A Key Dilemma for Banking CIOs

The Expectant Consumer 

As we look ahead to 2026, ‘AI’ will be more than only a buzzword across industries. From Agents becoming a vital part of the customer experience to the automatic completion of purchases in retail, consumers are increasingly expecting to see automation woven into company operations. This expectation is echoed internally too, with 92% of CIOs expecting to harness the technology by 2028.  

The banking industry is no different. However, according to a recent survey carried out by IBM, in association with BIAN, and despite a widespread drive for innovation, multiple banking CIOs still face hurdles when trying to implement practical change. 

Innovation in Practice  

For over 50% of CIOs, cost management presents a fundamental challenge to successful modernisation efforts. Escalated by the fact that only a third of CIOs actively check for vulnerabilities in risk and validation support as they scale, institutions have found themselves exposed to threats, with unexpected security considerations cited as a major reason for the increasing expense.  

In addition, the need for cloud and AI expertise, no doubt exacerbated by the IT skills gap, and the complexity of untangling legacy systems have both contributed to make projects more expensive than first anticipated. For two-thirds of businesses, outdated technology is holding back modernisation efforts and draining 70% of IT budgets. To combat rising costs, financial institutions need a long-term transformation strategy that evolves as they do – but where should they start? 

Modernising to Compete  

As financial institutions choose between the cost of maintaining current solutions and the expense of investing in a new technology stack, there’s another thing to consider: the competition.  

In an age where a multitude of interactions have moved online, neobanks continue to demonstrate the possibility of a seamless, 24-hour banking experience. In a race to keep up, financial institutions are turning to agentic AI, with 17% planning 2026 launches and 42% already in the pilot stage. To meet industry-wide objectives of consistency and compliance, 55% are targeting smarter data handling and analysis of documentation and/or source code. Those who fail to do the same will fall behind, losing customers and ROI.   

Pitfalls of Ultra-Customisation  

The consequences of failing to modernise must be balanced against those of an ultra-customised approach. According to IBM’s survey, 69% of CIOs are seeking implementation of an ultra-customised approach, relying on in-house builds or tailored partner solutions. When laid out in front of the board, this plan can sound promising, but, in practice, frequently fails to enable the necessary flexibility to keep up with the latest innovations. Instead, it can leave businesses stuck where they were with legacy technology, unable to keep up with the rest of the industry. 

Next Steps for Banks 

Considering escalating costs and the potential downfalls of ultra-customisation, CIOs have a big decision to make about the implementation of their company’s innovation approach. With most financial institutions having faced a cyberattack in recent months, a priority must be the ability to keep up with cybercriminals as they constantly evolve their tactics. To do this, balancing cybersecurity considerations, customer expectations, and the potential for reduced IT upkeep costs, a flexible technology stack will be vital to success.    

The Coreless Banking Concept 

To remain compliant, retain consumers, and adopt the latest emerging technology, including developments in agentic AI, it’s crucial for CIOs to prioritise future-proof flexibility over an ultra-personalised strategic plan. This is where coreless banking comes in, enabling CIOs to choose a ‘plug and play’ approach to innovation.  

At the Banking Industry Architecture Network (BIAN), our not-for-profit standards body, we built the Coreless Banking concept to give  the industry a solid foundation for modernisation. From new legislation to growing customer expectations, the expectations of financial institutions are constantly changing. With coreless banking, financial institutions can add or swap components, driven by microservices and open standards to ensure compliance. 

The Future of Banking 

For financial institutions, the goal is clear and has been well summed-up by Emanuel Medina Gomez, Leader of IT Engineering Platform at Bancolombia, who was quoted in The 94% core banking problem report from IBM and BIAN. In it, he outlined the objective “to simplify complexity and foster a cohesive ecosystem where AI, platform engineering, and governance integrate seamlessly to drive transformation at scale”.  

As we head into 2026, many banks remain conflicted on the best way to embrace AI. Driven by a climate of competition within the sector, and under pressure to attract and keep consumers, the curation of a technology stack based on interoperability will be vital to success. To keep up with evolving cyberthreats, the newest emerging technology, and sectoral expectations, the need to be adaptable, while driven by open standards and APIs, is key to future-proofing innovation for the long-term.  

As we finished our 3th Global Banking Summit, all participants agreed that “the risk of doing nothing is much greater than the risk of doing something!”.