How can composable architecture transform UK banking?

In an era where modernisation and automation are changing the face of financial services, UK banks must embrace composable architecture to stay competitive and to offer a foundation to support their next phase of growth. New SaaS and PaaS solutions are central to this transformation. The ability to take advantage of emerging technologies such as Open Finance and Artificial Intelligence provides banks with the ability to scale without increasing costs. As an example, according to Yolt, open banking can reduce the time spent processing loans by 85%, and these efficiency gains are critical to staying ahead of the curve.

Let’s be clear—lenders cannot afford to be chained to rigid, monolithic systems. Composable architecture is a game changer because it allows banks to modernise their systems without overhauling their entire infrastructure. By enabling modular, plug-and-play integration between core banking systems and third-party services or APIs, composable platforms create a far more agile and data-driven customer experience. Banks can refine their offerings in real time, personalise services at scale, and adapt quickly to shifting market demands.

For smaller banks, composability levels the playing field. It allows them to compete with larger institutions without the need for extensive in-house development, offering access to cutting-edge technology at a fraction of the cost.

Composable architecture in action

But what does a composable banking platform look like in practice? It can vary by customer to customer, but in short, it needs to ensure flexibility and scale across three main areas: customer experience, collaboration, and operational efficiency. With the right strategy in place, composable architecture provides tangible, measurable benefits.

A composable platform is built for flexibility, allowing banks to swap in and out various APIs and microservices as their needs evolve. For instance, a lender could integrate an API that aggregates a customer’s financial data from multiple sources to offer hyper-personalised product recommendations. Personalisation is key - consumers expect tailored services in every other aspect of their digital lives, and banking should be no different.

Having a system that can seamlessly integrate third-party solutions also fosters better collaboration between banks and fintech partners. New services or features can be introduced quickly, without disrupting the entire infrastructure. Instead of relying on costly, full-scale system replacements, banks can simply plug in best-in-class solutions when needed, whether it’s fraud detection, AI-powered chatbots, or real-time payment processing.

Streamlining the process though modularity

Beyond customer experience and collaboration, composable banking drives significant operational efficiencies. Legacy banking systems are expensive to maintain and difficult to upgrade. A modular composable architecture enables banks to reduce their reliance on cumbersome IT infrastructures, adopting a more cost-effective, agile system where individual components can be replaced or improved independently.

As market dynamics shift and regulatory demands evolve, banks need technology that grows with them. Instead of undergoing expensive, time-consuming system overhauls, composable platforms allow for incremental updates and seamless regulatory compliance. This future-proofs banks, ensuring they remain competitive without the burden of legacy system constraints.

Final remarks

The benefits of composable banking extend beyond customer experience—they provide banks with a more efficient, scalable, and cost-effective way to operate. By reducing reliance on monolithic systems and enabling real-time automation, banks can enhance compliance, streamline operations, and accelerate innovation.

As the UK banking industry faces mounting pressure to modernise, those that embrace composable architecture will be best positioned to thrive. The future of banking is modular, agile, and customer-centric—and composable architecture is the key to unlocking it.