Core Banking: MACH approach to feed the Buy + Build strategy 🚀

In a context of constant innovation, financial institutions need to be ever-increasingly agile to meet changing user needs and remain competitive in the face of new market entrants (especially fintechs and bigtechs in particular). To achieve this, they have two options: to develop their systems in-house (Build approach) or to outsource an external service provider (Buy approach).

More recently, a third option has emerged: a hybrid Buy + Build approach combining both strategies' benefits. Such an approach provides financial institutions with a solid, innovative Core Banking Platform while maintaining control over their solution and a high degree of customization.

This is where MACH comes in: by helping structures to innovate with agility, the characteristics of the MACH approach feed into the Buy + Build strategy. Here's how.

MACH approach: definition

A MACH approach is a strategy that aims to develop a modern software architecture instead of a monolithic historical architecture. The architecture must enable new partners or products to be integrated quickly and easily to achieve this. The aim is to enable financial institutions to innovate rapidly. The MACH approach encompasses four main principles: a composition of microservices, API-first technology, a native Cloud structure, and a Headless architecture.

M for Microservices

A MACH approach is based on a microservices architecture. The principle is simple: each "brick" has a specific function and can be designed, developed, and deployed independently - although all components are brought together within the same interface to form a whole. As a result, services communicate with each other, but each block can be specifically managed. This type of architecture thus multiplies the possibilities for evolution and enables very specific corrections to be made by service or product.

A for API first

The second component of the MACH approach is API-first technology. This approach considers APIs as products within a solution, not as "mere means of integration". An API-first approach gives priority to APIs, positioning them as distinct elements. Result: an API-first approach requires applying product management best practices so that services evolve in line with users' needs (in this case, developers).

C for Cloud-native

Hosting, information storage, updates... A MACH approach is inseparable from the Cloud. This technology enables applications to be built and upgraded in modern environments. A cloud-native approach (designed to run in the Cloud from the outset) allows financial institutions to benefit from greater scalability, flexibility, and elasticity.

Read also: Cloud opportunity for banks to become more agile

H for Headless

Finally, MACH logic is synonymous with headless architecture. This concept refers to architectures in which the front-end and back-end are separated. This agnostic technological structure offers great flexibility thanks to the independence of each interface. A headless architecture enables organizations to move towards an ecosystemic rather than a monolithic model and seamlessly integrate other services.

MACH's features enable us to build on a solid foundation to integrate new partners and functionalities with greater ease and agility later. This approach suits financial institutions wishing to implement a Buy + Build strategy for their Core Banking.

The importance of MACH in supporting financial institutions' Buy + Build strategy

As a reminder, a Buy + Build strategy consists of combining two approaches:

• The construction approach in which the structure develops its core banking internally.
• The purchasing approach involves relying on an external supplier to develop the solution.

 To find out more, see also: Core Banking: Build vs Buy

A Buy + Build strategy combines the advantages of each approach: customization and control for Build, innovation and speed for Buy. MACH is particularly well-suited to this task. Indeed, such an approach offers multiple advantages necessary to the development of a Build + Buy approach, such as:

• Setting up a technological base: a clean environment from the outset and a solid technical foundation enable us to develop ever more powerful and user-friendly applications in a spirit of continuous improvement.
• The Cloud: this enables financial institutions to leverage the best tools and benefit from scalability and elasticity. Resources outsourced to the Cloud can thus grow and shrink in line with real-time business needs.
• Rapid deployment: MACH features enable financial institutions to integrate new products or services more quickly. This means they can seize every opportunity to realize an immediate return on investment: improving the user experience with innovative tools, opening a new market...
• Great flexibility: in the same vein, the MACH approach facilitates changes and updates, thanks to a microservices infrastructure. Organizations can rapidly test and evolve their products and services and orchestrate new partners to meet changing user needs.

Skaleet: your partner for modernization

To support financial institutions in their Buy + Build approach, Skaleet offers a new-generation core banking solution based on MACH principles. Key features:

• API-first architecture: Skaleet lets you integrate new customized products quickly and easily by connecting to a network of Best-of-Breed partners.
• Modular structure: Skaleet helps you move from a monolithic to an ecosystemic approach, leaving the field open to innovation.
• A cloud-native and cloud-agnostic solution: Skaleet is designed to run in the Cloud from the outset and can be hosted by any cloud provider, ensuring the tool's scalability and upgradability.
• Reduced time-to-market: thanks to its agile environment, Skaleet enables rapid development of new products. The solution offers a Time-to-Market up to 4 times faster than the market average.

Based on the MACH approach, the Skaleet solution helps you rapidly integrate new functionalities and offer differentiating customer experiences, all via simplified technological execution.

So, are you ready to turn your Buy + Build strategy into reality with Skaleet? We'd love to hear from you!