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Why Credit Unions Are Rushing to Modernize Their Core Banking Systems in 2025

April 21, 2025
Caitlyn Truong

In the rapidly evolving financial services landscape, credit unions across the country are facing mounting pressure to modernize their core banking systems. This transformation isn't merely about keeping up with technology trends—it's about survival, competitiveness, and meeting the changing expectations of members.

As we navigate through 2025, the urgency around core banking modernization has never been greater. This article will explore why credit unions are prioritizing these initiatives now, the challenges they face, and how Zengines is helping them navigate this complex journey.

The Growing Urgency for Core Banking Modernization

Aging Infrastructure Reaching Critical Limitations

Many credit unions are still operating on legacy core systems that are up to 40 years old, running on mainframe hardware coded with outdated programming languages such as COBOL. These systems were designed for a different era of banking and struggle to support modern digital services.

Recent incidents highlight the vulnerability of these aging systems—in late 2023, approximately 60 U.S. credit unions experienced significant outages due to a ransomware attack against a third-party service provider, exposing the fragility of outdated infrastructure.

Rising Member Expectations

Today's credit union members expect seamless, personalized digital experiences that rival those offered by fintech companies. They want real-time transaction processing, instant payments, and mobile-first interfaces.

Legacy core systems – built decades ago – simply weren’t architected or designed for today’s modern needs, so they aren’t able to deliver these capabilities at scale or at speed. Credit unions that can't meet these expectations risk losing members to competitors who can.

Competitive Pressures from Digital-First Financial Services

Traditional banks and fintech startups are aggressively targeting credit union members with innovative digital services. The competitive landscape has become more intense, particularly as we move through 2025, with fintechs offering specialized services that many credit unions struggle to match due to core system limitations. According to CUInsight's 2025 trends report, digital banking is no longer a differentiator but a baseline expectation.

Business Expansion Opportunities

Credit unions are increasingly looking to expand into commercial banking services to grow their business. The opportunity to capture market share from traditional banks in 2025 is significant, but success requires modern treasury platforms with capabilities like real-time cash management, automated loan underwriting, and advanced fraud detection—all of which demand a modern core banking foundation.

Regulatory and Compliance Requirements

Evolving regulatory requirements are putting additional strain on legacy systems. Compliance with new data privacy regulations, security standards, and reporting requirements is becoming increasingly difficult with outdated core systems, creating operational and legal risks for credit unions.

Common Challenges in Core Banking Conversions

Data Migration Complexity

One of the most significant challenges in any core conversion is migrating decades of financial data accurately and completely. Credit unions struggle with data inconsistencies, missing information, and mapping complex relationships between different data elements. The risk of data loss or corruption during migration can have severe consequences for member trust and operational continuity.  

Two key drivers of this challenge are the lack of resources (people/solutions with pattern recognition on the data conversion) and the lack of automation tools to deal with the unpredictability, messiness and volume of data.

Technical Integration Hurdles

Modern banking requires seamless integration between the core and numerous third-party systems and services. Legacy cores often lack open APIs and interoperability features, making integration with modern services difficult and expensive. Credit unions frequently find themselves trapped in a complex web of customizations and workarounds.

Operational Disruption Risks

Core conversions are high-stakes projects with significant operational risks. Any downtime or functionality issues can directly impact member services and trust. The fear of disruption often leads credit unions to delay necessary modernization, creating a vicious cycle of increasing technical debt and growing conversion complexity.

Resource and Expertise Constraints

Many credit unions lack the specialized technical expertise needed to execute a successful core conversion. The mainframe and legacy system knowledge required is increasingly scarce as skilled professionals retire. Additionally, the complexity of these projects demands higher-cost resources that may strain already tight budgets.

Extended Implementation Timelines

Core conversion projects typically span multiple years, with some credit unions reporting wait times of 2-3 years just to begin implementation with major providers.

These extended timelines delay the realization of benefits and create challenges in maintaining project momentum and stakeholder support. According to EY's case study, core modernization journeys often extend to five years or more.

How Zengines Solutions Address These Challenges

AI-Powered Data Migration

Zengines' data migration solution leverages advanced AI algorithms to dramatically accelerate and de-risk the data conversion process. Our technology automatically analyzes source data, predicts optimal mappings, and identifies data quality issues in minutes rather than months. This AI-driven approach reduces the time and cost associated with data migration while significantly improving accuracy.

An incremental modernization process is crucial for credit unions that need to unlock their mainframe data for product innovation while keeping security at the forefront.

Key Benefits:

  • Automated schema matching and data mapping that's 6x faster than manual methods
  • Intelligent data profiling that surfaces quality issues before they impact your conversion
  • AI-assisted transformation rules that eliminate costly engineering time
  • Comprehensive testing and reconciliation tools to ensure data integrity

Mainframe Data Lineage for Legacy Systems

For credit unions with mainframe-based core systems, Zengines' Mainframe Data Lineage solution provides unprecedented visibility into "black box" legacy applications.

Our technology parses mainframe code, job schedulers, and data structures to create a comprehensive map of data flows, business rules, and system dependencies. This addresses what Fiserv identifies as a critical need: understanding the business case and outcomes before undertaking modernization.

Key Benefits:

  • Visual mapping of data relationships across legacy systems
  • Discovery of embedded business logic and calculation rules
  • Identification of data interdependencies to reduce conversion risks
  • Acceleration of requirements gathering for the new core system

Real-World Success

Credit unions and banks implementing Zengines solutions have experienced remarkable improvements in their core conversion projects:

  • 80% faster data migration compared to traditional methods
  • 6x productivity increase for business analysts working on mapping and transformation
  • 99% reduction in reconciliation break resolution, significantly decreasing time and risk in testing, post-conversion data issues, and member or customer impact
  • Months saved in the overall conversion timeline

As one executive recently noted: "What would have taken our team months to accomplish manually, Zengines helped us complete in weeks. The AI-assisted mapping and transformation capabilities dramatically accelerated our timeline while giving us confidence in the accuracy of our data migration."

The time for modernization is now - Zengines can help

The urgency for credit unions to modernize their core banking systems continues to grow as we move through 2025. As FIS emphasizes, "A bank deciding to keep playing the waiting game is taking a major risk" in today's competitive landscape. Those that successfully navigate this transformation will be positioned to thrive in an increasingly competitive and digitally-focused financial services landscape.

With Zengines' AI-powered data migration and mainframe data lineage solutions, credit unions can overcome the most challenging aspects of core conversion projects, reducing risk, accelerating timelines, and ensuring a seamless transition for their members.

As the Federal Reserve Bank of Kansas City notes, "Depository institutions (DIs) that have already completed their core system modernization and realized the benefits have a competitive advantage in the banking and payments markets."

Don't let your technology project move too slowly or your data migration become a barrier to progress. Contact Zengines today to learn how our solutions can help your credit union successfully modernize your core banking system and prepare for the future of financial services.

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We're excited to unveil our refreshed visual identity, a transformation that mirrors our company's evolution, recent funding success, and expanding product portfolio. This strategic rebrand marks a pivotal chapter in our story, reflecting our company's growth and evolution while honoring the core principles that have guided us from the beginning.

The evolution of Zengines

Born from a vision of technological freedom in 2020, Zengines emerged with a clear purpose: to ensure data maintains its utility and integrity when transitioning between systems to remain valuable regardless of technological evolution. We recognized that companies everywhere were being handcuffed by their data - trapped in legacy systems and hindered by the complex, time-consuming process of data migration. What should have been a straightforward path to digital transformation was instead a journey filled with roadblocks, delays, and frustration.

Our journey began with a powerful AI-driven data migration solution that dramatically simplified how organizations convert and migrate their valuable data end-to-end. As we partnered with more clients, we discovered a critical insight: many businesses couldn't even begin their migration journey because they were paralyzed by "black box" legacy systems. Decades of mainframe COBOL code and undocumented processes had created an impenetrable maze of data paths that no one fully understood.

This revelation led to our groundbreaking Mainframe Data Lineage product, technology that illuminates these black boxes by exposing the hidden data paths, calculation logic, and relationships buried within complex legacy systems. By helping companies understand their current data environment first, we enable them to confidently plan and execute their migration or modernization strategies.

Today, with our recent funding round success, our comprehensive platform addresses the full spectrum of data transformation challenges, from unveiling the mysteries of legacy code to seamlessly migrating data into modern systems. As we've grown from a promising startup to an established technology partner for global enterprises, we needed a visual identity that reflected this evolution and maturity.

Our new visual language

Our refreshed identity system embodies our brand attributes of being trusted, exciting, and hyper-intelligent. The new design system is built around a sophisticated geometric serif logotype that communicates intelligence and innovation.

Our new color palette distinguishes the Zengines brand, adding meaning, energy, and depth to our identity.

A key visual element in our new identity is the Sankey illustration language, which makes visible the invisible connections between systems. Inspired by the fluid connections formed during data migration, this visual element adds movement and reflects the intelligent transformation at the heart of our work – all to maintain data continuity and utility through the inevitability of enterprise and systems change.

Why this matters

This new identity isn't just about aesthetics - it's a reflection of our growth and maturity as an organization. Our client roster has expanded significantly to include global enterprise organizations that recognize the critical importance of managing data transitions and modernization efforts effectively. These partnerships with Fortune 500 financial institutions, global wealth managers, and leading technology providers have pushed us to elevate every aspect of our business, including how we present ourselves visually.

As we've expanded our capabilities from AI Data Migration to include Mainframe Data Lineage, our visual system needed to convey the sophisticated technology and trusted expertise we bring to solving complex data challenges. Enterprise clients with decades of legacy systems and millions of customer records require a partner they can trust implicitly with their most valuable asset - their data. Our refined visual identity now properly reflects the enterprise-grade solutions we deliver and the confidence our clients place in us.

Our commitment remains unchanged

While our look has evolved, our fundamental mission remains steadfast: to create a world where data retains utility and integrity regardless of technological evolution, and technology decisions are based on business needs - not migration fears or legacy constraints. We remain committed to helping organizations reduce time, cost and risk while ensuring successful project outcomes through our AI-powered solutions that empower the business user.

As we continue to grow and evolve, this new visual identity will serve as a strong foundation for clearly communicating the value we deliver - making complex data migrations and research simpler, faster, and more reliable for our customers.

We will continue to serve our customers with the same dedication and innovation they've come to expect from Zengines, now with a visual identity that better reflects who we are today.

Looking to learn more about our products and capabilities?

Schedule a demo with our team today.

In this episode of The Disruptor Podcast, host John Kundtz interviews Caitlyn Truong, CEO and Co-founder of Zengines.

Mainframe Modernization Prioritization and Challenges

While mainframes are highly performant and reliable, many organizations are seeking to modernize them to de-risk legacy technology.

Mainframe legacy technology is risky to organizations for several reasons, including:

  • Code written decades ago with SMEs no longer available
  • Fewer people familiar with older programming languages
  • Lack of standards in older code making maintenance difficult

According to Caitlyn, "There are more lines of COBOL code in existence than any other programming language," making mainframe modernization particularly challenging.

Zengines Mainframe Data Lineage Product

Caitlyn explains that Zengines' Mainframe Data Lineage product was developed when they discovered a client struggling to modernize because their mainframe was a "black box." The product ingests schemas, metadata, code (including COBOL and JCLs) to create a data lineage information base, helping business analysts understand calculation logic and conditions critical to modernization success.

Zengines' Mainframe Data Lineage product helps organizations understand their legacy systems by providing:

  • Interactive research application and data
  • Data lineage with graphical visualization
  • Relationship mapping between modules, tables, fields, and variables
  • Tables and fields inventory with profiling
  • Calculation logic analysis
  • Branching/conditional statement analysis

Recommendations for Mainframe Modernization Success

Caitlyn's recommendations for mainframe modernization success include:

  • Understand what you're converting and the full lineage/interdependencies
  • Have a guiding strategy and design - use phased approaches rather than "big bang"
  • Employ proper tools for data lineage to answer questions about the system
  • Start small with something you know you can convert, then celebrate successes

Her most important advice is to "get started" rather than spending too much time planning: "You'll learn and get more value just by doing."

Listen to the full episode

In today's increasingly regulated financial landscape, banks and financial institutions face mounting pressure to ensure complete visibility and traceability of their Critical Data Elements (CDEs). While regulatory frameworks like BCBS 239, CDD, and CIP establish clear requirements for data governance, many organizations struggle with implementation, particularly when critical information resides within decades-old mainframe systems.

These legacy environments have become the Achilles' heel of compliance efforts, with opaque data flows and hard-to-decipher COBOL code creating significant blind spots. Zengines Mainframe Data Lineage product offers a revolutionary solution to this challenge, providing unparalleled visibility into "black box" systems and transforming regulatory compliance from a time-consuming burden into an efficient, streamlined process.

The Regulatory Challenge of Critical Data Elements

For banks and financial services firms, managing Critical Data Elements (CDEs) is no longer optional - it's a fundamental regulatory requirement with significant implications for compliance, risk management, and operational integrity. Regulations like BCBS 239, the Customer Due Diligence (CDD) Rule, and the Customer Identification Program (CIP) mandate that financial institutions not only identify their critical data but also understand its origins, transformations, and dependencies across all systems.

However, for institutions with legacy mainframe systems, this presents a unique challenge. These "black box" environments, often powered by decades-old COBOL code spread across thousands of modules, make tracing data lineage a time-consuming and error-prone process. Without the right tools, financial institutions face substantial risks, including regulatory penalties, audit failures, and compromised decision-making.

"Financial institutions today are trapped between regulatory demands for data transparency and legacy systems that were never designed with this level of visibility in mind. At Zengines, we've created Mainframe Data Lineage to bridge this gap, turning black box mainframes into transparent, auditable systems that satisfy even the most stringent CDE requirements." - Caitlyn Truong, CEO, Zengines

The Hidden Compliance Challenge in Legacy Systems

Many financial institutions operate with legacy mainframe technology that can contain up to 80,000 different COBOL modules, each potentially containing thousands of lines of code. This complexity creates several critical challenges for CDE compliance:

  1. Opacity of Data Origins: When regulators ask "Where did this value come from?", companies struggle to provide clear, documented answers from within mainframe systems.
  2. Calculation Verification: Understanding how critical values like interest accruals, risk assessments, or customer identification data are calculated becomes nearly impossible without specialized tools.
  3. Conditional Logic Tracing: Determining why specific data paths were followed or how specific business rules are implemented requires manually tracing through complex code branches.
  4. Resource Scarcity: Limited availability of mainframe or COBOL experts makes compliance activities dependent on a shrinking pool of specialized talent.
  5. Documentation Gaps: Years of system changes with inconsistent documentation practices have left critical knowledge gaps about data elements and their transformations.

"The challenge with mainframe environments isn't that the data isn't there—it's that it's buried in thousands of COBOL modules and complex code paths that would take months to manually trace. Zengines automates this process, reducing what would be weeks of research into minutes of interactive exploration." - Caitlyn Truong, CEO, Zengines

Introducing Zengines Mainframe Data Lineage

Zengines Mainframe Data Lineage product is purpose-built to solve compliance challenges like these by bringing transparency to legacy systems. By automatically analyzing and visualizing mainframe data flows, it enables financial institutions to meet regulatory requirements without the traditional manual effort.

How Zengines Transforms CDE Compliance

1. Automated Data Traceability

Zengines ingests COBOL modules, JCL code, SQL, and other mainframe components to automatically map relationships between data elements across your entire mainframe environment. This comprehensive approach ensures that no critical data element remains untraced.

2. Visual Data Lineage

Instead of manually tracing through thousands of lines of code, Zengines provides interactive visualizations that instantly show:

  • Where data originates
  • How it transforms through calculations
  • Which conditions affect its processing
  • Where it ultimately flows

This visualization capability is particularly valuable during regulatory examinations, allowing institutions to demonstrate compliance with confidence and clarity.

3. Calculation Logic Transparency

For BCBS 239 compliance, institutions must understand and validate calculation methodologies for risk data aggregation. Zengines automatically extracts and presents calculation logic in human-readable format, making it simple to verify that risk metrics are computed correctly.

4. Branch Condition Analysis

When regulators question why certain customer records received specific treatment (critical for CDD and CIP compliance), Zengines can immediately identify the conditional logic that determined the data path, showing exactly which business rules were applied and why.

5. Comprehensive Module Statistics

Zengines provides detailed metrics about your mainframe environment, helping compliance teams understand the scope and complexity of systems containing critical data elements.

"When regulators ask where a critical value came from or how it was calculated, financial institutions shouldn't have to launch a massive investigation. With Zengines Mainframe Data Lineage, they can answer these questions confidently and immediately, transforming their compliance posture from reactive to proactive." - Caitlyn Truong, CEO, Zengines

Real-World Impact: Accelerating Compliance Activities

Financial institutions using Zengines Mainframe Data Lineage have experienced transformative results in their regulatory compliance activities:

  • 90% Reduction in Audit Response Time: Questions about data calculations that previously took weeks or months to research can now be answered in minutes.
  • Enhanced Confidence in Regulatory Reporting: With the ability to see, follow, and explain data origins and transformations, institutions can ensure the accuracy of regulatory reports.
  • Reduced Dependency on Specialized Resources: Business analysts can now answer many compliance questions without requiring mainframe expertise.
  • Improved Risk Management: Comprehensive visibility into how critical risk metrics are calculated enables better oversight and governance.
  • Future-Proofed Compliance: As regulations evolve, having comprehensive data lineage documentation ensures adaptability to new requirements.

Beyond Compliance: Strategic Benefits

While regulatory compliance drives initial adoption, financial institutions discover additional strategic benefits from implementing Zengines Mainframe Data Lineage:

  1. System Modernization Support: The detailed understanding of data flows facilitates safer, faster and more accurate modernization from legacy systems - this may include requirements gathering, new development, data migration, data testing, reconciliation, etc.
  2. Operational Efficiency: Rapid identification of data dependencies reduces development time for system changes.
  3. Risk Reduction: Comprehensive visibility into mainframe operations reduces operational risk associated with mainframe management and changes.
  4. Knowledge Preservation: As mainframe experts retire, their implicit knowledge becomes explicitly documented through Zengines.

"What we've discovered working with financial services firms is that CDE compliance isn't just about satisfying regulators—it's about fundamentally understanding your own critical data. Our Mainframe Data Lineage solution doesn't just help banks pass audits; it gives them unprecedented insight into their own operations." - Caitlyn Truong, CEO, Zengines

Getting Started with Zengines

For financial institutions struggling with CDE compliance across legacy systems, Zengines offers a proven path forward. The implementation process is designed to be non-disruptive, with no modifications required to your existing mainframe environment.

The journey to compliance begins with a simple assessment of your current mainframe landscape, followed by automated ingestion of your code base. Within days, you'll have unprecedented visibility into your critical data elements – transforming your compliance posture from reactive to proactive.

In today's regulatory environment, financial institutions can no longer afford the uncertainty and risk associated with "black box" mainframe systems. Zengines Mainframe Data Lineage brings the transparency and traceability required not just to satisfy regulators, but to operate with confidence in an increasingly data-driven industry.

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