Modernizing the Banking Core on AWS: Agility, Scale, and Compliance

Modernizing the core doesn’t mean “turning a bank off and on again.” It means migrating business capabilities to a more agile platform—with faster time to market, predictable costs, and enhanced security.

AWS provides key building blocks like data, integration, mainframe modernization, resilience, and a core-as-a-service ecosystem to accelerate transformation. Success stories like Itaú Unibanco and Capital One show that it’s possible to exit the data center and scale new products with near-total availability.

Why Now? Three Business Drivers

🚀 Innovation Speed & New Revenue

Itaú successfully built its Pix instant payments system on AWS within the Central Bank’s 10-month regulatory window, achieving more than 99.7% uptime, reducing transaction processing costs by around 80%, and scaling to handle over 20 million daily transactions. Leveraging a serverless, event-driven architecture with services like Lambda, Fargate, SNS, Kinesis, and DynamoDB, the solution delivers high resilience and low latency. At the same time, Itaú advanced the modernization of its Credicard platform, adopting a microservices-based, cloud-native foundation that supports rapid feature delivery, seamless API integrations, and customer-driven innovation. Together, these initiatives enable the bank to accelerate digital product development and compete at market speed.

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💡 Operational Efficiency & Exiting the “Data Center Business”

Capital One became the first U.S. bank to fully exit its data centers in 2020, shutting down all 8 facilities and moving 100% to AWS. Today, it runs thousands of applications in the cloud with a serverless-first approach, leveraging services like AWS Lambda to increase agility, scalability, and efficiency.

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🛡️ Compliance & Resilience

AWS-managed services come with built-in security controls, encryption, auditability, and data residency options—facilitating audits and ensuring continuous regulatory compliance.

Common Strategies for Core Modernization

🔹 Augment

Expose current core functionalities via APIs, create a digital layer for new channels/products, and gradually replace legacy components.

🔹 Replatform

Move critical workloads to managed services, and automate testing and regression to reduce risk.

🔹 Progressive Core Replacement

Adopt a cloud-native core, migrating products by domain, while maintaining interoperability with legacy systems.

Note: AWS Mainframe Modernization supports hybrid paths and staged coexistence to minimize operational risk.

Key AWS Capabilities for a Modern Core

• Integration & Orchestration Layer:
  Use Amazon API Gateway, AWS Lambda, and Step Functions to expose core domains and orchestrate microservices. Amazon EventBridge supports event-driven banking architectures.
• Data & Analytics:
  Used by banks like Itaú to accelerate time to market with machine learning.
• Mainframe & Legacy:
  Services and tools for assessment, refactoring, and automated testing to reduce migration cycles and improve quality.

Proven Market Examples

• Capital One:
  Fully cloud-based since 2020, with thousands of applications on AWS using a serverless-first model.
• Itaú Unibanco:
  Modernizing its Credicard and Pix platforms on AWS, establishing cloud governance and an operating model that supports rapid product launches and high availability.

Metrics That Matter to the Board

• Time to Market: From months to weeks for new product/channel launches.
• Availability & Recovery: Improved uptime and faster recovery from incidents.
• IT Efficiency:
  • Lower infrastructure costs
  • Reduced legacy license dependency
  • Gradual data center decommissioning (Capital One as an all-in reference)

Risk, Compliance & Continuity

🔐 Security & Auditability by Design

• Encryption with AWS KMS
• Identity controls with IAM
• Private perimeters via VPC Endpoints / PrivateLink
• Logging and audit trails with CloudWatch and CloudTrail

🌍 Data Residency & Lineage

Use landing zone patterns, tagging, and catalogs to prove data origin, transformation, and usage for regulatory purposes.

🔄 Safe Coexistence (Legacy + Cloud)

Patterns like “strangling the monolith” and automated testing reduce the cutover risk.

Economic Model & FinOps

From Business Case to Run-Rate

Beyond total cost of ownership, it’s critical to define unit economics by domain—e.g., cost per transaction, per active account, per credit approval—and use cost tagging by product and environment.

Cost Optimization Levers

• Replace proprietary licenses
• Auto-rightsizing
• Demand-based auto-scaling
• Serverless for unpredictable peaks
• Reserved Instances / Savings Plans for stable workloads
• Budget guardrails, anomaly alerts, and cost policies to prevent end-of-month surprises

Key FinOps KPIs

• % idle cost
• Cost per 1,000 transactions
• Savings vs. on-prem
• Spend predictability
• Build vs. run ratio

Switch’s Studio-Based Delivery Model

Studio-Driven Delivery

At Switch, we work through a coordinated network of Studios, assigned based on the modernization domain.

This model ensures speed with control:

• Cloud & DevOps define landing zones, private networks, and CI/CD pipelines
• Engineering & UX bring digital capabilities to life
• QA & Cybersecurity implement testing, hardening, and traceability
• Data, AI & ML unlock analytics and intelligent insights from bank data

Modernizing the Banking Core on AWS: A Staged Journey with Real Benefits

Modernizing the banking core on AWS isn’t a leap into the unknown—it’s a phased journey delivering agility, efficiency, and resilience. Leading banks have already proven this.

With our Studio-driven approach and tested playbooks, you can decouple legacy systems, launch digital capabilities faster, and close the gap between strategic ambition and operational execution.

If you’re interested, get in touch. We can run a fast discovery process to identify your first domain, prioritize quick wins, and design a plan that minimizes disruption and maximizes results.

The Bottom Line

Modernizing your core on AWS is, above all, a disciplined investment in execution capacity. The sooner you start, the sooner your platform becomes a driver of growth, innovation, and risk control—today and for the years ahead.

Ready to modernize your banking core with AWS? Let’s connect to explore a low-risk, high-impact path tailored to your goals.

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