The digital banking landscape has drastically changed over the last 10 years, with the pace of change accelerating. As the finance industry’s needs evolve, new technological demands emerge, rendering past solutions obsolete.
The first generation of digital banking in the 90s, while revolutionary, was slow-moving, mainly offering balance checks. The advent of mobile ushered in the second generation, separating services from the presentation tier but maintaining a modest change pace.
In the past seven years, change has exploded with innovations like 3-minute mobile onboarding, open banking, neobanks, and in-app stock buying. The key to staying competitive now is agility. Businesses must quickly adapt and iterate, making a flexible technology stack essential.
MACH principles—Microservices, API-First, Cloud-Native, and Headless—provide the answer to these rapid changes in financial services.
The capabilities that power the digital bank are separated from each other, operating independently. A single microservice could range from searching transactions in the mobile app to staging a payment.
There are two main scenarios where a microservices approach is uniquely competitive:
Firstly, when business needs change subtly, this can be managed by adding or changing a single microservice. Capabilities are event-based and operate autonomously, avoiding drastic overhauls.
Secondly, when facing entirely new requirements, like entering a new market or adopting a new business model, the existing library of microservices can be adapted with minimal effort.
Building a digital banking app for the first time often reveals the extensive number of services required for even basic functionality, referred to as the “Digital Banking Iceberg”—but that’s for another article.
API-first requires all functionality and logic to be exposed and available via APIs. In a modular paradigm, APIs enable connectivity, much like the notches on Lego blocks that allow them to click together.
Many legacy technology vendors also talk about APIs, but their solutions are tightly coupled to other layers of the architecture, lacking the flexibility needed to build user journeys that matter to your customers. API-first is different because it is designed in a decoupled way to accommodate as many possible user journeys.
API-first within digital banking is a game-changer because it allows commoditised components to be combined with unique features created by your organisation, providing unlimited flexibility to tailor the digital banking layer to your needs.
“Cloud” has been an overused term for some time. Almost any software can be put into the cloud, but the primary advantages of modern, truly cloud-native technologies are elastic scaling, continuous deployment, and high availability. To leverage these benefits, the code must be created natively for the cloud. Therefore, a genuine MACH architecture means “cloud-native,” not just cloud-ready.
Cloud adoption has been slower in financial services due to complexities like data residency and public cloud provider coverage. However, global coverage has significantly improved, with public clouds now viable worldwide. The public cloud market is more competitive than ever, with new regional providers addressing unique market challenges.
The headless architecture component of MACH separates the front end (user interface) from the back end (business logic and data). This decoupling enables banks to create a highly customisable and flexible user experience, which is critical in today’s environment. Previous generations of off-the-shelf and white-label solutions did not allow for unique experiences or capabilities, forcing banks to adhere to restricted features and design systems.
Creating a seamless and user-friendly experience is essential for banking web and mobile apps, but success as a digital business isn’t a sprint; it’s a marathon.
Rapid and sustained innovation and feature releases are the currency of success in the digital world. The age-old questions of when to buy and build are still relevant. However, ‘how’ businesses build capabilities is now as important as ‘what’ they build. Short-term thinking and architectural shortcuts will cost you dearly later on.
With its headless and modular design, MACH architecture allows banks to focus on improving the user experience without being constrained by the limitations of a highly coupled system. Banks can continuously iterate on the user interface, making it more intuitive and responsive. They can also integrate cutting-edge features like AI-driven chatbots and embedded wealth solutions to provide customers with convenient and efficient interactions.
In the era of digital banking, MACH architecture stands out as the paradigm for creating web and mobile apps that meet the rapidly evolving needs of customers and the broader banking industry.
Plumery is the first fully MACH-compliant digital banking platform. It is suited for ambitious digital businesses that want to leverage the speed of pre-built capabilities without compromising their ability to quickly build additional features or create unique and differentiated user interfaces.
MACH might not be for everyone, but if you’re considering adopting a MACH approach to creating or modernising your digital banking solution, Plumery is here to help and ensure the adoption journey is seamless.
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