Why Europe’s banks must rethink how they build digital solutions

In today’s race toward digital transformation, banks across Europe face a critical inflection point: continue optimizing legacy systems through rigid, scope-driven projects or shift toward a product-led approach that prioritizes customer outcomes, agility, and long-term value.

For years, project-led banking software development has been the go-to model for banks. It excels at delivering well-defined outputs within strict budget and timeline constraints. But increasingly, this model is showing its age. In a landscape defined by open banking, fintech disruption, and shifting customer expectations, the traditional project mindset is often too narrow, too slow, and too fragmented.

The alternative? Product-led fintech software engineering – a model built around creating, delivering, and continuously evolving digital products that directly serve users. And it’s gaining traction fast.

What Is Product-Led Software Development?

At its core, product-led development is not just a methodology – it’s a mindset.

Rather than focusing on discrete tasks or deliverables, product-led teams are empowered to own the full lifecycle of a solution: from ideation to release, and beyond. This includes:

• Continuous delivery and feedback loops
• Iterative development cycles
• Cross-functional collaboration
• Outcome-based roadmaps
• Flexibility in budgeting and planning

More than just agile by name, product-led software development embed customer-centricity into every engineering decision – resulting in software that’s not only functional, but intuitive, relevant, and adaptable.

Why Banks Are Embracing Product Engineering

In interviews with technology and engineering leaders across the banking industry, a clear theme emerged: Speed to market and customer value are becoming non-negotiables.

As one former head of core engineering at a large bank shared:

“The biggest frustration that we had was the business; they just weren’t proper product owners at the end of the day. So what we ended up having to do is… keep a bunch of business analysts around, which are not a part of any agile model, to basically do the work of the business.”

It’s a telling insight. While the will to shift is there, legacy structures, roles, and habits often prevent banks from fully realizing the benefits of a product-led financial software engineering model

The Challenges: Why This Isn’t a Simple Switch

Many banks still struggle to establish clear product ownership. Common roadblocks include:

• Resistance from traditional project managers
• Siloed operations between business and tech teams
• Lack of product management talent in-house
• Poorly defined KPIs for product success
• Overburdened engineering teams acting as proxy owners

This is more than an operational hiccup – it’s a strategic vulnerability. Without clear ownership, products can suffer from scope creep, misalignment with customer needs, and disjointed experiences.

How a Fintech Software Partner Accelerates Growth

Transitioning to a product-led model is not just a cultural leap – it’s a structural and operational overhaul. A strong custom fintech software development partner can accelerate this transformation by providing expertise, structure, and capacity when it matters most.

Here’s how the right partner can help:

✅ 1. Jumpstart with Cross-Functional Squads

Experienced partners bring ready-to-deploy agile teams – product managers, engineers, designers, and QA specialists – that can integrate with your internal teams or operate autonomously to deliver real outcomes.

✅ 2. Infuse Product Thinking

Seasoned consultants can embed product mindset into existing workflows, coach internal staff, and help define customer-centric KPIs that go beyond traditional project success metrics.

✅ 3. Upskill and Build Internal Capability

A partner with training and knowledge transfer programs can upskill your teams, especially in product ownership, agile delivery, and continuous improvement practices – creating long-term value even after the engagement ends.

✅ 4. Bridge Strategy and Execution

Good partners act as translators between your business vision and technology execution, ensuring delivery is aligned with both strategic goals and user needs.

✅ 5. Accelerate Delivery Without Compromise

With access to nearshore or hybrid delivery models, partners can scale teams quickly, optimize cost-efficiency, and maintain high quality across time zones and geographies.

Building Product-Led Capabilities: What Banks Need to Do

To truly unlock the power of product-led development, banks need to invest in new capabilities and cultural change. That includes:

1. Redesigning Delivery Structures

Move away from centralized tech teams and create autonomous, cross-functional squads that own a vertical slice of functionality – from backend logic to frontend UX.

2. Investing in Product Talent

Product managers in banking must possess a rare mix: technical fluency, commercial thinking, and strong stakeholder management. These roles should be elevated, not sidelined.

3. Establishing Real Metrics

Replace traditional delivery KPIs with product health indicators: adoption rates, retention, user satisfaction, and feature success.

4. Bridging the Business-Technology Gap

Encourage co-creation between business and tech. Avoid defaulting to “proxy product owners” in engineering—this leads to burnout and misalignment.

Final Thought: From Project Output to Product Outcome

The move from project-based development to product-led fintech engineering isn’t just a structural adjustment – it’s a strategic evolution. In a product-led model, software engineering becomes a core driver of business value, not just a delivery function.

For European banks facing digital competition and complexity, embracing this shift may be the key to staying relevant, responsive, and resilient.

Want to accelerate your shift to product-led software engineering?
We help banks build agile delivery capabilities, structure effective product teams, and deliver impactful digital banking products faster. Let’s start the conversation.

Schedule a discovery call with our team today and let’s build your next-generation platform together.