The Green Sheet Online Edition
September 28, 2026 • 26:09:02
Many banks are still operating on severely outdated tech platforms
Banks built on tech platforms architected decades ago are confronting a growing set of pressures: aging infrastructure that resists modern tooling, calculation logic that may no longer reflect current compliance requirements, and a workforce of institutional experts approaching retirement.
According to Carleton's May 2026 Platform Migration and Modernization Survey, 87 percent of banks are already engaged in migration in some form, with more than half planning to migrate within the next 12 months. The question is no longer whether to modernize, but how to build the technical case for doing so.
The weight of legacy architecture
Legacy systems are not simply old. They are often monolithic in design, meaning their components are tightly coupled in ways that make isolated updates difficult, expensive and risky. Every change becomes a major event, and the cumulative effect is a banking platform that grows harder to maintain with each passing year. The resource burden this creates is substantial for banks. The survey also found that one-third of respondents spend 80 to 100 percent of their platform resources on maintenance rather than new development, with another 40.9 percent reporting that 60 to 80 percent of resources go toward maintenance.
That leaves almost no organizational capacity for innovation, product expansion or compliance readiness. Some banks continue to operate on legacy platforms, such as IBM AS/400 systems, and maintain applications developed in programming languages like COBOL or RPG, which the broader technology industry has left behind. The operational continuity of these platforms depends on an ever-shrinking pool of people who understand them and hardware that grows harder to repair or replace.
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 modernization is a small minority position.
What most banks are weighing is transition risk. They know their current platform's shortcomings, and a migration introduces a new set of unknowns. Calculation logic that has been stable may behave differently in a new environment. Compliance processes that have been historically defensible may be disrupted during a rewrite. These concerns are legitimate and should be addressed directly in any modernization strategy.
A related and underappreciated risk is expertise dependency. Consumer banking calculation logic is a specialized discipline that can take years to master. When a key subject matter expert retires or departs, institutional knowledge can go with them. The survey found that 18.1 percent of respondents cited expertise dependency as an operational challenge, a figure that likely understates the true exposure across the market.
API-based architecture: the technical foundation of modern platforms
The shift from locally hosted, monolithic systems to API-first architectures is the enabling condition for nearly every capability modern banks need. An API-based platform allows calculation updates to be deployed centrally, eliminating the version drift that occurs when banks manage their own module updates. It supports third-party integrations without rebuilding core functionality, and it provides the connective tissue that fraud detection, compliance tooling and AI-driven capabilities require.
The market has recognized this priority. In the survey, API connectivity was the most commonly cited modernization priority at 31.4 percent, selected more frequently than cloud capability, scalability or faster deployment. This means banks are not simply looking for newer software, but instead want platforms that connect to the broader ecosystem of tools and regulatory data that modern operations require.A microservices architecture makes this possible at scale.
Where a monolithic system requires all-or-nothing updates, a microservices-based platform allows targeted changes to individual components. A compliance update can be deployed to the calculation engine without touching fraud logic. A new product type can be added without rebuilding underwriting workflows. This modularity reduces both the risk and cost of ongoing maintenance, and it compresses the deployment timelines that leave many banks exposed during the gap between a regulatory change and its implementation.
The strategic case for moving now
Several converging forces are narrowing the window for deliberation. AI-driven capabilities are being built on modern, cloud-native architectures, and legacy platforms cannot natively integrate with them. Fraud threat actors are operating on modern infrastructure as well, meaning the defensive tools being developed to counter them are designed for environments legacy systems cannot host. Staying on an older platform is not a neutral choice; it is a decision to fall further behind on both dimensions simultaneously.
Business growth is accelerating this pressure further. Entering a new state, launching a new asset class or expanding a branch network surfaces gaps in legacy platforms that may have been manageable at a smaller scale. The survey found that 76.5 percent of respondents rated their need to modernize as either extremely urgent or very urgent. Banks that continue to delay are doing so against a competitive environment that is not waiting.
The transition game plan
Most banks will not execute modernization alone. The survey also found that 64.6 percent cited migration support as the most needed form of assistance, and 65.9 percent reported using a combination of internal development and third-party solutions. Hybrid delivery models are already the market norm.
When evaluating partners, banks should look beyond technical capability to domain expertise. Consumer banking calculation logic requires sustained investment in regulatory tracking, compliance accuracy, and actuarial precision. A platform that is architecturally modern but lacks that depth may solve one problem while creating new exposure in areas that matter most to examiners and customers alike.
The transition from legacy to modern is not a single event. It is a shift in operating model that affects how compliance is maintained, how products are launched and how institutional knowledge is preserved over time. Banks that approach it as a long-term strategic investment rather than a discrete technology project are the ones most likely to emerge with a durable competitive advantage. 
Tim Yalich is vice president of Business Development for Carleton, the country's leading provider of financial calculation software, loan origination compliance support, and document generation software. You can reach him via LinkedIn at https://www.linkedin.com/in/timothy-yalich. For more information about Carleton, please visit www.carletoninc.com.
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