Modernizing Financial Services Through Composable Solutions

The terms “composable” and “composability” are gaining momentum in financial services, as insurance firms and banks work to eliminate silos, quickly implement new capabilities, and actualize robust strategies across the business, all without introducing added risk, or inefficiencies. 

That’s a tall order, but composability is proving itself effective in meeting these objectives. Industry analysts such as Gartner Group have declared that composability is central to the ability to grow and adapt in times of change. 

At Earnix, we see it like this:  

Composability is a set of technologies and an architectural approach that allows us to work with our customers and partners as an intelligent layer that connects existing systems, new technologies, and diverse teams to create more focused and flexible solutions.  

To achieve these goals, modern insurers and banks are adopting a “composability stack” – one that’s reflected in the business, in technology infrastructure, and in the development and operation of software applications. 

The Composable Enterprise 

To meet the rapidly-evolving needs of the market, the composable enterprise places a laser-focused emphasis on working across functional boundaries, breaking down silos, and reacting quickly to market changes, resulting in a fully-connected organization. 

Based on recent Gartner research, businesses that achieve high levels of composability have the potential to outperform their competition in several key dimensions: 

  • Increasing their revenue and/or funding;
  • Reducing their operating costs;
  • Mitigating business risk; 
  • Resulting in better overall business performance.

Achieving composability requires infusing the culture with the thinking and actions that emphasize constant monitoring of the market and competition, quick reaction to changing conditions, and an ability to reconfigure organizational building blocks as needed to adjust to changing market conditions, customer expectations, and new regulation. 

Composable Technology Infrastructure 

Forward-thinking enterprises can now select from a wide range of technologies for maximum benefit.  

Applying composable infrastructure can result in significant cost reductions, allow for a wide range of technology choices, and provide a level of interoperability not possible with yesterday’s monolithic, in-house/on-premises technology stacks. 

Composable Insurance Software 

Achieving composability in the software portion of the stack allows insurers and banks to deliver new and compelling customer experiences (CX), offer new products and services in record time, minimize risk, maximize revenue, and run a more efficient business overall. 

Here are some recommendations for making composability work: 

  • Reduce dependence on monolithic core systemsputting outdated core systems on track to becoming record keepers as their business value is diminishing will allow resources to be directed to more productive tasks.
  • Get the data house in order – no matter what application strategies you pursue, data is key. All financial services organizations suffer from issues with data that “lives” in silos throughout the organization, is not well-maintained, and has no clear ownership. To take full advantage of composability, these hurdles must be overcome. 
  • Open APIs – once composability is established as a key tenet of application development and deployment, open application programming interfaces (APIs) will be key to rapid integration with still-useful legacy applications, development of new solutions, and making connections with partners and their complementary applications.

The Functional Components of Modern Customer-Centric Applications

To complete the composability stack and take full advantage of all the benefits that composability has to offer, there are several functional components of customer-facing applications that must be employed: 

An artificial intelligence-driven (AI-based) enterprise rating and pricing engine operationalizes advanced analytics, and builds in robust control and governance standards across the organization. This allows insurers to instantly deploy updated pricing to online channels, to serve up to millions of quotes and offers per day, and to leverage those digital channels in real time. 

  • Personalization 

Nothing drives customer engagement faster than personalized insurance offers. With the right software, banks and insurers can reach a new level of personalized consumer experiences, to better serve diverse audiences, implement new market/product strategies in real time, and build a more relevant, value-adding organization. 

  • Usage-based Insurance (UBI) and Telematics 

In the insurance space, usage-based insurance (UBI) and telematics insurance are revolutionizing the way business is done and how customers are treated to highly-personalized experiences. 

Look for a solution that delivers a complete telematics and UBI solution, combining an app that collects robust data around braking, acceleration, distraction, speed, cornering, and other real-world driving events with machine learning (ML) and dynamic pricing capabilities. 

  • Consumer Engagement 

Timing is critical to capturing consumer attention and incremental business. Proactively engaging with consumers to offer contextually-relevant and timely offers allows financial services leaders to create real-time, value-adding engagements that increase customer lifetime value (LTV). 

Summing Up 

Wherever you are in your quest to make your organization a leader now and in the future, make composability a cornerstone of accelerating the transition and ensuring that the competitive advantages last. 

Composability will allow you to connect existing systems, new technologies, and diverse teams at all levels across the organization to not only improve what exists, but to accelerate “what’s next.” 

Want to know more about Composable Solutions? Download the eBook.

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