Can CEE banks afford to delay core banking modernisation?

Modernisation is not simply a technology upgrade; it is a strategic business decision that requires the right priorities, governance and implementation approach.

From digital transformation to AI-enabled banking

For banks across Central and Eastern Europe (CEE), the next phase of transformation is no longer simply about expanding digital channels. It is about rethinking how banking operations, data and technology work together.

This shift puts the underlying technology architecture firmly in the spotlight. AI capabilities depend on access to reliable, well-governed data, effective integration with existing systems and clear controls over how automated processes operate. Fragmented applications, inconsistent data and tightly coupled systems can make it harder to deploy AI across end-to-end workflows and translate experimentation into measurable business value.

For CEE banks, core banking modernisation is therefore not just about improving existing operations. It is about establishing the technological foundations for the next generation of banking—one that combines automation and intelligence with the security, resilience and regulatory discipline the sector demands.

As the industry prepares to discuss the future of banking at Bancee, several key questions emerge: how can banks prioritise modernisation initiatives, manage transformation risks and translate technological innovation into sustainable business outcomes?

Aligning core modernisation with strategic business objectives

Core banking modernisation is most effective when driven by a clear business strategy. Rather than approaching transformation as a standalone IT initiative, banks need to assess how their technology capabilities support their broader objectives, from improving customer experience and operational efficiency to expanding product offerings and entering new markets.

For many institutions, this begins with evaluating the existing technology landscape. Over time, acquisitions, regulatory changes and the introduction of specialised solutions can contribute to increasingly complex architectures. Disconnected systems and fragmented data flows may create additional operational overhead, limit transparency and make it more difficult to introduce new services.

An integrated, API-enabled architecture can help connect core banking functions with digital channels, specialist applications, data platforms and emerging AI capabilities. Consistent access to trusted information can also support more reliable analytics and automation across business functions. Ultimately, the objective is to ensure that modernisation investments contribute directly to the bank’s strategic priorities, rather than simply addressing individual technology constraints.

Balancing efficiency, resilience and regulatory compliance

Technology investment must deliver operational benefits without compromising the stability and control of banking services. This is particularly important as AI and automation become more closely connected to business-critical workflows.

Banks operate within demanding regulatory environments and must maintain effective controls throughout periods of technological change. maintaining data integrity and traceability, preserving reporting capabilities, validating controls and ensuring that critical operations remain available during implementation are key for success.

Modernisation can also create opportunities to strengthen compliance and risk management. More integrated data environments can improve the consistency of information across business functions, while automated workflows can reduce manual intervention and support more standardised processes. Better access to operational data can further help institutions identify anomalies, monitor performance and respond to emerging risks.

Alongside compliance, banks need to establish clear measures of transformation success. Relevant indicators may include reductions in processing costs, improved straight-through processing rates, faster product delivery, fewer operational incidents and shorter implementation cycles. The return on investment should also account for the costs and risks associated with maintaining existing systems, as well as the longer-term benefits of greater scalability and flexibility.

By connecting technology investment to measurable outcomes, banks can make more informed decisions about where to allocate resources and how to assess the progress of their transformation programmes.

Turning innovation into strategic agility

Selecting the right technology is only one part of the transformation challenge. Banks must also determine how to implement change in a way that balances immediate business needs with long-term objectives.

The appropriate approach will depend on each institution’s starting point, strategic priorities, operational constraints and risk appetite. Some banks may favour incremental modernisation, addressing specific capabilities over time. Others may pursue broader platform transformation to simplify their architecture and establish a more integrated operating model.

In either case, a clearly defined roadmap is essential. Transformation initiatives benefit from realistic milestones, clear accountability and close collaboration between IT, business, operations, risk and compliance teams. This alignment helps ensure that decisions are evaluated not only in technical terms, but also in relation to their impact on customers, employees and business performance.

Banks should also consider how their operating models will evolve alongside their technology. New capabilities deliver greater value when processes, responsibilities and governance arrangements are adapted to make effective use of them.

The objective is to develop an organisation that can respond more effectively to change: introducing products more quickly, adapting to new requirements and scaling operations as business needs evolve. In this context, strategic agility is not simply a technical capability. It is the result of combining flexible technology, efficient processes and coordinated decision-making.

Building the foundations for the next phase of banking

For CEE banks, core banking modernisation is increasingly a strategic decision about how to compete, operate and innovate in an AI-enabled financial services landscape.

Artificial intelligence, for example, can support process automation, data analysis and more personalised customer interactions. Cloud technologies can provide additional flexibility and scalability, while application programming interfaces (APIs) can facilitate integration with external services and digital ecosystems. Improved data capabilities can help banks gain greater insight into their operations and support more informed decision-making.

These technologies are not independent of the underlying core banking environment. Their effectiveness often depends on the availability of reliable data, well-integrated systems and clearly defined controls. Where architectures are fragmented or data is inconsistent, deploying new capabilities at scale can become more complex.

At ERI, we believe that a modern, integrated core banking platform can provide an important foundation for this journey. Banks need to consider innovation within the context of their broader technology strategy. The focus should be on moving beyond isolated initiatives towards capabilities that can be integrated into everyday banking operations and deliver demonstrable value over time.