Security by Design: How Cyber Risk and DORA Are Rewriting Core Banking Requirements
The Core Banking System has always been a bank's most critical piece of technology. It holds the ledger, the customer records and the transaction history on which everything else depends. What has changed is how exposed that core has become. Banks now connect their cores to APIs, cloud infrastructure, real-time payment schemes and a growing ecosystem of third-party providers. Each connection adds value, and each adds risk.
As a result, cybersecurity and regulatory compliance have become central to how banks choose core platforms. Epignosis Insights estimates that the global core banking software market reached USD 17.94 billion in 2025 and will approach USD 65.39 billion by 2034, at an 18.0% CAGR during 2027–2034. A growing share of that spending is shaped by security and resilience requirements rather than functionality alone.
A Persistent Threat Environment
Attacks on banks are not occasional events. The European Banking Authority reported that 58% of banks experienced at least one cyberattack in the second half of 2024. DDoS attacks, identity theft and data exfiltration or manipulation remain among the most common techniques used against financial institutions.
The financial impact is also significant. Industry breach-cost benchmarks for 2026 place the average cost of a data breach in financial services at around US$6.3 million, well above the cross-industry average of US$4.99 million. In India, the average breach cost for financial services is estimated at INR 409 million. The same research indicates that around a quarter of malicious breaches now involve AI-enabled techniques, a trend that raises the bar for detection and response.
DORA Turns Resilience Into a Measurable Obligation
Regulation is reinforcing the pressure. The EU's Digital Operational Resilience Act (DORA) sets out requirements covering ICT-risk management, incident classification and reporting, resilience testing and third-party technology risk. Its effect is already visible: during 2025, 3,383 major ICT-related incidents were reported across EU financial sectors under the framework.
DORA matters for core banking because it makes resilience something banks must demonstrate, not just claim. Institutions need systems that can classify incidents quickly, produce reliable audit trails, map dependencies on third-party providers and recover critical operations within defined tolerances.
Operational-resilience guidance from the Basel Committee on Banking Supervision points in the same direction, emphasizing governance, business continuity, mapping of critical operations, third-party dependency management, incident management and resilient ICT, including cybersecurity.
For banks outside the EU, these frameworks still set the tone. Supervisors in many markets look to DORA and Basel principles as reference points, and global vendors increasingly design their platforms to meet the strictest common standard.
What Banks Now Expect From the Core
Security Built Into the Architecture
Banks increasingly expect encryption, identity and access management, privileged-access controls, transaction monitoring, fraud detection and data-loss prevention to be native capabilities of the core rather than separate products layered on top. Embedded controls reduce integration gaps, which are often where attackers find their way in.
Compliance That Keeps Pace
Automated regulatory reporting, continuous auditability and configurable compliance rules allow banks to respond to new requirements without lengthy development cycles. As regulatory change accelerates, the ability to update controls through configuration rather than code is becoming a practical differentiator.
Resilience Across Hybrid Environments
Most banks will run cores across on-premise, private cloud and public cloud environments for years to come. Platforms must therefore protect workloads consistently across all three, support incident-response workflows and give banks clear visibility into third-party dependencies, including the cloud providers on which the core itself runs.
What This Means for the Core Banking Software Market
Epignosis Insights expects differentiation in the Core Banking Software Market to depend increasingly on built-in security architecture, regulatory adaptability, automated compliance and cyber-resilience. Vendors able to show strong controls, transparent resilience testing and clear evidence of regulatory alignment will have an advantage in competitive evaluations, particularly with large and regulated institutions.
For banks, security and resilience should be evaluated alongside functionality from the very start of a core selection process. Questions worth asking include how the platform supports incident classification and reporting, what audit and monitoring capabilities are native, and how the vendor manages its own third-party and cloud dependencies.
The Bottom Line
The modern core is more connected, more real-time and more exposed than ever before. As attacks grow more sophisticated and regulators demand evidence of resilience, security can no longer be treated as a layer added after implementation. It has become part of the definition of a modern core banking platform, and a deciding factor in which vendors banks trust with their most critical systems.