Banks face a growing talent crisis as legacy system experts retire and younger engineers reject outdated tech, making core modernisation a workforce priority.
The escalating talent crisis in banking, driven by retiring legacy system experts, Gen Z’s aversion to outdated tech, and soaring maintenance costs for obsolete payment infrastructure, is forcing banks to treat core modernisation not merely as an IT upgrade, but as essential workforce insurance to attract young talent, secure operational continuity, and meet the seamless digital expectations of next-generation customers.
Much ink has been spilt over the risks for banks clinging to legacy systems, and it seems that the message is finally sinking in. For instance, a recent report revealed “almost two-thirds of banks engaging in card systems migration within the last two years”. To add fuel to the fire, the rise of AI is changing how an entire generation interacts with their devices, software, digital tools, and more.
While I would like to believe that decades of pot banging and alarm ringing by service providers have finally had an effect, I suspect the industry-wide change in mindset is actually linked to a simple calculation that can no longer be ignored – while legacy systems can be maintained almost indefinitely, a legacy workforce cannot. At least, not without great cost.
The real cost of keeping the lights on
Banks are making genuine efforts to modernise. We see institutions migrating to cloud-native solutions, adopting API-first architectures, and embracing AI and automation. These are the right moves, and they are delivering real improvements in efficiency, innovation capability, and customer experience.
At the same time, global banks are projected to spend $57 billion by 2028 to maintain outdated payment systems. That is not an investment in new capability; it is the cost of treading water.
When pressure mounts to cut costs, banks look to reduce headcount. But here lies the trap: they cannot touch the tenured specialists maintaining legacy systems without risking operational collapse. So cuts happen everywhere else, while the legacy workforce segment remains untouchable and continues to grow. Almost 80% of banks surveyed employ the same number of, or more, people in their card systems departments than five years ago, at a time when automation should be reducing headcount and making routine tasks easier.
Of course, the shift of competence has to be managed, and this requires significant time and cost, but the risk of lagging and the cost of inaction are higher.
Anecdotal as this may be, I am hearing stories from all directions about banks paying through the nose to pull their legacy experts back from retirement and help smooth over their migration/transition efforts.
But that is the core issue facing virtually everyone right now – the employees who understand these legacy systems, who can navigate COBOL codebases and maintain critical infrastructure, are retiring.
And Gen Z is not queuing up to replace them.
Gen Z is not interested in old tech
When your core systems run on mainframes older than the people you are hiring, you have already lost the recruitment battle. A workforce study revealed that 80% of Gen Z want to work with innovative, cutting-edge technology, and 91% say a company’s technological sophistication directly influences their job choice.
Not to mention, we are seeing the rise of Gen Alpha, who are AI-natives. Their workflows and interactions with digital tools will differ from those of previous generations. They will instinctively turn to AI and LLMs to solve problems and create solutions. As it stands, legacy systems will remain outside the AI ecosystem, creating an increasingly wide gulf between the technology and the users who must maintain them.
If you are a young talent, especially at an idealistic age, what is your motivation for choosing to dive into legacy tech that is likely to be replaced in the not-too-distant future, anyway? The learning curve is steep, the work feels like maintenance rather than creation, and their peers at fintech startups are shipping new products every quarter.
At the same time, banks need this talent badly. Not just to fill seats left by retirees, but because fresh perspectives drive innovation. When you cannot attract young engineers, you lose more than headcount – you lose the ability to evolve at the pace the market demands.
And here is the scale of the problem: banking is one of the largest employment sectors globally. Europe alone had 1.8 million bank staff in 2024. What happens when new talent stops entering the ecosystem? It is not just the banks and institutions offering entry-level positions that are affected. It is also the major players who have adopted a poaching strategy for high performers.
The talent shortage has a mirror image on the customer side. Gen Z grew up with seamless apps, instant payments, and embedded finance. They expect their bank to work like everything else in their digital lives. The same outdated infrastructure that repels young engineers is also more likely to produce the clunky customer experiences that drive young customers elsewhere.
Time to treat the talent divide with the seriousness it deserves
Modernisation is not just IT cleanup; it is also workforce insurance. Banks need to treat core system transformation as a hiring and retention strategy. If the stack stays legacy, top engineers, especially Gen Zers, will not join, and the bank loses future capability along with its current competitiveness.
Build on open, well-documented, industry-standard platforms: New systems should be transparent, modular, and API-driven, instead of another closed black box that only three people can support. Openness and documentation enable new talent to onboard quickly and keep knowledge within the bank rather than locking it in a few ageing specialists or a single vendor. We are moving toward API banking, API-first architecture, AI and automation, and modern payment rails, but achieving these transformations will not happen by retraining 50- and 60-year-old specialists on entirely new technology paradigms. It requires hiring young talent who grew up with these technologies.
Capture critical knowledge now: Many core payment and ledger systems still depend on a handful of senior experts. That institutional knowledge needs to be documented, automated, and transferred before those people retire. More and more banks are discovering that waiting until someone announces their departure is too late. This should be an active, ongoing initiative that treats knowledge transfer as mission-critical infrastructure.
Show real migration, not just roadmaps: It is no longer enough to present a cloud strategy or AI roadmap at board meetings. Banks need to prove that real payment volumes are already running on modern, supportable rails. Talent wants to see evidence of transformation, not promises of future change. They want to join organisations that are already on the journey, not ones perpetually planning to start.
Recognise that your brand equals your tech stack: Technology maturity has become a core part of employer branding. If the inside of your bank still looks like 1999, you will lose engineers to competitors and fintechs with modern infrastructure. And once you lose the engineering talent, you will lose the next generation of customers as well, because you will not be able to build the experiences they expect.
Treat this as a systemic risk, not just an IT cost item: If the last person who understands your legacy payment engine leaves, that represents an operational stability risk that belongs on the board agenda, not buried in IT budgeting discussions. This is about business continuity and long-term viability, not simply infrastructure refresh.
The banks that recognise modernisation as workforce insurance will be the ones that thrive in the next decade. They will attract talent that competitors cannot, build products that customers demand, and maintain operational resilience that regulators require. The question is not whether to modernise, it is whether you will do it fast enough to secure your workforce before the window closes.
