Composable Enterprise Model: Unlocking New Growth Opportunities in Financial Services 

Financial services organizations have typically provided services in a tightly integrated, monolithic business model.  This approach has limited their ability to respond quickly to market opportunities and changing demand. 

Now, fintech companies are introducing innovative ‘consume as a service’ business models, challenging traditional financial institutions. To remain competitive and agile in the market, financial institutions must transition to a composable business model, enabled by technology, to seize growth opportunities and higher profit margins. 

What is a Composable Enterprise? 

A composable enterprise is a business model in which organizations decompose their business at the unit level into products and services, which can be offered independently or assembled as a basket of products and services in a business process to create product lines. These products and services can then be promoted digitally through multiple partners and channels. 

The composable enterprise business model enhances agility by allowing more products and services to be integrated and created. This flexibility is based on market dynamics and customer demands and provides access to a broader customer base. Data monetization and crypto asset class opportunities are great examples of how new products can be introduced in the market through the composable enterprise business model. 

Data Monetization: Integrating Data Services to Offer Data Products 

A composable enterprise model can unlock new growth opportunities in data monetization. Market participants have a wealth of data that they can monetize to create more avenues for revenue. There is increased demand from customers to gain insights from alternative data, data analytics, and artificial intelligence/machine learning (AI/ML) models for better decision-making. 

Vik Iyer of CIO Marketing Services and Hexaware’s Ravi Vaidyanathan discuss growth opportunities in emerging financial services markets. 

Crypto: A High-risk, High-return Asset Class 

Investors are always looking for higher alpha. Market participants can derive maximum value from the most profitable asset classes by unitizing each asset class in a composable business model. Crypto is one such high-risk, high-return asset class that is, therefore, in high demand. The crypto asset class offers opportunities across the entire market value chain: asset management, asset servicing, broker/dealer, and market infrastructure providers. 

Organizations are expected to increasingly embrace digital enablement and a data-centric approach, shifting from monolithic models to more componentized or composable models. Chief information officers (CIOs) should empower their organization to be domain-driven, with each domain offering consumable services. This will enable business users to access data on their terms and develop data-based products and services, ultimately helping organizations to capitalize on new trends and opportunities. 

To elucidate the composable enterprise business model, let’s explore data monetization and crypto asset class opportunities and how CIOs can help accelerate these opportunities. 

Data Monetization 

According to a Fortune Business Insights report, the global data monetization market size was valued at USD 2.60 billion in 2022 and is projected to grow from USD 2.99 billion in 2023 to USD 9.10 billion in 2030, at a CAGR of 17.2% during the forecast period. 

Demand for data insights is ever-growing. Data monetization refers to creating data insights from raw data and providing the insights as a service for quantifiable economic benefit. For example, market infrastructure providers have a wealth of data. This data can be enriched with alternative data sources such as news and social sentiments to provide insights into economic and business cycles, industry trends, shifts in asset allocation, behavioral patterns, market anomalies, asset-specific risk and returns, and more. These insights are in high demand among fund managers, wealth and asset managers, and other market participants. Organizations can also use data insights internally to improve business decisions, efficiency, and margins. 

Data monetization involves the creation of data products and services that can be made available in a marketplace for different market segments or client-specific needs. Data monetization begins with an open data ecosystem in which product owners can integrate various data sources to derive insights through correlation driven by causation. Ease of product creation with access to reliable quality data sources is the key. A domain-driven data governance framework is required to bring high-quality data at a faster pace for consumption and distribution. Data visualization, modeling tools, and AI/ML capabilities pave the way for creating data products and services. 

To implement data monetization engines, CIOs should: 

• Modernize the data ecosystem 
• Empower business users to access and utilize data independently, allowing them to create new data products swiftly 
• Distribute data products digitally on marketplaces such as Snowflake 
• Embrace cloud technologies for improved agility, scalability, reliability, and faster time-to-market 

Hexaware’s enterprise data management platform for capital markets is a purpose-built solution to accelerate and enhance the open data ecosystem. With it, customers can accelerate data integration and consumption by up to 60% while reducing costs by up to 40% while enjoying an error-free and highly reliable integration platform. 

Use Cases for Data Monetization in Different Market Segments 

Asset servicing/exchanges 

Asset servicing/exchanges can provide insights into: 

• Macroeconomic trends (leading economic indicators) 
• Investible trading patterns 
• Sustainable industry trends 
• Investment strategy trends 
• Correlation between news, events, and sentiments 
• Risk analytics: Credit risk, market risk, and operational risk 
• Compliance analytics: Regulatory, product, and policy 
• Behavioral analytics: Market momentum 
• Market anomalies 
• Expense budgeting: Predictable cost 
• Aggregation of multiple position-level data for exposure analysis 

Fund/wealth/asset managers 

Fund/wealth/asset managers can integrate data services across the firm to deliver better decision-making for: 

• Developing predictive and prescriptive analytics 
• Risk management analytics 
• Compliance analytics 
• Performance analytics 
• Comparative analytics 
• What-if analysis (scenario-based) 

Market infrastructure companies 

Market infrastructure companies can provide insights into: 

• Correlation of news, events, and sentiments 
• Micro-industry trends 
• Corporate action impact analysis 
• Decision intelligence 

Crypto Economy 

Crypto as an asset class is gaining acceptance from high-net-worth individuals (HNIs) and institutional clients for generating alpha and portfolio diversification. This is catalyzed by a growing ecosystem of players in digital assets custody, crypto wallets, crypto exchanges, venture capital, investment products, and more, enabling investors to explore investments into these assets. 

According to data available with CoinGecko, the total market capitalization of cryptocurrencies has grown from approximately USD 200 billion in January 2020 to nearly USD 3 trillion in 2021 and is hovering around USD 1.35 trillion, as of October 2023. 

Crypto tokenization has also helped build new marketplaces for illiquid assets such as real estate. 

Recent developments in the blockchain (distributed ledger technology (DLT)) space: 

• The Depository Trust and Clearing Corporation (DTCC) recently developed an alternative settlement platform under Project Ion, based on distributed ledger technology. On average, the Project Ion platform can process more than 100,000 concurrent bilateral equity transactions per day. 
• Coinbase provides an ecosystem for the crypto economy by integrating multiple DLTs on its crypto exchange platform. 
• BlackRock has partnered with Coinbase to provide institutional clients of Aladdin® direct access to crypto through the Coinbase Prime platform with crypto trading, custody, prime brokerage, and reporting capabilities. 

To adapt to developments in the crypto economy, CIOs should: 

• Build a business-specific crypto ecosystem 
• Decide which DLT (permissioned ledger) platforms best fit their business 
• Integrate different DLT platforms to work together by using digital wallets and integration service providers 

Hexaware offers consulting services for defining and designing business-specific crypto ecosystems with fit-for-purpose architecture and infrastructure, information security frameworks, and enhanced customer experience. Hexaware can collaborate with market participants to establish a business case and develop a minimum viable product (MVP) or point of view. This will aid in building awareness and confidence within the business to provide the complete crypto ecosystem eventually. 

Enterprises can unlock greater value by considering composable business models and unitizing their business. Hexaware offers business consulting in the composable business modeling space and a componentization framework for reimagining products and services to leverage new opportunities such as data monetization and crypto assets. 

To learn more about how Hexaware is the ideal partner in your journey to unlocking new revenue streams, visit the Hexaware website today.