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BAAS (Business Banking as a Service) is Empowering Your Customers

BAAS (Business Banking as a Service) is Empowering Your Customers

Commercial banking is confronted with a potentially more complex environment than ever before: customer needs, rapid improvement in digital capabilities, digitization, and new sources of competition are compelling banks to innovate immediately.

For one, customers demand immediate, smooth, and omnichannel banking. Secondly, the pressures for product and service innovations are made more complex by the embedded demand for financial services in corporate processes.

Data, Digital, and Technology impact Business Banking and Empowers Customers

As superior technology systems integrators like Maveric would report, banks are preparing for cloud- and API-enabled ecosystems with the help of AI-enabled, networked technology.

Cloud and API technology adoption

Commercial banks collaborate with modern infrastructure providers to upgrade or overhaul legacy technologies. Digital services, such as lending origination and onboarding, replace manual processes and antiquated systems with a single, end-to-end solution that serves SMEs, corporations, and commercial clients. As part of digital transformation, banks have made substantial investments in automating their origination platforms. Moreover, APIs facilitate new collaborations and partnerships between banks, digital banking enterprises, and Fintechs. Moreover, with lower entry barriers, new cloud-based lending services are being rapidly implemented.

There is an immediate need to accelerate the time to market

Digital disruptors innovate through automated document population, e-verification, and verified external data validation to ease servicing evaluations, financial spreading, and deal structuring. As a result, the time required to make a credit judgment quickly decreases.

Data value creation will differentiate performance

Leading commercial banks are transforming their roles to become both producers and consumers of data, for instance, by selling their payment, trade finance, and lending capabilities to other entities. The vast amounts of data created enable commercial banks to strengthen their client connections by personalizing digital experiences and sending highly customized, timely messages based on in-depth consumer information. Niche solutions can be incorporated in a data environment where rivals can be partners.

Integrating financial crime prevention, cybersecurity, data privacy, and regulatory requirements into the engineering and design lifecycle

By integrating new technologies, collaborating throughout the ecosystem, and focusing on data and client security, banks are altering their capacity to combat financial crime. Cybersecurity, once considered the final frontier is now the de-facto foundation of trust and an integral part of every product and service.

Architecting the modern-day commercial banking ecosystem

Leading commercial banks have created platform-based ecosystems that extend beyond traditional banking and cater to a broad spectrum of customers’ growing needs. The future of commercial banking is platform-based service models and competitive ecosystems enabled by data and cloud technology with API access. This situation allows banking systems of the next generation to service multiple individualized client segments. “Platformization” will increase the availability and velocity of innovation for products and services and dramatically cut the time required to gain mainstream adoption. It can also enhance banks’ data collection and analytical capabilities, giving them a significant advantage over non-financial competitors.

Conclusion

Commercial banking is undergoing fast change through digitization, more competition, and stricter regulation. Small and medium-sized commercial banks are adapting to remain competitive. The way forward for Banks and leading FIs lies in evaluating their maturity, shaping their transformation agenda and strategies, and deploying enterprise-wide enhancements to the goal of value maximization.

About Maveric Systems

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership.

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

 

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Top 5 Steps to a Successful Core Banking Transformation

Top 5 Steps to a Successful Core Banking Transformation

Core banking systems are becoming increasingly important to banks for several reasons. One is cost reduction. Maintaining older platforms is expensive, becoming less and less acceptable for FIs focused on their margins.

Also, as banks try to stand out by making new products and expanding their markets, the need for flexibility and scalability in their operations and core banking systems grows. In the meantime, as banks’ IT systems have gotten older, differences between local platforms have stayed the same or even expanded. High maintenance costs, performance problems, and the difficulty of making changes have also stayed the same or worsened.

Now that many banks expect growth again, the need to standardize core banking platforms and replace core systems has become the spotlight.

There are many challenges ahead for CIOs.

  • Speed to Innovation includes all technologies governing API enablement, big data, machine learning, cloud computing, open service architectures, and machine learning.
  • CX expectations customers crave a fully integrated digital experience that is personalized and rewards loyalty.
  • A legacy that comes from Siloed systems This impacts aspects such as time to market, systems integration, and a challenge to provide a customer-centered approach.
  • Volatile Regulatory Environment includes complex cross-border PSD2 and Open API mandates and Open API and upcoming market reforms.
  • External Competition. From Fintech companies and Peer-to-peer lenders and the rise of cryptocurrencies, non-banks offer banking services like retail providers and payday lenders.
  • Financial Pressures a push towards cheaper infrastructure and a more profound shift to more automation reduce operational costs.

How to make a core banking transformation work – 5 steps.

Every core modernization story is different, and clients can protect their investments and save time and money by making the process fit their needs. The playbooks are made with a single client’s current and future architecture landscape in mind. If there are different approaches, then banks must bring pragmatic approaches.

Start with an integrated Road Map.

that increases business capability and digital transformation. An integrated, custom-tailored road map gives the bank new business capabilities aimed at achieving the bank’s business priorities and has the real benefit of refreshing the technical architecture underneath.

Componentization Approach for Targeted Modernization.

There has been a growing trend toward breaking things down into smaller parts in the past few years. Full “big bang” or “rip and replace” deployments are too risky for most banks, especially the biggest ones. This risk kept many banks from replacing their core systems, which they needed to do. Componentized solutions allow FIs to replace things in a less risky, more step-by-step way.

Prioritizing Tactical Modernization Needs.

Reduce the number of strategic investments that can’t be used again in the current scheme of things, especially for core banking systems for the next ten years. Make a list of the tactical changes that need to be made to the current core banking system, but only invest if there is a pressing need.

Maintain High Readiness for Migration.

This step involves keeping clean customer accounts. Much of the success comes from avoiding duplicate, and redundant product portfolios, as also the dormant or inactive accounts.

Build up the organization’s core skills.

Start a core team of cloud experts, data engineers, and product, finance, and operations experts who know much about core banking.

Conclusion. Time to Move

Banks haven’t been able to get the most out of their core banking systems for far too long. During the financial crisis, IT budgets were cut and redirected, and many banks thought that putting core systems in place was too risky and expensive.

Today, most institutions are again considering replacing and changing their core banking systems. The old systems at these banks can’t keep up with how quickly their environments are changing, while new technologies have made core banking implementations less risky and complicated.

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5 Ways FinTech’s are Transforming Banking

5 Ways FinTech’s are Transforming Banking

Banks have used technology to deliver financial services for decades – Credit cards in the ’50s, internet banking in the ’90s, and contactless payments in the ’00s. However, the stratospheric use of technology has only upped the ante. Some instances highlight this. Like the Neo banks (Brazil’s Nu Bank, Berlin’s N26, and the American Chime) operate their complex operations purely on tech without physical branches.

Innovations that FinTech’s represent are primarily focused on improving customer-facing facets. The three growth levers that drive Fintech growth rates are – superior CX driven by the high trust earned, new-age branding, and marketing approaches, including gamification and cost optimization possible because of deep venture capital and leaner virtual operations.

FinTech’s straddles a complex intersection of financial services and technology sectors that disrupt the traditional value chain.

 

5 Ways FinTech’s are Transforming Banking

 

1.  Disintermediation is the most decisive Fintech impact. 

Fintechs have primarily disrupted consumer banking, fund transfer & payments, and consumer & commercial lending by offering new customer-centric solutions, leveraging data and analytics to enhance interactions, build trust, and even powering business outcomes with sophisticated operational abilities. As the industry grapples with changing customer behavior, new technologies, and new distribution and business models, Fintechs’ product focus on millennials and Gen Z is characterized by enhanced accessibility, convenience, and tailored products.

2.  With Blockchain technology, Fintech’s game-changing prowess grows stronger.

As Blockchain tech pushes for a democratized financial landscape, Fintechs eye its unprecedented disruption potential. Be it through the use cases of borderless payments, altering KYC forever, bankless financial management, and revolutionary optimization, Blockchain’s digital ledger systems attract because of its un-hackable nature and by removing third-party intermediaries. Like ERP software allows functions and entities to optimize enterprise processes by sharing data and logic, Blockchain enables entire industries to optimize operations by sharing data between businesses with competing economic objectives. With infrastructure cost reduction as a key differentiator, the blockchain trend will likely throw up the highest Fintech winners in the next few years.

3.  Fintech’s infuse agility like never before

As mentioned earlier, Fintech innovations reimagine customer-facing digital experience blocks. With advanced self-service capabilities, Fintechs have revitalized the customer banking possibilities. Today opening new accounts, applying for loans, buying insurance, understanding financial positions, and making better financial decisions are seamless activities customers use and love because of Fintechs. These functions (also how mobile wallets ‘ talk’ to banks) are possible because of API development (Application Program Interfaces). In the same vein, POS terminals have revolutionized the way consumers spend and receive funds. Any discussion on agility is incomplete without acknowledging the growing influence of conversational banking (or voice bots) and the continual advancements in user authentication and security.

4.  Bank-as-a-service – The change agent of 2020s. 

BaaS is a type of developer platform designed to empower fintech companies. The Bancorp Bank, BBVA Open Platform, and Green Dot have launched their own BaaS platforms.

To access the payments system and store money, Fintechs form banking partnerships. These partnerships are becoming the product themselves. As several banks enable digital disruptors and neo-banks to gain access to inexpensive deposits, they earn valuable fee income. Treasury Prime sells BaaS enablement software to multiple banks while SynapseFi and Cambr build API platforms for neo-banks. Along with SaaS Fintechs that offer cost reductions to banks, the BaaS ecosystem is poised for hyper-growth.

5.  Technology Players turning Fintechs – The Maze Multiplies. 

Fundamentally, Banks sit at the sweet spot of data and technology. One disruptive business model gaining strength is high-technology companies (Amazon, Google, and the like) entering the Fintech space. The two domains, banking and software development, share similar concepts – record-keeping, tracking transactions, and predictive modeling. Digital-first companies turn their eyes to banking – Apple’s credit card, WhatsApp payments, Instagram shopping, Google Pay, and Facebook’s foray into financial services – are all developments that point to a more serious future. Expect the resources and investments to multiply, and the partnerships that aim to scale growth will transform banking in ways we don’t fathom.

In sum, leading Banks are learning from the Fintech story. The banking space is poised for exciting developments by encouraging and incubating internal innovation, creating an agile enterprise, aggressively digitizing the customer experience, adopting an entrepreneurial mindset, and overhauling brand positioning to attract purpose-driven demographics.

 

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Top 5 Core Banking Software Companies in 2022

Top 5 Core Banking Software Companies in 2022

As neo-banks win market share and serve customers at around one-third of the cost of traditional. Then, there are threats posed by big tech players eyeing lucrative niches in the value chain. Post-pandemic customer is more digital, and less loyal. Also, today’s banking regulations are equally about innovation (PSD2 for instance) as they are about reporting and compliance.

That being the landscape for core banking software, what are the incumbent banks to do?

The answer, more than ever, is to exploit disruptive technologies like cloud, mobile, big data, microservices, open API’s and AI.  But these technologies rely on a robust banking core.

Before we look at the top 10, let’s see the top 4 parameters that distinguish the great core banking software from the good.

  1. IT cost reduced: Removing technical debt, pushing for higher efficiencies by leveraging cloud-based services, not to mention higher developer productivity (via automation tools DevSecOps) – are all factors that add to reduce costs.
  2. Quicker time to market: Employing both hyper parametrized configuration and higher standardization levels, banks leverage automated testing – all of which helps them to speedily develop new products and services.
  3. Customer-centric proposition: Data differentiates. Modern-day core banking software support integrated data sets and operate on a single source of truth. This capability in turn helps create real-time personalized experiences and brings into play, advanced analytics. Ergo. Precise decision making and a happier customer.
  4. Mastering scale through ecosystem partnerships: Modular architecture and API communication enables rapid scaling. This becomes critical especially in a development environment where core and ancillary services are relatively cheaper.

Little wonder that a McKinsey report, highlights 65% of banks surveyed exploring next-gen core banking platforms.

How were the top 5 arrived at? Simply, by applying these five comparisons.

  • Faster access to support digitization
  • Flexibility in pricing
  • Facilitating faster time to market
  • Supporting agile and remote working
  • Allows new capabilities like open banking

Top 5 Core Banking Software in 2022

  1. Temenos Transact: 25 years of industry-defining banking software, Temenos supports retail, corporate, wealth, and treasury lines of business. 41 of the top 50 banks use Temenos Transact. It has been ranked #1 for 16 years by IBS intelligence. Cloud-native, Cloud-agnostic, API-first, and AI-enabled, Transact (it was called T24), allows banks to launch products in cycles that are 10X faster.
  2. Mambu: Riding on a composable approach (traditional providers lock functions like decisioning, reporting, analytics into dedicated applications), Mambu offers low-code, born-in-the-cloud functionalities that lets banks scale on their terms. With deployment across 65 countries, 200 + global customers, and a 4X higher NPS score than others, Mambu’s USP is to deliver great modern financial experiences.
  3. SDK Finance: With 15 years in FinTech, SDK’s use-cases target neo banks, E-wallets, currency exchanges, and online payments. The core banking software allows creation of digital banking solutions so financial institution can deliver reliable products and services. Secure authentication, next-gen integration offers ease in handling traffic; SDK finance’ includes best-in-class personalization.
  4. Oracle Flexcube: Packed with features that modernizes a bank’s core system for today’s digital and agile demands, Oracle Flexcube places significant value on enhanced customer engagement, increased insight generation, and rapid integration approaches via open architecture. The USP of Oracle’s product is the flexibility banks get in choosing transformation models, and the associated support across deployment models.
  5. Infosys Finacle: Finacle helps both traditional and emerging financial organizations in their digital transformations, focussed on frictionless customer experiences. Relying on Finacle, banks across 100 countries service 1B customers and $1.3 B accounts. Bringing a proposition of – ‘truly digital’ – Finacle’s core banking software offers flexible product factories, extensive parametrization, product building and reusable business components – all of which accelerates innovation-led growth.

In 2022, what is the consensus on core banking software – final words

Most incumbent banks are limited with legacy platforms. Approaching inflection points puts distance between the leaders and laggards, each passing day. The post-pandemic altered customer behavior and accelerated digitalization trends, makes it necessary to act without delay. Once an assessment of the current core banking platform is done, banks should choose solutions and software that greatly increase their odds of success.

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Regulatory Reporting in Banking

Regulatory Reporting in Banking

Regulatory reporting and compliance is an unavoidable subject in Banking. It is a critical activity for banks and financial institutions, which requires, sustained effort from risk, finance, and IT teams. Many banking and financial organizations struggle with the high level of redundancy, dependence on manual processes, and opacity of their regulatory reporting processes.

Alarming Facts for Regulatory Non-Compliance in Banking

Current Outlook: Why it Needs Attention?

Many regulatory reporting processes are internal to the organization, but there is a regulatory body that oversees compliance. These regulatory bodies are dependent on the industry that the organization is part of. For the BFSI vertical, it is the Fellow Chartered Accountant (FCA), the energy industry is Office of Gas and Electricity Markets (Ofgem), advertising is ITC and the communications industry is “The Office of Communications” (Ofcom).

Like most regulatory bodies, FCA and others engage in periodic reviews. During these checks, they not only check what your organization is doing at that moment but also a back story to that point. Some of the most common forms of regulatory reporting in practice today include:

  • Complaint Handling Process: The complaint handling process checks how the business handles complaints and the official procedures in place to make sure it is productive and fair. Once the business has established a fair and process-driven system, the business should adhere to it and also make sure it conforms to regulation.
  • Training: This has to do with the processes the business puts in place for performance reviews, appraisals, CPD, and on-the-job training. Regulatory reporting ensures all of these processes are fair and above board to the parties involved.
  • Procedures and Processes: These check all the processes and procedures for operation in an organization regardless of how complex or diverse they may be. These processes are as intricate as the method of signing paperwork, explaining terms and conditions to customers, and others like that. All of these are examples of regulatory reporting as it is mandated and regulated.
  • Record Keeping: This is the basic form of regulatory reporting that most organizations do in some form or the other. It is the process of keeping and maintaining accurate, detailed, and accessible records of all the transactions carried out as regulatory bodies check it. These records also include the organization’s adherence to process in whatever form that may take. It should also cover penalties for whenever anyone deviates from the specified protocol.

Challenges Banks and Other Financial Organizations Face with Regulatory Reporting

Banks find it difficult to keep up with the fast-changing and increasing regulatory requirements.

The fast pace increased complexity, and granularity in the regulatory reporting requirements are putting banks under more pressure even with stretched budgets and resources. This challenge is more apparent for banks that cut across several regulatory jurisdictions and many of these organizations are constantly looking for ways to standardize reporting and stretch data models.

Reporting timeframe
of regulatory reporting reduced from months to weeks for improvement and a timely view of the financial risks.
Data integrity and quality
with less than effective data quality frameworks. Studies show that 31% of institutions view data quality as a major challenge to effectively meet all the compliance requirements. Also, analysts spend a lot of their time in data collection and organization duties making them spend less time on data analysis.
Effective Tracking
Maintaining an end-to-end data lineage to make it easier to track the final numbers back to the origin for quicker validation during onsite inspection.
Legacy Systems and processes
Core systems are dependent on many manual processes and multiple independent systems to meet up several complex requirements. It puts immense pressure on time, accuracy, resourcing, and efficiencies. This inflexibility affects adaptability to the constantly evolving regulatory requirements.

Emerging Trends in Regulatory Reporting

Technology is at the center of developing a culture of a comprehensive and proactive approach to help regulatory reporting. Compliance has gone beyond adding new resources for better effectiveness as it has shown that a gradual and planned adoption of new gen technologies such as AI, Cloud and Big data technologies etc, can help handle the challenge banks and other financial institutions are facing

Regtech is the management of regulatory processes in the financial industry through technology. It can greatly help combat the challenges listed above and make regulatory reporting processes more efficient.

Effect of COVID on the Regulatory Landscape Today

The pandemic led several governments to shut down their economies in a bid to contain the spread. This had a direct effect on regulatory reporting as the operational and economic resilience of the global financial system is now the topmost priority of many regulators.

Banks have the pressure to continue lending regardless of the shrinking revenues, increasing cost reduction measures, increasing liquidity risk, and unstable workforce productivity because of remote working. Regulators are trying to establish a balance between putting adequate measures for risk assessment and mitigation to prevent a financial crisis by relaxing the following activities:

  • Deferring the submission deadlines for regulatory reports
  • Relaxing several reserve ratio requirements and buffers
  • Loosening the implementation deadlines of new regulations
  • Suspending non-critical supervisory examination activities
  • Allowing early adoption of exposure/risk calculation methodologies

How RegTech Can Solve the Puzzle?

Using RegTech involves technology-driven improvements to the operating model of banks so that their regulatory reporting effort and spend are more efficient and creates value for all parties involved.
Global Tech Investment

There are two main options by which RegTech implementation can greatly improve regulatory reporting:

Delivering Actionable Insights

RegTech can give organizations actionable insights into new and emerging regulatory requirements so they can improve efficiency in their compliance process. This removes any confusion about the constantly updated regulatory reporting methods so the organizations can save costs. These insights also include new technologies like advanced analytics, robotic process automation (RPA), cognitive computing, and distributed ledger technologies.

These technologies help organizations implement strategic end-to-end reporting solutions. The processes include extracting input data, checking the regulatory calculations and mappings, generating regulatory returns, and producing management information for analysis. Organizations can always stay up to date with any new changes in the regulatory and compliance methods of the appropriate bodies that guide them.

Cloud based Solutions

Banks can easily build robust platforms for automating financial compliance using cloud based RegTech solutions. These solutions can embrace the powers of AI and ML for offering greater agility to banks and regulators. Potential risks, threats and cases of non-compliance can be identified faster to take necessary actions. Cloud solutions also allow banks to easily exchange data. This streamlines the entire effort towards data reporting.

Point to Ponder

A research study conducted by Bank of England revealed the UK’s 30 largest banks have adopted nearly 2,000 cloud-based applications between them.

Conclusion

Financial institutions that implement or adopt Regulatory Technology will be adaptable to any fundamental shifts in the future. Apart from the technology used to run these processes, developing a granular and centralized data model to maintain, govern and document is important in delivering a an efficient and reliable solution to relevant stakeholders.

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