Implication 3: FSIs need new criteria for platform selection & portfolio evaluation.

Innovation glut creates the need for hyper-flexibility (primarily on the business side) and hyper-composability (primarily on the architectural side). Both of these factors will change the evaluation and selection criteria that FSIs have typically used until today. 

Even in the past, any attempt to identify functional differences between similar components of two banking platforms, for example, needed a detailed analysis: At the highest level, business capabilities were equivalent or at least similar. For example, only a fairly detailed evaluation could reveal how well end-of-day processing of a core banking system was designed and how smoothly it would run. 

Today, FSIs need to look beyond what AI-powered features a banking or insurance platform can offer and how powerful they are. At least equally important is the ability to disable platform-internal Al-powered capabilities and use external ones instead. It goes without saying that this applies to every other type of business capability as well. Otherwise “hyper-flexibility” remains nothing more than a buzzword. 

Consequently, criteria related to hyper-composability move center stage. The platform architecture needs to enable hyper-flexibility, and designing around the Ev hub is one way to achieve this. However, architecture also needs to meet the governance requirements discussed earlier. 

However, “functionality” will not disappear entirely in evaluation and selection processes. On the one hand, FSIs might decide to use platform capabilities for areas (like core banking) where efficiency, rather than differentiation is the primary focus. On the other hand, FSIs might use individual off-the-shelf platform capabilities for various reasons, for example because their inhouse-build capability is not yet fully mature or because a vendor had developed a business capability that enables substantial differentiation. 

The bottom line: The increasing maturity of insurance and banking platforms has led to a shift in emphasis within evaluation and selection criteria – moving from “functionality” toward “architectural flexibility”. Leading FSIs have already embraced this shift. Now, hyper-flexibility and hyper-composability are accelerating this transformation. The ability of platform architectures to deliver individual business capabilities across different platforms, to introduce new capabilities quickly, and to discontinue them just as quickly is becoming the decisive factor in evaluation and selection criteria.