Why Financial Institutions Are Modernizing the Mainframe and How to Start the Process

If you made a purchase this week, you most likely interacted with a mainframe without realizing it. Every day, mainframes power 90% of all credit card transactions and billions of ATM transactions across the globe, according to IDC¹ (IDC, Perspective: Mainframe Still Plays a Crutical Role in Financial Services , IDC #US52951525, March 2025). These systems, some decades old, continue to operate as the functional backbone of some of the financial world’s most mission-critical systems.

Benefits of Mainframes in Finance

By building on core systems like the mainframe, some institutions are keeping up with modernization. Banks offer instant transactions and account balances, capital markets offer instant trade, mobile apps handle everything from purchases to peer-to-peer payments, and credit card processors rely on real-time fraud detection tools. In fact, for those institutions continuing to leverage the mainframe, building on it has enabled modernization in a way that offers:

Resilience and Less Downtime

While modern cloud platforms offer impressive resilience, mainframes still set the benchmark for uptime in many high-stakes environments – particularly for tightly scoped, transaction-heavy workloads – thanks to built-in redundancy, workload specialization, and tighter, more mature security models.  

Security and Compliance

Security and compliance are non-negotiables for the financial sector. Nothing downgrades a financial institution’s reputation or generates fines like a systems breach.  

Mainframes are widely regarded as a gold standard for security and compliance thanks to their centralized processing and storage architecture. This centralization ensures there are fewer attack surfaces, built-in encryption, and granular access controls, simplifying adherence to industry regulations like SOX and PCI-DSS.

Scalability and Control

Cloud platforms offer the flexibility to dynamically scale resources up or down to meet fluctuating demand, helping organizations avoid paying for peak capacity year-round. For some financial institutions, mainframes still provide advantages in handling predictable, transaction-heavy workloads at massive scale with precision and reliability. By building on the mainframe while extending into the cloud, organizations can balance elastic scaling with tight infrastructure control, which is a combination that ensures resilience, efficiency, and cost-effectiveness.

Transaction Speed

You’ve probably experienced the excruciating moment between swiping or tapping your card for payment and receiving a delayed response for approval. While a lot of factors contribute to this delay, not just the payment infrastructure, mainframe infrastructure still plays a key role. In the fast-paced world of digital banking, the mainframe is essential for ensuring quick and seamless transactions. While there are various factors that can influence response times, having a robust mainframe infrastructure significantly enhances the speed and efficiency of payment approvals, allowing for a smoother customer experience. Embracing this technology helps keep transactions swift and reliable, making it a crucial component of modern banking. By minimizing the layers between the application and the hardware, mainframe architecture reduces delays in all types of transaction processing, making it attractive to this sector.

Risks of Rewrites  

So what about organizations that choose to move away from the mainframe? A ull-scale re-platform can be a reasonable and feasible choice for some organizations, but how you approach it matters.  

The costs and risks of misconfiguration in complex rewrite projects can be more than just directly financial – they also risk reputational and regulatory disaster. According to Forrester, 90% of these projects fail the first time and can take up to six times before achieving results.  

A better approach is re-platforming existing applications. This strategy modernizes and streamlines systems without requiring a full rewrite. By tapping into cloud-native technologies and microservices, organizations can incrementally shift applications to more agile platforms while keeping core functionality intact. This approach minimizes disruption and provides a more controlled, predictable process that reduces costly errors.

Re-platforming also unlocks greater scalability, performance, and cost-efficiency from cloud environments while preserving high-value mainframe code. It enables seamless integration with modern tools and services, fueling innovation and elevating the customer experience. By embracing a re-platforming approach, organizations strike a smarter balance between modernization and risk management, laying a future-ready foundation for growth and technological advancement.

Benefits and Considerations for Modernization in Place  

Modernizing in place, i.e., building on the mainframe, can be a valuable first step for some banks and insurers. This approach allows institutions to evolve at their own pace and retain the stability and value of mission-critical systems. At the same time, it creates a flexible foundation for adopting next-generation technologies like generative AI and hybrid cloud, bringing together the best of core system strength with cloud-driven innovation.

Rocket Software has guided complex modernization journeys for enterprises across industries, including financial services, whether pursuing on-prem modernization, hybrid cloud, or re-platforming.  

Future-proofing infrastructure in the financial sector means considering the right mix of approaches, building on the mainframe, adopting hybrid strategies, and expanding into the cloud, depending on your institution’s needs. IDC's recent industry report² (IDC, Perspective: Mainframe Still Plays a Crutical Role in Financial Services , IDC #US52951525, March 2025) defines them as follows:

• Modifying the existing mainframe to support private cloud
• Upgrading specific components as needed to support AI’s need for data access and speed
• Keeping existing workloads on-prem
• Modernizing select mainframe applications to run on private or public cloud.
• Re-platforming select applications to run on public cloud, lightening the mainframe’s workload

No matter what approach you choose, Rocket Software is the most experienced partner for the job. Learn more about Modernization Without Disruption and how to get started here.