BANKING CIRCLE: NEO INFRASTRUCTURE
The
playbook
As digitisation accelerates, it has profound implications for the infrastructure that supports and connects banks to each other and the wider financial ecosystem. Anders la Cour, CEO of Banking Circle, takes up the story CHAPTER 1: THE PATH TO DIGITAL READINESS MONEYFEST MAGAZINE: You recently published research into how COVID-19 has impacted banks’ digitisation plans. What did that tell you? ANDERS LA COUR: Banks have been embracing digital more and more in recent years. They have been working to build more responsive and flexible businesses, in response to changing customer requirements as well, probably, as competition from fintechs and challenger banks. Regulation such as the revised Payment Services Directive (PSD2) has also been a key driver for digitisation. And banks have worked to overcome their traditional reluctance to moving to the Cloud for delivering essential transaction services. But COVID-19 accelerated their existing plans – suddenly, customers couldn’t go into branches, employees couldn’t come into branches or call centres, or online support hubs. Banks had to adapt and switch on more digital solutions. Many were already working with third-party financial infrastructure providers for some parts of their service. A number had also launched their own digital banks as a way of digitising and not replacing legacy systems – some more successfully than others. NatWest launched Mettle; Bank Leumi in Israel launched Pepper; J.P. Morgan is launching a digital bank in the UK in 2021. However RBS, for example, closed Bo. Our research among banks and payments providers across Europe, right
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at the start of the pandemic, showed that 90 per cent of banks and financial institutions are building technology design and architecture into their business planning. Eighty per cent of retail banks and 74 per cent of commercial banks have already worked with infrastructure providers. Close to 90 per cent of retail and commercial banks use customer data to determine demand.
CHAPTER 2: THE FUTURE-PROOF BANK MM: Banks have been through previous financial crises, in very different circumstances, but can the lessons learned from those events be applied today, to help build more future-proof banks? ALC: Banking has long been a tech-heavy industry – banks’ basic architecture is derived from monolithic systems. It is a significant challenge for a bank to deploy new software in an agile, easy way and apply best practice. Many banks have tried to overhaul their legacy infrastructure – but with difficulty. Now the mindset has shifted – banks are increasingly open to collaboration to find the best solutions for the customer. In 2019, Apple and Goldman Sachs launched a groundbreaking new credit card and Google is partnering with a variety of banks. Another example is Starling Bank, which has pursued partnerships with other fintechs. For example, Moneybox was one of Starling Bank’s earliest partnerships. In the context of COVID-19, collaboration has also addressed the issue
of financial fraud. HSBC has become the latest bank to sign up to a biometric identification system, developed by technology firm MiTek and offered through a partnership with Adobe. This trend of collaboration should continue post-pandemic. The most confident banks are those that have made heavy investments in
Alex Mifsud, Co-founder & CEO of payment services provider, Weavr Digital will continue to drive innovation and financial infrastructure. For example, innovation in customer onboarding has been largely driven by digital. The traditional way that banks used to pick documents and decide whether to open a bank account for you has shifted very significantly, as digital presents customers with a better way to do things. The same thing is going to happen to all aspects of financial services. Digital is simply going to drive a whole lot of innovation that financial infrastructure needs to respond to, because you can’t create a very deep and joined-up user experience if your back-office is completely disconnected. So, the next bit of transformation, I think, will happen in the backend systems. Ultimately, banks can’t do everything, so they also have to digitise a much bigger supply chain.
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