Implication 2: Banking and insurance software vendors need to design for hyper composability.

An AI-powered software development environment enables FSIs to quickly build, buy or consume and deploy countless new business components. Failed innovations will force FSIs to discontinue many of these new business components even more rapidly and to turn to new ones to fill gaps. This rollercoaster ride is where cross-portfolio composability (aka hyper composability) comes into play. The previous implication already looked at the internal perspectives of FSIs. But what about banking and insurance platforms? 

Just as is the case today, there will continue to be at least two categories of FSIs in the future: Some will continue to use these platforms and hook value-added capabilities – which are not part of the platform vendor’s portfolio – into the platform. Others (with their own hyper-composable frameworks and evolutionary architecture) will select only what they need from a banking or insurance platform; without necessarily using the platform’s infrastructure components. 

Today, banking and insurance platform vendors typically provide pre-integrated software components, including core banking or insurance, and everything else an FSI needs to run its business. The catch? “Pre-integrated” usually meant at best “within a vendor’s product portfolio” rather “with all applications of any given FSI”. Only very few vendors had hyper-composability in mind when developing their platforms. 

To remain successful with category-one FSIs, banking and insurance platform vendors need to recognize – from their perspective – external business components as standard and welcome elements of the platforms they deliver. Vendors need to design their platforms for leveraging and interoperating with these external components– whether build by FSIs or provided by third parties – rather than viewing their integration as a necessary evil. 

Category-two FS firms are likely FSIs with large engineering organizations or a big innovation and differentiation appetite. They likely have numerous components – whether build in-house or by third parties - that fit into their frameworks, and they will expect their vendors’ components to do the same. This means that vendors need to develop their components not integration-ready, but framework-ready – which, in turn, places high demands on interface design and flexibility. 

Today, banking and insurance platform vendors don’t fully deliver on the still limited composability that, for example, BIAN can offer. Frankly, some vendors even view the composability available today —that is, the limited composability of components across different vendors’ portfolios— as a threat to their business. To survive in the world of innovation glut, vendors need to walk the walk and serve both categories of FSIs well: Banking and insurance platform vendors need to design and build their platforms with hyper-composability in mind.