100% found this document useful (1 vote)
326 views8 pages

Composable Banking Deloitte Be Report v2 en PDF

Uploaded by

Sushma Kaza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
100% found this document useful (1 vote)
326 views8 pages

Composable Banking Deloitte Be Report v2 en PDF

Uploaded by

Sushma Kaza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 8

Composable banking

The transformational approach that treats change as a constant


2022
Composable banking - The banking transformation approach that treats change as a constant

The future of banking is a moving target


The future of banking is a moving target 01 Over the past years, an increasing pace of change around In addition, democratisation of access to financial and non-
three main factors triggered incumbent banking’ players to financial data is increasing the ability of non-bank third
rethink the way they operate. parties to offer competitive financial products and services
Flexibility enables neobanks to embrace change 02 to companies. Established players require the ability to
Customers
adapt in order to stay relevant within this highly
Globalisation and socio-demographic evolution generate
Modular does not mean composable 03 significant changes in the profile of the client, triggering
competitive environment.

demand for new products—extended digital offering, Environment


service aggregators, cross-border payments or remote The current macroeconomic conditions delay investment
Introducing composable banking 04
advisory. decisions and pose a huge threat to the sustainability of
the current banking business models.
In addition, companies and individuals demand the same
The principles and tech that make composable banking work 05
high-quality experience they are used to from other service Non-traditional players found their place within the
providers like Amazon and Netflix. The customer of today banking ecosystem and started to compete directly with
The solution landscape 06 expects knowledge and expertise available at hand in established banks via innovative financial products and
combination with an easy, quick, and effortless experience. services, challenging them on key value chain activities.

Partner spotlight 07 Technology On the regulatory side, the scope and role of regulators at
AI solutions constantly become smarter and faster. jurisdictional level are evolving in light of activity-based
Therefore, elegant, automated processes are the new regulation, emerging sources of risk, and the entry of non-
Composable banking allows for a new way to transform 09 standard. This contrasts with the technology costs and bank players into the ecosystem.
development pace of incumbent banks.
Flexible delivery models 10

Considerations 11
New profiles and new Connectivity and
Deloitte can provide E2E support 12 ways of working democratised data access

Contacts 13
Evolving banking Smarter, faster
expectations machines

ENVIRONMENT
Changing rules of
Value chain displacement
engagement

01
Unprecedented macroeconomic environment
Composable banking - The banking transformation approach that treats change as a constant Composable banking - The banking transformation approach that treats change as a constant

Flexibility enables neobanks to embrace the Modular does not mean composable
changing environment and disrupt the status Banking system vendors have been touting modularity for years. What they really mean is a predefined
suite of proprietary modules that extend the functionality of their core systems. They are extensible but
they are not flexible nor open. An apt metaphor is the jigsaw puzzle piece vs the Lego brick:
quo
Non-traditional players and neobanks like Revolut or N26 are
growing fast by offering seamless and easily accessible digital
• Founded in Munich in 2013
services. These players possess the business agility to quickly
adapt their product line and offer it through scalable channels,
• Full banking license Modular
with the customer at the centre. This flexibility toward the
• Servicing +7M customers in 25
countries and +150K customers in BE
customer is enabled by the flexibility of their internal systems • E2E core banking system provided by established SaaS vendors
• Functionality of core can be extended by adding architecturally separated modules
Inspiration for established players?
KEY STRENGTHS OF ESTABLISHED • Choice of modules is limited to what the vendor (or his ecosystem) provides: the system is not
Established players can rely on key strengths such as brand
PLAYERS open or flexible
recognition and trust, a strong customer base, extensive customer
data, a high level of compliance with regulations in place or a
Result: A set of puzzle pieces (modules) that can be combined into one, predefined picture, with
Brand recognition and trust limited possibilities to change a piece for a better one.
strong balance sheet to compete in the market. Yet, a lot of these
players are challenged by the lack of flexibility of their architecture
landscape which prevents them from accelerating their pace of Strong customer base and
extensive customer data
transformation and support their latest strategies to stay ahead in
an ever more competitive market.
Composable
Strong balance sheet and proven
Deloitte identifies four transformation approaches that meet profitability
different strategic purposes and priorities. This paper will further • Core banking engine coordinates a set of independent components through open APIs
elaborate on how the recent trend around composable banking High level of compliance with • Functionality can be extended by adding or swapping components
solutions aims to address the current, but also the future regulations in place
• Choice of components is unlimited: any player can integrate with the system
challenges of these organisations.
Result: A Lego structure where blocks (components) can easily be swapped for best-for-purpose
solutions, allowing you to flexibly compose your future-proof solution landscape to design
differentiating customer experiences and address your specific market needs.

Legacy E2E package Composable banking Business process


modernisation implementation solution outsourcing (BPO)

Relevant for systems with Relevant for IT driven E2E Relevant for value driven Relevant for non-strategic
high unamortised value replacement of the legacy business transformations activities to optimise cost
and/or highly customised aiming to reduce costs, aiming to build efficiency and availability
functionalities that simplify the architecture differentiating customer of technology expertise.
differentiate them in the within an agreed time experiences whilst setting
market that they want to frame, and adopt out-of- up a future-proof, flexible
keep. the-box functionalities of a and cost-effective IT
proven solution. landscape.

02 03
Composable banking - The banking transformation approach that treats change as a constant Composable banking - The banking transformation approach that treats change as a constant

Introducing composable banking The principles and tech that make


composable work

“ Composable is an approach to the design and delivery of financial


services that is based on the rapid and flexible assembly of
independent, best-for-purpose systems. - Mambu
Ecosystems beat pre-integrated suites
No single vendor can innovate on every front as well as an extensive ecosystem of vendors, each dedicated to
one thing. Need a cross-border payments solution? Choose one of several specialists. Fintech is your friend.

Everything must be open


Open, easy to integrate modules are essential for composability. Closed modules severely restrict agility. A risk
assessment application needs to be able to easily call out to an AML module or a KYC service.

Configuration and testing must be easy


Developers need to be able to work with open, public APIs and access existing developer forums. Every
ADVANTAGES OF COMPOSABLE BANKING component must be easy to trial and test. In addition, turnaround times for error reporting and support need
to be fast.
High flexibility and scalability
Independent and secure
Composable banking gives you the freedom to quickly combine and recombine solutions whenever Each module is independent, secure and takes care of one specific business process. So, for example, a
you need to. payments engine handles the entire payment process, and an authentication module handles authentication
only.

High speed to market


Get new products or whole new banks to market in months, not years.

Low vendor dependency


Unlike package implementations, there is no dependency on a single banking suite
vendor.

Low total cost of ownership


Composable banking requires fewer resources, no big capital investments, and
comes with low maintenance costs and automatic upgrades.

Hyper-personalisation of client journeys


The endless ways to recombine solutions allow you to compose your banking
system to your needs and hyper-personalise your client journeys.

Best of breed solutions


With many solution vendors in each functional domain, you can easily select your best-
for-purpose solution.

Future proof technology


Composable banking does not create the legacy of tomorrow. There is no need for big
transformation programmes every 10-20 years.

04 05
04
Composable banking - The banking transformation approach that treats change as a constant Composable banking - The banking transformation approach that treats change as a constant

The solution landscape Partner spotlight


Mambu is the leading SaaS banking engine powering innovation banking and deposits, the lean alternative to legacy core banking
Solutions
systems. Mambu's cloud-native solution is the driving force behind configurable API-driven architectures which enables clients to
As stated in the principles, composable banking leverages the best of breed solutions available on the market. Instead of relying leverage best-of-service technologies to rapidly realise business value.
on an E2E solution provider who cannot be the best in everything, a composable set-up gives the opportunity to explore the
market and select the best-in-class lending, payment or asset management solution. As shown on the wheel below, the solution Mambu’s core product principles.
landscape is diverse and dominated by Fintech players often focusing on a single functional capability. A combination of different
Configuration vs Customisation Cloud-Native & API-First
solution providers enables the required flexibility to compose a future-proof solution landscape based on specific market needs.
Zero-code product, process and data-set Cloud-first and API-first development and
The criteria that could be used to properly select a certain solution provider are further discussed below. configuration ecosystem enablement

Singular Product Focus SaaS Servicing Model


Solution selection process Focus on being best-in-world in core and Managed application and infrastructure
supporting capability services
When composing a future-proof solution landscape, having a robust process to select
solutions is key. Deloitte has built an extensive assessment method of these solutions based
on four main criteria to support its clients in making the right choices.
Flexible and agile core engines in the cloud.
Lending Engine
Functional coverage
1 A key factor to consider in the solution selection process is its Supporting the full lifecycle of all types of loans from origination to servicing to collections.
functional coverage. When mortgages are your core business, a Product factory able to create thousands of configurations of SME, consumer, mortgage,
lending solution that offers no support for them is of little value. corporate, and leasing types of products.
Especially in their ability to comply with local regulations and market
demands, the so-called localisation layer, solutions can differ. Deposits Engine
Supporting the full lifecycle of all deposit products from current accounts to term
Experience enablement deposits with or without overdraft facility and the full range of interest and fee
2 The extent to which a solution enables a customer experience in calculation options. Full ability to customise data capture on account and transaction
line with your vision is a determining factor for its added value. level.
The breath of services within a functional scope and confidence in
the vendor’s ability to deliver innovative features in the future,
are important elements to take into account. Foundational Platform including features

Solution maturity Transactions & Accounting


3 Before selecting a solution, the maturity of a vendor’s operating
Full real-time balance sheet, profit and loss, and trial balance visibility and
model and its ability to provide support during implementation and
transaction-level traceability on all account activity with fully customisable and
ongoing operations should be assessed. Strong market credentials, as
demonstrated by, for example, well-known clients or a large market searchable reference data.
valuation, can serve as an indication of vendor maturity.
Mambu’s commercial approach is different.
Licensing model attractiveness
4 There are as many licensing models as there are solutions. Choosing one that best Traditional Mambu
fits your needs (in terms of total cost of ownership, flexibility, etc.) is key. • Set-up costs for custom-built solution • SaaS subscription fee tailored to your volumes
Integration layer • High additional cost due to vendor lock-in • All inclusive—updates, maintenance, hosting,
In order to ensure all the different solutions can work together in a proper and harmonised way, the infrastructure, SLAs and more
process orchestrator in the middle manages all the different API integrations. There is no value in Deloitte and Mambu
building those integrations point to point. If then a specific component needs to be swapped,
• Joint implementation experience at multiple customers of which three transformations
everything needs to be rebuilt and reconnected. Therefore, it’s crucial to have that integration and
• Deloitte winner of Mambu Global Partner Recognition Award 2021
orchestration layer in the middle to remove those concerns.
06 • Multiple accelerators and best practices to maximise the success of the implementation project
The Contact Centre of tomorrow
Composable
enabled bybanking
a Cognitive
- The
experience
banking transformation
| Deloitte as a partner
approachof that
the Contact
treats change
Centeras
ofatomorrow
constant

Composability allows for a new way to


transform
Big bang transformations that take so long they deliver
outdated products are a thing of the past. With a composable
technology foundation, you get a plug-a-play approach that
allows transformation to take place fractionally, delivering
results in days and weeks, rather than years.

Legacy solutions Composable solutions


Big bang transformation Fractional transformation

Embrace lean implementation


Multi-year projects
models with shorter delivery cycles

Higher transformation risk Lower transformation risk

Measurable ROI in reasonable


Negative ROI
timeframe

Measurement criteria are


Make business decisions based on data
obsolete by the time you
and iterate
complete

Continuous improvement by adding or


replacing best of breed ecosystem
components

09
Composable banking - The banking transformation approach that treats change as a constant Composable banking - The banking transformation approach that treats change as a constant

Flexible delivery models Considerations


Launching a business transformation programme in order to embrace composability is not straightforward. There are different Composable is a powerful approach to design and deliver financial services, but several considerations need to be taken into
delivery models/approaches available to bring such a project to life and provide the run services afterwards. Three different account before commencing with the implementation. These are described below, along with potential solutions to overcome
delivery models in the context of a Mambu implementation combined with different integrated solutions are further explained them.
below with Deloitte as the systems integrator.

Client
1. Enterprise architecture
Managed
Making use of a composable approach puts a stronger emphasis on the integration of the different solution components and
Deloitte acts as the single point of contact for
the customer for the delivery and/or the System generates new types of challenges (e.g., end-to-end responsibility on the overall solution design and performance, solutioning of
Mambu potential application failures that might occur in the run) that need to be addressed as from the start of the transformation.
contractualization of the different integration
components of its composable architecture Building a resilient architecture, envisioning different delivery models, and having the right governance to run the platform can
landscape to provide professional services for be the answer to these challenges.
configuration, integrations, custom business Integration Integration Integration
processes, customer builds, and maintenance
of the integrated solution. 2. Procurement
Having the ability to pick and choose a set of different solutions implies increased complexity in terms of solution procurement:
different vendor contracts need to be negotiated and properly managed in order to avoid vendor lock-in and keep the solution
Integration Integration landscape future proof. Therefore, it is crucial to establish a business-driven RFP process to ensure the right clauses are included
Supported
in the contracts with the different vendors.
Deloitte supports as a system integrator in the
Client
implementation of Mambu the integration
with other components of the client’s
architecture landscape.
institution contracts directly
The financial
with each System
3. Roadmap
component of its architecture as well as with integration
the system integrator. Before implementing such a business transformation programme, it is vital to have a clear view on the project set-up
Integrationhg
Mambu (greenfield, brownfield, or integrated) taking into account scope, timing, and budget. Important questions to consider are: What
u
domain of the business do we want to tackle first? When do we start decommissioning legacy systems in order to start realising
cost savings? Therefore, it is essential to develop a clear transformation roadmap bearing in mind the business priorities/needs,
friction points, and current IT landscape constraints.

Independent Integration Mambu

The end-customer has full ownership over the 4. Data


business, functional and non-functional
requirements. Mambu provides application Client Composable can pose challenges for data management. Data might be scattered across the many solutions in use, data flows
training and technical support. No use is made might be obscure, etc. Additionally, it might be unclear how historical data can be migrated to the new system. Setting up a data
of a systems integrator. As a consequence, the lake and developing strong data management capabilities can be part of the solution to these challenges.
customer needs to develop those capabilities Integration Integration
in-house.

5. Cloud maturity
Composable ecosystems are cloud-native. For enterprises with low cloud maturity, this implies a paradigm shift toward a cloud-
centric IT approach. This is not a straightforward exercise—it requires careful planning and sponsorship from key stakeholders.

10 11
The Contact Centre
Composable bankingof- tomorrow
The banking
enabled
transformation
by a Cognitive
approach
experience
that treats
| Deloitte
changeas as
a partner
a constant
of the Contact Center of tomorrow Composable banking - The banking transformation approach that treats change as a constant

Deloitte can provide E2E support Contacts


Don’t hesitate to reach out to learn more about how composable banking could
At Deloitte, we help to imagine, deliver and run the future of our clients. In addition to support in addressing the previously
raised considerations, Deloitte can offer a wide range of skills that are required when embarking on a transformation journey.
transform the way you operate your business!

Business Vision & Business Enterprise & Solution Change


Strategy Data & Analytics
Architecture architecture Management

Nicolas Georlette Sabri Mzah Arnaud Leplat


Partner Partner Senior Manager
[email protected] [email protected] [email protected]
Solution Procurement Deloitte Belgium Deloitte Belgium Deloitte Belgium
E2E Program
Service Design Cloud Engineering Configuration & Management &
Management
Testing Contracting

What makes us different?


Deloitte has delivered digital strategy projects, building
new digital banks from scratch based on next generation
platform architectures and ensuring enhanced customer
journeys based on service design approach. In terms of João Sales Caldeira Miguel Cunha Amaro
Partner Director
composable banking platforms, we have a CoE for [email protected] [email protected]
Mambu located in Portugal. Deloitte Portugal Deloitte Portugal

Digital and Next Generation Regulatory expertise


platforms
Deloitte has deep regulatory compliance experience and
understanding across different geographies. Our
relationships with regulators will assist you in navigating
the possible implications of such a transformation.

Serkan Ünal Michel Breeuwer Nienke Veenhoff


Head of Partnerships EMEA General Manager Benelux Partner Manager Benelux
Core banking implementation [email protected] [email protected] [email protected]
experience We bring a global team that is experienced with core Mambu Mambu Mambu
banking implementations as well as the capabilities and
experience for all parts of the delivery lifecycle, with the
best experts in pre-inception and inception phases.

This publication contains general information only, and none of the member firms of Deloitte Touche Tohmatsu Limited, its member firms, or their related
entities (collective, the “Deloitte Network”) is, by means of this publication, rendering professional advice or services. Before making any decision or taking any
action that may affect your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss
whatsoever sustained by any person who relies on this publication.
As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description
of the legal structure of Deloitte USA LLP, Deloitte LLP and their respective subsidiaries. Certain services may not be available to attest clients under the rules and
regulations of public accounting.

Copyright © 2022 Deloitte Development LLC.


All rights reserved. Member of Deloitte Touche Tohmatsu Limited

You might also like