Partner Piece - 10x Banking and Their Meta Core Approach
Discussing the realities that bank leaders face with digitisation, the existing inertia to core transformation and the bridge that 10x offers to straddling modernisation and stability
Illustration by Mary Mogoi - Website
This is a Frontier Fintech partner piece. With partner pieces, we work with Fintech companies to generate insights and fresh thinking on a specific topic whilst educating the market on the value that our partners bring to the market. This week we’re digging into the Core Banking System market and how 10x is well positioned to help Tier 1 banks with their modernisation journeys.
We have shared our Partner Piece Policy before to ensure that we work with people that we feel aligned with and whose products actually benefit the market. Our partner piece policy ensures that we retain the trust that our readers have in Frontier Fintech.
Introduction
The core banking world is always in flux. In the last year, a number of banks in Africa have embarked on core banking shifts with varying results. From abject failure to moderate success and, for some, impressive outcomes. It’s an industry that radiates energy all the time. The energy is a function of the inertia of change always rubbing up against the market-driven realities of bank modernisation. The latter is held back by not only technology but often, traditional mindsets.
I was talking to a friend of mine about the job market for tech talent. He provided some really interesting insights about how the modern tech job is getting shorter and shorter, largely as a result of project timelines shrinking. The latter is a derivative of the speed at which technology is always changing. ChatGPT’s rise from a niche product to a must-have for everyone is the perfect example of this sudden shift. The future in tech jobs could be one of engineers having two-month revolving gigs. This current tech reality is a constant source of stress for tech leaders within banks, particularly when it comes to core banking transformation.
In the 1990s, Bill Gates succinctly predicted Kodak’s demise, calling it “toast” during a conversation with Warren Buffett and Bill Ruane. Gates foresaw how digital photography would disrupt Kodak’s business model, even though Kodak had pioneered the technology. It wasn’t an immediate death—supporting technologies like cheaper digital cameras and ubiquitous storage took time to mature. Kodak's story, while not perfectly analogous to banking, teaches a key lesson: platform shifts are slow until they’re sudden. Without the incremental advancements enabled by Moore’s Law and the internet, Kodak might have survived. The banking world now faces a similar inflection point.
This article is about the context in which banks are facing innovation challenges and how they can leverage 10x Banking’s platform to future-proof themselves. It will cover the history of core banking systems, explain the friction that exists between the need to maintain stability and the need to innovate, highlight the drivers for core banking change, explain why a dual-core approach makes sense, and explain what 10x Banking brings to the table.
A primer on Core Banking Systems
Understanding the current Core Banking market requires a historical understanding of the industry. I wrote about it some years back and you can revisit the article for more detail. The context of the article is that core banking like any other platform is a function of the economic environment in which banks are operating. As standardisation was the core paradigm of the industrial era, data and AI could be the paradigms of the new technological era.
Core banking systems are the backbone of modern banking, handling key functions such as ledgers, account management, balance computation, and product engines. The first generation of core banking platforms, emerging in the 1960s, leveraged mainframe technology to centralize transactions across branches, introducing batch processing for end-of-day updates. These systems, while highly reliable and built for peak transactional throughput, were costly and limited by their centralized design. The 1970s and 1980s saw the rise of second-generation systems that integrated new channels like ATMs and telephone banking but continued to rely on mainframes, compounding complexity and maintenance costs. In the 1990s, a third generation introduced application servers and more customizable product engines. However, these monolithic systems struggled with reliability and scalability, especially as customer expectations for always-available banking grew.
By the 2010s, as mobile and internet banking gained traction, banks relied on workarounds to modernize legacy cores, such as hollowing out core functionality or layering APIs over monolithic systems. These solutions, while functional, introduced significant complexity, data silos, and technical debt, ultimately stalling innovation and increasing costs. The limitations of earlier systems paved the way for the current fourth-generation core banking platforms, defined by cloud-native designs, microservices architecture, enhanced data capabilities (e.g., Kafka, CockroachDB), and API-first approaches. These modern systems enable flexible scalability, seamless integrations, and lower costs, addressing the long-standing challenges of their predecessors while meeting the demands of a digital-first banking era. 10x Banking is part of the wave of these new modern platforms or neo-core platforms as they’re called. 10x specifically thinks of itself as a meta-core banking platform, an idea that we will discuss in more detail.
The current core banking environment consists of two main players. 3rd generation core banking platforms that were birthed in the 1990s and early 2000s as well as the Neo-core platforms. Amongst the former are players like Temenos, Finastra, Oracle Flexcube and Finacle by Infosys. This group is dominant amongst Tier 1 banks in Africa, Asia, Europe and the Middle East. Most top banks run on either of these platforms and it’s critical to understand why they are core to these banks.
Incumbent Players - The Workhorses of the Modern Tier 1 Bank
To grasp the current banking ecosystem, it’s essential to know how these systems were developed and what banks now prioritize in their technology partnerships. In the 1990s prior to the API economy, cloud computing and micro-services, software was built and sold in a completely different way. Without APIs and micro-services, software had to be built in a monolithic manner i.e. functionality tightly packed within the product. To serve banks properly, core banking systems had to include all the modular components that banks needed such as ledger management, account management, product engines, transaction services, payments and others such as compliance and reporting. Given that it was difficult to integrate other services, the key requirement from your core banking provider was that the system they sold was as feature rich as possible. Moreover, all software was sold on prem. Buying a Core Banking platform meant having a team from the Core Banking provider together with installation partners size up your requirements and install both hardware and software . These projects were usually long and full of risks.
The outcome was that Core Banking providers had great economics and very strong vendor lock-in given the switching costs involved. The economic model was centred around;
Software licenses priced based on the number of accounts or other markers of size - meant to ensure the bigger a bank you are the more you pay;
License renewals based on regular system upgrades with banks urged to renew on the basis that support will halt for older versions;
An ecosystem of partners that handled installations and helped with sales;
Software sales bundled with hardware and database products with Oracle being the preferred database partner;
Revenue growth for a legacy core banking provider centred on maintaining accounts, increasing wallet share within existing accounts and onboarding new banks. Given that there was an extensive feature set within the existing system, growing wallet share centred around increasing functionality by launching a plethora of new features.
Banks on the other hand grew accustomed to these systems. By and large they did their core job of helping the bank to maintain accurate ledgers, store value in accounts and serve their critical corporate segments well with an extensive feature set. It's a relationship that worked. In fact, in a continent with limited acceptance of cloud computing, the marriage of traditional core banking systems and on-prem environments did its job.
The Uphill Battle of Unseating Incumbent Players
Over the last 10 years, the Fintech revolution has swept across the world. The rise of the cloud led to the “software is eating the world era”. Innovation cycles have become shorter, the world has digitised and customer expectations of their digital experiences have shot through the roof. Responding to this shift, some players in the banking industry noted that core banking platforms have to adjust. Anthony Jenkins, founder of 10x Banking was part of the insiders who saw this shift. At Barclays, he realised that bank systems were simply not up to scratch and to modernise banks, one had to go deep into the core rather than make changes at the engagement or UX layer. His was a deep-seated frustration on how banks were innovating. Okan, 10x CPO tells me about how “people want to buy homes, they don’t want to take mortgages… bank systems need to be built on this central idea of the customer and their data”.
This generation of Neo-Core players set out to modernise core banking systems for the 21st century. They built systems with the following foundational elements;
Cloud-Native - built for the cloud;
Modular and not monolithic - relying on micro-services;
Everything as an API;
Cloud agnostic;
Data streaming (using kafka) rather than batch processing;
Sold as SaaS with the customer benefiting from constant upgrades - Away from the versioning paradigm;
Incumbent players responded by repurposing their systems for the cloud and introducing as many APIs as possible without becoming truly cloud native.
Incumbents like Temenos and Finacle struggle to build cloud-native systems from scratch due to the entrenched architecture of their systems, designed for on-premise reliability and tightly coupled features. Rebuilding would require rethinking their entire operational model and refactoring their entire codebase, a daunting task given their legacy dependencies and client reliance. Instead, repurposing existing systems offers a practical path, allowing them to modernize incrementally by integrating cloud-compatible components while preserving compatibility with legacy systems. This approach minimizes risk, maintains client trust, and balances innovation with the practicalities of serving an established customer base, even if it falls short of full cloud-native flexibility.
Banks on the other hand have witnessed this client shift towards digital. A recent survey by KMPG found that over 42% of clients only interact with banks through their apps. This is expected to grow with higher smartphone penetration and more Gen-Zs entering the workforce. However, despite all this, there is no real impetus to drastically alter their core banking systems. The reasons are varied;
Incumbent providers have a strong feature set which is important for most banks;
Existing workarounds such as API layers and moving more and more functionality to the engagement layer has done a good enough job to enable banks to “modernise”;
Cloud regulations in most African countries are still prohibitive with on-prem environments preferred;
Existing systems over-time have built strong, localised compliance and regulatory reporting features;
Incumbent providers have built robust ecosystem partnerships that make upgrades or improvements easier for banks;
The result of all this is that banks are effectively locked in to their core banking vendors. At the moment, there’s no strong enough reason for CIO’s to put their careers on the line and institute a complete platform shift to neo-core players. On the back of this, incumbent core banking system providers have no real impetus to re-architect their systems to be truly cloud native. It’s a win-win situation for both, a marriage of convenience if you will.
The Tides are Shifting
So far we’ve explained the stable equilibrium that exists between incumbent core banking providers and large banks. A bias for stability enables both players to continue with existing approaches to core banking modernisation. Nonetheless there are some factors at play that are pressuring banks to modernise at a faster rate or at least think about it.
The Need for Speed in Product Innovation
There’s an expectation nowadays that banks should be able to quickly launch new products. Whether it’s a new SME product or a digital proposition for lifestyle banking. The challenge banks face goes back to the fact that incumbent providers are still effectively monoliths. This means that banks don’t have the capability to quickly design new products. Often, change requests must be made for such capabilities to be enabled. The fact that incumbent providers are handling multiple banks, the level of priority a bank is given is proportional to the amount of Annual Maintenance it pays. I remember this vividly having run a small bank in the Great Lakes region that ran on Flexcube. We were pretty much forgotten. In fact, we toyed around with the idea of building a new core banking system.
The result is that banks are limited in how much they can innovate. With Neo-cores, product management is a much more straightforward process and often banks have the capabilities of building out new functionalities from scratch.
A New Breed of Leader
Millennials are now in their forties and Gen-Zs are starting to approach their 30s. The bulk of the world's productive workforce are either Millennials and Gen-Zs. This means that Gen-X CIOs are slowly being replaced by Millennial CIOs and CEOs for that matter. One outcome of course is going to be a bigger emphasis on technology being a driver of competitive differentiation. Another outcome more structural in nature is that banks will slowly start embracing the idea of “Best of Breed”. In this approach, the idea is that rather than having functionality provided by one platform, a bank can use APIs to stitch together different capabilities. A treasury solution can be provided by a dedicated treasury solutions platform and the same for trade finance, onboarding, KYC and regtech. Currently, leaders prefer the ease in vendor management that comes with having all functionality tightly packed into one solution.
Agentic AI and the need for Real-time Data
I wrote an article recently about the role of Agentic AI in rebuilding new bank products. The core idea is that the logic that’s tightly packed into existing banking systems will shift to an AI layer that houses all the business logic. Citi in one of their recent GPS publications comes to a similar conclusion. Their report is worth a read. The main take-out from all this is that in an agentic world, the requirements from your database will shift. You will need your ledgers to be real-time, API first and cloud native to scale with the requests coming in from the swarm of AI agents. The point I made in the article is that this transition will be much faster given that the building blocks are already in place. The consumer apps exist, the data exists and the initial shift towards digital transaction enablement has already happened. In a world of AI agents, having a truly cloud native ledger provider will be critical. To be fair, workarounds can still be built and the industry will respond to this. However, a cloud native platform will make a difference.
Other Factors
In addition to these core factors, additional pressures are emerging from;
Open Banking and the need to comprehensively respond to data driven mandates. A number of banks are struggling to adequately implement open banking due to their existing systems;
Cost Pressures - Traditional core banking players are relatively expensive compared to modern providers who offer flexible pricing such as usage based pricing;
Competitive Pressure from Fintechs - Whilst this has mostly been in theory at least from a revenue perspective, Fintechs are slowly starting to become a competitive threat. In markets like South Africa and Nigeria, the rise of Tymebank and Moniepoint pose a long-term threat to incumbent banks from a customer acquisition perspective. In Kenya, M-Pesa has slowly started adding to its product offering with the launch of a savings product called Zidii.
With all that said, it’s becoming clear that having a modern platform is no longer a luxury but it's slowly becoming a necessity.
Dual Core - The Most Logical First Step towards Modernisation
So far we’ve discussed the inertia that exists within the system as well as the competitive pressures that are driving change. A middle-ground must be had.
The only logical conclusion is that tier 1 banks are well advised to adopt dual-core strategies. In such a strategy, a bank can adopt two core banking solutions. Their traditional system and a modern neo-core system. These would be integrated by an API middle-ware layer like Zafin, Backbase or M2P. The idea is that new products can quickly be launched using the Neo-Core system whilst legacy products are maintained in the traditional system. The middleware would ensure data integrity overall and that ledgers can easily be maintained. Of note is that over the years, middleware solutions have matured in sophistication and reliability.
Through such a system, a bank can achieve the following benefits;
Reduced risk given that you don’t have to overhaul mission critical systems at once;
Faster innovation by launching new products quickly;
A test bed for innovation - A bank can use their neo-core platform to test new propositions. Agentic AI is a key area where the benefits of neo-core platforms such as real time data streaming makes sense;
Cost efficiency given you only pay for what you use;
Future proofing - By having a neo-core to play with, banks can slowly add more functionality to their modern core and invest less in the traditional core if need be;
10x Banking and How They’re Set up to Support Tier 1 Banks
So far, the logic for investing in a neo-core has been made clear and what’s more, the idea of a dual-core approach is becoming the only valid way of sustaining innovation. Leading global banks such as JP Morgan, Morgan Stanley, ANZ Bank and Standard Chartered have all in some way utilised this strategy. The question then becomes; which neo-core platform should be used.
In this regard, 10x Banking stands out for a number of reasons which I found compelling.
The Meta-Core Approach
Neo-Core Banking Systems can either be Framework Cores or Configuration Cores. Framework Cores provide a toolbox approach to building and managing core banking systems. They offer banks the flexibility to create and customize their banking operations using pre-designed patterns and tools. In essence they’re a blank canvas and banks can then build the system they want using the toolkit provided. The challenge with framework cores particularly in Africa is that most banks don’t have the talent required to work with a framework core nor the time and effort.
Configuration cores on the other hand provide a ready-made approach, with predefined features and processes that banks can configure to meet their specific needs. They come with ready to use features that a bank can quickly set-up. Nonetheless, the challenge with configuration cores is that they’re a “bank in a box” approach and would only work if your bank has a very narrow use case in most instances.
10x solves this approach by building what they call a Meta-Core approach that combines the best of both. They have ready made functionality that comes out of the box and on top of that provide the frameworks for the bank to build on top of this pre-existing configuration. This enables a bank to achieve the best of both worlds. In a market like Africa where banks often come across very unique product requirements such as pro-rating fees, having the capability to create your own logic can be a long-term competitive advantage. With 10x Banking, they offer a polyglot environment for software development meaning that you can build your software using whichever language your developers are used to.
Distributed and Scalable Design
10x Banking’s architecture leverages microservices and advanced messaging systems like Kafka to ensure scalability and resilience. Each microservice operates independently, with its own database and messaging capabilities, eliminating bottlenecks. In pilot environments, the platform has demonstrated its ability to handle 500,000 transactions per second (TPS) in India and can support environments with over 100,000 TPS, making it one of the most robust solutions for high-volume banking operations. This scalability is very critical for tier 1 banks that are known to have millions of customers. A retail proposition in a large market like Nigeria, Egypt, South Africa and Kenya can routinely be expected to have over a million customers. Given the prominence of mobile-centric approaches to financial services in some of these markets, then scalability is critical for success.
Monitoring and Resilience
Resilience is a cornerstone of the 10x Banking platform, ensuring reliability even in the face of unexpected failures. Its event-driven architecture processes tasks as "events" that can be replayed if errors occur, guaranteeing no data or transaction is lost—a capability known as fault tolerance. The platform also leverages Elastic Kubernetes Service (EKS) to manage and scale its microservices dynamically, allocating resources as needed during high-demand periods to ensure seamless operations.
A standout feature is the "Logan’s Run" pod lifecycle management, which ensures consistent system performance by periodically replacing older pods (containers running microservices) with fresh ones. Over time, these pods can develop inefficiencies that might affect performance, so this proactive refresh prevents minor issues from escalating into larger problems. Together, these features enable 10x to deliver a platform that is both reliable and responsive, maintaining uninterrupted service even during peak loads or technical disruptions.
Adaptability to Regional Cloud Restrictions
Flexibility is a defining strength of 10x Banking, enabling banks to tailor their core banking systems to meet diverse regulatory, operational, and market-specific needs. The platform offers two deployment models: a fully managed Software-as-a-Service (SaaS) solution hosted on public cloud platforms like AWS and a licensed option for private cloud environments. The SaaS model provides scalability, cost efficiency, and reduced operational overhead, ideal for markets with advanced cloud adoption. Meanwhile, the private cloud option gives banks greater control over their infrastructure, allowing them to meet data sovereignty and regulatory requirements. This dual approach ensures that 10x Banking aligns with the varying realities of global and regional markets, making it a versatile solution.
In the African context, this flexibility is particularly critical. Many African countries, such as Nigeria and Egypt, enforce stringent data sovereignty laws that require sensitive customer data to remain within national borders. The private cloud option ensures compliance while enabling banks to modernize. Additionally, in regions with inconsistent internet connectivity or less developed cloud infrastructure, the ability to deploy in private or hybrid cloud environments ensures reliable service delivery. For banks in rapidly digitizing markets like Kenya and South Africa, the SaaS model provides the scalability needed to meet growing customer demands. By accommodating these diverse challenges, 10x Banking empowers African banks to innovate at their own pace while maintaining regulatory compliance and operational stability, ensuring they remain competitive in an evolving digital landscape.
A growing ecosystem of partners
10x Banking works closely with a network of system integrators (SIs) and technology partners to ensure that banks experience a smooth and efficient transition to its platform. System integrators play a crucial role in bridging the gap between 10x’s cutting-edge technology and the bank’s existing infrastructure. These partners bring specialized expertise in managing complex migrations, customizations, and integrations, reducing the risk of disruptions during implementation. Whether it’s integrating the 10x platform with a bank’s legacy systems, setting up APIs, or ensuring regulatory compliance, these SIs provide the hands-on support needed for a seamless transformation.
Additionally, 10x’s collaboration with technology partners enhances the platform’s ecosystem by giving banks access to a wide array of complementary tools and solutions. Some of these partners include Zafin, Suntec, Form3, Paymentology, Salesforce, Onfido, Ozone API, Feedzai and Feature Space. Their collaborations are growing, enabling true best of breed capabilities.
Data Migration Expertise: How 10x Works Alongside Existing Core Banking Systems
10x Banking ensures a seamless transition from legacy systems to its neo-core platform by emphasizing a controlled, piecemeal migration strategy. Instead of advocating for risky "big bang" migrations, 10x recommends moving functionalities incrementally, starting with front-book operations and new customers, while gradually transitioning back-book data and processes. For banks with modern integration layers sitting atop their legacy cores, 10x integrates smoothly beneath this layer, routing new messages to its platform while legacy systems handle existing traffic. This phased approach minimizes operational disruptions and allows both systems to coexist during the transition.
For banks lacking integration layers, such as those solely reliant on systems like Temenos, 10x collaborates with system integrators (SIs) to build middleware solutions that facilitate migration. Using extract, transform, and load (ETL) processes, data from legacy systems is carefully migrated to 10x’s platform. This incremental "hollowing out" of the legacy core ensures that critical operations remain intact while leveraging 10x’s modern architecture. By avoiding disruptive wholesale changes, 10x provides a pragmatic and low-risk path to modernization, enabling banks to embrace new technologies without jeopardizing stability.
A Picture of Success - Building a Digital First Bank in South Africa with Old Mutual
Early in 2024, Old Mutual and 10x Banking announced their partnership towards building a digital first bank. In a market that has digital savvy players like Tyme Bank and sophisticated incumbents like Standard Bank, NedBank and Absa, this announcement was particularly interesting. Old Mutual’s approach was that they felt that a bank should exist in the background like a commodity. What was critical was to enable clients to better manage their financial lives and therefore, it was critical to get the technology right. To enable the kind of rich personalisation that was needed to transform banking from a set of transactions to a financial assistant, they had to get their core banking strategy right. From the start, they had to sell the idea of building best of breed to their board and navigate the board's natural aversion towards the sort of execution risk that comes with such an endeavour.
They have successfully managed to implement the system. 10x is in conversation with a number of other Tier 1 banks across the continent especially in markets like Kenya and South Africa. The core idea of dual-core approaches seems like a winning approach for Tier 1 banks
A future with 10x
It seems clear that for many large banks in Africa, a dual approach may be necessary to balance the need for innovation and the need for stability. 10x Banking is likely to be an important partner in this dual core strategy.