Kim Furni — co-founder and CEO of Saxo Bank
To be truly competitive in a rapidly changing world, the Bank needs to put in the first place and to rethink their it strategy to meet the technological giants. It is here that you can use technology partnerships through which services are sold under the brand name of the seller, not the developer (i.e. white label).
Banks have long been predicting the disappearance from the market. In 1990s appeared the expression: “Banking is necessary, but not the banks,” and this is sad for the banks forecast became topical again in recent years. Amid finehow ensuring the client demand and accurate service, banks appear unsightly and backward. However, such technological giants as Apple, Tencent and Alibaba, to quickly capture those areas which are normally associated with traditional financial institutions. Most of the banks were late to the digital PIR is clear to everyone. However, despite the obvious problems, the rumors about the death of banks is greatly exaggerated. If they have the courage to make the right decisions, they have a bright future.
In our view, a successful Bank of the future should be based on the Foundation of long-term mutual benefit, and in the center of its operations should be the client. The future belongs to banks that understand that the growing client demand for digital services cannot be satisfied by a simple extension always growing it Department. Increased customer expectations in part of digital services and the numerous possibilities offered by the new technology, require an open business model and clear focus on the core advantage of the Bank — client service.
Most banks used to develop their systems on a large segment of the value chain, seeking to use the opportunities and solve the problems associated with digitalization. It turns out that most banks today are developing essentially the same technology and digital solutions. Extremely inefficient and silly when everyone is doing the same thing, and even compete in it. The best may be someone — so why not take advantage of the best suppliers, rather than develop all its own?
The old model is clearly unsustainable in the long term: studies show that approximately 80% of annual budgets on it in European banks is used solely for the operation and maintenance of legacy it systems. In the end, there is too little resources for real innovation and success in the fierce competition with findahome and technological giants.
Our understanding is that the Bank of the future is not engaged in the development of large amounts of technology through their own efforts. The Bank of the future helps the client to navigate in an increasingly complex world of applications and smart FINTECH solutions, selecting the best solutions and effectively packaging them. Such a platform (or market) model will enable the Bank to provide inexpensive, flexible and modern customer service. The flexibility of the open model makes it easy to offer new services without excessive cost and complexity.
The core competence of the Bank customer service. However, outdated it infrastructure too often does not clearly focus on the client. In the era of the dominance of flexible technologies and cloud solutions strange to see how many banks continue to run on older mainframes.
When the Bank moves to a more open model, it gets the benefit of not only greater flexibility, but also lower costs. Thus it creates a more solid Foundation for long-term mutually beneficial relationships. Work on an open platform allows you to remove the incentive to promote their own products and services (what many banks are doing today) and really put in the forefront the interests of the client that, in our view, is a precondition for long-term success.
A bright future will see banks that dare to make the leap from developing a technology to become truly open banks as markets or platforms. Indeed, with the advent of cloud solutions is the future not so distant.
In 2001, Saxo Bank signed an agreement about white label partnership with one Bank, which will use our technology to better serve their own clients. We have long been talking about the fact that the partnership is the future of the financial sector. The development went not so fast as I was expecting, but it certainly accelerated. More and more banks begin to understand that legacy it infrastructure is the biggest obstacle — there is no need to develop technology independently. It’s too expensive — especially in the face of rising regulatory requirements; and the world is moving too fast.
Banks have a good opportunity to compete with findahome and large technology companies because the banks have the resources and large loyal customer base, but this solid Foundation can not stand, if the banks will be hard to develop their own systems, products and solutions.
The winner will be the one who will focus on service, adapted to the needs of the individual client. This can be achieved only through cooperation with specialized partners, each of which will supply individual components that collectively will develop into a clear and unique customer service with the lowest cost at which the client’s interests will come first.
Read more •••