Ask any bank why they haven’t changed cores yet, and the answer will likely be the same: Core conversions are massive undertakings. However, with a deliberate strategy and approach, core modernization is possible.
Consider PeoplesBank, a $4.4 billion community bank in Holyoke, Massachusetts, that recently switched to a modern, cloud-native core platform. The conversion was completed a day earlier than planned, with more than 19,000 customers re-enrolling in online banking in the first 24 hours.
But perhaps more impressive than the execution was their strategic approach, offering a proven roadmap for community banks.
Mindset Is Critical
Setting the conversion apart from others was the bank’s mindset. Successful banks like PeoplesBank don’t approach core modernization as a technology project. They view it as part of their business strategy, starting with a clear understanding of where they want to be in three to five years.
Technology decisions should support this vision, not drive it. Banks that start with “we need a new core” often struggle. Those that begin with “we need to serve small businesses better” or “we want to compete nationally in a specific vertical” make better technology choices.
Crawl, Walk, Run
With the right mindset and strategy in place, banks can then establish the right approach. For instance, rather than betting the entire institution on a wholesale conversion, many successful banks begin with a sidecar core strategy.
This was PeoplesBank’s approach, launching ZYNLO Bank — its digital-only bank — several years earlier. The bank was able to test new technology with specific product lines and customer segments while maintaining operations on its existing platform. It’s a lower-risk way to evaluate both the technology and the service delivery model of a potential new provider. ZYNLO has since grown to over $150 million in deposits with more than 7,500 customers — proof of a strong, results-driven collaboration.
A primary reason why PeoplesBank started here was to test a modern core’s ability to support critical capabilities that legacy systems cannot deliver, such as vertical market specialization. The path to a sustainable competitive advantage for community banks lies in serving specific market segments better than anyone else. Whether it’s military families, healthcare professionals or local business owners, success requires understanding customers’ unique pain points and building solutions around them. This level of customization demands a core that can rapidly deploy new features and workflows without lengthy development cycles.
Reimagining Processes
After a thoughtful, carefully phased approach, PeoplesBank successfully completed a full core conversion in June. As part of the bank’s “It’s a New Day” campaign, the upgrade provides a faster, easier and more secure solution to enhance customers’ digital banking experience. Associates have also embraced the new system, praising its ease of use. Trainers report that onboarding time has been reduced, allowing team members to get up to speed and into branches faster.
Key to PeoplesBank’s success — and a critical lesson for other banks — was their willingness to reimagine processes rather than simply migrate them. Core conversions fail when banks attempt to replicate every legacy business process on the new platform. Banks regularly discover scripts written decades ago by employees who left years earlier, still running every night without documentation or understanding of their purpose.
Core Modernization: No Longer a Moon Shot
PeoplesBank can now envision a future of streamlined processes, improved efficiencies and a foundation for meaningful innovation that will drive revenue growth. They’ve positioned themselves as a pioneer in community banking technology adoption, proving that mid-sized institutions can successfully implement enterprise-grade, cloud-native solutions.
Perhaps most significant, the success of forward-thinking financial institutions like PeoplesBank offers a compelling blueprint for how this transformation can be executed thoughtfully and strategically. The bank’s recent full conversion underscores just how impactful this shift can be when aligned to long-term business goals.
This is particularly important amid growing need in the market. A new American Bankers Association survey found that 35% of banks are dissatisfied with their core processor, and 19% are likely to convert at their next renewal date. Less than half of those surveyed say they would recommend their current core, indicating a strong desire for modernization.
Core modernization used to be a moon shot — now it’s a milestone. PeoplesBank’s journey demonstrates that the right mindset, the right partner and a clear strategic vision can turn a once-daunting project into a springboard for growth, agility and lasting differentiation.
