*This article appears in the fourth quarter 2025 issue of Bank Director magazine.
Most community banks remain tethered to decades-old core systems that have hampered innovation. This technology gap represents more than operational challenges. It undermines community banks’ ability to innovate, launch new products and meet evolving customer expectations in ways that threaten their future.
The reality facing community bank leadership today is stark: Legacy core providers have become innovation inhibitors rather than business enablers. In fact, we’re hearing from banks that when they approach many legacy cores with new product ideas or requests for enhanced capabilities, they’re routinely dismissed. Part of the challenge for large core processing companies is that they support multiple core products, which effectively dilutes any innovation or research and development investment from them. The losers end up being the banks that are held stagnant by their current core providers.
This stifles growth and innovation for individual banks and systematically prevents an entire industry from differentiating and competing effectively. However, the consequences extend far beyond individual feature requests. When banks repeatedly find themselves telling their boards and senior management that promising opportunities cannot be pursued because “the system doesn’t do that,” they’re not just losing individual deals; they’re surrendering their strategic autonomy.
As a result, hundreds, if not thousands, of bank tech companies have emerged to fill the gaps in innovation. Standalone digital banking platforms, fraud detection systems and payment rails are often augmentations versus native capabilities of the core platform, translating to increased costs and added complexity to manage third-party risks and operations.
This technological paralysis has created a particularly damaging dynamic within community banking.
Banks know that core modernization is an imperative. In particular, speed to market has become a critical competitive factor. Banks operating on modern platforms can launch specialized products and partnerships in weeks versus years. This agility enables them to respond quickly to opportunities, test new concepts and iterate based on customer feedback. These are capabilities that legacy systems simply cannot support.
A Proven Approach to Core Conversions
Despite knowing that core modernization is critical, most community banks continue to operate on outdated systems because the conversion itself has historically been overwhelmingly complex and risky. However, this is no longer the case. PeoplesBank, a community bank headquartered in Holyoke, Massachusetts, recently created and refined a systematic approach to core modernization that transforms what was once considered a dangerous gamble into a manageable, strategic initiative.
With $4.3 billion in assets and over 90,000 customers, PeoplesBank was able to fully convert to a modern, cloud-native core by migrating to the Nymbus Banking Platform in June 2025. Replacing its legacy systems from the 1980s, the conversion even launched 24 hours ahead of schedule. Here’s a step-by-step of the strategic considerations and tactics that went into this successful migration.
Start With a Sidecar Core
PeoplesBank’s decision to begin modernization without betting the entire institution on an untested approach was key to their success. Rather than attempting a wholesale conversion, they implemented a sidecar core strategy in 2020, launching its digital-only brand, ZYNLO Bank.
This approach allows banks to test modern technology with certain product lines and customer segments while preserving operational stability. PeoplesBank used ZYNLO to validate both the platform and their internal capabilities without exposing their core customer base to conversion risk. The results provided undeniable validation: ZYNLO now has more than $150 million in deposits and over 7,500 customers.
For banks considering modernization, this strategy offers a practical starting point. Launch a digital brand or product line on a new platform first. Use this initiative to build expertise, test processes and gather evidence of improved capabilities. This approach transforms core conversion from a leap of faith into a data-driven decision based on proven results.
Reimagine Operations
One of the most critical insights from PeoplesBank’s experience involves its approach to legacy processes. Rather than simply migrating existing workflows to new technology, they used modernization as an opportunity to eliminate outdated procedures and rebuild operations.
Legacy systems often perpetuate inefficient processes. PeoplesBank knew there were overly complex workflows and manual processes that created operational vulnerabilities. Instead of preserving these problems on a new platform, they developed a systematic plan to eliminate manual processes and design automated alternatives.
Banks pursuing modernization should resist the temptation to simply replicate existing processes on new technology. Instead, use the conversion as an opportunity to examine workflows, eliminate inefficiencies and design operations that maximize the capabilities of modern platforms. This approach ensures that core replacement will deliver transformational value.
Plan for Scalability From Day One
Modern core platforms offer scalability that legacy systems cannot match, but banks must plan their implementations to capitalize on these capabilities. PeoplesBank’s platform uses microservices architecture that allows each system component to scale independently based on demand, ensuring optimal performance during peak periods while enabling rapid updates without affecting other functions.
The scalability indicators from PeoplesBank’s experience demonstrate the potential impact. ZYNLO has grown substantially since launching, while the cloud-native architecture enables automatic scaling without infrastructure limitations. The platform’s design supports growth without the capacity constraints that plague legacy systems.
Banks implementing modern technology should design their architecture for future growth rather than current needs. Choose a core provider that will scale with you, plan for digital channel expansion and ensure that your technology can support aggressive growth without requiring additional conversion projects.
Communication Is Critical
PeoplesBank’s success hinged as much on its communication strategy as its technical execution. Core conversions require meticulous coordination across every department and transparent communication with all stakeholders.
Internally, PeoplesBank established cross-functional project teams that met regularly to address challenges before they became problems. They invested heavily in ensuring that staff understood not just what was changing, but why the transformation was essential for the bank’s future competitiveness. Employees were actively involved in the process and excited about what it meant for them. This upfront investment paid dividends during the actual conversion, when every team member knew their role.
The bank’s leadership maintained consistent communication across the organization, providing regular updates, addressing concerns, and ensuring that governance remained informed and supportive throughout the transformation. This transparency built confidence and maintained institutional support even when challenges arose.
Externally, customer communication proved equally critical. PeoplesBank developed a comprehensive communication plan that began months before the conversion, educating customers about upcoming improvements while addressing potential concerns. They established dedicated support channels and prepared customer service teams to handle increased inquiries during the transition period.
However, it is essential to remember that every conversion is unique, and not all scenarios may be planned for. This is yet another reason why communication and coordination is critical to ensure unforeseen issues can be quickly resolved.
Transformative Results
The successful conversion delivered improvements that touched every aspect of the bank’s operations.
Customer service transformed from reactive to proactive. Representatives can now see complete customer relationships across all products and channels, enabling them to provide personalized assistance and identify opportunities to help customers achieve their financial goals.
Associates have embraced the new system, calling it easier to use, while trainers report faster onboarding and reduced ramp-up time. Manual processes have been automated, and new products that once took months to launch now go live in weeks.
Perhaps most importantly, PeoplesBank gained the ability to innovate at the speed customers expect.
A New Era Begins
PeoplesBank’s vision of preparing for the next century has become reality. The bank that once struggled to compete in a modern world using 1980s technology now operates on a platform designed for the future — fundamentally changing how they serve customers, compete in the marketplace and grow their business.
This success story also provides a road map for other community banks. This isn’t just about technology — it’s about redefining the future of community banking.
