The Modernization Mistake Community Banks Keep Making

Bresnahan argues there's a middle path most institutions overlook, outlining three real pathways — incremental upgrades that add modern capabilities on top of existing infrastructure, modular replacement that modernizes a single product or segment to build confidence before scaling, and full platform migration, which is the most comprehensive but also the costliest and riskiest route. He argues the real reason modernization efforts fail isn't technology, but strategy: too many banks let procurement processes drive vendor selection based on cost and convenience rather than genuine strategic fit, and business cases often collapse when an executive sponsor moves on because ROI was never tied to outcomes leadership actually cares about, like customer retention, margin growth, or speed to market. To illustrate the point, he points to a 120-year-old regional bank with a dominant share in its home market that took the modular path, starting with a cloud migration of its core and sequencing a broader transformation from there rather than attempting everything at once. The piece closes by urging banks to separate strategy from procurement, choose partners who act as genuine collaborators rather than transactional vendors, and pick a modernization pathway that matches their organization's actual capacity for change rather than chasing the most advanced technology available.

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