Introduction

Legacy banking systems still account for a significant share of IT spending in financial institutions, with 70–80% of bank IT budgets tied up in maintaining outdated infrastructure (McKinsey). While these systems once provided stability, they now limit innovation, speed, and customer experience.

The global core banking software market was valued at $10.89 billion in 2022 and is projected to grow at a 9.3% CAGR through 2030 (Grand View Research). This growth is fuelled by banks modernising legacy cores to keep up with the rise of digital-first competitors, the pressure of new regulations, and demand for instant, mobile-enabled financial services.

As a result, many banks are shifting to modular, API-based platforms that support real-time processing, embedded compliance, and multi-asset management.

Why Banks Replace Legacy Core Systems

Rising customer expectations

Clients expect 24/7 access, real-time transactions, and a smooth digital experience. Legacy cores, often built on outdated mainframes, were never designed for mobile banking, instant payments, or embedded finance.

Compliance and security demands

With growing regulatory requirements such as AML and KYC, banks need systems that integrate compliance tools directly into operations. Old systems require costly customisations and still struggle to keep pace with evolving standards.

Operational inefficiencies

Maintaining legacy platforms consumes resources. These systems are expensive to operate and difficult to upgrade. A heavy reliance on them means banks have less budget and talent available for innovation.

Competition from digital-first banks

Neobanks and fintechs, built on modern software from day one, deliver rapid updates and superior user experiences. Traditional banks risk losing market share if they don’t evolve at the same speed.

Challenges in Legacy Core Replacement

• High cost and complexity: Migrating millions of accounts and transactions without disruption requires careful planning.
• Operational risk: Transitioning to a new core can cause downtime and service interruptions if not managed properly.
• Talent gap: Legacy systems often run on programming languages that fewer engineers understand today.
• Change resistance: Large institutions face internal barriers and cultural challenges when shifting from established processes.

How Modular, API-Based Platforms Help

Replacing a legacy core doesn’t have to mean rebuilding everything at once. Modular, API-based platforms let banks modernise step by step. Each module — such as accounts, payments, or card issuing — works independently, so it can be upgraded or replaced without disrupting the rest of the system.

The API layer connects these modules with external services like payment gateways, KYC providers, or card issuers. This makes it easier to add new features, shorten development cycles, and lower operational risk compared to monolithic legacy systems.

SDK.finance follows this approach with 470+ APIs and a ledger-based foundation that supports fiat, crypto, loyalty points, and other assets. Combined with deployment flexibility — on-premise, private, or public cloud — this model gives banks the freedom to adapt, scale, and innovate without the risks of a full system overhaul.

SDK.finance as a Replacement Path

SDK.finance’s Digital Banking Platform is designed specifically for institutions that want to modernise legacy cores without losing control over their infrastructure.

Delivery models

• Source Code Licence: Complete access and ownership of the codebase, providing unlimited customisation and independence from vendor lock-in.
• SaaS: A cloud-based subscription model enabling faster deployment and lower upfront investment.

Key strengths

• High performance: Processes more than 2,700 transactions per second, scalable to tens of millions daily.
• Modular architecture: 60+ functional modules that can be implemented independently.
• Compliance-ready: Built-in KYC, AML, and PCI DSS Level 1 certification.
• Integration ecosystem: Pre-built connections with payment gateways, card issuers, and verification providers.
• Pre-built UI interfaces: Ready-to-use back-office and customer-facing applications, including a white-label mobile app for iOS and Android, which accelerate implementation and reduce development effort.
• Proven deployments: Used by fintechs and payment providers across Europe, MENA, Africa, and Asia.

Replacing a legacy core banking system is one of the most complex challenges financial institutions face, but it is increasingly unavoidable. Old systems lock banks into high costs, slow innovation, and rising risk. Modern modular platforms built on APIs and real-time processing offer a way forward.