ARTICLE
Composable banking myth #2: composable banking is more expensive than traditional, one-stop-shop solutions
9 March 2023
In the next blog in our ‘5 myths about composable banking’ series, Nuno Alpendre, FS Business Consulting Lead at Deloitte, debunks the second myth: composable banking is more expensive than traditional, one-stop-shop solutions.
Myth debunked
Due to the fact that composable requires multiple vendors, there is a common assumption that composable ecosystems are more expensive.
In reality, if we consider all costs involved - direct investment, maintenance, infrastructure and intangible opportunity cost - this composable approach can be significantly beneficial for clients.
Due to the fact that composable requires multiple vendors, there is a common assumption that composable ecosystems are more expensive.
In reality, if we consider all costs involved - direct investment, maintenance, infrastructure and intangible opportunity cost - this composable approach can be significantly beneficial for clients.
Traditional systems generally have additional costs with upgrades, and to assure the customisation in the systems that clients already have. This might be challenging, depending on the complexity of the customisation.
Furthermore, traditional systems use a customised code base. This means that as a business’s requirements inevitably change, the system will need to be re-coded, increasing the effort to adjust to business, and at the same time bringing higher time to market, which might impact the client’s business. Additionally, the clients will inherit a higher tech debt, which is hard to sustain in the long term.
Furthermore, traditional systems use a customised code base. This means that as a business’s requirements inevitably change, the system will need to be re-coded, increasing the effort to adjust to business, and at the same time bringing higher time to market, which might impact the client’s business. Additionally, the clients will inherit a higher tech debt, which is hard to sustain in the long term.
Composable can be less expensive
Based on our analysis of recent Mambu projects, here are some examples of where composable ecosystems can bring savings.
1. Accelerate implementation and delivery: the shift from coding to configuration and application of APIs means there is a diminished need for specialist resources to configure a pure Software-as-a-Solution (SaaS) technology solution. This results in shorter delivery cycles, increased productivity and cost efficiencies.
2. Make platform upgrades in real-time: with SaaS deployment, there are also no associated outlays on platform upgrades. Vendors will manage the coding directly and deploy this at no additional cost.
3. Reduce physical infrastructure and maintenance costs: cloud-hosted infrastructure requires less in-house resources for financial institutions, as this is handled directly by the vendors. This frees up resources to focus on innovation and building new products and services.
4. Seamlessly enhance financial offerings: it is much simpler for product teams to adapt the solution to customer, business needs and regulatory obligations, which reduces time to market and faster response to the end customer.
Based on our analysis of recent Mambu projects, here are some examples of where composable ecosystems can bring savings.
1. Accelerate implementation and delivery: the shift from coding to configuration and application of APIs means there is a diminished need for specialist resources to configure a pure Software-as-a-Solution (SaaS) technology solution. This results in shorter delivery cycles, increased productivity and cost efficiencies.
2. Make platform upgrades in real-time: with SaaS deployment, there are also no associated outlays on platform upgrades. Vendors will manage the coding directly and deploy this at no additional cost.
3. Reduce physical infrastructure and maintenance costs: cloud-hosted infrastructure requires less in-house resources for financial institutions, as this is handled directly by the vendors. This frees up resources to focus on innovation and building new products and services.
4. Seamlessly enhance financial offerings: it is much simpler for product teams to adapt the solution to customer, business needs and regulatory obligations, which reduces time to market and faster response to the end customer.
As you can see, there are several advantages in an efficiency and cost perspective to adopt a composable approach to banking. Leveraging existing SaaS solutions that are fit for purpose will not only save you time and increase efficiency, but will also provide your organisation with the agility to stay competitive and continue to adapt to the changing financial landscape.
Webinar: Composable Banking FAQs
To find out more about composable banking and hear the views of leaders from Deloitte and Mambu, watch our Composable Banking FAQs webinar, where we dispel some of the myths around composable banking and answer the most frequently asked questions.
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