“To stay ahead of fast-changing markets, meet evolving regulatory requirements and reduce time-to-market, modernising decades-old cores by moving to the cloud is imperative.”
AI is making that shift easier. Generative AI tools are already streamlining difficult migration tasks, scanning legacy code, generating documentation and mapping dependencies. Mullins points to customers who have used code-transforming systems to reduce upgrade timelines from weeks to days, with productivity rising by as much as 40 per cent.
Scott Mullins, managing director worldwide financial services at Amazon Web Services.
“What was once a costly and risky exercise can now be done at scale with far less disruption,” he says.
Cloud as the foundation for AI
Cloud technology is emerging as the essential pre-condition for AI adoption. Financial institutions cannot build and run advanced AI services without compute power, secure storage and strong governance in the cloud. Mullins says cloud platforms provide that base while embedding controls to reduce risk. “Our approach brings mathematical certainty to AI governance and gives institutions detailed audit trails for regulatory compliance,” he says.
That approach has enabled global financial institutions to deploy AI systems safely, setting benchmarks for responsible use in a highly regulated industry. Engineers and compliance specialists now co-design environments with institutions and regulators, aligning architecture with local rules while keeping data secure.
Paths to a modern core
The routes to modernisation differ. Some organisations begin by augmenting existing cores with new cloud interfaces. Others migrate entire platforms and refactor in phases. Challenger banks sometimes skip incremental steps and build fresh, cloud-native stacks from day one.
Whichever path is chosen, the decisive factor is a modern data architecture. Generative AI requires reliable real-time access to data, something legacy systems were never built to deliver. When financial institutions invest in core modernisation, they can innovate and scale in ways they never would have imagined before. One example is CommBank, whose core banking platform modernisation helps enable personalisation and data-driven insights through AI
Product cycles are accelerating in tandem. Where launches once took more than a year, some organisations now move from idea to market in weeks. In a sector where customers expect seamless mobile experiences and instant personalisation, the gap between laggards and leaders is widening quickly.
That urgency is not just about competition. The nation’s financial regulator, the Australian Prudential Regulation Authority (APRA), recently introduced a new standard, CPS 230, mandating how APRA-regulated entities must manage their operational risks. It requires banks, insurers and super funds to demonstrate stronger resilience, tighter oversight of third-party providers and more rigorous business continuity planning. For institutions still running on ageing mainframes, meeting those obligations is proving increasingly difficult.
“APRA’s CPS 230 aims to enhance operational resilience by strengthening risk management frameworks, improving business continuity planning, and enhancing third-party risk management,” says Mullins. “With standards such as CPS 230 now in effect, agility and resilience isn’t optional – it’s essential.”
Resilience and agility in practice
Transforming the core is not just about speed, it is also about resilience. A failure in a mainframe can bring down critical services, but distributed cloud systems are designed to avoid single points of weakness. Financial institutions are leveraging cloud technology to build architectures that withstand outages and recover within minutes.
National Australia Bank (NAB) demonstrated this by reducing disaster recovery times from hours to under half an hour after migrating its Murex trading platform, while performance improved by nearly a third. “Resilience, agility and developer capability all improve when the core is modernised. Developers get access to modern tools, productivity rises, and the organisation can respond faster to customer demand,” says Mullins.
NAB is also a prime example of how modernisation provides developers with the latest tools. They accelerated software delivery by equipping about 4500 developers with Amazon Q Developer helping to boost productivity of production code coming from AI-generated suggestions. The bank’s experience illustrates a broader pattern – when teams modernise the core, they also modernise how they build, test and ship.
Meanwhile in North America, insurance giant Transamerica modernised about 90 per cent of its 2.5 million lines of COBOL in roughly 14 months using AWS Blu Age, unlocking the ability to launch new products at pace. The common thread is that core transformation shortens feedback loops, improves reliability and frees people to focus on higher-value work.
A customer’s view: Nasdaq
Global capital markets organisations are also reshaping their foundations to cope with global complexity. Robert Schulz, senior vice-president and head of surveillance technology at Nasdaq, says modernisation is now inseparable from growth. “Investing in modern infrastructure is a prerequisite for investing in growth. Companies that prioritise it are better placed to adapt, innovate and maintain strong financial health,” says Schulz.
Nasdaq, which operates regulated markets and provides technology to financial firms worldwide, has spent more than a decade operating workloads in the cloud. This year it deepened its collaboration with AWS with an announcement of a blueprint to help local market operators modernise without sacrificing control.
Schulz says the motivation is clear. “The environment is becoming more complex, so we have to remain nimble and efficient. Modernising our own markets teaches lessons we can apply to clients everywhere,” he says.
Robert Schulz, senior vice-president and head of surveillance technology at Nasdaq.
AI built on modern cores
For Nasdaq, the biggest payoff is the ability to embed AI deeply and responsibly. Modern infrastructure creates consistent data models across operations, allowing effective training of systems that work across multiple business domains. Schulz says AI is now being put into the hands of employees to lift productivity and is embedded in products to deliver measurable benefits.
One example is the first order type approved by US regulators that uses AI to improve trading outcomes. In regulatory technology, agentic AI is being deployed to automate investigation of suspicious payment patterns and to summarise unstructured data around potential market abuse. “We are embedding these capabilities across all products and services, so clients benefit from our investment in fighting financial crime and strengthening compliance,” he says.
New entrants and challengers
For newer organisations, the complexity of today’s financial system can be daunting. Regulatory obligations, compliance regimes and technical standards create barriers to entry. Schulz says modern, cloud-based infrastructure lowers those barriers by providing ready-made, democratised access to foundational capabilities. “That allows new institutions to focus on what makes them unique, while relying on managed infrastructure to handle the rest,” he says.
Challenger financial institutions are proving how fast this can happen. Free of legacy cores, some build fully serverless architectures in under a year, eliminating downtime and cutting transaction processing times. Mullins says such cases show what is possible when institutions combine cloud foundations with AI. “There is no single template, but the goal is the same – create a flexible, scalable architecture that can absorb future innovations while maintaining security and stability,” he says.
Agentic AI, personalised customer service and core modernisation are converging into a single transformation. Institutions that fail to adapt risk being locked out of the next wave of growth, while those that rebuild their cores are creating more resilient and responsive systems.
In Australia, the shift touches all financial services institutions – that means banks, super funds, insurers, non-bank lenders, capital markets firms and fintechs. Each is moving at a different speed, but the direction is clear: the core is being re-engineered not just to support today’s operations but to open the way for tomorrow’s. As Schulz puts it, investing in infrastructure is not about technology for its own sake – it is about building the future of the financial ecosystem.
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