Consumers expect financial transactions to be as seamless as streaming a movie or ordering a package for same-day delivery. This demand for immediate processing has put pressure on traditional banks, which operate on legacy infrastructure that was not designed for such rapid execution. Financial institutions are now reevaluating their technology strategies to meet these evolving customer expectations. Companies like Galileo Financial Technologies are advocating for a shift in banking architecture to accommodate real-time financial services. Meanwhile, industry leaders emphasize that modernization is not solely about adopting new technologies but also about aligning business strategies with digital advancements.
Efforts to modernize banking infrastructure have been ongoing for years, yet a significant gap remains between consumer expectations and what traditional banks can deliver. Past discussions highlighted incremental updates to legacy systems, but today’s approach focuses more on composable banking—breaking systems into modular components that can be updated independently. While previous initiatives centered around improving payment speeds, current trends emphasize full integration of financial services into everyday applications, eliminating the need for separate banking interactions.
How Are Banks Responding to Consumer Expectations?
Financial institutions are recognizing that separating technology from business strategy is no longer an option. Dan Williams, senior vice president of Embedded Banking at KeyBank, emphasized that technology plays a critical role in consumer decision-making.
“When you realize how prevalent technology is in consumer choice and how they make payments, how they select things, you realize that the technology strategy and your business strategy are hugely intertwined,” Williams said.
Michael Haney, head of product strategy at Galileo Financial Technologies, pointed out that younger generations, who are accustomed to digital transactions, expect the same immediacy in financial services that they experience in other sectors. He noted that businesses must adapt by offering real-time processing, data-driven insights, and integrated financial services.
What Architectural Changes Are Needed for Modernization?
Upgrading banking infrastructure requires more than just faster transaction processing. Haney outlined three essential components for modernization: cloud-based infrastructure, modern middleware with API management, and a data-first mindset. These elements enable real-time financial interactions, which are now considered essential rather than optional.
“A lot of the legacy architectures didn’t have a data-first mindset, which makes it very hard to get data moving in and out,” Haney explained. “That’s why we see chief data officers arising—especially at large banks—along with data governance, data standards and an overall focus on data.”
Williams reinforced the need for interoperability in financial services, stating that payments must seamlessly integrate into broader business workflows rather than functioning as standalone processes.
Instead of replacing entire legacy systems at once, banks are shifting toward modular approaches. Haney described strategies such as launching digital sidecar initiatives or gradually phasing out outdated systems to minimize disruption.
“Long gone are the days where we have five-year transformation programs and you don’t see business value until the very end,” Haney noted.
Williams highlighted the importance of continuous adaptability rather than pursuing a fixed transformation strategy. He questioned the notion of “futureproofing,” suggesting that flexibility and ongoing improvements are more practical than attempting to create a system that will never need change.
“The more important principle of future proofing is putting your business in a position where you can improve and adapt over time,” Williams said. “It’s all going to change; it’s all going to move on.”
As banks work to meet modern consumer expectations, composable banking has become a necessity rather than a competitive advantage. The ability to rapidly adjust to new demands is now essential in financial services. While FinTechs continue to innovate, traditional banks still hold regulatory advantages, ensuring their continued relevance.
The push for modernization is not just about adopting new technology but about executing it efficiently. Williams noted that many financial institutions understand the importance of digital transformation, but success ultimately depends on execution.
“This is not a strategic problem; this is an execution problem,” Williams stated. “Everyone’s reading from the same cheat sheet around how the world’s changing. It’s just whether or not you can execute.”
For banks, staying competitive means rethinking their approach to financial services. Solutions such as embedded banking and modular modernization allow institutions to respond more effectively to consumer demands. Instead of focusing on large-scale overhauls, incremental improvements in infrastructure and service delivery could provide the speed and convenience that customers now expect.
