Steven Van Wyk is a corporate director and the former Group Chief Information Officer (CIO) of HSBC Bank PLC. Throughout his 40-year career, he held senior-level domestic and international information technology roles, including CIO of PNC Financial Services Group, Inc., Global CIO of ING Groep N.V., and multiple roles with Morgan Stanley, including several years as CIO/Chief Operating Officer of its Individual Investor Group. Mr. Van Wyk holds a B.A. in business management and accounting with a minor in computer science from the University of Central Iowa and was awarded an honorary Doctorate of Public Service from Central College in 2019. He is a Certified Public Accountant, Certified Internal Auditor, and Series 27 Financial/Operations Principal. Mr. Van Wyk chairs the Board of the Banking Industry Architecture Network, a non-profit seeking to establish a common architecture framework for enabling banking interoperability.
The banking industry continues to undergo a major transformation, with a strong shift towards digitization. New technologies are allowing banks to revamp their operations in ways we could have only imaged a few years ago. Now, for instance, AI is enabling banks to analyse individual customer data in so they can offer tailored financial products, services, and personalised recommendations in real-time, enhancing user experiences and improving customer satisfaction.
It is essential to remember, however, that a bank’s IT architecture isn’t something that can be completed within a major project or a quick technological upgrade. Instead, it involves a long-term commitment to evolving how they operate, how they deliver services, and how they engage with customers.
Despite this importance, research shows that only 4% of retail banks achieved a high score on business commitment and technology capabilities, while 41% scored average, indicating a “widespread lack of readiness to embrace and effectively implement intelligent transformation”.
In the digital age, there must be a consistent understanding across the entire business on the importance of having an IT architecture that is future ready, and able to evolve alongside the needs of the industry. This is of critical importance given no one can predict what the future holds. But what must organizations consider when developing this type of strategy?
The evolving technology ecosystem
As technological advancements rapidly progress, the incorporation of emerging innovations like AI, small language models, and quantum computing, will fuel both innovation and uncertainty as the industry rushes to adopt and experiment with different use cases, in fear of being left behind.
If we look at AI, for instance. Thanks to the data-rich and language-heavy nature of banking, the industry has been uniquely positioned to capitalize on the developments of AI and has been experimenting with the technology for years. Research shows us that in 2023, financial services firms spent $35 billion on AI, with projected investments across the industry expected to reach $97 billion by 2027. Despite this increasing investment, there is still work to be done to be ensure that AI can reach its potential.
The World Economic Forum recommends that “as AI becomes central to technology strategies, executives must continually evaluate technology ecosystems to capture emerging opportunities, ensuring that AI investments are thoughtfully integrated into broader initiatives.”
AI is just one of the technologies set to disrupt our industry over the next several years. For architects, this may seem like a daunting task, but it is imperative that they focus on how these new technologies might impact their business in the future. By creating a strategy that can evolve alongside these developments and the emergence of newer technology, banks will be well placed to gain from these developments.
What does this look like in practice?
Back in 2019, the Banking Industry Architecture Network (BIAN), a not-for-profit standards body, introduced its Coreless Banking concept. This concept demonstrated how banks could move away from outdated, rigid systems and instead use smaller, more specialized components that can be easily replaced or integrated, by adapting open standards and API-driven ecosystems. Since the concept was initially developed, BIAN has gone on to develop three additional concepts.
Developed in 2024, this concept leveraged AI and machine learning to reduce customer churn by responding to competitive offers. The proof of concept showed that a coreless model, combined with AI, could detect competitive pressure, identify, and refine customer targets, and present personalized offers. Results were then fed back into the model for continuous improvement.
The new concept demonstrated that the delivery of these capabilities through standard service definitions which could be used as building blocks that could be assembled and implemented in unique ways, or even changed, dependent on requirements or the availability of new capabilities.
A clunky and outdated approach
Failing to take a coreless approach means banks will lose out to those who can prioritize flexibility. Research shows that half of IT leaders encounter constraints with their current outdated core systems, hindering their progress towards business objectives. In addition to this, 44% of banks cite the speed that they’re able to bring new services to market as the biggest obstacle caused by their core banking solution.
Not only does this approach incur additional costs and time, but it makes organizations far less competitive and able to keep up with technological development and the needs of customers. For the banking organizations considering their next steps, they must focus on how they can shift their reliance on core systems to a more agile approach that will set them up for success both today and in the future.
Making strides towards the future
The rapid evolution of technology in the banking sector presents both challenges and significant opportunities for growth. As digital transformation accelerates, the need for future-ready IT architecture becomes critical for banks looking to stay competitive and meet customer demands. The shift towards AI, open standards, and modular, coreless banking systems represents the future of flexibility, scalability, and innovation.
To compete, banks must adopt a long-term, adaptable strategy that not only integrates emerging technologies but also fosters an ongoing commitment to rethinking how they operate and deliver services.