Revolutionizing Banking Through Modular Architecture

Daniel Gozman and Jonas Hedman describe a modular architecture approach to taking banking to the next level. Modular architecture lets banks build their value propositions into services, functionalities, and raw data while enabling new distribution and service creation. Using a four-pronged framework, the authors explain how banks can continue their current role as integrator (providing all services under one brand) while expanding into roles such as producer (banks create a service and a third party distributes it), distributor (banks distribute third-party services), and platform (banks facilitate other businesses by acting as an intermediary). Gozman and Hedman end by exploring the framework’s potential challenges and opportunities and summing up the ways modular architecture could revolutionize banking.