Core banking modernisation is no longer just a tech upgrade, it’s a strategic transformation shaping whether banks stay relevant in a digital, customer-driven era. Deloitte’s Dirk Kotzé says success hinges on clear alignment, disciplined measurement and strong CFO leadership. “Core modernisation is like steering the Titanic, once it’s moving, it’s hard to stop,” he warns.
When Dirk Kotzé, Africa financial services industry leader at Deloitte, talks about core modernisation, he doesn’t start with technical jargon or abstract strategy. Instead, he begins at the foundation, the “core” of the bank itself.
“If you think about a bank, the core system is the one that records all financial transactions – from payments to deposit-taking, interest calculations and so on. You could call it the general ledger of the bank,” he explains.
It’s the unseen machinery that powers everything from ATM withdrawals to mobile app transfers. And in Dirk’s view, modernising this system, a process known as core banking modernisation, is not just a matter of technology. It’s a matter of transformation, agility and survival in an increasingly digital, customer-driven world.
The beating heart of the bank
Dirk likens the structure of a bank to an organism made up of a front, middle and back office.
“The front office is what customers interact with, the branch, the ATM, the mobile app. The core is the middle office, it’s where the transactions are recorded. Then the back office, typically your ERP or finance system, captures the final outcomes,” he says.
For decades, the core has been a stable yet rigid foundation for banks. Many of Africa’s major financial institutions still run on systems developed in the 1970s or 1980s, written in programming languages that have long since fallen out of favour. “One of the banks is still operating a system developed in Hogan, that’s from the 1970s and many of those who wrote the code are no longer around. My first programming language was COBOL, that was in 1983.”
That nostalgia quickly gives way to realism. He says old systems just aren’t fit for purpose anymore. They weren’t designed for speed, personalisation, or integration with the cloud. Today’s customers want hyper-personalised, seamless services. They expect banks to move as fast as the technology they use daily, from WhatsApp to digital wallets.
Across Africa, a confluence of factors is driving banks to modernise their core systems. Technical obsolescence is one, but Dirk believes customer expectations and market agility are equally powerful motivators.
“Customers are demanding products that are fit for purpose – tailored to who they are and what they need. In the old days, you got a home loan with a standard interest rate and term. Today, we can use data to design something specific to your circumstances. That’s only possible with a modern, cloud-based core that allows flexibility and rapid product development,” he explains.
Modernisation, then, is more than a simple back-office upgrade – it’s a competitive necessity. And according to Dirk, legacy systems were designed around products while modern systems are designed around customers.
Transformation, not just technology
Yet despite the urgency, Dirk cautions that many banks misunderstand what core modernisation really entails.
“Most people think it’s a technology project. It’s not. It’s a transformation. New ways of working, new skills and new governance.”
This is where the CFO’s influence becomes crucial because for him, the CFO plays a massive role. They’re not just custodians of the investment case. They also ensure strategic alignment, from the vision of the business to the value that’s ultimately created. That synchronisation, he says, is where many institutions stumble.
“You need everyone, from the board to the implementation teams, to be aligned. Without that, roadmaps become vague and transformation loses direction,” he adds.
From Deloitte’s experience across Africa, Dirk identifies two common pitfalls that derail core modernisation programmes: poor stakeholder alignment and a lack of a clearly defined business case.
“The first pitfall is misalignment. The board might approve a modernisation, but the people running the existing system resist change because it affects what they’ve always done. It becomes a change management issue,” he says.
The second is the absence of measurable goals. It is important for one to know why one is modernising. “Is it to cut costs? Improve customer service? Accelerate product development? Without KPIs and regular tracking, you can’t measure return on investment, financial or otherwise,” he says.
That’s where the CFO’s analytical discipline becomes indispensable, because for Dirk, CFOs must track not only financial metrics but also productivity metrics. For instance, are they developing products faster? Are they reducing technical debt? Are they optimising software licensing costs?
Modernising a bank’s core system is a delicate balancing act: transforming operations without disrupting the day-to-day running of the business.
Dirk advises against what he calls “big bang” transformations. “Changing everything at once is rarely advisable,” he says. “It’s too disruptive.”
Instead, Deloitte often recommends a componentised approach: “modernising specific elements on the edge of the system first”.
“It’s a long journey. If you’ve been developing your core for 20 years, it will take time to modernise it. And people come and go during the process. That’s why a proper project charter, a clear roadmap that outlines why you’re modernising and how you’ll measure progress, is essential for continuity,” he says.
Staying the course
For Dirk, successful transformation depends less on speed and more on clarity and he explains that those who succeed have a clear business case, a well-defined roadmap, and consistent measurement.
“Those who don’t lose focus midway and end up still ‘busy’ years later. Core modernisation is like steering the Titanic, once it’s moving, it’s hard to stop. So, you’d better know exactly where you’re headed,” he says.
When asked how CFOs should measure the success of such programmes, he points beyond the numbers.
“Yes, there’s the financial ROI, cost savings, increased revenue, operational efficiency,” he says. “But modernisation is also about customer experience. It’s about being faster to market, creating hyper-personalised products, and improving service delivery.”
These qualitative benefits, while harder to quantify, eventually translate into financial outcomes. “Better service drives customer retention and revenue growth. Quicker product launches mean competitive advantage. Those are your long-term returns.”
Still, convincing stakeholders to invest in a multi-year transformation with intangible payoffs requires a compelling business case, one that CFOs are uniquely positioned to craft.
He breaks it down into four drivers of shareholder value: revenue generation, cost optimisation, asset efficiency and people.
“First, can you generate more revenue? Can you reach more customers with more products at better margins? Second, can you optimise costs, reduce spend on software licensing, maintenance, or manual processes? Third, can you use your balance sheet more efficiently? And lastly, do you have the right people, with the right skills, to make it work?”
It’s a straightforward framework, he says, but one that ensures the business case is balanced between quantitative and qualitative benefits. “If you cover those four, you’ve covered the full picture.”
The legacy talent gap
The discussion of people brings one to another critical challenge: the diminishing pool of legacy talent.
“The people who understand these old systems are retiring. It’s like finding someone who can still fix a Ford Model T, they’re rare.”
“If you modernise gradually, on the edge, you can maintain your current system while bringing in new skills. Over time, you upskill existing employees and integrate new talent who are fluent in modern languages, data science and AI.”
But Dirk is candid about the generational reality and explains that for those closer to 60, it’s harder to keep modernising themselves. That’s why transition planning is so important. He argues that talent attraction and retention is directly linked to the technology stack.
“Digital talent wants to work with modern tools,” he says. “If your finance department still operates like it’s the 1980s, manually producing reports, young professionals won’t stay. Imagine telling a finance graduate that you’re still using an abacus, they won’t even know what that is! But if you tell them you’re using cloud-based analytics and AI-driven reporting, they’re interested.”
Modernisation, then, becomes both a technological and cultural magnet. Modern systems attract modern talent. “It’s that straightforward,” he adds.
Sustaining trust and momentum
Large-scale transformation programmes can span years, outlasting executives, teams and even strategic priorities. Maintaining trust across that lifespan is one of leadership’s toughest challenges.
“Transparency is everything,” Kotzé stresses. “You need to be clear about the plan, communicate progress consistently and ensure everyone, from the board to the project teams, knows where they stand.”
He cautions against the disconnect that often occurs between executives and implementation teams. “Executives might say everything’s going well, while teams on the ground see chaos. That breaks trust.”
Regular, honest reporting bridges that gap and he believes that people want to know how far they’ve come and what’s next. Without that, he explains, one loses alignment. Then the blame game starts. Therefore, transparency and consistent communication are the only ways to sustain momentum.
Continuity is another critical factor and for journeys that can continue beyond three years, people will come and go, a clear project charter becomes the North Star. It ensures that when new people join, they understand the vision and how far the progress is.
Looking ahead, he believes Africa’s banking future will be defined by those markets that can leapfrog legacy constraints.
“Think of it like the telephone,” he says. “Many African countries skipped fixed lines entirely and went straight to mobile. The same can happen with banking systems.”
In his view, countries like Kenya and Nigeria are already leading this leap because the amount of fintech innovation in those markets is phenomenal. They don’t have the same level of legacy systems holding them back, and they’re embracing new technologies fast.
South Africa, by contrast, faces a different challenge, one of transformation rather than adoption. “Our systems are more established, more complex. That makes modernisation harder, but also more necessary.”
As the custodians of value creation, CFOs are increasingly central to these journeys. Their role has evolved from financial gatekeeper to strategic enabler.
“The CFO must bridge vision and value. They must ensure that the transformation aligns with the organisation’s broader goals, and that every milestone, whether financial or operational, is tracked and measured.”
“Modernisation is not about replacing old technology with new. It’s about rethinking how the bank operates, how it serves customers and how it creates value. And that’s something the CFO is uniquely positioned to lead.”
For Dirk, the path forward is clear and urgent. Core modernisation isn’t optional anymore, It’s the foundation for future growth, agility, and relevance in a digital economy. But while the journey may be complex, the reward is substantial.
“When you modernise your core, you unlock the potential not only of your bank but of the broader financial ecosystem, from fintech collaborations to inclusive, accessible banking for everyone.”
