Composable banking: The powerhouse of lending - Nucleus Software

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Composable banking:
The powerhouse of lending

April 19, 2023 | 5 minute read

Solving the riddle of inefficient banking systems and powering the core systems- Composable banking is a term rapidly gaining traction as the enabler of digital banking evolution driven by a technology enabled approach.
The ever-evolving digital banking landscape has propelled banking players to re-assess the models and deliver to the soaring expectation of the customer.
Composable banking endorses – Change is the only constant, giving banks the flexibility to innovate and sift through the traditional growth challenges.
Composable banking, often confused as new age banking, is an extension of modern banking where the banks attain the readiness to integrate new partners and tackle inefficiencies.

When orchestrated well, notable advantages of composable banking are:

High Scalability: Composable banking allows pliancy with the freedom to operate with smarter technology and models, it also keeps the bank up to date with the market trends on a regular basis and not necessarily wait for big developments executed in the gap of years.
Personalized client journeys: With cloud-based technology, AI and ML banks are fast and furious with the kind of journeys that can be developed for their customers. The ‘how to’ and ‘what to’ do when the customer behaviour changes beyond the set use cases – is much easier with a composable approach.
Low vendor dependency: In regular Banking models’ high dependence on few vendors increases the turnaround time for implementation, however with multiple solution vendors and an approach that allows the bank to think beyond the ‘regular’, swift implementations can happen at lower costs.

The principles of composable banking are composable thinking, architecture, and technology to gain flexibility and embrace the changing environment.

To change is to grow: Envisage a modular landscape and build models that are new age and unthinkable! Rapid growth comes hand in hand with a fearless approach to take new risks! Before embarking on the journey of composable banking, understand the set-up, scope, timeline, and budgets.
Architecture: Build models that overcome legacy infrastructural challenges. Composable architecture, which allows one element’s strengths to be used to benefit others. Create a roadmap considering business priorities, friction spots, and IT landscape constraints.
Technology: Keeping up with an evolving tech landscape is the Future of banking! The ability to anticipate the unknown with cutting edge technology will help gain competitive advantage for the bank.
For a bank, predicting future customer expectations is challenging; therefore, having a robust, intelligent, and efficient system with minimal downtime and uncompromising security will be a winner!
A holistic composable design can futureproof the lending ecosystem by opening more avenues of growth and revenue.
The time is now!

Jennette Arora

Senior tech lead,

Nucleus Software