Why banking modules are the future of banking

Banks are under increasing pressure to be tech first, whether that be mobile, digital, or something else entirely. As the tech progresses, financial services are becoming increasingly modular to enable faster and more accessible banking. The implications for modularity in banking are vast, so industry leaders must understand what modularity actually means. Yet definitions seem to vary from company to company and department to department. Making it harder to understand what banking modules are and what value they bring to banks.
What does modular mean in banking?
Fundamentally, the core of modularity remains relatively consistent. It is the breakdown of a complex system, platform, product, process, or solution into smaller bricks or chunks.
Modularity in tech development refers to how a tech stack is coded. A product, system, or process is broken into more manageable chunks (modules). Each module is independent and can live and function independently but can be designed to communicate with other modules. Breaking the whole system into modules reduces complexity and helps eliminate legacy code as it is much easier to maintain and update modules of code than an entire system.
However, for the less technical of us, modularity breaks a platform or system into smaller stand-alone chunks of independent functionality, such as credit decisions, savings, and calculating amortization. Each function is a separate module that can be connected and, instead of replacing or amending existing tech modules, is designed to complement what is already up and running. These functions are external to the core, giving banks access to new tools without taking on the risk and costs of overhauling existing tech.
Regardless of how modular is defined, modularity in banking reduces complexity. It helps banks customize and update products without requiring a core overhaul. Banks can select the bricks that will help them to meet their goals without affecting existing technology.
Why do banks need banking modules?
One of the most significant challenges banks face today is how to overcome legacy tech (you can read more about the challenges of legacy tech by clicking the button below). The banking systems of most large banks were built decades ago. Updating them is not straightforward due to risks of privacy, security, and data loss. Moreover, the money required to maintain these systems prevents banks from investing in development. It actually stops banks from creating services that today’s consumers want.
Replacing old systems is incredibly costly, tremendously risky, and highly time-consuming. While some banks are undergoing the tech-first revamp through intensive internal core system development, others find it faster, cheaper, and easier to complement existing tech with modules.
Introducing modules in banking improves efficiency where needed without adding unnecessary functionality in other areas. A module can be implemented quickly, doesn’t require integration, and will not require internal resources. Instead of trying to understand the complexity of a system that has been built and modified over decades, banks can simply identify some tech challenges or a tech wishlist and implement modules that complement existing tech and processes.
Replacing old systems is incredibly costly, tremendously risky, and highly time-consuming. While some banks are undergoing the tech-first revamp through intensive internal core system development, others find it faster, cheaper, and easier to complement existing tech with modules.
Introducing modules in banking improves efficiency where needed without adding unnecessary functionality in other areas. A module can be implemented quickly, doesn’t require integration, and will not require internal resources. Instead of trying to understand the complexity of a system that has been built and modified over decades, banks can simply identify some tech challenges or a tech wishlist and implement modules that complement existing tech and processes.

Näktergal banking modules
Näktergal’s banking modules are plug-and-play, cherry-picked solutions that can all be cloud-based or on-prem. Built with the latest-and-greatest frameworks that handle cloud-native continuous modernization and agility, our modules are not just tech-enabled but tech-first. The architecture incorporates modern, scalable, intuitive technologies ready to run in the cloud.
Our modules help banks with specific aspects of the lending journey. For example, our credit engine module helps banks swiftly generate a credit score and a risk class for each applicant. Or our amortization calculator works out which amortization rules a customer must abide by and the specific monthly cost.
Our game-changing modules help banks to improve efficiency and transform – enabling them to offer their customers the services and experiences they deserve
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TL;DR
Change is always scary, especially for banks. Rather than overhauling a whole system banking modules provide a fast and pain-free way to update functionality, offer new product and improve processes.