Adopt Gartner’s 4 composable banking principles to innovate faster

1. Speed

With direct access to a comprehensive array of existing digital data and decision-making resources from across the organization, banks do not need to begin from scratch. This enables them to implement new decisions, scorecards, models, and use cases more efficiently.

2. Agility through modularity

Modular access to enterprise-wide data and services enables financial institutions to make informed, real-time adjustments to products and strategies, akin to a "plug-and-play" system, in response to evolving market conditions.

3. Better orchestration

A good orchestration ensures all the components—such as core banking systems, payment systems, and customer-facing apps—work seamlessly together. Furthermore using orchestration will centralize data and processes to ensure smooth customer experiences, even as different teams use independent tools to innovate. 

4. Resilience through automation

Individual components or teams within the system are independent, self-contained, and can operate without requiring constant coordination with others. Composable banking's modular design allows individual services or products to be updated, replaced, or scaled independently without impacting the rest of the system.

This independence creates resilience because issues in one area don’t cascade through the entire organization. If a bank’s payment gateway encounters issues, its core banking operations (e.g., lending or deposits) continue functioning because of the autonomy of the modules.

Key benefits of composable banking

1. Lower costs

Composable technologies reduce maintenance spend and reduce both the cost of transformation and make it less disruptive to the wider business so that going to market is faster, less risky, and more cost-efficient. 

2. Accelerated innovation

A modular approach gives banks the ability to slot new products and services into place when needed or remove them if required. Composable building blocks make it possible to enact continuous transformation, letting institutions take an iterative approach to developing new products or services. 

3. Faster compliance

Changes often require extensive testing and can disrupt entire systems, delaying compliance and increasing costs. Composable architectures make updates simpler to enact, ensuring faster compliance with regulations, reduced operational risks, and greater agility in responding to market demands.

4. Customer retention

Composable banking’s modular architecture allows banks to easily swap out or upgrade specific services to more cost-effective alternatives, ensuring competitive pricing for customers.

This can be particularly useful in areas like payment processing and lending, where improved vendor options can lead to lower costs that are passed on to customers.

Key opportunities for CIOs

As the speed of digital transformation continues to accelerate, adopting composable frameworks can be a critical enabler of long-term success. When combined with the principles, the building blocks of composable business enable organizations to pivot quickly.