Customized development or standard solutions in banking – a focus on the motives

General trend observations in the German banking market

At first glance, the question of standardization versus individuality in IT seems to be a contradiction. However, for banks in particular, it is not necessarily a hard “either/or” decision, but rather a strategic guideline for reconciling the efficiency advantages of both options in the design of their technology strategy. Banks in Germany are increasingly tending to use a mixture of standard solutions and customized developments to drive forward the modernization of their IT landscape. Both options have their advantages and are justified. Finding the right balance for banks therefore requires systematic consideration and an understanding of the basis for decision-making.

Looking at the importance of customized technology solutions for ensuring that banks can deliver their services provides interesting insights into how demand for these services will develop in the future. This blog post takes a look at the drivers for customized IT solutions and outlines the need for possible individual solutions in banking. The focus is particularly on the technological trends and regulatory challenges that could be decisive for the year 2025.

Motivations for IT investments in banking

The basis for IT investments is ensuring smooth banking operations while meeting business productivity and profitability targets. This requires modern IT systems and infrastructures that guarantee the efficient design of value creation in banking. This goes hand in hand with the need to optimize existing system landscapes. Technology is never an end in itself, but serves as a vehicle for customer-oriented banking services and optimized processes. Accordingly, the question of “what for?” is an important indicator for IT spending. A look at the motivation for IT modernization provides important insights:

• Increasing productivity through technological innovation: The banking industry is striving to increase its productivity through the use of innovative technologies such as artificial intelligence (AI), machine learning, and outsourcing IT services to the cloud. These technologies are intended to help increase operational efficiency, exploit economies of scale, and offer personalized services.
• Ensuring competitiveness: Modern and efficient system landscapes are particularly important in competitive industries such as finance. The ability to adapt quickly and agilely to changing market and customer needs is a key unique selling point. Modern IT systems that flexibly implement customer needs and market changes are decisive competitive factors.
• Cost and efficiency advantages: Outdated technologies cause friction costs and delay the time-to-market of financial services. Automated solutions can optimize labor- and resource-intensive processes. To drive forward the modernization of their IT landscape, banks are investing in the modernization of their IT infrastructure. This also involves considering cloud solutions and optimizing technology architectures.
• Customer acquisition and retention: Positive customer experiences throughout the entire customer journey have been high on the agenda for banks for several years. Banks are looking to improve customer penetration and satisfaction through personalized financial services, customer portals, and customized offers based on data analytics and AI. However, modern platforms and ecosystems as well as data-driven business models place high demands on user-friendliness (UX/DX), data quality, and data management, and require powerful IT and system landscapes.
• Demographic development and skilled labor requirements: Banks are facing the challenge of a shortage of skilled workers. At the end of 2023, the financial sector was short of around 33,000 new employees. The average age of German bank employees is currently over 47. Forecasts indicate that financial institutions will lose an average of over 30 percent of their employees by 2030 due to retirement alone. By increasing the level of automation and digitalization in service delivery, they hope to at least partially offset this shortfall.
• Adaptation to regulatory requirements: The financial sector is highly regulated. Banks must ensure that their IT systems comply with all local and international regulations, such as the EU General Data Protection Regulation (GDPR), MiFID II, PSD2, and the requirements of Basel III. This presents banks with various regulatory challenges resulting from new technological developments, geopolitical changes, and an increased focus on sustainability and financial stability. New legal requirements and increasing regulatory burdens require significant investments in IT infrastructure to ensure operational resilience and security.
• Improving risk management: Whether cyber risks or data security, market risks or volatile markets – banks must manage a range of risks that place high demands on transparency. This means they need robust systems for recording and assessing different risks. In view of geopolitical challenges and the expected deterioration in credit quality in 2025, banks are also investing in advanced IT systems to improve risk monitoring and analysis.
• Promotion of sustainability initiatives: The focus on sustainability and ESG criteria is increasing. Banks must ensure that ESG aspects are taken into account in their business models. As part of their sustainability strategies, banks are investing in IT solutions that support financing and consulting in the area of environmentally friendly projects.

What banks can expect in 2025 – catalysts for individual developments

Looking at the key technology drivers in banking, the following trends will play a particularly important role for individual development services in 2025:

AI and machine learning

As AI-based banking applications become increasingly sophisticated, AI is increasingly becoming a key technology for boosting efficiency and offering personalized services. Experts expect AI to be used more extensively, particularly in the areas of regulatory management, risk assessment, and fraud prevention. AI will also be used more frequently in the design of service processes and in interactions with bank customers. As generative AI becomes increasingly integrated into standard banking processes, the demands on data analytics and data management systems will also rise. The demand for customized solutions will lead to increased investment.

Payment transactions and real-time transfers

From January 2025, all banks in the eurozone must be able to receive real-time transfers, and from October 2025, they must also be able to send them. This procedure enables money transfers to be processed within ten seconds and represents a significant advance in payment transactions. The high regulatory requirements and the implementation of specific requirements will increase demand for customized solutions. An expansion and modernization of the infrastructure, particularly in the back-end systems, will be necessary. The same applies to both the payment processing platforms and the underlying data infrastructure. Banks need high-performance, scalable systems that are capable of processing payments in real time and meeting the requirements of SEPA Instant Credit Transfer (SCT Inst) or other national and international real-time systems, as well as ensuring interoperability between systems. Individual solutions are also the preferred option given the dynamic changes in regulatory guidelines and security requirements.

Introduction of the digital euro

The European Central Bank is working on the introduction of a digital euro, which is intended to serve as digital central bank money. This project could revolutionize the way payments are processed and open up new possibilities for payment transactions. The introduction of the digital euro (also known as CBDC – Central Bank Digital Currency) presents banks with a number of challenges and requirements in the areas of technology, regulation, security, and customer support. The lack of state-of-the-art solutions in this context increases the need for customized individual solutions.

Expansion from open banking to open finance

The opening up of financial data across banking boundaries is becoming increasingly important. This enables third-party providers to develop innovative financial services that benefit customers and promote competition. As the business model matures, needs-based solutions will become necessary. Investments in customized technology solutions will also be observed in this area.

Compliance and adaptation to new regulatory requirements

With the introduction of the Digital Operational Resilience Act (DORA), banks will have to adapt their IT infrastructures and security standards to meet the new regulatory requirements. These adjustments particularly affect IT risk management and ensuring operational stability.

We provide support with customized solutions for banking and harmonize technology, maturity, and individual requirements

Standard software helps banks overcome numerous IT challenges by being cost-efficient, secure, scalable, and easy to integrate. These solutions offer rapid implementation, continuous updates, and comprehensive support. The trend is moving toward standard software, especially for routine processes. In specialized areas that require a high degree of differentiation, such as lending, payment processing, or risk management, customized solutions are still in demand.

adesso helps banks strike this balance: When standard software doesn't meet your needs or when a high degree of flexibility, adaptability, and uniqueness is required, our experts support you in developing customized software solutions. Banks rely on custom developments, particularly for complex or specialized business processes, or when a stronger competitive advantage is required—for example, in the development of corporate portals, platforms, credit rating, and risk management systems that are precisely tailored to their requirements.

In the area of digital banking and customer journey design (customer experience, UX), we also support banks in implementing customized solutions that enable personalized services that go beyond the standard. These include tailor-made customer portals or mobile banking apps with functions such as personalized financial advice or particularly user-friendly design. We also provide support with customized software solutions for the implementation of omnichannel strategies in digital sales.

Individual development is also key to innovative solutions, for example in the field of AI and blockchain. adesso works with banks to develop AI-based applications and blockchain solutions for processing transactions and managing digital assets. By partnering with an experienced technology partner such as adesso, banks can leverage modern technologies such as AI and machine learning for new products and services.

Compliance and security solutions are also areas in which we support banks with customized developments – especially to meet high regulatory requirements. Individual compliance functionalities that need to be specifically integrated into processes such as AML, KYC, or Basel III can thus be implemented optimally.

In summary, adesso supports banks in making targeted investments in custom developments – especially in the context of digital transformation, innovative AI and blockchain technologies, compliance, and optimizing the customer experience. Custom developments thus remain a central component of IT strategies in the German banking landscape. Depending on their needs, we also advise and support banks in choosing between standard software, custom development, or hybrid approaches.