Q2 Fabric: Core Modernization One Problem at a Time

Core modernization is the fastest path to profitable growth, but for most banks and credit unions, it’s also the hardest. Legacy core replacement can feel like a hill too steep to climb—so institutions often go around it rather than through it.

Ignore it completely, though, and you’ll stay stuck. That’s because legacy cores make it difficult to: 

In a standing-room-only session at CONNECT 25, Q2 SVP and Helix GM Ahon Sarkar shared that “big-bang” core replacement is no longer the only path to modernization. The smartest approach for many institutions is solving small, well-defined problems standing in the way of your goals—and building momentum from there. 

Reconsider Where You Start 

Institutions of every size are facing a heavy mandate: grow deposits, diversify revenue, and reduce costs. Core modernization is a giant step toward all three. 

How you start has everything to do with your success. By identifying a single, focused objective—launching a new product, reaching a new demographic, or improving cost efficiency—you can begin a journey of progressive modernization without the burden of replacing your entire core. 

Q2 Fabric helps achieve progressive modernization that drives profitable growth at a fraction of the cost of rip and replace. Fabric weaves together Q2’s best-in-class digital banking platform, the Helix modern core, and Q2 Innovation Studio’s robust, pre-integrated fintech partner ecosystem. Fabric empowers financial institutions to stand up new digital brands, launch products faster, and personalize experiences without complete core replacement. 

The strategies below—all possible with Fabric—represent proven paths to unlocking growth and efficiency—one thoughtful step at a time. 

Grow Deposits and Diversify Revenue 

Whether you're chasing deposits, diversifying revenue, or reaching untapped markets, Fabric delivers the agility to grow—without waiting for your legacy core to catch up.

Get to market faster 

Traditional cores often require nine months or more to launch a basic product—like a high-yield savings account.  With Fabric, institutions break free from the bottleneck. 

Our modern architecture decouples product innovation from legacy constraints—making it possible to introduce high-yield savings accounts, prepaid cards, or modern card controls in weeks, not quarters or years. This agility helps banks and credit unions stay relevant and scale to needs. 

Test New Markets Without Major Investment 

Rather than making a major investment in physical branch expansion, Fabric lets you test new markets digitally. You can stand up one or multiple digital brands on Fabric’s full-stack platform—each tailored to a target geography or niche—and assess where your offerings resonate most. This test-and-learn approach provides agility and data-driven confidence. 

Reach a New Demographic Without Cannibalizing Your Brand 

Monetize Commercial Relationships With Co-Branded Banking 

Fabric also supports innovative co-branding opportunities. Institutions can partner with commercial clients to offer white-label banking services to their employees or customers—meeting a growing demand for financial wellness benefits and deepening commercial relationships. Because Fabric supports multi-tenant, digital-native operations, you can scale the offering without rearchitecting your infrastructure. 

Consider Banking as a Service (BaaS) 

Fabric was purpose-built to power BaaS the smart way—not as a bolt-on middleware patch, but as a secure, compliant, scalable platform with deep operational controls.

Institutions that excel in operations and compliance but need help reaching new audiences can use Fabric to enable embedded banking partnerships that safely deliver outsized deposit growth. You can increase new deposits with clear compliance and less risk exposure. 

Reduce Costs 

Fabric’s modular structure helps lower operating costs by tailoring your tech stack to meet the needs of target groups. 

Segment by Balance and Digital Behavior 

You can serve digital-only, low-balance account holders more cost-effectively on Fabric than on legacy cores. By routing these users to a Fabric-powered stack, reduce servicing costs by up to 66%, freeing up margin to invest in growth—or pass savings along to account holders. 

Segment During M&A Integration 

M&A integration is a perfect opportunity to rethink cost structures. Instead of migrating acquired account holders into a high-cost core, Fabric enables you to segment populations—migrating digital-first users to a more efficient digital stack. This preserves the strategic value of the deal while lowering long-term operating costs. 

Fabric: Your First Step Toward Core Modernization 

No one replaces a legacy core overnight—but modernization doesn’t have to be all or nothing. Fabric gives you the freedom to start small and scale strategically—to launch a digital brand, test a market, segment your user base, or offer embedded banking without rewriting your entire infrastructure. 

In many cases, over time, institutions often find that more than one of these alternative growth strategies makes sense. Once one is implemented, the next one can be pursued. That’s progressive modernization. 

Sarkar points out that while running two cores can feel like a monumental burden, the fact is that processes can be automated at 20% of the lift of a legacy core, while generating incremental revenue from the strategic pivot. 

Q2’s team of experts is working with institutions of all sizes to grow deposits, diversify revenue, and reduce operational costs. Let’s explore where you can start—and how small, strategic moves today can help you thrive tomorrow.