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Explore what you unlock on remodeling banking application architecture for digital-first banking
As Finance embraces the ‘Digital First’ environment, traditional data systems powering finance are in dire need of remodeling. The BFSI industry is on its toes for digital acceleration. And, rightly so. Keeping up with changing times allows lenders to retain customers who are now accustomed to data-backed, intuitive digital services.
Banking application architecture forms the backbone of banking in the digital age. Consisting of cloud-based databases, internal data systems, and digital integrations with external lending partners, it enables advanced data analytics, inclusions of Artificial Intelligence (AI) and Machine Learning (ML), and transforms banking on multiple fronts.
What Constitutes Banking Application Architecture?
Banking application architecture is made up of various components and layers that work together to create a robust and scalable system.
Some of the key components of banking application architecture include the front-end user interface, the middleware that connects the front-end to the back-end systems, the databases that store the data, and the analytics and reporting tools that provide insights and business intelligence.
Banking Application architecture also includes security and compliance features to protect sensitive data and ensure regulatory compliance.
Many major banks are already investing in and implementing modern software architecture to improve their digital capabilities and stay competitive in the industry. According to Deloitte, By 2025, 80% of heritage banking services will be delivered through modern banking platforms, enabling banks to reduce the cost of delivery by 30%.
Here's what banks' goals are with banking application architecture today -
Design and develop micro-service platforms and containerized components using a domain-driven approach.
Implement an API gateway and an enterprise event bus for communication between systems and components.
Incorporate business process automation to streamline and optimize banking operations.
Leverage big data analytics and AI/ML capabilities to collect, standardize, and analyze data for better decision-making.
Implement a comprehensive data management and governance framework to ensure the accuracy, security, and privacy of sensitive financial data.
What is Banking Application Architecture Enabling Today? Why is Remodelling Important?
Banking Application Architecture supports banking services that are highly interconnected with Digital Banking. In modern use cases, it supports new-age banking functions such as Banking as a Service (BaaS) models using Application Programming Interfaces (APIs) for payments, credit, and investments.
In all, it supports -
Digital Agility Services
Business Process Automation
Integration and Interoperability
Customer Experience
Security and Privacy
Core Banking Functions
Mobile Banking
Payment and Transaction Processing
Regulatory Compliance
Comprehensive Analytical Insights
Today, remodeling is important as cloud-based Banking Application Architecture helps increase the integration of banking solutions with partners, service providers, and regulatory institutions. In addition, modern banking application architecture also enables FIs to enhance customer experience, reduce operational costs, streamline business processes, and stay competitive in a rapidly changing industry.
With the use of advanced technologies such as big data analytics, artificial intelligence, machine learning, and robotic process automation, FIs can gain valuable insights from their data, automate repetitive tasks, and make data-driven decisions.
Here are three major improvements Banking Application Architecture brings to digital banking –
Molds Digital Customer Experience
Offers convenience, user satisfaction, and ease in interactions with Banks
Updates the applications to meet and exceed customer expectations
Delivers integrated services of the bank for partners to add value
Cutting Costs and Operating Expenses
Streamlines and enables auto-updates for portfolio management
Enables high efficiency and operability for interconnected systems
Increases Return on Investment, resulting in higher productivity
Increase Security and Compliance-readiness
Rapidly builds on requirements for new-age cybersecurity efforts
Reduces costs, mitigates risk, and increases compliance with operations
Helps quickly provision for bad loans, financial crimes, fraud, and more
How Does Digital Banking Benefit from the Remodeling?
In the rapidly changing landscape of banking, data-driven automation and insights are critical for success. But how can financial institutions achieve these goals while ensuring maintaining privacy and security?
Your technology service partners should offer system integration and solution architecture services to help firstly remodel banking application architecture, including digital agility services, business process automation, and comprehensive analytical insights. These are three major areas that are driving success in digital lending.
See how these three layers help financial institutions thrive in today's digital age.
Digital Agility Services
This service layer provides micro-service platforms such as financial work fronts, which are used to create a container and containerized components. These are mainly cloud-based. New application structures are designed and developed using the ‘Domain-driven Design’ for both – Banking Frameworks and Information Frameworks.
These are loosely coupled components connected with one another or external systems through APIs and messaging by using an API gateway and an enterprise event bus – a communication system between mutually interacting software applications in a service-oriented architecture.
Some examples of where this works are data management, customer onboarding, and loan management.
Business Process Automation
The automation layer provides a proven set of methods and tools that deliver a defined value proposition. It supports business process reengineering.
Big Data Analytics and AI/ML capabilities are used to collect, standardize, and analyze data and to reuse it for business processes.
A few examples are automated task management, process mining and modeling, robotic process and intelligent automation, document processing, decision management, and workflow orchestration.
Comprehensive Analytical Insights
The insight layer helps financial institutions get the most value from data in a cost-effective way, irrespective of its origin and data storage.
This domain provides capabilities that include an AI and machine learning platform, operational and main data stores, data warehouse and data lake, hybrid cloud data access, data integration and virtualization, intelligent automation, and data governance and lineage.
To learn more about how these services can help your financial institution remodel its banking application architecture, and drive digital innovation, connect with our banking domain experts today.
Contact us to schedule a consultation and discover the benefits of adopting digital agility services, business process automation, and comprehensive analytical insights for your organization. Let us help you stay ahead of the curve in the fast-paced world of finance.
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