Speed Stops Being an Advantage for Banks When The Core Can’t Keep Up
By Justin Estes, Contributor at The Financial Brand
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Executive Summary
- On a recent episode of the Banking Transformed podcast recorded at the Bonneville Salt Flats in Utah, host Jim Marous spoke with three executives at very different stages of the modernization journey: Kelli Keough, who leads spend, invest, protect, save at SoFi; Raphael Reznek, CTO at Mascoma Bank; and Chris Black, president and CEO of Thread Bank.
- Modern, composable cores are giving institutions the speed and flexibility to launch products in weeks instead of years, freeing them from legacy providers that restrict access, data control and innovation.
- Banks that build orchestration layers and centralized data models are gaining real operational resilience, enabling seamless migrations, cleaner compliance oversight and unified experiences across retail and sponsor banking.
- The institutions moving fastest share a common pattern of leadership clarity, full-stack commitment and a member-first mindset that turns modern infrastructure into rapid execution and deeper customer engagement.
Q: How has SoFi’s modern infrastructure enabled rapid product launches compared to traditional banks?
KELLI KEOUGH: What Galileo has done is, with the modern core, has helped us also move fast. We ask ourselves the question, first of all, “How do you design something right for the members?” We start with the design first.
And then we ask ourselves, “Where in our company do we already have this capability and how can we leverage it to get to market as fast as possible?” And then that gives us a base that we can now start to build on, using, even more modern technologies of AI and blockchain. We are going to see ourselves expand in those spaces, but we can build that on that modern core.
Q: What advantage does a composable core give you in responding to market changes?
RAPHAEL REZNEK: Our upgrades from our core provider occur once a year, whereas our competitors can release products daily. Amazon is able to introduce code every eight seconds and it lends $10 billion a year to small businesses. Those are businesses we should be able to lend to.
The ability to compose your system versus accepting a monolithic product from a single vendor is crucial because no one is an expert in everything. We want to be able to take best of breed and implement it quickly, not take years to implement it, but implement it in weeks and months.
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The Parallel Core Approach
Q: How is Mascoma running two cores simultaneously without customers noticing?
REZNEK: So, over the last 14 months (we’ve been live for 14 months on our platform), we’ve been able to migrate, move data and not take the customer down so they can be in the middle of digital banking doing transactions and they have no idea that we’re moving accounts around or moving data around behind the scenes.
We have built in an orchestration layer and so we repoint the orchestration layer from one core to the other. So, it’s like a change of address. We have all the data and we present it to digital banking, for example. We don’t have to ask the core for the data because we have a real-time repository. And all we have to do is change the address of where that system of record is.
Q: What were the biggest “aha moments” during your migration that other banks should know about?
REZNEK: We had this concept that we were going to take Thought Machine vault and just plug it into our ecosystem and it would not be a problem, that there would be no issues moving data around. And we quickly realized that our walled garden from our legacy provider is that. It is a well-defended walled garden.
Our legacy provider does not want to relinquish control of the data in any sense of reform and they don’t want to lose control of it. So, we had to take control of that data. We had to take that away from the legacy core provider and claim ownership of it. We were supposed to own it anyway; we’re responsible.
The customer doesn’t know that we use a particular vendor; they look at us. The trust is with the bank, not with our technology provider. That aha moment certainly caused an extension of our project, adding 12 months immediately, as we determined that we needed to own that data and extract it.
Breaking Free from the Walled Garden
Q: How do you bring new technology partners up to speed when you have a unique infrastructure?
REZNEK: That’s a tough one because there are some providers where there are not really a lot of options around. So, you’re dealing with a legacy provider and they of course, don’t know anything about our orchestration layer and if we ask them to rebuild the integration on their side to our orchestration layer, you’ve just added 18 months and half a million dollars to the project.
So, what we’ve done is pattern our own core facade, allowing us to integrate with our legacy core, for example, through a legacy provider. So, we pattern facade, they think they’re talking to our core, but they’re really talking to our integration layer. That way, we don’t have to slow down the effort and we can utilize something that is considered mature from their perspective.
Data Homogeneity for Sponsor Banks
Q: How is Thread Bank centralizing data across community banking and sponsor banking activities?
CHRIS BLACK: We talk a lot about homogeneity. Therefore, we must ensure the homogeneity of our data, risk management framework and technology and payment rails. That doesn’t mean we have a single infrastructure partner handling everything. It means, as with LoanPro, we have homogeneity on the credit ledgering side and that’s what we’re building with you guys to that end.
We don’t have analysts going into one platform for this disparate activity and another platform for this and another for this. So, we really create that. I keep using the word homogeneity because that’s the point. Because that is what inevitably enables our partners to do what they do best.
Q: Why is having one source of truth critical for compliance and regulatory oversight?
BLACK: We started this out of necessity. We knew it was important, but we applied it first to BSA because we were just looking at just the incredible cost burden that BSA activities within banks represent and AML, especially when you’re doing volume and scale that we’re involved in.
And so, we said, we need to have all our data in one place, we need to transform it, normalize it and put it into a single AML transaction monitoring system. So, our BSA analysts don’t have to go and we don’t have to be scaled for four or five different systems. We want them in one and as we validate and prove that out, then that can be extended to every possible extension.
Member-first Design in Practice
Q: How does SoFi’s psychology-driven approach influence product development?
KEOUGH: The whole concept of SoFi is helping people get their money right. And helping people manage the challenges of their lives and make informed decisions, all in one place, holistically and digitally. And helping people navigate those emotional ups and downs, making informed decisions, is a significant part of it.
First of all, there is empathy for our members. Whether we are all in different financial situations, the reality is that it’s not easy, it’s hard and it can be overwhelming. And even the data we receive can be very difficult to parse. And so, first of all, it’s having empathy with our members.
Q: What role does behavioral data play in creating personalized financial guidance?
KEOUGH: We have great work going on right now. We’re working on what we call SoFi Coach. That really takes all the data that we have access to and helps optimize your cash, providing ideas for how to better utilize your dollars that might be lying idle. It also helps you understand your expenses and identify opportunities to trim them.
And you’ll see us continue to implement that kind of coaching model across all our products. So, for example, if you’re looking for insurance, it’s a really hard thing to figure out what to buy, why to buy it. Having guidance through that process, there’s an enormous opportunity.
From Concept to Live in Days
Q: How quickly can banks actually implement new systems with modern infrastructure?
REZNEK: Three months ago, we made a determination on a new teller platform. We had basically a six-week proof of concept. They spent four weeks working with our team and we conducted workshops on all the business rules necessary to implement this teller platform.
We then took five days to go from not having any type of connectivity with Mascoma Bank to demonstrating deposits on their teller platform, running through our orchestration layer and hitting our cores (so, five days). That gives us the velocity we need to test new systems and prove whether they will work for us from a business and value standpoint.
Q: How does modern infrastructure enable better member experiences beyond just speed?
KEOUGH: We focus on experience and our members. And that holistic member-centric is key. And we try to think beyond, rather than just serving within, “Oh, I want to come to you for a loan,” and how we can help you share data across so that we can provide personalized guidance.
About a third of the new products that our members take out are from existing members. So, they’re deepening their relationships with us. And I think that’s partly because we have a lot of daily engagement experiences now, too.
The No-dabbling Rule
Q: What’s your advice for executives considering core modernization?
BLACK: No question, all in commitment, no dabbling and you’ve got to understand the fixed base of this type of operation is really significant, the requirement. You can’t have half of this or half of that or half of this in terms of personnel, in terms of data, in terms of compliance monitoring systems and all that type of thing. So, for those who think it’s the easy button for deposits and generates some great interchange revenue, that’s just not the case.
Leadership Trumps Technology
Q: Why is vision more important than the specific technology stack you choose?
MAROUS: All three of the people that we’ve had have a passion, a leadership and a vision for what the end game is, they know their North Star and those organizations that are dabbling, that don’t have the passion, don’t have the place they got to go, do not know the order in which they’re doing things, do not have a priority structure, will not succeed, will not become resilient.
Everything we’ve talked about, too, fast as hell. The reality is that all three companies achieved this very quickly because they possessed the vision, passion, leadership and technology. However, they also knew where they were going, which made it a lot easier.
