The future of retail banking and the case for core transformation

This paper argues that the widespread uptake of disruptive new technologies is exacerbating the pressures facing retail banking today, thereby driving a fundamental change in the structure of the industry i.e. digital-driven disintermediation of the banking value chain.

Download white paper

Most European banks are not equipped for this change because of the limitations of their aging legacy systems. Although banks have been investing in digital propositions in the frontend, they have been reluctant to embark on core systems replacement.

At Temenos, we believe that true digital transformation requires developing a coherent front-to-back proposition, built on a future-proof, modern core banking platform rather than on a complex web of legacy applications. Without a modern core, it is not possible to fulfill the emerging needs of the industry and to meet the heavy regulatory burden in an affordable way. The good news is that core banking transformations can now be executed easily and with acceptable levels of risk, because of the sophistication of packaged software now available and the lessons learnt and proven benefits delivered from successful transformations all over the world.

The technology mega-trends in retail banking

Today, a nexus of four disruptive technologies – mobile, cloud, big data and social media – is becoming omnipresent in retail banking. Blockchain, the distributed transaction validation model behind digital currencies, is another technology likely to significantly impact banking, especially payments, in the future.

Download the white paper today to find out more:

The future of retail banking and the case for core transformation

This paper argues that the widespread uptake of disruptive new technologies is exacerbating the pressures facing retail banking today, thereby driving a fundamental change in the structure of the industry i.e. digital-driven disintermediation of the banking value chain.

Download white paper

The “farm to table” movement has grown in popularity in the culinary world as consumers have gained an appreciation for the health and economic benefits of serving fresh, locally-sourced ingredients. There are many parallels between a successful indirect merchant lending channel and the “farm to table” concept. Throughout this article we will investigate methods for cultivating that merchant lending channel.

The future of retail banking and the case for core transformation

This paper argues that the widespread uptake of disruptive new technologies is exacerbating the pressures facing retail banking today, thereby driving a fundamental change in the structure of the industry i.e. digital-driven disintermediation of the banking value chain.

Download white paper

Temenos believes in a connected world. We know that a connected world needs a common language for communication. The ISO 20022 standard defines a set of XML format messages for financial services, which define a common language that will allow connected systems to have an automated dialogue.

We are not alone in this belief, and this standard has support from organizations such as SWIFT, Euroclear, Payments UK and OAGi among others, all of whom have submitted messages for inclusion in the ISO 20022 standard.

While there are benefits to the introduction of a common language of communication; generally, the introduction of ISO 20022 is not being mandated except where there is a genuine business change or market change. A good example of this is the Single European Payments Area (SEPA), which has replaced national payment systems in the Euro area with a common payments message set, based on the ISO 20022 standard.

Download the white paper today to find out more:

The future of retail banking and the case for core transformation

This paper argues that the widespread uptake of disruptive new technologies is exacerbating the pressures facing retail banking today, thereby driving a fundamental change in the structure of the industry i.e. digital-driven disintermediation of the banking value chain.

Download white paper

Celent evaluated banking Omnichannel Customer Acquisition vendors and identified the leaders based on functionality, technology, and service.

The future of retail banking and the case for core transformation

This paper argues that the widespread uptake of disruptive new technologies is exacerbating the pressures facing retail banking today, thereby driving a fundamental change in the structure of the industry i.e. digital-driven disintermediation of the banking value chain.

Download white paper

From what Deloitte observes in the market, 2016 is the year that sees the move from the across EMEA to gain a clear understanding of their current plans and status with blockchain technology hype phase to prototype phase.

They are predicting the development and launch of the first blockchain PoCs within the financial services industry at a company level and banks must respond to this. However, in this scenario, the majority of financial institutions interviewed seem unprepared to tackle the upcoming challenge.

Lack of accountability is the main reason that hinders organizations in embracing innovation, and blockchain is not different from this perspective, as affirmed by 46% of respondents in a recent survey by Deloitte.

Blockchain could represent the next big shift in technology over the next five years but the pace of innovation within financial institutions seems to be slow; for example, very few banks have a blockchain lab. A radical change in culture is required to re-think banks’ business models in order to prosper in the future. So banks must devote adequate focus and manpower if they are to keep up the pace with the market, but, once established, the focus must be on the true benefit rather than just exploratory. So which areas do banks see the most opportunity?

Download the white paper today to find out more:

The future of retail banking and the case for core transformation

This paper argues that the widespread uptake of disruptive new technologies is exacerbating the pressures facing retail banking today, thereby driving a fundamental change in the structure of the industry i.e. digital-driven disintermediation of the banking value chain.

Download white paper

The collection sector has come a long way since the global financial crisis of 2008 caused record levels of “bad” loans, leaving financial institutions struggling with the consequent chaos.

Few financial institutions have been looking at how to use the technology available today to prepare for the future and improve their processes, their service, their risk management and their bottom line. They are failing to use this brief interim to get ahead before they fall behind.

This white paper examines the collections practices and technology of the past, present and future – inviting banks and credit unions to imagine the possibilities as they cultivate a healthy consumer base and prepare for the challenges and triumphs of tomorrow.

download white paper

The future of retail banking and the case for core transformation

This paper argues that the widespread uptake of disruptive new technologies is exacerbating the pressures facing retail banking today, thereby driving a fundamental change in the structure of the industry i.e. digital-driven disintermediation of the banking value chain.

Download white paper

Cloud computing, which in the most basic of terms offers unlimited computing resource as a service on a pay-per-use basis, is proven to directly translate to less upfront, capital expense and reduced IT overheads, offering a cost-effective, simple alternative to accessing enterprise-level IT without the associated costs.

Recognizing the value of cloud computing, Temenos has made a significant investment in its products to ensure they run natively on the Microsoft Windows Azure platform, Microsoft’s cloud computing environment.

This development not only makes Temenos the first technology provider in the world to take a complete banking system to a public cloud environment but puts into practice the real value cloud computing can bring to the financial world.

download White paper

The future of retail banking and the case for core transformation

This paper argues that the widespread uptake of disruptive new technologies is exacerbating the pressures facing retail banking today, thereby driving a fundamental change in the structure of the industry i.e. digital-driven disintermediation of the banking value chain.

Download white paper

Our very relationship with banks will be transformed, as will the way they operate. Branches will disappear as we no longer require face-to-face service. Wearables and biometric devices, cars, homes, offices and even the built environment will initiate transactions directly with banks in real-time, while banks’ role as custodians of our money will grow to include management services to help with budgeting and even health.

The extent of change is limited only by our imagination. Already there are game-changing applications and services being trialed and implemented. It is time for financial services to be provided by the “Bank of Things”.

Introduction

Dawn of the “Bank of Things”

Over the past 10 years, I’ve seen analysts forecasts of the number of devices connected to the internet grow from 2 billion to 50 billion. The reality is we simply don’t know – and the ever-spiraling statistic is a sign of just how big the potential for this new technology is.

It seems it will soon be possible to connect anything and everything.

We already have a mattress cover that monitors your health; socks that tell you how many times they’ve been worn and washed; 3D printed clothes that adjust to temperature; and milk bottle tops that tell you if the contents have gone off. Meanwhile, toothbrushes, light bulbs, door handles and even pens can all be connected and deliver new services as a result.

New types of information

A new era of connectivity has begun and with it comes a whole different level of Big Data, as devices emit a constant flow of information. In addition, just as the number and variety of things connected to the internet continues to grow, so does the range of information coming from them. Sensors can provide data on location (GPS), movement (accelerometer), temperature, pressure and light, for example. And it quickly becomes apparent that the possibilities for this continuous stream of information are limitless.

Interconnected “things”

Nor does it stop there, because these connected “things” can also communicate with each other. Imagine a washing machine that warns you that you’ve left your phone in the pocket of the jeans you’ve just placed inside it to wash. Or curtains that open when the alarm on your phone wakes you up in the morning (possibly a little later than usual because it has checked your diary for the day ahead and detected that you haven’t slept well).

Again, the possibilities of what could result from devices that are able to talk to each other are endless. Children are today learning the basics of wiring up sensors and finding ways to employ the resulting data using kits such as Wunderbar, SAM and Kano to build their own gadgets.

These are the skill sets of the future – electronics (circuits), APIs/scripting and analytics.

Download the white paper today to find out more:

The future of retail banking and the case for core transformation

This paper argues that the widespread uptake of disruptive new technologies is exacerbating the pressures facing retail banking today, thereby driving a fundamental change in the structure of the industry i.e. digital-driven disintermediation of the banking value chain.

Download white paper

At its core, the industry still provides savings and loans, but interaction has moved from a traditional, face-to-face, branch-based approach – based on cash, cheques and bank tellers – to a digital channels-dominated model, with real-time payments and communication based around integrated data and systems with rapid consumer adoption of mobile and digital platforms.

Retail banks are responding to these forces with different strategies. Some have patched their legacy IT systems and maintain a hybrid approach, reluctant for various reasons to completely overhaul the core architecture on which they built their businesses. Other new entrants and incumbents now facilitate and accelerate the provision of digital services via multiple channels in response to changing client needs, whatever and wherever those are. Another group has abandoned branches and embraced digital-only models.

All, though, share the goal of providing the most seamless services at the lowest price, to retain loyalty and win new business. And all are aware that providing clients with experience-rich banking and placing themselves alongside the customer always is essential for success.

However, banks must avoid past mistakes in their approach to core IT systems – patching over gaps in existing legacy systems and layering on top multiple “silo” solutions that are not integrated or that duplicate capabilities across different business units – to liberate front-end functions like marketing, sales and other communication services, and enable all channels to function effortlessly via a single command centre.

This paper explains how this new, unified command-center approach to banking works – switching the focus to the customer’s demands from the current, transaction-driven core model. Those who embrace this customer-centric, unified approach will thrive.

The future of retail banking and the case for core transformation

This paper argues that the widespread uptake of disruptive new technologies is exacerbating the pressures facing retail banking today, thereby driving a fundamental change in the structure of the industry i.e. digital-driven disintermediation of the banking value chain.

Download white paper

You may have read Tom Goodwin’s popular TechCrunch article. But almost certainly you’ve heard the famous quote from it that starts:

Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content”.

The quote has become the accepted metaphor for disruption in the internet age – so much so that it was cited by more than 80% of the speakers at a conference we attended in London last November.

What started as an interesting observation – that the internet has shaken up the supply chain and allowed for the emergence of balance-sheet-light, distribution-only platforms – has morphed into orthodoxy. In the information age, the theory goes, one set of companies does the hard work of producing goods and services, while another set – internet platforms – distributes them, earning super-normal profits on account of having few assets and negligible costs.

This is an interesting and intuitively appealing theory, but it doesn’t hold when you examine it in detail. It turns out that these internet platforms are not as balance-sheet light as we might think and are, in fact, becoming much more operationally geared and vertically integrated as they seek to cement leadership and deliver better customer experience. But, more importantly, it looks at digitization through the wrong lens. The fact is the internet era is not producing an overall trend to smaller balance sheets – just different routes to customers (with varying delivery models). And when we look at the FinTech sector, we see no reason why this won’t be the case, either.

Hierarchical models have given way to ecosystems. Within an ecosystem, some things are controlled while others are not; some assets are owned, others are not. What matters is the route to the customer, not the size of the balance sheet.

The future of banking starts here

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