Composable designs are the future of banking architecture, allowing to build agility, speed and flexibility in serving MSMEs

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In this RadioFinance session, we will discuss how banks and FIs are redefining business models to be more inclusive, innovative, and resilient to volatile market conditions for SMEs. It will also highlight the challenges and opportunities of utilising composable banking and cloud-based solutions for SaaS models in the microfinance sector.

Senior executives and heads discussed how banks and financial institutions redefine business models to be more inclusive, innovative, and resilient to volatile market conditions for SMEs. They also highlighted the opportunities and challenges of utilizing a composable design to succeed in the market.

Aswin phlaphongphanich of DeeMoney, Edu Trinidad of UBX, Frankie Wai of Temenos, Prashant Chauhan of Tata Capital, Sokha ROS of SBI LY HOUR Bank, and Srinivasan Shanmuganathan ( Shan ) of Standard Chartered shared their perspective on how can the composable design enable financial institutions to better address the needs of SMEs. Composable designs through interconnected components of microservices which can be assembled and reassembled quickly to go live fast are going to be the future. They also discussed how traditional banks have to evolve to compete with new market entries amid technological disruption and regulatory changes. To serve smaller-sized MSMEs a change of the game is needed in distribution and infrastructure.

Wai discussed that new players keep raising the bar for customer experience. Whenever there is a new positive experience regardless of industry, customers expect the same standards. Sokha pointed out that most incumbents only look at the top SMEs which leaves MSMEs behind. Aswin revealed that the pandemic brought to the fore pain points on the payments side where MSMEs were unable to reach their banks for remitting fund transfers within and across borders, and were facing huge forex volatility impacting the cash flow and liquidity of MSMEs. Trinidad commented that embedded finance allows the ability to provide quick and specific solutions right to the customers.

Shanmuganathan noted that infrastructure is more about accessibility not about technology enablement and how to gain access and speed to market that is critical. API connectivity and fintech collaboration are critical in building a self-service model for MSMEs to empower them to pick and choose what they need. He also highlighted that the biggest challenge with open banking is that there are many regulatory market restrictions, including how to utilize data that have not yet been addressed. To create service and product flexibility at the front end, Prashant shared that for agile capabilities one needs to build a layer on top of legacy systems, an open network of APIs for various functions. But to succeed in this, the most important part is to change the process, the policies and the digital mindset of the company accordingly. In the future, there is no brand loyalty only service loyalty and those FIs that serve the best and provide the best rates in the shortest time will win the race

Key discussion points:

  • How can the composable banking approach address the needs of SMEs and promote financial inclusion?
  • How can traditional banks evolve to compete with challenger banks amid technological disruption and regulatory changes in digital payments and lending?
  • How do organisations build and redefine business models to be more inclusive and resilient to volatile market conditions?
  • How organisations are balancing corporate responsibility and profitability to achieve greater stakeholder satisfaction and engagement?

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