Abstract

Banks and insurers are undergoing a paradigm shift owing to the challenges arising from competition from new entrants, increased customer expectations, digital disruption, and a low-margin environment. 

Meanwhile, non-traditional players are poised to grab significant market share from traditional financial service entities, and are disrupting the banking, financial services, and insurance (BFSI) value chain. Pressure from the digital economy, regulations, and nimble fintechs as well as big entities are forcing a re-imagination of banking and insurance business models, products, partnerships, and the services landscape.  

Banks and insurers are responding to these challenges by extending their digital services and leveraging ecosystem partners to drive sales and offer new customer-centric products and services. Here, unlocking siloed data within the enterprise and combining it with data from partners to provide innovative products and contextual services to the customer has become a key imperative. We outline the fundamentals of an ecosystem integration fabric, which refers to the capabilities financial institutions need to expand their integration landscapes by capitalizing on ecosystem partnerships. 

Connecting enterprise capabilities to ecosystem partners 

To remain competitive, financial institutions must be able to provide new services that customers demand. Present-day banks and insurers carry the burden of outdated middleware infrastructure that contributes to the high total cost of ownership (TCO), longer time-to-market and delays in capitalizing innovative business models. Inflexible legacy application landscape, monolithic architectures, and redundant services are one part of the problem. On the other hand, non-standardized interfaces and multiple integration infrastructures, often involving heavy enterprise service bus (ESB), contribute more to the problem. Establishing seamless connectivity among digital channels, internal systems, cloud-based platforms and services, third-party providers, and external partner networks have become imperative for financial institutions to compete in the marketplace. 

The integration abilities are expanding from involving traditional applications, data, and processes to include event-driven architecture (EDA), business-to-business (B2B), software-as-a-service (SaaS), internet of things (IoT), application programming interface (API), and event streams. Meanwhile, deployment platforms are evolving to include hybrid cloud, containerization, and serverless options. Similarly, integration touchpoints are rapidly changing to include devices, IoT, SaaS, and B2B. Further, developer profiles have shifted from integration developers to business integrators, application developers, API developers. In addition to these, new business models are emerging to enable purpose-led customer journeys such as B2B, B2C, B2B2C, monetization, open banking, banking-as-a-service, coreless banking, and embedded finance.  

To capitalize on ecosystem opportunities and achieve business and operational agility, financial institutions need to evolve their integration landscape by adopting the latest techniques and approaches in an optimal fashion.

Core components of the ecosystem integration fabric

Each core component of an integration fabric (see Figure 1) performs specific functions required for connecting internal systems and ecosystem partners in a secure fashion. 

Figure 1: Core components of the integration fabric

The functionalities include:

• APIs need to be appropriately secured, managed, and governed irrespective of their deployment location (multi-cloud or on-prem). API gateways securely expose internal and external APIs by leveraging authentication and authorization. The API marketplace and developer portal enables self-service by the internal and external API developers. 

• Breaking down monolithic applications into discreet functional components, by leveraging domain standards such as BIAN allows banks to identify the right candidates for microservices and prevent unintended consequences. Experience APIs focus on delivering digital experiences to the end consumers and they can consume domain or system APIs internally as needed. Further, with service meshes such as Istio, workloads are deployed to on-premise or cloud platforms, yet are centrally managed via a control plane. 

• Cloud integration design needs to be carved out so that scenarios that include hybrid, multi-cloud, SaaS, and partner integration aspects are addressed securely. Banks increasingly prefer partner integration via APIs and events, and less of B2B file-based connectivity. Serverless components play an important role in the mediation of workloads and the same should be used based on the business requirement.

• Creating, consuming, storing, analyzing, and reacting to events in real time is critical for bank systems to deliver superior customer experience. Microservices are designed to handle events in both transactional and streaming scenarios for a robust, intelligent, and resilient system. Banks can set up an insights engine to derive insights from the events and event streams and make them available for business components.

• An optional integration platform as a service (iPaaS) on the cloud helps financial institutions integrate cloud-based workloads faster with readymade templates. Given that SaaS services have become pervasive, iPaaS reduces time-to-market for integrating them with on-premise systems and data.

• If real-time data integration is enabled via change data capture, events, and streaming methods, financial institutions can share and use data from ecosystem partners as well as address digital customer experience demands. Extracting data from core systems, combining it with data from partners, and exposing data APIs in line with the ecosystem strategy enable monetization. 

• DevOps processes for integration fabric components should be established upfront through an API contract-first approach and cover on-premise and hybrid cloud deployment scenarios.