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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.

Three Reasons Financial Institutions Are Losing Out to FinTechs

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

Three Reasons Financial Institutions Are Losing Out to FinTechs

June 16, 2022

…And How to Keep Up with Digital Natives 

by Bob Paajanen and Charles Payne

The way we bank has changed forever. While FinTechs have the latest technology innovations, what they don’t have is decades-worth of relationships with customers and large swaths of Big Data. Financial institutions need to recognize this advantage, leverage their data, streamline processes, and thereby empower their relationship managers if they want to compete with their new-age rivals.

Mismanagement of Data

Most financial institutions have multiple customer-facing systems that operate in their own silos. As many as 50% of banks and credit unions state that they have trouble accessing their internal data. Without a single unified view of their customer, banks and credit unions are unable to collect, process, or indeed deploy insights that will enable them to cross-sell products and services to their customers.

The services gap left by financial institutions is especially felt in commercial banking where FinTechs are sweeping up SMBs with targeted products and quicker access to funds. A prominent example of this trend is Shopify, which started out as an e-commerce platform, but is now the tenth-largest provider of financial services to SMBs. Another example is Stripe, which has created an end-to-end lending API (application program interface) as its next offer to SMBs.

Paper-heavy processes, and disparate data management systems are some of the major causes of this issue. As the finance industry moves toward open banking, it is imperative that financial institutions unlock the value of their data and translate it into actionable insights so they can improve their languishing businesses.

why financial institutions are losing out to fintechs
Source: 11:FS ‚ÄėFintech filling services gaps‚Äô Designing digital financial services that work for US SMBs¬†

Lack of Efficiency

A 2019 Gartner report estimated that process automation, including document processing, could save financial institutions 25,000 hours of avoidable work per year. With advances in technology in the last three years, it is not hard to imagine that this number may have gone up even further.

Most of the productivity loss mentioned above has been attributed to human error. This is hardly surprising when many financial institutions continue to use paper-heavy loan origination models. Without automation, document processing is rife with efficiency and security issues including document mishandling, collaboration on email (generating multiple copies of the same document), versioning issues, loss of time to find the documents when required, a lack of compliance, and a lack of remote access.

Since the pandemic, consumer expectations have changed dramatically. Close to 60% of customers today are open to completing their mortgage applications entirely online without support on the phone or in person. Even more pressing than the platform, is the need for speed, with customer satisfaction falling 15 percentage points for approvals that take longer than 10 days.

With unprecedented demand for mortgages, financial institutions must speed up intake, underwriting and decisioning processes faster if they want to keep the customer’s business.


Inefficient loan origination processes lead to rising costs. On average, loan origination costs $7-9k per application. That is over and above the cost of productivity loss, estimated to be $878,000 (for 25,000 hours lost per year) for a company with a 40-person finance team. This cost is invariably passed on to the customer who may end up paying higher fees and charges compared to what they might pay if they opted for a non-banking entity.

rising cost of loan origination

The FinTechs Are Coming… And how to slow them down

As a result of service gaps and inefficiencies, customers from both commercial and retail banking have been veering towards nonbanking entities for loans. 50% of Canadian SMBs in 2021 felt that they couldn‚Äôt maintain their growth strategies ‚Äúdue to a lack of capital.‚ÄĚ Today, nonbanking entities, account for more than 70% of total originations. By using automated processes and digital interfaces, non-banking entities or FinTechs are 25% cheaper than the industry average and can deliver a decision 30% faster compared to other financial entities.

In the age of Open Banking, it is important that financial institutions update their legacy processes and unlock the potential of their data if they want to survive.

The automation journey begins with intelligent document processing. Blanc Labs provides a 360-degree IDP (Intelligent Document Processing) solution that can:

  • Automate workflows for document collection, digitization, and analysis
  • Replace manual effort through intelligent data capture
  • Connect with third party data providers for analysis and insights
  • Analyze document data, provide status alerts, and flag fraudulent entries
  • Secure documents in a drop box
  • Deploy on-premises, in the cloud, or as a hybrid model

Book a demo or discovery session¬†with Blanc Labs to learn about the impact of our IDP solutions for banking.‚ÄĮ

Delivering a world-class teledermatology solution in partnership with MedX and Smile Digital Health

Healthcare | FHIR | Interoperability | Technology Architecture

Delivering a world-class teledermatology solution in partnership with MedX and Smile Digital Health

May 5, 2022

In 2021, MedX Health Corp (MedX) engaged Blanc Labs to upgrade the SIAscope from PC-based hardware to a browser-based, multilingual interface that could also host patient data in a secure cloud. In collaboration with MedX stakeholders and Smile Digital Health, Blanc Labs’ multi-disciplinary team of designers, engineers, and product specialists created a solution within just twelve months.

In this webinar, Blanc Labs CIO, Dariush Zomorrodi, speaks about Blanc Labs’ partnership with MedX and Smile Digital Health in delivering an efficient and effective teledermatology solution to a global market.