Core Banking: Progressive Migration in Practice; Embedded finance is easy to understand, harder to execute well in practice;
In this week’s Fintech Wrap Up, we explore progressive core banking migrations, the growing role of stablecoins in cross-border payments, and AI’s transformative impact on banking operations
Insights & Reports:
TL;DR:
This week’s edition is packed with insights into the ever-evolving world of fintech, payments, and banking. Let’s dive in!
We start with a look at how banks are embracing progressive migration to modernize their core systems. It’s not just about upgrading tech—it’s a transformation of people, processes, and platforms. By running legacy and next-gen systems side by side, banks are achieving seamless transitions, automating workflows, and cutting technical debt. Proof that big changes can be done right!
In open finance, inclusivity is the name of the game. From empowering underserved groups to ensuring privacy-compliant data sharing and interoperability, the push for equity and accessibility is reshaping the industry. Open finance is becoming not just a trend but a necessity for global financial inclusion.
On the AI x crypto front, blockchain is stepping up to support an AI-driven internet. It’s helping users regain control of their digital identities and protect against the rising tide of deepfakes. In banking, AI is also making waves—not through isolated experiments, but by completely reimagining business domains like risk and operations.
Stablecoins are proving indispensable for cross-border payments, quietly streamlining remittances, supplier payments, and e-commerce payouts. This stablecoin sandwich simplifies complex transactions, delivering faster settlements without users even touching the crypto itself. And speaking of growth, cross-border payments are booming, with a $320T market size projected by 2032. Innovation in instant payments and regulatory strides like PSD3 are driving this momentum.
On the news front, Hyperline’s $10M raise is a bold step towards simplifying the complex world of billing for the subscription economy. Meanwhile, eToro and Monzo are gearing up for IPOs, signaling exciting times ahead for fintech.
From big migrations to small wins, this edition is a testament to the resilience and creativity driving fintech forward. Which trend or story resonated with you the most? Let’s discuss!
Insights & Reports?
Core Banking: Progressive Migration in Practice
The bank embarked on holistic change plan to fully embed this transformation:
? People included stakeholder management across business, technical and support functions, as well as a talent plan to strengthen in-house capabilities and sustain the new model;
? Process covered the operating model and ways of working, with a clear focus on achieving greater process automation;
? Finally, Technology managed systems migration and cutover while minimizing disruption
Phase 1: Mapping the Initial State
The Technology stream began with a detailed understanding of the Bank’s legacy system architecture.
The overall platform schema included many of the main building blocks typically found in mid-sized banks:
1. Legacy mainframe core banking system holding customer information, payments and transactions data, payments orchestration, financial products, and reporting.
2. Channel applications including web, Java, and 3rd party solutions. In this example, Channels were left as-is to minimize customer impact.
3. Middleware handling distributed services for application connectivity, interoperability, and security.
4. Payment rails built from a 3rd party solution mainly for ACH payment gateway connectivity.
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5. Finally, backend systems covering General Ledger accounting, Treasury, Cash Management, and other functionalities.
Phase 2: Progressive Migration Rollout
The Progressive Migration process begins by deploying parallel system architecture housing the next generation core and supporting platforms, which “coexist” side-by-side with the legacy core. The key systems added during this phase included:
Guiding principles for an inclusive open finance ecosystem
The design and implementation of an inclusive open finance ecosystem should be anchored by core principles that promote equity, security, and innovation.
INCLUSIVITY AND ACCESSIBILITY
Promoting the intentional and proactive participation of financial sector entities, including financial service providers (FSPs), mobile money operators (MMOs), and fintechs, in designing and enhancing an inclusive open finance ecosystem, while ensuring equitable access for underserved groups such as women, youth, elderly populations, and MSMEs.
PRIVACY-COMPLIANT DATA SHARING
Provide clear guidance on customer control over data-sharing decisions, including the ability to transparently grant, revoke, and manage consent.
CYBERSECURITY, PRIVACY, AND DATA PROTECTION
Prioritize strong data protection and cybersecurity measures to prevent fraud, misuse, and unauthorized access, ensuring that customer data always remains secure.
INTEROPERABILITY
Encourage the use of common technical standards (such as APIs) across the ecosystem to enable seamless and secure data-sharing and that enables competition and innovation.
Curated News
Hyperline has raised $10M led by Index Ventures
The subscription economy has evolved significantly over the past decade as businesses adopted hybrid revenue models to create diversified income. Pricing and billing have become increasingly complex for modern businesses, but they have been let down by legacy providers ill equipped for this new complexity. The trend towards more bespoke, flexible pricing models clashed with the status quo in billing software. This has created a new market opportunity for Hyperline to step in with a new kind of platform built for today’s needs — offering the simplicity buyers now expect.
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