SAP Logo LeanIX is now part of SAP
The Definitive Guide to

Banking Architecture

Banking architecture includes the applied technical frameworks that banks use, and those which customers and employees traverse through, in order to provide and procure banking services.


Today’s financial environment is constantly changing. That is why banks need to quickly discover new ways of streamlining their current banking architecture in order to become more agile and stay ahead of the curve. With steadily increasing pressure from the tumultuous financial market, it is absolutely crucial that banks work towards new digital models and leave past models behind.

It goes without saying that modern banking requires modern banking solutions. So first of all, a successful transformation requires an investment towards modern banking systems that are able to overcome the pitfalls found in outdated systems and thus improve an institution's products and services.

Thus, just like any other enterprise architecture, banking architecture needs to evolve to remain competitive in a digital world. That is why banks are advised to offer their services online, adopt a tech-first culture, and undergo a transformation towards digital banking architecture.

New call-to-action

What does banking architecture mean?

But what is banking architecture? And what does banking architecture mean in a digital context?

The definition of banking architecture can be summarized as the applied frameworks that banks use, and those that customers and employees traverse through, in order to provide and procure banking services. If a bank is a large room, then banking architecture can be seen as the design of that room. The function, furniture, and style of the room all affect how those who work at the bank and those who wish to use it navigate their experience. Whether they move around with ease or with difficulty depends on the quality of the design.

In a modern context, customers are seeking easier and less complicated ways to move through their bank’s virtual space. Systems should be faster, simpler, and more convenient. If banks are driven by a customer-focused approach, something we will discuss in the following section⁠, then simplification should be the main goal.

Technological and multi-channel forms of banking are clearly the direction in which banking has moved over the last two decades. To accommodate customers' desire for digital banking, financial institutions must be equipped with the tools that create this convenient banking space.

But, how do banks plan and execute their transformation towards a new architectural model? While each bank has specific needs, financial objectives, and customer inclinations, all banks need a functional strategy to successfully manage their digital architecture. Much in the same way that an architect requires a blueprint, knowledge of materials, and a clear budget, banks require a similar set of tools to implement a new model.

And this is where enterprise architecture (EA) can help. By using EA tools, banks can align their objectives, services, and data in one single piece of software. This allows them to visualize, strategize, and organize all parts of their digital banking architecture and never lose oversight. We will further discuss the role of enterprise architecture later on.


What are the transformation drivers in banking architecture?

To understand the drivers of banking architecture, it is best to take a look at its evolution.

During the 1970s, the first core banking systems were put into place. Compared to their modern counterparts, these systems were rather basic and only used to process simple transactions for core banking functions. Much like the surrounding cultural, scientific, and sociological characteristics of the time, technology was much less integrated into banking as a whole.

In the following decades of the 80s and 90s, the banking industry started integrating internet banking services (pioneered by Bank of Scotland) and began to adopt more customer-focused systems and home-accessible bank accounts as well as an advanced financing software.

At the turn of the Millennium, banks saw further expansion into multi-channel banking platforms and online banking fully entered the public sphere. During this time, banks started using large sets of data in an effort to create modern core banking solutions.

Around 2010, consumer technology was evolving at a rapid pace and mobile banking systems became the new normal. The core architecture required large investments as regulations became more stringent. Banks across the world groaned under the pressure of sudden technological requirements and regulations.

In the later stages of 2010, technological systems matured with mobile banking, online banking, and social network compatibility turning into the new figureheads of customer-facing banking services.

If this short history is pointing towards one trend, it is that banking architecture has always been propelled by technology and a focus on the customer. This is an important factor to remember when adopting a digital framework. As services become faster, more free-flowing, and flexible, banking architecture must follow suit.


Where to start with banking architecture?

Now that we have highlighted the transformation drivers for banking architecture, we want to look at some more concrete steps that banks can take to smoothly transition into a digital banking architecture mode of operation.

The primary goal of core banking architects should be to renew banking architecture from top to bottom. Established systems have been improved and added to, but over time, banks are left with systems that are rooted in outdated architecture.

The biggest difference between digital banking architecture and traditional banking is that digital banking should be future-proof. This means that it should avoid the pitfalls of the architecture used in the past and demonstrate a nimble and adaptable structure that allows for easy adaption.

  1. Reduce customization. By minimizing the amount of custom code used in your digital banking architecture, you are also minimizing the number of legacy assets in the future. Instead, focus on rolling out standardized systems with minimal customized development. This will make your core banking systems much more transferable and flexible.
  2. Consider the triad of the front-, mid-, and backend when it comes to core banking. Transitioning should be a smooth and satisfying process not only for customers but also for employees. It makes sense that core banking architecture should keep all parties in mind.
  3. Discuss breaking up your banking architecture into the following three categories: presentation, where services such as web banking, mobile apps and employee portals are held; client, where all client data and processes exist; product, which focuses on the management of products and services that don’t overlap with the other categories.
  4. If you continue to push core banking architecture to be more standardized, self-servicing will be a common practice. Service functions become much more streamlined and simplified, and the removal or addition of features no longer requires the support of IT teams.
  5. Cloud systems are the most modern approach to digital banking solutions. Cloud services provide a faster, safer, and more flexible form of digital architecture. Furthermore, by making use of the cloud in digital banking architectures, banks can shift their focus away from problems related to IT and security.

Enterprise architecture as a key role for banking innovation

Previously, we established that in order to properly plan and manage a digital banking model, enterprise architecture tools are essential. After all, a bank that wants to demolish its outdated, traditional architecture needs to create a healthy base for a digital environment.

Enterprise architecture and EA software is therefore a fundamental tool for constructing a coherent digital banking architecture. By collecting all relevant data in one place, inconsistencies within the banking architecture can be identified and banks are better equipped to build a new and error-free system.

Thus, enterprise architecture plays a central role in the digital transformation of banking. It turns the institution’s goals into functional IT models that have a positive effect on the entire operation. It is the best way to successfully reinvent core banking services.


Banking architecture framework

By incorporating Application Portfolio Management (APM) and Technology Risk Management (TRM) into their architectural framework, banks can effectively phase out legacy applications. This is how it works: Through APM, a bank’s application libraries are examined and evaluated in regards to cost and benefit. APM achieves this by generating a breakdown of every IT application so that unnecessary software can be stripped away.

Much like unnecessary clutter at home, applications build up over time. However, with a portfolio management application, you can preemptively remove superfluous or unrequired applications on an ad-hoc basis. Services can be changed on a granular level, with little effect on other parts of the bank’s digital architecture. This means that banks can change with the times and can act quickly when necessary.

Although application portfolio management is an incredibly valuable tool, there are various hurdles that can stifle its success. Management and application information are just two factors that can affect the success of APM, which is why it is vital to install a sound framework in which APM can be governed.

An effective and active APM framework should have some of the following characteristics:

  • Transparency: to support financial reports and audits as well as guarantee accountability
  • Clarity: to deliver information and analysis in a way that is efficient
  • Adaptability: the ability to change, react and adapt to different customers, clients, and markets
  • Scalability: the ability to work with data sets that vary in size

With a robust APM framework in place, a bank can make use of the following APM features: application portfolio assessments, application transformation roadmaps, application rationalization, application inventory management, risk landscape assessment, and application metrics development.

A useful APM relies on a strong methodology and well-built software. With a robust APM, banks can automate their data collection, analysis, and reporting. This accurate information can be reviewed at any point and helps banks make informed decisions for the future while following the banking reference architecture that can help financial institutions modularize and align business and technology assets in a predictable way.



Over the past two decades, reference architectures like banking architecture have rapidly evolved with technology and improved customer experience being the main drivers. That is why banks alongside most organizations are integrating modern and user-friendly systems into their day-to-day operations.

A more modern approach includes a reduction of unnecessary customization, a three-layer transformation of core banking services, standardization, and the integration of cloud-based solutions. These are just a few strategies that can be used to begin a bank’s journey into the digital world.

Most importantly, this digital banking transformation cannot rely on old systems. Instead, banks need to implement new dynamic frameworks that are able to adapt. That is why digital banking architecture requires digital tools that are conducive to the fast-moving, everchanging needs of a technology-focused market. Likewise, dynamic technologies such as the cloud are incredibly useful components in digital banking architecture, but they require a well-fitted operational style and need to be monitored and reviewed regularly.

This is achieved through enterprise architecture and the implementation of banking architecture frameworks such as APM, which allows for detailed and continual analysis as well as automatic information gathering and reporting with lower running costs and high-value deliverables.

With a robust digital banking architecture built on an enterprise architecture foundation, banks are able to quickly produce roadmaps that guide them to the digital landscape they need. On top of that, EA tools allow banks to create reports and data visualizations not only for themselves but also for stakeholders and key decision-makers.

Free White Paper

Learn How Banks and Financial Service Organizations Keep Pace in a Digital World by Utilizing Enterprise Architecture

What technology trends impact banking and financial services? How financial industry can leverage EA and avoid common fail points?

Preview the first 8 Pages

Page: /

Fill out the form to get the full version

Frequently asked questions on Bank Architecture

What is bank architecture?

Bank architecture is all applied frameworks that banks use, and those that customers and employees traverse through, in order to provide and procure banking services.

Which type of architecture is used for the banking system?

Most often banking systems use Service-oriented architecture (SOA) which refers to the frameworks and processes that enable banking application functionalities to be provided as sets of services relevant to specific business functions.


Free White Paper

Success Kit: Enterprise Architecture for Financial Services & Banking

Download now!