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Rapid-growth markets are embracing cloud banking

By Temenos reporter 21 Apr 2015

Mexico is championing financial services innovation and proving to be an early adopter of flexible, cost-efficient banking solutions.

Last month we saw SeFia and Soficam, two Mexican savings and loan organisations, adopting the T24 Mexico model bank which offers a tailored core banking software solution for the local market. The banks will be running the solution on Microsoft Azure, our cloud platform partners.

The two banks will now be able to offer access to affordable banking services in previously underserved communities in Mexico. Temenos’ work with Microsoft in Mexico builds on shared experiences in other fast-growing emerging economies such as Nigeria, Kenya and Myanmar, where a number of financial institutions have been embracing banking across multiple channels that fit into consumers’ everyday lives. No matter how remote their customers are, banks can be there too.

SeFia will adapt the model bank solution to work around its own niche, financing the purchase of machinery and equipment in the agricultural sector, helping farmers, cattle ranchers and builders to obtain loans to expand their businesses and boost the local economy. Soficam will use T24 in the cloud to bolster its core business offering loans to small producers in the agricultural and fishing industries.

It seems to me that Mexico is a market that may, alongside others, be a vibrant engine for growth for the whole sector, so there’s much to play for. Driven by an expanding middle class, urbanisation and a young demographic, the country is currently demonstrating demand for affordable, accessible and efficient banking solutions across a range of sectors.

Indeed, a recent survey by EY found that bank credit to the private sector in a number of fast growing markets, including Mexico, would grow by over $1.5tn by 2018. Banks in some of those markets already use best-in-class technology to add and retain customers.

The same survey also showed that 78% of respondents believed developing new digital channels was crucial for banks to expand in those markets and help them to improve internal operational efficiency, reach new customers and build enduring client relationships.

In both developed and developing markets, banks need to make important technology decisions now, allowing them to invest in customer loyalty, by building technology capabilities to help meet existing client expectations or attract new customers. If not, they risk leaving other players to pick up market share and profitable services.

Those that invest now will be able to expand customer reach through digital channels and use the power of analytics and customer data to understand their clients and offer them new and compelling services at the point of sale and at the right price. That, by the way, was also one of the messages that came through in the recent Temenos-EIU survey of retail banking, and has been backed up by a multitude of other intelligence and surveys.

Whether it’s delivering core banking in the cloud to lower costs and improve agility, or embracing digital technology, both, by extension, allow banks to access a range of technology solutions to support customer demands and growth ambitions. It just goes to show that banks have a great opportunity to embrace technology that allows them to create new services to win them business, whether that takes place in retail, wealth management or corporate banking.

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