Futureproofing European banks’ IT infrastructure to drive agility and business growth

European retail banks are at a crossroads where legacy IT infrastructures can no longer sustain the pace of market change, customer expectations, and regulatory demands. To remain competitive and accelerate growth, banks must future-proof their IT infrastructure—embracing agility, scalability, and innovation as core principles. This transformation, anchored by augmented core banking systems and data-driven strategies, is essential for powering business growth and operational resilience.

The imperative to modernize Europe’s banking IT infrastructure

Europe’s banking sector faces a complex environment: economic uncertainties, stringent regulations, and rapidly evolving customer demands for seamless digital experiences. Many banks still rely on legacy core systems that are rigid, costly to maintain, and slow to adapt. These systems consume up to two-thirds of IT budgets just to keep running, leaving limited resources for innovation.

Modernizing IT infrastructure is no longer optional but critical. Banks must transition to cloud-native, API-first, and microservices-based architectures that enable real-time processing, scalability, and continuous innovation. Such architectures allow independent scaling of services, rapid deployment of new features, and seamless integration with fintech ecosystems. Moreover, they future proof IT investments by leveraging augmented core and data principles. By leveraging a flexible, intelligent and adaptive banking platform, not only can banks respond dynamically to customer, market and regulatory changes but they can easily take advantage of advances in technology. When new capabilities arise, banks can simply swap out old components and slot in new components. As demands for 24x7, always-on services continue to rise, augmented core and data delivers the kinds of self-healing, self-sealing, self-curing capabilities needed.

How future-proof IT infrastructure enables agility

A future-proof IT infrastructure provides the foundation for agility, enabling banks to:

• Respond Rapidly to market changes: Modular microservices and cloud platforms allow banks to launch new products or update existing ones in days or weeks rather than months, critical in Europe’s competitive landscape.
• Scale dynamically: Cloud and hybrid cloud models support automatic capacity adjustments to meet demand spikes (e.g., payroll cycles), ensuring uninterrupted service and cost efficiency.
• Integrate seamlessly: Open APIs foster collaboration with fintechs and third-party providers, expanding service offerings and enhancing customer experiences without overhauling the core.
• Enhance security and compliance: Modern infrastructures incorporate advanced security protocols and centralized management, ensuring GDPR compliance and reducing risk exposure.
• Utilize agentic AI: Operating with goal-driven autonomy, perceiving, reasoning and making context-aware decisions Intelligent virtual assistants and other forms of Agentic AI will transform banking.

Business growth powered by IT transformation

Future-proofing IT infrastructure is a direct enabler of business growth:

• Improved customer experience: Real-time data analytics and AI embedded in modern cores allow personalized, predictive services that build loyalty and increase wallet share.
• Operational efficiency: Automation and self-healing systems reduce downtime and operational costs, freeing resources for growth initiatives.
• New revenue streams: Banks can monetize data assets ethically and transparently, offering value-added services aligned with European data sovereignty principles.
• Cost optimization: Consolidating data centers and migrating to cloud reduces energy consumption and telecom costs, improving overall profitability.

Opportunities enabled by augmented core and data principles

Beyond reducing costs, augmented core and data principles open up numerous opportunities for European retail banks. Not only can real-time data insights provided by AI and ML help revolutionize decision-making processes, but banks can anticipate market trends and customer needs with remarkable accuracy, enabling them to stay ahead of competitors. Better decision-making and enhanced strategic planning capabilities allow banks to make more informed choices that align with market dynamics and customer preferences.

Augmented core and data enable banks to deliver highly personalized services. AI-powered chatbots and virtual assistants offer real-time support, while data analytics tailor services to individual customer needs. This personalization enhances customer experiences, fostering loyalty and engagement. Banks can leverage augmented core and data to create innovative products and services. This includes developing new financial instruments, enhancing mobile banking apps, and integrating with emerging technologies like blockchain. Such innovation drives growth and positions banks as leaders in the financial sector.

Cloud computing provides operational resilience and agility. During market disruptions, banks can seamlessly scale resources to meet fluctuating demands, ensuring continuity and customer satisfaction. This flexibility is crucial for maintaining service levels and adapting to changing conditions without compromising performance. Consolidating data centers and migrating to cloud reduces energy consumption and telecom costs, improving overall profitability. This cost optimization is essential for maintaining competitive advantage and maximizing resource efficiency.

Strategic steps for European banks

• Adopt cloud-native core banking: Where permitted by regulations, transition to cloud-enabled, microservices-based platforms that support scalability and continuous innovation.
• Leverage enhanced services: Partner with technology providers offering a wide range of value-added services, including fully managed solutions to simplify operations and accelerate migration.
• Build a robust data strategy: Combine internal and external data sources to enhance predictive analytics and customer insights while ensuring compliance.
• Upskill IT and business teams: Invest in talent development focused on cloud, AI, and agile methodologies to sustain transformation momentum.

Conclusion

European banks that future-proof their IT infrastructure position themselves to be agile, innovative, and customer-centric. By embracing augmented core and data-driven strategies, banks can navigate the complexities of the modern financial landscape and deliver exceptional value to their customers. This transformation is essential for sustainable business growth, operational resilience, and competitive differentiation in a rapidly evolving market.

The adoption of cloud-native, API-first, and microservices-based architectures will enable banks to respond swiftly to market changes, scale dynamically, and integrate seamlessly with fintech ecosystems. Real-time data insights provided by AI and ML will revolutionize decision-making processes, allowing banks to anticipate market trends and customer needs with remarkable accuracy.

Innovation and cost optimization are key benefits of modernizing IT infrastructure. Banks can create new financial instruments, enhance mobile banking apps, and integrate with emerging technologies like blockchain, driving growth and opening up new revenue streams. By taking these strategic steps, European banks can achieve unparalleled agility, operational resilience, and customer-centricity, securing a competitive edge in the rapidly evolving market.

References:

¹Device42, How Banks & Financial Institutions Use IT Infrastructure Visibility to Become More Resilient
²EY, How should Asia-Pacific banks push the frontiers of transformation? 
³Frank Luong, Future of Core Banking: Trends and Transformation 
⁴Italtel, Agility and efficiency in banking services: a tailored solution for a leading Finance Multinational