in lockstep, the organization can adapt continuously rather than sliding back into old habits.”

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Core modernization stalls under an outdated operating model

Many banks find that core modernization efforts falter not because of technology, but because the organization around it stays stuck. The case for upgrading legacy cores is clear – outdated tech cost banks over $36 billion in 2022 alone – yet time and again, core projects underdeliver due to operational roadblocks. An aging operating model with rigid processes and siloed teams creates bottlenecks that no shiny new platform can fix on its own. Below are key ways an outdated operating model can undermine a core modernization initiative:

• Siloed teams and fragmented goals: Separate departments (IT, operations, product, risk) each chase their own priorities, so a core upgrade becomes an isolated IT project rather than a business-wide transformation. Misalignment leads to miscommunications and delays as work bounces between silos.
• Unchanged processes and policies: Legacy workflows built around old systems are often left in place. New technology ends up shoehorned into antiquated processes, slowing everything down. For example, manual approval steps or batch-processing routines carry over, negating the real-time capabilities of a modern core.
• Cultural inertia and change resistance: Employees cling to familiar habits and tools. Without a concerted change-management effort, staff underutilize the new system’s features or invent workarounds to continue doing things “the old way.” This resistance means the bank fails to realize much of the new platform’s value.
• Compliance as an afterthought: If risk and regulatory teams aren’t part of the modernization design, the bank may unknowingly recreate compliance blind spots. New software doesn’t automatically fix control gaps in workflows. When the operating model remains unchanged, critical checks can fall through the cracks, exposing the bank to regulatory trouble.
• Lack of strategic alignment: Perhaps most importantly, a core upgrade left on “autopilot” – handled by IT with minimal business input – results in underutilized capabilities. The new system might go live, but it isn’t aligned to strategic goals or KPIs. Without tying the modernization to tangible business outcomes, ROI evaporates as advanced features sit idle.

These failure modes have little to do with the core platform’s technical merits, and everything to do with organizational inertia. Unless a bank addresses these underlying issues, even the best core technology upgrade will struggle to deliver meaningful results.

Operating model redesign unlocks full value of new core systems

Upgrading core technology without reshaping how the bank operates is like installing a jet engine on a horse cart. To avoid this mismatch, banks need to redesign their target operating model in tandem with core modernization. (A target operating model defines the ideal future state of processes, people, and governance that will support the business.) As Forrester observes, banks don’t just need new software – “they need new paradigms to deliver core banking capabilities.” 

Reimagined processes eliminate bottlenecks

Modernizing operations means streamlining and simplifying processes end-to-end. Instead of replicating clunky legacy procedures on a new platform, the bank re-engineers workflows to be lean and customer-centric. Superfluous steps are removed, manual handoffs are automated, and policies are updated to reflect real-time digital capabilities. For example, a loan approval process that once took days and multiple departments might be redesigned to complete in minutes on the new system. These leaner processes translate the core platform’s speed into faster service delivery and a shorter time-to-market for new products. 

Compliance and governance baked into workflows

A successful operating model redesign builds risk management and compliance into daily operations from the start. Rather than treating compliance checks as separate, manual chores, banks integrate them into the digital workflow. The new core system can be configured with automated controls, audit trails, and real-time monitoring that align with regulatory requirements. Meanwhile, risk and compliance officers collaborate with product and IT teams throughout the modernization. This ensures that new features (like Open Banking APIs or real-time payments) launch with proper oversight and safeguards in place. Embedding governance into processes not only prevents the blind spots of the old model; it also creates a culture where staying compliant is simply part of getting work done. The bank can adopt new technology with confidence that controls are built-in by design, avoiding nasty surprises later.

Agile culture and continuous improvement

Redesigning the operating model also means evolving the organizational culture. Banks must shift from a slow, siloed culture to an agile, collaborative one. In practice, this involves embracing cross-functional teams, iterative development, and a mindset of continuous improvement. Employees are encouraged to break out of narrow job boxes and work together on delivering end-to-end outcomes. Small multidisciplinary squads (combining IT developers, business analysts, operations staff, etc.) take ownership of products or customer journeys rather than each department tossing work over the wall. This cultural change fosters accountability and innovation – teams can rapidly pilot new core system capabilities, gather feedback, and refine processes on the fly. Crucially, it also sustains momentum after the initial go-live. With an agile, learning-oriented culture in place, the bank keeps optimizing both the technology and the operations over time. The result is a core platform that doesn’t stagnate; it continually adapts to improve efficiency and customer experience.

Overhauling processes, embedding compliance, and cultivating an agile culture ensures a bank’s target operating model is redesigned to fully leverage the modern core system. These operational changes turn a core upgrade into true transformation – enabling the bank to deliver new value streams rather than just run old routines a little faster.

Unified teams accelerate modernization and cut risk

One of the most powerful enablers of this change is the move to unified teams. When technology and business experts work side by side, modernization accelerates and risk is reduced. Traditional banks often separate IT projects from business operations which is often a formula for misalignment. In a new operating model, banks form cross-functional teams that include IT developers, business product owners, and even compliance and QA specialists all working toward the same goal. This “one team” approach breaks down the silos that slow projects to a crawl. Decisions get made faster when everyone is in the room. Problems are spotted and resolved earlier, because the team includes a diversity of expertise at every stage.

Integrating risk and regulatory roles into delivery teams is especially critical in financial services. For example, having compliance officers co-design processes with developers means potential issues (say, a data privacy concern or an anti-money-laundering check) are caught in design, not after deployment. This proactive approach cuts risk dramatically compared to the old model of bolting on compliance reviews at the end. It’s no surprise that organizations embracing agile, cross-functional teams report measurable gains as 64% see better alignment between business and IT after adopting these ways of working. However, simply declaring a “squad” isn’t a silver bullet. In fact, 75% of cross-functional teams struggle or fail when the organization lacks a supportive structure. Banks need to back up teams with clear executive sponsorship, new incentive models, and the empowerment to make decisions. When they do, unified teams become the engine of transformation.

Consider the experience of one global bank during a core system overhaul. Over a multi-year journey, this bank tried three different operating models, ultimately finding success only after shifting to cross-functional agile delivery. In the final phase, mixed teams from IT and business worked together continuously, releasing improvements in rapid iterations. This approach eliminated the huge “big bang” handover at the end of the project instead of a risky one-time go-live; there were many smaller wins and adjustments along the way. The bank was essentially learning and delivering at the same time, which built trust among frontline users and technology teams. The outcome was not just a smoother implementation, but a permanent new way of working. 

Aligning technology and operations ensures lasting results

Aligning a bank’s technology initiatives with its operational model isn’t a one-off task – it is an ongoing discipline. The banks that succeed with core modernization treat it not as a IT project, but as a joint business-technology program for change. This alignment mindset ensures the results stick long after the initial rollout. When technology and operations move in lockstep, the organization can adapt continuously rather than sliding back into old habits. New system capabilities are introduced alongside training, process updates, and policy changes that make them effective. Metrics are put in place to track outcomes (like faster loan processing times or error rate reductions) so that leaders can see the business impact and reinforce the new ways of working.

In practice, this means establishing forums and governance where IT and business leaders co-own the modernization journey. It means developing change agents across the bank – tech-savvy operations managers and business-savvy technologists – who champion the integration of tools and workflows. The payoff is agility at scale. The bank can respond quicker to market changes because its technology upgrades are always coupled with operational readiness. For example, if a regulatory change requires a tweak in the core platform, the aligned operating model allows a rapid response with minimal disruption. Over time, the bank builds muscle for continuous improvement, rather than treating modernization as a once-in-a-generation upheaval.

Most importantly, aligning technology and operations positions the bank to realize the full ROI of its core transformation. Instead of a shiny system that delivers only half its promises, the bank gets a platform and an organization that reinforce one another. Efficiency gains, risk controls, and customer experience improvements compound over time, strengthening the bank’s competitive position. In a landscape where fintechs and new entrants move quickly, this tight alignment becomes a lasting advantage. The bank is not just modernized, but prepared to keep evolving seamlessly, with strategy and execution in sync.

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“A bank can’t just plug in a new core system and expect miracles.”

Bridging strategy into execution with Electric Mind

Achieving such alignment between new technology and day-to-day operations is at the heart of Electric Mind’s approach to core banking transformation. Electric Mind works shoulder-to-shoulder with bank leaders to redesign the operating model in parallel with upgrading core systems, ensuring that strategy turns into engineered execution on the ground. This pragmatic, engineering-led partnership focuses on tangible outcomes: streamlined processes, integrated compliance, and cross-functional delivery teams that move fast without breaking the bank’s risk controls. With over 35 years of deep technical delivery in high-stakes environments, the Electric Mind team doesn’t hand over a report and disappear – it co-creates the solution and helps implement it, adapting the organization along with the technology.

Common Questions

How do I align my core banking modernization with a target operating model

You start by mapping customer journeys and critical controls to the future state before configuring the platform. Treat operating model redesign as a parallel workstream so processes, teams, and governance are ready when the new core goes live. Tie each capability to a KPI such as time to market, error rates, or unit cost. Electric Mind aligns target operating model design with core delivery so you see faster releases and measurable value.

What target operating model example fits my bank’s modernization goals

A practical target operating model example groups cross-functional squads around products like deposits, lending, or payments with shared risk and ops support. Each squad owns outcomes across discovery, delivery, and service, backed by lightweight governance. Standard patterns for controls, data, and release management keep quality consistent. Electric Mind tailors this template to your context so teams ship faster without adding risk.

Why does my core upgrade stall without operating model redesign

Old workflows fight new tech, so handoffs, manual checks, and siloed priorities slow everything. Teams load the modern core with legacy processes that cancel out real-time capabilities. Compliance stays bolt-on instead of built-in, creating rework at the worst moment. Electric Mind fixes the operating model in step with the platform so delivery speeds up and value shows up earlier.

How can I structure my teams to reduce risk during core banking modernization

Form stable, cross-functional teams with clear product ownership and embedded risk and QA. Give each team a crisp mission, a shared backlog, and authority to make day-to-day decisions within guardrails. Standardise engineering and compliance practices so quality scales across squads. Electric Mind sets this structure and coaches leaders so your teams move quickly while keeping control.

How do I bake compliance into my operating model without slowing delivery

Integrate controls into the workflow instead of adding manual checkpoints at the end. Automate policy checks, approvals, and audit trails in the toolchain that ships the core banking changes. Involve risk early on prioritisation, design, and test so issues surface before build. Electric Mind engineers these controls into your operating model so assurance improves while releases stay on pace.