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Insights and Expertise

Many banks are still operating on

severely outdated tech platforms

Why banks delay:
structural barriers, not complacency
Among banks that have delayed migration, the reasons
are primarily structural rather than philosophical. Cost
constraints were cited by 28.6 percent of respondents as
a barrier, and limited resources by 31.6 percent. Only 5.3
percent reported confidence in their current system as the
reason for delay, meaning active resistance to moderniza-
tion is a small minority position.

What most banks are weighing is transition risk. They
know their current platform's shortcomings, and a migra-
tion introduces a new set of unknowns. Calculation logic
By Tim Yalich that has been stable may behave differently in a new en-
Carleton vironment. Compliance processes that have been histori-
cally defensible may be disrupted during a rewrite. These
anks built on tech platforms architected concerns are legitimate and should be addressed directly
decades ago are confronting a growing set in any modernization strategy.
of pressures: aging infrastructure that resists
B modern tooling, calculation logic that may no A related and underappreciated risk is expertise depen-
longer reflect current compliance requirements, and a dency. Consumer banking calculation logic is a special-
workforce of institutional experts approaching retirement. ized discipline that can take years to master. When a
According to Carleton's May 2026 Platform Migration and key subject matter expert retires or departs, institutional
Modernization Survey, 87 percent of banks are already knowledge can go with them. The survey found that 18.1
engaged in migration in some form, with more than half percent of respondents cited expertise dependency as an
planning to migrate within the next 12 months. The ques- operational challenge, a figure that likely understates the
tion is no longer whether to modernize, but how to build true exposure across the market.
the technical case for doing so.
API-based architecture:
The weight of legacy architecture the technical foundation of modern platforms

Legacy systems are not simply old. They are often mono- The shift from locally hosted, monolithic systems to API-
lithic in design, meaning their components are tightly first architectures is the enabling condition for nearly
coupled in ways that make isolated updates difficult, ex- every capability modern banks need. An API-based plat-
pensive and risky. Every change becomes a major event, form allows calculation updates to be deployed centrally,
and the cumulative effect is a banking platform that grows eliminating the version drift that occurs when banks man-
harder to maintain with each passing year. The resource age their own module updates. It supports third-party in-
burden this creates is substantial for banks. The survey tegrations without rebuilding core functionality, and it
also found that one-third of respondents spend 80 to 100 provides the connective tissue that fraud detection, com-
percent of their platform resources on maintenance rather pliance tooling and AI-driven capabilities require.
than new development, with another 40.9 percent report-
ing that 60 to 80 percent of resources go toward mainte- The market has recognized this priority. In the survey, API
nance. connectivity was the most commonly cited moderniza-
tion priority at 31.4 percent, selected more frequently than
That leaves almost no organizational capacity for innova- cloud capability, scalability or faster deployment. This
tion, product expansion or compliance readiness. Some means banks are not simply looking for newer software,
banks continue to operate on legacy platforms, such as but instead want platforms that connect to the broader
IBM AS/400 systems, and maintain applications devel- ecosystem of tools and regulatory data that modern op-
oped in programming languages like COBOL or RPG, erations require.A microservices architecture makes this
which the broader technology industry has left behind. possible at scale.
The operational continuity of these platforms depends on
an ever-shrinking pool of people who understand them Where a monolithic system requires all-or-nothing up-
and hardware that grows harder to repair or replace. dates, a microservices-based platform allows targeted
changes to individual components. A compliance update
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