Only the most innovative banks will be able to secure future profitability, the CEO of Temenos warned on Wednesday, as he outlined a series of challenges that for banks have meant lower returns on equity, tighter regulation and a raft of new competitors.
Speaking at the opening of the 2015 Temenos Community Forum (TCF), David Arnott told the 900 delegates in his keynote address: "It will only be the most innovative banks that will be able to change the paradigm, break out of this cycle and return to profitability. It will take real forward thinking."
In his third year as Temenos CEO, Arnott added: "At the same time, the customers want a new relationship. They want a trusted adviser for the right products -- they want their loyalty rewarded."
The TCF opened in Istanbul with a series of interactive sessions, panel discussions and speeches around the event's overarching theme this year of "Experience-Driven Banking".
Temenos believes that banks' response to changing client demands has to start with technology, as consumers seek new ways of interacting -- amid an explosion in the number of enquiries (the "look-to-book" ratio). That means systems need to handle massive increases in data flows. Or, as Dharmesh Mistry, the UXP Product Director for Temenos, later put it:
"We're going from 'Big Data' to humongous data."
The message from Arnott, and others including Temenos Chief Enterprise Architect John Schlesinger, was that banks must start with core information management systems and then seek to build real-time, scalable and compatible processes in the form of extra layers, such as rich analytics and reporting tools that can be adapted to different channels and devices.
Banks, in other words, should start to see themselves as enablers and not just custodians of data, the conference was told. They should also consider cross-selling opportunities offered by third parties, allowing those partners to build applications to complement the banks' existing systems.
"For me it feels like a race against time," Arnott said. "We are competing as an industry against very, very savvy tech players who are coming into our space, breaking up the value chain."
Subsequent sessions included an interactive product demonstration by Mark Winterburn, Group Product Director. Adrian Hadley, Retail Banking Product Director, focused on the potential of rewards. Todd Winship, Product Director of Business Intelligence, looked at real-time reporting across the balance sheet and the power of analytics to streamline and manage cash flow and liquidity.
These sessions were interactive and set against the stage backdrop of a Paris cafe, where a bank customer and small business owner was shown the power of Temenos T24, the integrated front-to-back-office, customer relationship management tool and product management software platform.
Amanda Gilmour, Product Director for Payments, subsequently hosted a discussion on the future of payments with Robbert Melgers of ABN Amro, Welly Sculley of Ripple Labs and Gordon Baird of nD Bancgroup. One conclusion was that though there are hurdles to digitising payments, both technical and regulatory, banks need to innovate now or they will die.
Later sessions included a keynote speech from Kenneth Cukier, the Economist's Data Editor. Legacy companies, he argued, are well placed to exploit digital channels given their existing data troves.
Cukier then joined Celent analyst Stephen Greer, ME Bank CIO Mark Gay and Dan Dickinson of Equitable Bank in Canada to broadly debate banks and digitisation with Ben Robinson, Temenos's Chief Marketing Officer.
Robinson also used the first day of TCF to launch a white paper on Experience-Driven Banking to the press. The report sets out the reasons why banks must stay ahead of the evolving challengers.
It's now 21 years since George Koukis, still a non-executive director, founded Temenos, and in that time the company has expanded to become the market leading software provider. Part of that growth has been helped by TCF, which started in Cannes in 1999 as an annual event for Temenos customers and partners (which this year include Cap Gemini, Deloitte and Accenture).
This year, in Istanbul, there are more delegates and partners than ever before. The event will be bolstered by extra breakout sessions and an "innovation jam" to showcase new technologies and allow attendees to vote on them via a specially created app.
Temenos's Business Solutions Director Mark Gunning explained why senior Temenos staff are sporting lapel badges in the form of a key. "We wear this key because it symbolises how important people are -- not just technology ," he said. "People are the key to us realising our ambitions as individuals, as companies and of our customers and our banks' customers. By realising our customers' ambitions, we'll really be able to deliver them Experience-Driven Banking."
Earlier, Arnott had looked back at 2014's highlights which included Temenos becoming the clear leader in core banking software and wider platform sales in 2014. There was also the addition of new clients such as ABN Amro, ICBC and Julius Bar, and transactions including the acquisition of the wealth management specialist Multifonds in Europe and Akcelerant in the United States.
Arnott also explained the launch of new Temenos products like MarketPlace, which brings together Temenos's and partner products and apps in one ecosystem; and WealthSuite, which helps embed analytics.
"It feels to me like we're on for the best TCF ever," he told delegates.