The Cathedral and the Bazaar of Digital Banking

The Cathedral and the Bazaar of Digital Banking

It’s hard to believe that mobile banking is only a decade old. In 2010, there were probably 100 mobile banking apps; a decade later, there are several thousands of them across major mobile platforms representing more than 85% of banks and FIs.  Recent surveys indicate that more than 80% of US customers use mobile banking; in fact, mobile banking apps rank third in usage, behind social media and weather apps[1].

In this age of skyrocketing digital adoption and mobile usage, banks cannot distinguish themselves only on their product offerings or by simply having an app. Banks must now focus on delivering truly delightful user experience.

Changing Trends in App Design

Ten years ago, many mobile apps were built on top of a bank’s existing Internet banking system, which in turn was built on top of their legacy teller-banking systems. But as app functionality and user experience have gained prominence, these apps have proved to be bloated, complex and as expensive to maintain as legacy core systems themselves. 

In the mobile-first era, banks cannot afford to stack their mobile apps on legacy systems that were never designed for the kind of user experience that digital natives have come to expect.  Such monolithic apps simply cannot provide the speed, simplicity, and user-experience that customers expect and value most.

Today, leading players have broken away from an Internet-centric approach and offer customers a consistent and seamless mobile and desktop experience that is driven primarily by mobile sensibilities.  Their apps offer rich features, enhanced security, and a clutter-free user interface. 

Some studies have shown that people tend to use apps more often if they can personalize them. This does not mean simply changing the color scheme or background. Customers these days look for personalized landing pages based on their spending patterns, ability to control what they see, set language preferences, and so much more.

Innovative Features

The first generation of banking apps provided very simple features such as ATM locators, statement and balance inquiry, and similar high-cost low-value interactions.  Today, customers can perform most of their daily banking activities through mobile apps – mobile check deposits, bill pay, funds transfers, transaction inquiries, have all become standard features.

Personal Financial Management (PFM) – While banks have been offering PFM for several years, this has typically been through a separate Internet-based interface. Money management and PFM tools are now being integrated within mobile apps, thereby offering greater convenience and financial insights to customers.

Customer Onboarding – Some banks now allow customers to apply for a new deposit or loan accounts from their mobile devices.  Through seamless integration and real-time interfaces with third-party vendors, processes like identity verification that typically took days can now be completed online in a few minutes.

Machine Learning (ML) and Natural Language Processing (NLP) technology has progressed tremendously in recent years, allowing users to use natural language to request for account balance or make a funds transfer / payment.  Voice, chat, and text-based interfaces are features that help banks in offering a differentiated user experience. 


With the explosive growth in app functionalities, today’s mobile apps must be built in using extremely agile methodologies that ensure quick time to market and offer high levels of flexibility. Banks should incorporate scalability aspects that allow developers to quickly add features without disrupting the entire app or disrupting the user experience. Otherwise they risk losing out on customer satisfaction and digital engagement.  

Micro-app architecture is one such approach that addresses the challenges associated with traditional monolithic banking apps.  Simply put, micro-app design modularizes the entire app at a granular level into small fully functional standalone building blocks – each such block is a micro-app.  

Micro-apps are designed to be customer facing and provide the simplest user interfaces, free of clutter, and unnecessary features that the user does not want.  While a banking app must be downloaded from app stores, a micro-app can be loaded dynamically and rapidly, thereby improving the customer experience. 

Micro-apps are also simple to maintain, as they do not affect the entire banking application – this greatly reduces development and support costs for banks.

The App as a Platform

Many banking customers often grant third-party systems access to their bank for account balance and transaction information. The proliferation of open APIs has now made it much easier for banks to integrate with third-party service providers such as ERP systems, payment providers, accounting solutions, etc. This offers a tremendous opportunity to transform the banking app to act as the primary financial platform, allowing users to monitor and manage all their financial information from a single app.

As an example, some banks provide investment tools within their apps such as real-time quotes, market data, and visualization to help the user make investment decisions. Wells Fargo’s Control Tower allows users to track where they have shared their card or account information and to control what bank data third-party providers have access to. 

So like the popular book that has inspired the title of this blog, the micro-app approach to building apps provides a quick and easy way for banks to take new apps to the market and introduce super-app features in relatively short time spans. The age of digital has brought about a scenario where it is cool to move fast and break things and in such a scenario, time isn’t a luxury any business has. Hence, when the going gets fast, the bazaar approach definitely scores over the cathedral.


Written By : Karthik Sivaprakasam , VP, Business Development, Partnerships and Alliances