How your bank can progressively modernize with a headless digital banking platform

If you’ve been following along with this blog series, you’re fully up to date on two of the three key approaches to progressive banking modernization, namely the segment-based and journey-based methods. That means we have to cover just one more before we move on: the headless approach.

The headless approach isn’t about starting your modernization effort from a segment or journey perspective, but rather by using a digital banking platform to renovate your bank’s foundations — its core systems.

First, a bit of context. Consider all your different channel applications, including web, mobile, call center, branch, and so on. All of these have their own bespoke getaways, their own bespoke integrations, architectures, and logic in how they interact with your systems. As you might imagine, this eventually becomes a massive headache for your bank, but particularly for your developers. Just think of all the duplication in business logic, as well as the different code bases needed to maintain each of these channels. It’s tremendously laborious, and with a war on development talent, your bank simply doesn’t have the time or the resources.

That’s where the headless approach comes in. It’s a nice, intermediate step where you start to clean up and rationalize your core systems — the infrastructure that actually powers these different channel applications — by adopting a digital banking platform. This platform helps to unify your channels, aggregating your data and removing silos, allowing your bank to run more smoothly, and all without disruption to your channels, core systems, or customer journeys. And, as you might expect, it’s becoming increasingly popular, even across industries.

By rewiring and restructuring your various channels around a single, centralized platform, you’ll vastly reduce your bank’s complexity while boosting agility and scalability. That’s because if you want to make a massive change across your systems, you won’t need to code each and every one separately — and believe us, your developers will thank you. When you’re done, you can even deprecate your old systems, saving you a huge amount of resources you would usually devote to maintenance — and this time, it will be your shareholders thanking you.

Let’s get this out there right away — if you work at a smaller bank, the headless approach probably isn’t for you. Rewiring your apps to a digital banking platform requires a slightly higher level of IT sophistication and experience. But it’s a tremendously rewarding process for mid- and large-sized banks.

Like the other approaches, the headless method is all about deciding what you want to get out of the process. If you’ve been frustrated with the amount of time and resources your bank has been investing towards maintenance, this is a great first step. By using a platform to establish commonality across your systems — a common data model, data lake, etc. — you’ll realize a host of benefits. For one thing, you’ll be able to more easily configure new products and create a common capability to apply for these products, increasing your ability to cross- and up-sell.

And if your bank has been considering implementing a platform model, the headless approach is a great opportunity to introduce one without, per se, touching your digital channels. As you centralize and standardize your components, you’ll lightly implement a single unified platform and deprecate your legacy apps, which will give you a solid business case for eventually adopting a fully platform-based model in the future.

Keep in mind that selling the headless approach to your boardroom will not work if you don’t create a solid business case. CTOs and Chief Security Officers will be all in favor of adopting a platform, of course, but many others might balk at the prospect. Banks are still profitable, after all, even with their silos and legacy systems, and platforms are considered a major shake-up. Many senior execs may then consider the headless approach a tough sell, noting “if it isn’t broken, don’t fix it” — but the fact of the matter is that your bank's systems are fundamentally broken. They just might not know it yet. Above all, just be sure you’re prepared, explain the situation at hand, and connect it all to ROI and cost reduction.

In the next blog, we’ll go over a topic that every bank should be considering — the best-of-suite approach. Check it out to find out how your bank’s customers and employees can benefit from adopting a platform model to unify and harmonize the complete user experience.

For more information, check out our Banking Reinvented podcast, where Backbase Founder/CEO Jouk Pleiter dissects similar topics alongside Tim Rutten, EVP/Chief of Staff, and other digital leaders. Stay tuned as they chat about everything from progressive modernization to decomposing your bank’s complexity.