How composable design is modernizing the mainframe

April 5, 2022
5 min read

Banks running their core systems on mainframes – 90% of the world’s largest banks – have an opportunity to achieve greater innovation by embracing a modular modernization strategy. By delegating business capabilities to best-in-breed partners like Zafin that sit outside legacy systems, financial institutions can harness the massive computing power of mainframes, like IBM’s z16, the company’s newest offering. Zafin is a long-time ecosystem partner of IBM and together we help banks modernize their core, accelerate innovation and bring value to every customer transaction.

Organizations that modernized existing systems lowered annual hardware costs by up to 12.5%, software costs by up to 5.8% and staffing costs by up to 4.6%. They increased annual revenue by 5%, on average.

As market demand increases for responsive and highly interoperable technologies, banks want more out of their core systems, and composable technologies are near the top of their wish list.

Front-end capabilities that a digital bank should have in place, such as advanced analytics, chatbots, digital wallets and mobile payments, are also driving banks to upgrade to more-responsive core banking systems. The more digital that a bank wants to become, the deeper it needs to dig into the architecture stack and workflow to manage enduring change.

Top performing banks invest in new technology

Banks that use a “building block” approach to modernization delegate specific business capabilities to providers outside their core to ignite new innovations and integrate with their core to achieve fintech speed. These modular components can be reused and reconfigured across the bank as business needs and new use cases develop. Without costly programming or long timelines. The end game? Draw out and modernize specific business functions to better inform relevant offerings and streamline workflows to expand bank revenue and enhance customer relationships.

Composable architecture has proven to be an effective approach in the quest to modernize digital banking platforms. Gartner agrees. In their recent report: Drive Digital Banking Platform Success With the Right Use Cases and Composable Design, they confirm, “high performers are twice as likely to modernize legacy infrastructure, avoiding patching up traditional and digital channel capabilities.”  They are also “1.4 times as likely to roll out new emerging technology, such as artificial intelligence (AI) and analytics.” The research seems to equate the adoption of high composability with higher performance in digital banking.

Providers like IBM have begun to recognize it’s a business imperative to provide banks with a modernized mainframe experience that invites innovation by welcoming integrations that deliver specific functionality, right out of the box. It’s the impetus behind the game-changing AI functionality on the z16. As we partner with IBM, Zafin inherits this additional raw power and speed to power our own sophisticated end-to-end analytics that enables real-time insights for banks at scale.

“Given the value mainframe still holds for the financial services industry, the question becomes how to increase agility, enhance productivity and reduce costs without entirely abandoning the mainframe”.

Zafin’s product and pricing leverages the power of IBM z16

Zafin’s SaaS product and pricing platform is core agnostic and runs on premise and in the cloud, providing maximum flexibility to banks, regardless of where they are in their modernization journey.

It enables the creation and execution of personalized products and pricing into the market more quickly, driving growth. With the addition of the advanced chip on the z16 mainframe, end-to-end analysis, real time pricing, account alerts and behavioral nudging can be accessed, and a full view of the customer relationship can be surfaced from unlimited data silos and even outside sources.

The core banking market is adapting to changes in the banking industry, especially in digital banking. The leading trend in establishing these critical capabilities is composability: the decomposition of monolithic core banking systems into smaller components with discrete functionality.

Replacing a core banking system remains a risky and complex task. Banks must consider established vendors that can work alongside them to support their modernization requirements and their goal to digitally transform their business – particularly as computing paradigms change and evolve over time.

Early adoption of product and pricing externalization delivers a fast return, in six to nine months. By showing benefits to the organization early on, organizational buy-in grows and the speed of transformation increases.  

Benefits of Zafin’s cloud-native product and pricing solution

  • Modernize applications: quickly and with less risk and expense than a build
  • Engage sophisticated analytics: as a key driver to decision making and product design
  • Provide dynamic, real-time pricing, promotions and alerts based on data-driven insights
  • Strengthen product and pricing lifecycle management: for faster time-to-market and streamlined creation of hyper-personalized packages and programs
  • Increase responsiveness to market opportunities and competitive challenges: with offensive or defensive offerings, yielding greater revenue
  • Glean a 360-degree customer view: as well as unlimited data streams to build offers that increase share of wallet, drive revenue and grow loyalty
  • Encourage client financial wellness: by delivering real-time account alerts and behavioral nudges
  • View end-to-end analytics in real-or near-real time: at every point along the customer journey
  • Meet customer expectations to self-serve: provide easy access to real-time or near real-time account or offer statuses

Leveraging best-in-breed micro-services, like Zafin, to perform discrete functions, allows rapid mixing and matching of building blocks to empower new use cases and meet customer expectations as they evolve, at speed.

Zafin and IBM z16 – creating value in every customer interaction

Zafin’s product and pricing platform provides banks with end-to-end analytics and tools necessary to create innovative products and pricing packages, at speed, with little IT support.

Pricing has historically always been a key lever for financial institutions. Bank pricing benefits most by having as much information available, delivered as quickly as possible.

Learn how your bank can increase data-driven insights and enhance time to market for new initiatives, relationship pricing packages and more. Powered by the robust capacity and speed of the IBM z16, Zafin helps banks move ahead on their modular modernization roadmap to deliver smarter, more intuitive features to clients more quickly.

Zafin’s composable architecture has helped many financial institutions drive revenue growth and expedite product time-to-market while plugging revenue leakage. Regardless of where you are in your core modernization journey, we can help.

Founded in 2002, Zafin offers a SaaS product and pricing platform that simplifies core modernization for top banks worldwide. Our platform enables business users to work collaboratively to design and manage pricing, products, and packages, while technologists streamline core banking systems. 

With Zafin, banks accelerate time to market for new products and offers while lowering the cost of change and achieving tangible business and risk outcomes. The Zafin platform increases business agility while enabling personalized pricing and dynamic responses to evolving customer and market needs.  

Zafin is headquartered in Vancouver, Canada, with offices and customers around the globe including ING, CIBC, HSBC, Wells Fargo, PNC, and ANZ. 

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