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Category: Core Banking

What Is Composable Banking and Why Should I Care?

Financial Services | Core Banking | Digital Banking | Open Banking | Technology Architecture

What Is Composable Banking and Why Should I Care?

December 9, 2022
Composable Banking

by David Offierski

Composable Banking is a technology and transformation approach that addresses the simple fact that change is constant. To ensure that banks and FI‚Äôs can innovate swiftly and maintain the greatest level of control over their product roadmap, they must adopt a modular or ‚Äúswappable‚ÄĚ architecture. The characteristics that define Composable banking follow the MACH principles: Microservices, API First, Cloud Native, Headless.

A significant shift is underway in terms of how banks and FI’s do transformation work reflecting similar (r)evolutions in other industries like eCommerce and tech platform players like Apple and Google. The term that is being increasingly adopted to encompass a broad cross-section of tech evolution amongst financial institutions is composable banking.

Composable banking is a technology-enabled approach to delivering financial products and services to customers and ecosystem partners.¬† It is a banking transformation approach that addresses the simple fact that change is constant. To ensure that banks and FI‚Äôs can innovate swiftly and have an agile experience roadmap, they must own a modular ‚Äúswappable‚ÄĚ architecture. This is the only way to deploy new features rapidly and retain control of their destiny.

Modular banking is not composable banking

First, let us define the characteristics of composable banking by delineating how it is different from the traditional, modular approach offered by E2E core banking systems provided by established SaaS vendors.  They have been using a modular approach to extend the functionality of their core systems, whereby their propriety modules are extensible but are neither flexible nor open.

Composable banking is a solution approach that prioritizes integration readiness and flexibility, allowing organizations to dramatically improve the speed at which a company can onboard a new partner or design, build, test and deploy a new product.  This is relevant for value-driven business transformations aiming to build differentiating customer experiences while setting up a future-proof, flexible and cost-effective IT landscape.

What you are Composed of matters

Composable banking is enabled through the adoption of MACH characteristics to define how an organization approaches developing and supporting technology to enable new customer experiences and improve business operations.



M: Individual pieces of business functionality that are independently developed, deployed, and managed.

With a microservices architecture, an application is built as independent components that run each application process as a service.

These services communicate via a well-defined interface using lightweight APIs. Services are built for business capabilities and each service performs a single function. Because they are independently run, each service can be updated, deployed, and scaled to meet the demand for specific functions of an application.

Microservices Enabled Banking Example:

Monzo is a UK based neo-bank that has written extensively about their API-first approach and how they scale, secure, and manage over the over 2000 microservices that power their banking experiences.


API First

A: All functionality is exposed through an API.

API-first is a product-centric approach to developing APIs. It views the role of APIs as discrete products, rather than integrations subsumed within other systems.

Developing and managing microservices in an API-first approach means that APIs become key inputs to determine & define product functionality.  This means that the people developing against your API are your users, and your API needs to be designed with those users in mind.

An API-first mindset requires adopting product management best practices to ensure the services evolve to meet the needs of users (developers), particularly around the characteristics of flexibility, interoperability and reusability.

API-First Banking Example:

Citibank is one such organization that follows an API-first approach in its path to digital transformation and empowers a developer ecosystem for innovation. Citi’s global consumer bank serves 62 million clients in 35 countries and uses APIs to build many of its consumer facing digital products.


Cloud Native

C: SaaS that leverages the cloud, beyond storage and hosting, including elastic scaling and automatically updating.

Cloud-native technologies empower organizations to build and run scalable applications in modern, dynamic environments such as public, private, and hybrid clouds.  They feature containers, service meshes, microservices, immutable infrastructure, and declarative APIs to exemplify this approach.

Cloud-native banks leverage core banking systems built in the cloud and for the cloud to enjoy benefits such as scalability, flexibility, availability and elasticity, amongst others.

Cloud Native Banking Example:

In September 2021, JP Morgan Chase announced that it would migrate its retail core banking assets to the Google Cloud Platform and leverage Thought Machine cloud native core banking system.


H: Headless architecture enables an organization to evolve from a monolithic approach to service delivery to an ecosystem model.

Front-end presentation is decoupled from back-end logic and channel, programming language, and is framework agnostic.

Enables the ability to seamlessly embed secure banking services into a variety of customer touchpoints.   e.g., Apple Pay, ACH money transfers, budgeting and billing platforms.

Headless Architecture Banking Example:

Using the API’s available through Temenos core banking platform, EQ Bank was able to act as a deposit-taking backend for Wealthsimple to launch high-interest savings account offering to WS clients in Canada.


In the image below, we’ve highlighted some of the intended outcomes FI’s can expect to benefit from as they undertake the development of a digital transformation strategy and embark on a journey that can only be described as iterative and incremental. Spoiler alert: the work is never done.  The goal though is that with investment and dedication it goes faster and gets easier to measure.

Composable Solutions

‚ÄúAlmost half of the global financial services organizations are still in a very early or even immature stage of their¬†digital transformation journey.‚Ä̬†¬†

‚Äď Juergen Weiss, FI Practice Vice-President at Gartner¬†

Digital Transformation is the entire journey by which a financial institution seeks to digitize and automate its processes to improve its products and customer experiences and expand into newer, untapped markets with speed and greater operating efficiency.

For those organizations that are still in the early stages of planning and prioritizing their transformation initiative, the breadth of choice, cost, and complexity can be daunting. Some of the activities required to achieve MACH characteristics require major infrastructure upgrades and the migration will most likely be implemented over a multi-year horizon.

Status of core banking initiatives

A Composable Approach to Digital Transformation

Developing a composable transformation approach should allow for multi-threaded initiatives that support the broader organizational roadmap and transformation objectives. For this reason, we often work with clients to highlight one to two areas of opportunity, whereby organizations can see an immediate ROI in terms of CX and operational efficiency.

Initiatives like implementing an intelligent document capture platform to reduce manual data entry into a Loan Origination Systems (LOS) or conducting an API Maturity assessment allow FI’s to realize immediate benefits while building transformation capability and creating foundational progress towards a future state that reflects the characteristics of composable banking.

Curious about how you can develop a composable transformation approach at your organization? Book a workshop with Blanc Labs.

David Offierski
VP Partnerships

David Offierski is a tech and business strategist with a passion for innovation and customer experience. As VP of Partnerships, he is responsible for building a robust ecosystem of partners that create value for our clients and prospects.