Core systems that don't hold you hostage

The US core banking market is effectively controlled by FIS, Fiserv, and Jack Henry — three platforms built in the 1980s and maintained through four decades of patches, extensions, and workarounds. The ABA and ICBA have been publicly funding research into open banking alternatives since 2018. Every regional bank that wants to add a modern capability — real-time payments through RTP or FedNow, embedded banking APIs, open banking data sharing — must build an integration layer over its legacy core. These integration layers accumulate complexity with every new capability. Eventually the integration layer becomes as complex as the core it was meant to simplify, and the bank is maintaining two sets of technical debt instead of one. CCAR stress testing creates a specific data infrastructure problem: institutions subject to the Federal Reserve's stress testing requirements must demonstrate that their capital calculation data flows are accurate, complete, and reproducible under examination. Most regional banks cannot produce that evidence without manual reconciliation processes that the Fed's examiners have flagged as control weaknesses. FinCEN's BSA/AML enforcement actions in recent years have targeted institutions whose transaction monitoring systems were tuned to reduce alert volume without maintaining detection accuracy — a tradeoff that reduces BSA officer workload but creates regulatory exposure when the tuning decisions are examined.

The Algorithm approaches banking technology engagements with open architecture as the design principle and compliance as the engineering constraint. Core banking modernization follows a migration approach that maintains continuity of operations — new capabilities are built on modern, cloud-native infrastructure that runs alongside the existing core, with transaction types migrated progressively as each is validated. API-first design means that every banking capability is accessible through documented, standardized interfaces — satisfying Section 1033 open banking requirements without a separate compliance build. BSA/AML systems are designed with detection accuracy as the primary tuning objective, not alert volume reduction — because FinCEN's examination focus has shifted from whether institutions have transaction monitoring to whether their monitoring actually detects suspicious activity. Model risk management documentation is produced as part of the build for any system that meets SR 11-7's definition of a model — including AI-assisted underwriting, fraud detection, and AML systems. DORA operational resilience requirements — ICT risk management framework, resilience testing, incident reporting — are addressed as part of the infrastructure design for EU-connected operations.

Financial Services — Banking Compliance Assessment

A structured checklist for evaluating your AI and software vendor's readiness across the key regulatory frameworks in Financial Services. Free — no email required.