From Modular Core to Embedded Finance: How Banks Can Better Serve SMEs
For many banks, core modernization has long been framed as a technology problem: reduce legacy complexity, lower maintenance costs and replace systems that slow the business down. Those outcomes matter. But for banks serving small and medium-sized enterprises, modernization should be viewed through a bigger lens. A modular core is not simply a cleaner foundation. It is what makes new business models possible.
SMEs increasingly expect banking to be connected, responsive and relevant to how they actually run their businesses. They want simpler onboarding, better control across accounts, easier access to services and experiences that fit into their day-to-day operations. Meeting those expectations requires more than a new interface on top of old architecture. It requires a banking foundation built for flexibility, data accessibility and rapid change.
That is where composable core banking becomes strategically important. With a modular platform, banks can prioritize the transformation areas that matter most, reduce development time and move away from expensive legacy estates. Just as importantly, they can create the operational and technical conditions needed to launch new services faster, integrate partners more effectively and evolve their SME propositions over time.
Why SME growth depends on more than core replacement
SME banking is becoming more competitive on several fronts at once. Digital-first challengers are redefining customer expectations with seamless, always-on experiences. Regulatory demands continue to evolve across markets. And in many regions, significant SME segments remain underserved or underbanked, creating both urgency and opportunity for incumbents willing to rethink how they serve them.
In that environment, a legacy core does more than increase costs. It can limit product agility, fragment customer data and make it harder to connect the systems and services SMEs increasingly value. Banks may know what their customers need, but if the architecture beneath the business is rigid, every change becomes slower, riskier and more expensive than it should be.
A modular, cloud-native approach changes that equation. It gives banks the ability to modernize incrementally, focus investment where it will create the most value and build a platform that can adapt as SME needs change. Instead of treating modernization as a one-time replacement program, banks can use it as the starting point for continuous reinvention.
Composable banking creates the conditions for embedded finance
The next layer of growth is not just digital banking. It is ecosystem-driven banking. As financial services become more connected, banks have an opportunity to embed their capabilities more naturally into the journeys where SMEs already operate. That opportunity depends on having a core that is modular, data-rich and designed for integration.
Composable banking supports this shift by making services easier to assemble, connect and evolve. When banks can expose capabilities more flexibly, they are better positioned to support ecosystem partnerships, enable open banking strategies and participate in embedded finance models that extend beyond the traditional banking relationship.
For SMEs, that can translate into more relevant propositions: connected account experiences, easier payments integration, faster access to financing, smarter data-led engagement and value-added services that feel less like separate products and more like part of a unified business toolkit. The point is not to add complexity. It is to make the bank more useful in the moments that matter.
Data accessibility is what turns architecture into advantage
Modern architecture alone is not enough. To create better SME propositions, banks also need accessible, usable data. Data is what allows institutions to move from product-centric operations to more customer-centric experiences. It supports better decision-making, more personalized engagement and the ability to orchestrate services across channels and partners.
Publicis Sapient’s work across financial services consistently points to the value of modern data ecosystems and real-time insight. In one transformation for a leading Thai bank, a front-to-back platform connected the mobile experience, payments and a real-time data lake in just 12 weeks. The result was not simply a new digital channel, but a stronger technical and business foundation that enabled the bank to adapt more quickly, launch new products faster and align innovation with long-term goals.
For SME banking leaders, this is the real prize. Accessible data makes it easier to understand intent, reduce friction, design more relevant journeys and create experiences that build trust. It also strengthens the bank’s ability to work with partners, because services and insights can flow across a broader ecosystem rather than staying trapped in isolated platforms.
Governance, compliance and experience must scale together
Of course, greater flexibility does not reduce the need for control. Banks still need to meet strict internal policies, external regulatory obligations and high expectations around resilience, security and customer experience. The challenge is to modernize in a way that supports innovation without fragmenting governance.
That is why the strongest modernization strategies do not separate architecture from operating model. They combine modular platforms with clear delivery roadmaps, agile cross-functional teams and governance embedded into day-to-day execution. This makes it possible to launch new journeys without destabilizing what already exists, and to evolve services continuously rather than through disruptive rewrites.
For SME propositions in particular, this balance is essential. The most compelling offers are often the ones that feel simple to the customer while managing significant complexity behind the scenes. Banks need foundations that let them innovate at speed while keeping compliance, risk management and service consistency central.
How Publicis Sapient and Tuum help banks build for the next phase
Publicis Sapient and Tuum work together to help banks move beyond legacy constraints and build the foundation for scalable SME growth. Tuum’s modular core banking platform allows banks to choose the transformation areas that matter most, reducing cost and development time while creating a more flexible solution landscape. Publicis Sapient brings the strategy, product, experience, engineering and data expertise needed to turn that technology foundation into real business outcomes.
Together, that means helping banks modernize quickly and safely, while also preparing for what comes next: better data accessibility, stronger partner integration, more customer-centric design and new ecosystem-based revenue opportunities. It means building platforms that are not only modern, but usable, extensible and aligned to the realities of regulated financial services.
For banks focused on SMEs, this is the shift that matters most. Core modernization should not end with lower maintenance spending or faster product delivery, important as those are. Its real value lies in enabling the bank to become more connected, more adaptive and more relevant to the businesses it serves.
Embedded finance at scale does not begin at the edge. It begins in the core—with modular architecture, accessible data and the ability to turn change into a repeatable capability. Banks that get that foundation right will be better positioned to create the ecosystem-driven SME propositions that define the next era of growth.