May 14, 2025

In today’s rapidly evolving financial landscape, banks face a critical decision on how to modernize their core banking systems. Core systems are the backbone of financial institutions, connecting payments, customer data, and embedded services. As customer expectations rise for faster, personalized, and seamless services, upgrading core systems has become imperative. Banks must choose between three key strategies: building in-house, buying off-the-shelf solutions, or partnering with FinTech firms. Each option offers distinct advantages but requires careful consideration to future-proof the bank’s technology infrastructure.

A significant barrier to core banking transformation is the fear of change. Banks are often comfortable with their legacy systems, even if outdated, making the transition to newer technologies difficult. However, operational resiliency and the growing “tsunami of regulations”—such as AI regulations—are strong drivers for transformation. Banks must move beyond merely improving existing systems and focus on “leapfrogging” their technology as discussed with a senior Banker at the Next Gen Core Banking Cedar IBSi Summit held in London. Rather than incremental upgrades, transformation should address regulatory challenges and aim for innovation while enhancing both customer and staff experiences.

Building an in-house core banking system offers maximum customization. Banks can design systems tailored to their specific needs, aligning with operational models, customer segments, and long-term goals. This level of control allows better integration with existing systems and internal processes. However, the cost of developing a custom solution is significant—often exceeding $50 million—and can take years to implement. Additionally, the ongoing costs of maintenance, system updates, and staffing can hinder a bank’s ability to remain agile in responding to market changes. This option is more suitable for larger banks with substantial resources.

Buying off-the-shelf solutions from established vendors such as Temenos, Fiserv, or FIS is a popular approach for banks seeking quick implementation and stability. These systems come pre-configured, ensuring compliance with local and global regulations and offering rigorous testing for reliability and security. The key advantage of buying is speed—solutions can often be deployed within 6 to 12 months, allowing banks to modernize quickly and reduce operational risks associated with outdated systems.

However, off-the-shelf systems often lack flexibility. Banks may need to adapt their business processes to fit the technology, which can restrict operational agility. Over time, dependency on the vendor for updates and troubleshooting can lead to vendor lock-in, making it difficult and costly to switch providers.

Partnering with FinTech firms and adopting Banking-as-a-Service (BaaS) models are innovative ways for banks to modernize core banking without building or buying a new system. Both approaches allow banks to integrate advanced technologies like real-time payments, AI-powered analytics, and open banking APIs.

• Partnering with FinTech Firms: Through partnerships, banks gain access to cutting-edge services while avoiding the high costs of building or buying a full core system. However, banks must carefully vet FinTechs, especially newer players, for data security and regulatory compliance. Partnerships also require effective management to ensure alignment with the bank’s strategic goals.
• Banking-as-a-Service (BaaS): BaaS enables banks to offer new services without developing all the infrastructure. This model is cost-efficient and reduces time-to-market, allowing banks to launch new products quickly. However, BaaS requires careful oversight to ensure regulatory compliance and alignment with business objectives.

As the financial ecosystem evolves, banks must focus on future-proofing their core banking systems. Flexibility is the cornerstone of modern core banking, enabling institutions to adapt to future technologies and customer demands. Open finance, blockchain and digital assets are key areas for banks to monitor as they represent the next wave of banking innovation.

A hybrid multiload strategy is essential for avoiding dependence on a single hyperscale. This approach ensures operational resilience and flexibility, allowing banks to distribute workloads across various platforms for optimized performance and security.

Next-gen core banking systems must be modular and flexible, enabling banks to deploy new technologies quickly. A distributed, event-driven architecture is critical for scalability, although it brings operational complexity. Banks should have the freedom to choose where and how they run their software, supporting diverse deployment models.

Emerging Technologies: AI, Open Finance, and Quantum Computing

• AI: Human-centric AI is crucial in banking, as decisions made by AI systems affect significant aspects of customers’ lives. Ensuring that AI is transparent and designed with customer well-being in mind is key.
• Open Finance: Open finance is the evolution beyond open banking, enabling greater customer-centric solutions through data-sharing platforms.
• Quantum Computing: While still emerging, quantum computing offers the potential to revolutionize areas like data processing, risk analysis, and cryptography in banking.

The choice between building, buying, or partnering to modernize core banking systems is complex and depends on a bank’s size, resources, and strategic goals. Building in-house offers control but comes with high costs and long timelines. Buying provides speed and stability but lacks flexibility. Partnering and BaaS offer agility and innovation but require careful management of third-party relationships.

Banks must carefully evaluate their options and focus on flexibility, scalability, and regulatory compliance to ensure that their core banking systems are prepared for the future. By aligning their choices with long-term goals, banks can stay competitive in an increasingly digital world.

April 25, 2025

Every time you click, swipe, or tap, you’re participating in an evolving financial experience. The embedded finance market in GCC is expected to grow to USD 2 bn by 2030 at a 30% annual growth rate from USD 250 m in 2022 (Source: Roland Burger). Financial products are becoming invisible and being embedded into everyday platforms, or vice versa. And the fundamental change isn’t just technology—it’s how financial products are delivered and, more importantly, where they are delivered.

When Industries Become Financial Distribution Channels

What makes this evolution so powerful is that platforms are becoming the new distribution channels for financial services.

Take mobility platforms offering car loans to drivers. Or a software platform becoming the gateway for SME banking. Even a healthcare app embedding insurance into treatment plans. These industries have emerged from channels to ecosystems that customers trust and engage with daily.

Take mobility platforms like Uber or Ola, which now offer vehicle loans and insurance products directly to their drivers, often faster and more conveniently than traditional lenders. Shopify, originally an e-commerce enabler, has evolved into a powerful financial services hub, offering merchants embedded banking, lending, and payments through Shopify Capital. Zoho and Tally, popular among Indian SMEs, are increasingly integrating financial tools like invoice financing and payment reconciliation directly into their core accounting software.

Even healthcare apps are moving into this space — Practo and 1mg, for example, are exploring insurance partnerships that allow patients to finance treatments or access micro-insurance at the point of care. These industries have evolved from being mere service providers to trusted ecosystems that customers interact with daily, becoming natural gateways for financial products.

And here’s the reality: they’re doing a better job of capturing user attention than banks are.

Why Banks Can’t Sit This Out

Embedded finance changes the role of banks from financial product distributors to financial product enablers, manufacturers, and compliance layers. And unless banks adapt, they risk becoming invisible. The products may still be theirs, but the customer experience, the journey, the loyalty? That could belong to someone else.

The winners will be the banks that evolve:

• From product manufacturers to experience enablers
• From owning the customer interface to powering ecosystems from behind the scenes
• From chasing users to meeting them exactly where they are

It is imperative for banks to consider building the rails, the compliance layer, the intelligence and integrating them seamlessly into someone else’s digital experience.

The FinTech Opportunity: Build the Plumbing, Not Just the App

For FinTechs, the play is clear. The bigger opportunity lies in becoming the infrastructure layer—the rails and intelligence that power finance behind the scenes.

Think decision-making engines for marketplaces. Real-time credit embedded into platforms. Smart KYC workflows are triggered inside CRMs. This is where scale lives—and where future value will be built.

Case in Point: Mashreq’s Embedded Supply Chain Financing

We’re already seeing this play out in the GCC. In the UAE, Mashreq Bank has partnered with Invoice Bazaar to offer supply chain financing directly embedded into B2B ecosystems.

Instead of applying for credit separately, SMEs get access to working capital at the point of invoice generation. The underwriting decision is instant with a frictionless experience. Finance becomes part of the workflow, not a step outside of it. It’s finance reimagined to match the tempo of modern business.

What Leaders Need to Ask Now

For decision-makers in banks and FinTechs, this shift demands bold thinking and fast execution. Some questions to bring to the next leadership offsite:

• Are we integrated into the digital journeys our customers already live in?
• Can someone use our financial products without ever visiting our app?
• Are we seeing non-financial platforms as competition or as our next growth partners?

The Bottom Line: Finance Has to Follow the Customer

Here’s the truth: the future of finance is being built inside digital platforms where users shop, work, move, and live.

Those who embrace embedded finance will lead it.

Already, in sectors like retail, logistics, and healthcare, financial services are being woven directly into digital experiences — often invisibly to the end user. Andreessen Horowitz highlights that embedded finance has the potential to boost customer engagement and retention by up to 20% as financial services become part of native workflows. Staying relevant means adapting to a world where banking is a feature embedded seamlessly in digital workflows.

April 11, 2025

As the Digital Finance Landscape accelerates, one phenomenon is reshaping how consumers engage with financial services: the rise of the SuperApp. These integrated platforms blend Financial, Lifestyle, and Commercial Services into a single user experience—driving higher engagement, loyalty, and digital inclusion.

According to a recent whitepaper co-authored by IBS Intelligence and Mobifin, 79% of consumers express interest in using a single app to manage daily activities, while 77% say they would increase their usage of SuperApps if a broader set of lifestyle and other needs were integrated in the same app. This shift is more than a convenience play—it’s a call for ecosystem thinking, where banks, FinTech’s, and platform providers reimagine their roles in the digital economy.

Asia has the highest number of implementations for superapp innovation. WeChat in China and Grab in Southeast Asia have evolved into multi-service platforms by embedding finance into social, mobility, and retail experiences. WeChat’s mini-program architecture allows third-party services to thrive within a single interface, while Grab’s use of operational data enables real-time underwriting and tailored micro-finance products.

These platforms show that the future of Finance lies not in isolated apps, but in integrated ecosystems—where banking is contextually woven into everyday life.

India is rapidly emerging as one of the most exciting markets for super app innovation. With over a billion mobile connections and a robust digital infrastructure, India’s FinTech growth is underpinned by a unique blend of public policy, entrepreneurial momentum, and user readiness.

The foundation lies in India Stack—a suite of interoperable public digital goods including Aadhaar (identity), UPI (real-time payments), and eKYC. These layers enable rapid onboarding, seamless compliance, and cost-efficient delivery of services across urban and rural populations.

Paytm, a frontrunner in this space, has evolved into a multi-vertical platform offering payments, lending, insurance, investments, ticketing, and commerce. Its ability to serve semi-urban and rural users exemplifies the inclusive promise of the super app model. Meanwhile, PhonePe has built a robust financial and merchant ecosystem, and Tata Neu brings cross-sector capabilities by integrating retail, travel, finance, and healthcare into a unified digital experience.

Government-led initiatives like the Digital India Mission and ONDC (Open Network for Digital Commerce) are pushing the envelope further by encouraging open-access platforms and reducing digital monopolies. This supportive policy environment has enabled India’s FinTech players to test, scale, and innovate at an unmatched pace.

The Indian model offers global players an important reference point—how digital infrastructure, when combined with agile platforms and interoperable policy frameworks, can drive both scale and inclusivity.

Markets across the Americas and Europe face more complex regulatory environments and stronger consumer preferences for app specialization. However, open banking initiatives and real-time payment systems (e.g., FedNow in the U.S.) are laying the groundwork for change.

Platforms like Revolut, Cash App, and PayPal are gradually expanding into savings, crypto, remittances, and wealth products. While they haven’t yet reached the scale or breadth of their Asian counterparts, their strategic direction signals a growing interest in integrated digital ecosystems.

The competitive advantage for banks lies beyond transactions—in creating seamless experiences that integrate finance with everyday life. It demands a platform-first thinking.

India’s FinTech landscape provides a compelling example of how inclusive growth, platform strategy, and infrastructure alignment can power the next wave of global super apps. For financial institutions around the world, the opportunity lies not in replicating Asia’s success, but in interpreting its core principles in a way that aligns with local consumer needs, regulatory frameworks, and ecosystem dynamics.