The hidden cost of inaction

When banks delay replacing their core systems, they’re not just postponing a tech upgrade, they’re increasing operational risk. Legacy systems create a cascade of challenges:

• escalating maintenance costs,

• diminishing expertise as specialised staff retire,

• and an expanding knowledge gap that hampers operational efficiency.

For institutions attempting to build modern capabilities around legacy cores, this approach inevitably hits a ceiling, limiting agility at the very heart of the business.

It’s well acknowledged that maintaining outdated core platforms is costly, inefficient, and resource intensive. Yet, in a busy market, the innovation gap between traditional banks and fintechs is stark. Where the average fintech can deploy 20-30 new features a year, traditional organisations can struggle to release an update every three months.This translates in effect to the ability to offer a broader array of innovative products with a faster time-to-market. Fintechs are therefore able to attract more customers at speed with solutions that are ready to meet their needs sooner rather than later.

Meeting Gen Z expectations

Different payment habits, particularly among younger Generation Z customers, have driven a massive shift towards ‘alternative’ payments. The first truly digital-native generation, now the largest age demographic in the workplace, Gen Z’s banking expectations differ fundamentally from those of previous generations. Raised with smartphones in hand, their expectations are to access seamless digital experiences and hyper-personalisation.

Fintechs understand this instinctively. Companies like Revolut and N26 offer frictionless onboarding processes which take minutes rather than days. They're "tech-first" organisations that are comfortable with rapidly testing, iterating, and deploying new features, a contrast to the measured pace of traditional banking.

Even incumbents are beginning to respond, as seen with ABN AMRO recently launching its own digital-first neobank, BUUT, aimed at staying competitive with the agile offerings Gen Z demands.This presents a significant opportunity for growth for those who want to match the performance and flexibility of digital-native competitors.

The path forward: collaboration over competition

Forward-thinking banks have noticed that collaboration with fintechs plays to their advantage. Instead of competing head-to-head, the smart play for traditional banks is to work together to combine trust, scale and reach with agility and innovation.

Rather than aim to do everything in-house; build strategic partnerships which take advantage of API-first systems to move and adapt fast to focus on delivering what matters most: value to the customer. Partnerships with Mambu are a perfect example of this forward-thinking move.

The winners in this new landscape will be institutions who can meet their customers where they are - not the other way around. With banks holding more data than any other industry, agile, cloud-native platforms are key to turning that data into real-time, actionable insight. These platforms scale effortlessly, pulling in data from across systems to power advanced analytics, automate decisions, and surface opportunities instantly as events unfold, ready to respond to customer needs without delay. The result is a faster, smarter, and more competitive bank, ready to act on insight the moment it matters.

With the right technology foundation, banks are at a turning point to reshape, drawing customer data into personalised experiences, dynamic pricing, and contextual offerings that resonate particularly with younger generations.

The transformation won’t be easy; the most beneficial solutions rarely are. But for banks willing to modernise their core, the payoff isn’t mere survival, it’s sustainable growth and leadership in a market that’s moving faster than ever Simply put: banks and fintechs create added value for end-customers when they work together. At Mambu, we make more possible.

Learn more about how Mambu can support financial institutions to make this transition with our cloud banking platform, purpose-built for agility, innovation and a changing market.