Composable banking- fit’in to Open Finance
What it is?: The modern approach of composable banking enables financial institutions to develop their systems by combining modular components through API integration instead of traditional monolithic platforms. Institutions can select and integrate various services and vendors and technologies to build personalized banking solutions through this architectural framework.
Why it is?: Numerous contemporary fintech organizations together with forward-thinking banking institutions implement composable architectural designs. Organizations select different providers to handle their core account management and payments processing and fraud detection and customer onboarding services which all connect through APIs.
Open Finance
What it is?: Open finance represents a financial industry practice that enables third-party service providers to access financial data securely through APIs.
Why it is?: The main goal of open finance includes financial inclusion advancement and financial services innovation and competition enhancement. The open finance system enables customers to authorize financial institutions to transfer their data to other financial institutions without requiring individual contracts.
Current Global Status. as of 2025:
India and South Korea along with Brazil have become the primary examples of successful open banking implementation since then.
https://noda.live/articles/open-banking-in-brazil
The payment and bank deposit data-sharing model of open banking in Brazil and Korea has evolved into open finance that now incorporates insurance alongside investments and pensions.
United Arab Emirates: Every licensed financial institution in the United Arab Emirates must participate in the complete open finance framework that became mandatory in 2024.
https://www.openbankproject.com/blog/open-banking-in-the-uae/
South Korea: The open banking model in Brazil and Korea has evolved from payment and bank deposit data-sharing to include open finance elements such as insurance and investment and pension services.
India: The open banking implementation in India stands as a major success story while the country advances its development of open finance systems. https://thedigitalfifth.com/indian-open-banking-ecosystem/
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United Kingdom: The UK demonstrated its dedication toward Open Finance through the creation of the Open Finance Taskforce in April 2024. The initiative plans to build a fresh regulatory structure for financial service data sharing which rests on three foundational principles: Fairness, Partnership and Safety. https://www.openbanking.org.uk/
What Open Finance to do with composable Banking:
Proposed architecture for Open Finance leveraging Composable Banking
Composible tech stack , then :)
Open Questions to Open Banking
Technical & Architectural:
- Micro-service : How small is too small or too large?
- Data quality: Ensuring it across distributed data stores.
- API Versioning: Managing backward compatibility and evolution.
- Traceability: Monitoring and troubleshooting complex distributed systems.
- Security: Consistent security across numerous services.
- Legacy Integration: Bridging new components with existing core systems.
Organizational & Strategic:
- Cultural Shift: Fostering a DevOps, product-centric mindset.
- Governance: Maintaining standards without affecting innovation.
- Cost Management: Optimizing cloud and operational expenses.
- Vendor selection: Balancing best with integration complexity.
- Regulatory Compliance: Ensuring auditability and compliance in a distributed environment.
- Measuring Success: Defining and tracking ROI for the transformation.
