The way people bank is evolving. Banking services are increasingly embedded in people’s everyday lives – banking itself is becoming a journey and an experience. This has opened the door for new and disruptive business models to gain popularity. What started with basic retail products such as cards and lending products, is now extending to offerings for small and medium enterprise as well as for the mass affluent. A result of the open banking revolution, embedded finance is a massive force for change, bringing into the distribution of banking products any market player that has access to customers.
For example, if you are looking for a banking product such a loan you can now find it within a retail app or choose a Buy Now Pay Later product, rather than going to a bank. A mortgage is now available through a property broker app and a basic card product through any retailer customer onboarding journey. Banks are becoming not only banking-as-a-service providers allowing retailers to distribute banking products that they manufacture, but also marketplace orchestrators bringing financial products to groups of customers in partnership with other market participants.
While this is a significant change for banks, which are potentially disintermediated, it is also a massive opportunity. For banks to take advantage of this opportunity while at the same time strengthening their own abilities to compete directly in this fragmented marketplace, they do not only need to organize themselves differently, but also need to deal with the impact on their technology systems. The fast pace of change and innovation means that most of the banks’ legacy systems are not fit for purpose. They constrain banks that are trying to respond to market trends – equally, non-incumbents are also turning to third-party solutions to scale and gain faster time to market. Software-as-a service models with lower time to value and faster scale, make traditional installations based on legacy code unable to compete effectively.
This means that digital transformation has become an imperative.
Disrupting banking software through innovation
Temenos has always believed in technology disruption. After all, we have been disrupting the banking software industry for over 30 years; and we continue to constantly innovate and to embrace this change. From the introduction of packaged upgradeable software almost 30 years ago in a world of customised code, non-stop banking about 20 years ago to the rise of the cloud, Temenos thrives on innovative disruption. We are benefitting from the rise of cloud irrespective of whether we deliver our software as a service on Temenos Banking Cloud or by enabling our clients to run our platform themselves on public cloud or on premise of course or via other third parties. And this is irrespective of banks size, specialization, geographies, as well as non-incumbents. Temenos is capitalizing on this disruptive moment extending its lead over our competitors. With the capabilities of our Temenos Banking Cloud, we meet the technology needs of organizations from the smallest to the largest traditional banks through to specialist BaaS providers.
Building on our strong SaaS credentials, we do not only offer the software but also the service, and this will increasingly drive Temenos’ growth in the future. We are ideally positioned to deliver the best service, having successfully built a sizeable SaaS business in the last four years that today accounts for more than 40% of our software licencing business. We now have over 700 clients live on Temenos Banking Cloud across five continents, covering over 30 regulatory jurisdictions, and a new bank is going live on our SaaS platform on average every 10 days!
Paving the way for a more sustainable industry
As a leader of our industry, we need to be mindful that innovation and disruption are not enough; and we must continue to grow in a sustainable way. Not because it is fashionable, but because it makes business sense. Always did. Our partners choose to work with us because we understand how crucial this is, and because we have leading ESG credentials in the IT sector. Our clients are also selecting to work with us because of our ESG credentials, which in turn allow them to help their clients lead more sustainable lives.
Most importantly our commitment to sustainability reflects our product offering. We recently introduced a carbon emissions calculator on the Temenos Banking Cloud to help banks in their race for net zero. This independently verified solution is embedded into the Temenos Banking Cloud and offered at no cost to our customers, who can benefit from over 90% in carbon emissions savings compared to on-premise IT infrastructures and applications. It gives our clients deeper insight into their carbon emissions data, allowing them to track progress toward their sustainability targets.
Furthermore, Temenos Transact, our core banking product, has become over 30% more carbon efficient in the last 12 months with more year-on-year improvements underway.
Our people, our true North
We have achieved a lot in 2022, and our momentum is building. We ended last year with one of our best ever quarters. This would not be possible without the passion and great work of our people, our community of Temenosians. With great talent and collaboration, we can solve any problems.
As we entered the new year, we took the opportunity to reflect on our achievements and consider how we wanted Temenos to evolve. We decided that now was the right time to pass on the baton to the next generation of leaders. We have a strong, stable, and ambitious management team, and an independent Board with an impressive depth of experience to draw upon, whilst guiding this transition as we appoint our next CEO.
Every year we provide an update on our strategy and host a Capital Markets Day; this ensures we are constantly challenging ourselves and working to ensure that our strategy is right for the business. This year was no different and we were very proud to showcase some of our exciting new product developments during our Capital Markets Day. You can access our CMD material here.
You can learn more about banking trends for this year and about Temenos’ next chapter in this video. I am excited for the future of Temenos and of the wider banking sector, and I hope you are, too.