By Nikhil Mangal, Senior Vice President, Zeta
For much of modern banking history, institutions built and owned everything themselves, from ledgers and loan systems to fraud checks and customer channels. Banks were vertically integrated ecosystems, with tightly coupled systems designed for robustness, not agility.
That model worked in an era of physical branches and predictable demand. But as digital-first banking emerged, the same architecture that once delivered stability began to constrain innovation. Building new products meant rewriting decades-old code. Integrating new partners required multi-year projects. And regulatory changes tok forever to implement. Legacy stacks weren’t just technical debt; they became strategic debt.
The Great Unbundling: FinTech Take the Stage
Over the past decade, the balance shifted as fintech innovators began unbundling the bank, one service at a time.
Payments, lending, savings, and cards, once owned by a single institution, became independent, API-powered categories. For instance, digital payment gateways turned transactions into plug-and-play capabilities for businesses of every size.
Account aggregation frameworks and API-led data sharing have redefined how financial information flows across institutions. Card issuance and processing, once hardware-bound, are now delivered through cloud-native platforms that enable banks to launch new payment products in weeks instead of months.
For consumers and businesses, this fragmentation often led to better user experiences and faster innovation. But for banks, it introduced a new kind of complexity, managing dozens of vendors, disconnected data flows, and compliance across multiple layers. The ecosystem had become modular, but not cohesive.
Rebundling 2.0: Platforms, Not Products
Today, a more pragmatic rebundling is underway, powered by SaaS and composable financial infrastructure.
Modern Banking-as-a-Service (BaaS) and cloud-native payment platforms allow banks to assemble what they need, when they need it, without owning every layer. Instead of hardcoding capabilities, they can now orchestrate them. Account creation, KYC, Credit scoring, Fraud handling, Re-payments etc. are available as secure, API-first building blocks.
Behind this shift lies a quiet architectural revolution. The move from monolithic systems to microservices, API gateways, and containerized environments has made it possible to integrate new capabilities without rewriting the core. At its heart, this shift is about abstraction, allowing banks to focus on business logic while SaaS partners handle underlying complexity.
Composability as a Competitive Advantage
Composability, the ability to plug, play, and scale components, is emerging as a genuine differentiator.
Most banks today operate hybrid environments, balancing legacy cores with cloud-native layers. Even partial composability is changing the game: breaking silos, enabling horizontal collaboration, and allowing banks to design and distribute products at the speed of market demand.
Yet composability brings its own engineering challenges, from managing data consistency across distributed systems to ensuring security, latency, and governance at scale. Successful banks are addressing this through controlled modernization: decoupling layers where agility matters most while preserving core reliability.
This mirrors what we’ve seen in other industries. In media, streaming replaced broadcast; in mobility, platforms replaced fleets. In each case, ownership gave way to orchestration, and those that mastered integration became market leaders.
The winners of this era won’t be those that discard legacy systems, but those that layer composable platforms intelligently, combining reliability with agility.
Regulation and the Rise of Modular Banking
Regulation, once viewed as a constraint, is becoming an enabler. Open banking mandates in Europe, real-time payment rails in Asia, and interoperability frameworks in markets like India are accelerating modular adoption.
Banks are responding by re-architecting platforms to connect securely with third parties, streamlining compliance through API-led integrations, and leveraging modular infrastructure to serve new digital channels. Across markets, challenger banks are experimenting with cloud-native payment hubs and modular lending platforms, showing that composability is not a distant aspiration but a gradual, measurable evolution.Real progress lies not in replacing the banking stack overnight, but in rebuilding its connective tissue.
The Decade Ahead: Infrastructure as Strategy
The next decade will redefine what it means to “compose” a bank. The change is not about rebuilding everything from scratch, but about rethinking how banks evolve their technology and operations to respond faster to change.
Composable platforms are enabling a new rhythm of innovation, where experimentation is continuous; integrations are lighter, and release cycles that once spanned quarters are now measured in weeks. This new agility is helping banks move beyond incremental launches to create adaptive models that evolve with customer needs and regulatory shifts.
The next generation of financial institutions may not look like banks at all, but they will be built on architectures that are open, modular, and resilient by design. Those that master the balance between innovation and integrity will not just modernize banking, they will define its next operating system.