Issue 01 - 2021 MAGAZINE Technology
gbo-interview-next-gen-banking-begins-with-cloud

An era of next-gen banking begins with cloud

The technology has the potential to generate enormous cost efficiencies and create better customer propositions

When it comes to traditional core banking systems, they are highly inflexible. But the banking and the overall financial space is changing fast due to new disruptive technological innovation. In the UK, we have seen new challengers in fintech that are making significant traction in customer adoption. This is because challengers have the ability to innovate and are not burdened by legacy systems. The traditional banks with their core banking systems were deployed decades ago and over the years have not seen much technological change. Huge cost associated with it has often restricted significant changes in the banking system, however, things are now changing. Technologies such as cloud now allow banks and financial institutions to store data and applications and access advanced software applications through the internet.

While the coronavirus found its way out of China to other parts of Southeast Asia, the Middle East and then Europe, it pushed the global economy into a recession. The pandemic was expected to limit the growth of the fintech sector, however, that does not appear to be the case. Even with Brexit, the fintech sector in the UK is expected to remain strong. Over the years, London has been established as a financial hub in Europe. And it is expected to maintain its position despite uncertainties loomed over the outcome of Brexit for a long period of time.

With Brexit finally done, the fintech sector in the UK is expected to grow in the coming years. Brexit will significantly change the financial services landscape in the UK as well as in Europe. Changes are expected when it comes to regulations, trade deals and investments. However, how big and impactful the changes will remain is to be seen. Despite its ups and down, the number of startups popping up in the UK fintech space has also grown with time. Also, fast digital transformation is on the rise.

Most banks have embarked on some level of digital transformation already. Today, leaders across the financial landscape have understood the potential of cloud and what it brings to the table. Many banks have understood the potential of cloud and how it can lead to cost efficiencies and create better customer propositions. Some experts believe that banks can save up to 50 percent of their costs by adopting cloud technology to serve their customers. The technology allows banks to implement new operating models that lead to improved revenue generation and cost savings. It also helps to deliver market-relevant products quickly and efficiently, and helps to monetise enterprise data assets.

While challengers are already disrupting the industry, because of their ability to meet the increasing demand of digitalisation that banking customers often demand, it is likely that all traditional banks in the future will fully adopt cloud to run their operations. Unless a new disruptive technological innovation comes knocking on the door. Be it the traditional, cloud-native or serverless applications, it will reshape the banking industry. However, there is a difference between a genuinely cloud-native, next-generation core banking system and simply moving legacy technologies into the cloud. Cloud-native was designed with the very purpose to facilitate and utilise the cloud to its maximum potential. Cloud-native helps in designing, building and running applications on the cloud.

The modern-day consumer is more demanding with their own distinctive requirements. Nowadays, when it comes to finance, consumers expect 24 hours access to their financials in real-time and across many different devices. Most customers now prefer to carry out banking activities from the comfort of their home rather than walking into a brick and mortar office. The modern tech-savvy generation is even more demanding. This possesses a tremendous challenge in front of the banks, especially the traditional banks with legacy data. There are a number of companies that have the ability to solve these problems for the banks. With digitalisation taking place in almost every other sector, these companies have the cutting edge technology to help banks meet the demands of their customer and in a much efficient way.

One such company is Yobota which is based in London. Yobota’s core banking platform allows established and challenger financial institutions to launch innovative, user-centric products in a fast and reliable way. According to its website, the Yobota Platform allows established and challenger financial institutions to create innovative, user-centric financial products, and run them from origination and through the life of the account. Chief executive officer Ammar Akhtar in a conversation with Global Business Outlook discusses the importance of cloud and how Yobota with its cloud services is bringing digital transformation to the UK banking and financial services landscape.

What is the purpose of Yobota’s multi-brand capabilities on its core banking platform and what is the value proposition that differentiates itself from industry peers?
Yobota’s multi-brand management capabilities enable banks to create, launch and manage new brands quickly and at low costs. In years gone by, high street banks and traditional institutions will have needed to invest heavily, both in terms of time and cost, if they wanted to launch additional brands – with no guarantee of success. Now they can enter new markets easily and much more affordably. This was a breakthrough moment for the financial services sector at large. This innovation is particularly important at a time when banks must respond quickly to evolving customer needs, by launching offerings that target financial products for different demographics.

Chetwood Financial, for example, is one of our clients that has already been taking advantage of the platform’s multi-brand capabilities. The digital bank recently launched the BetterBorrow lending brand to complement their reward and loan savings brands, and it can now launch any additional brands at pace. We give our clients, whether this is financial services firms or businesses stepping into the world of fintech, the power to take a far more agile, responsive, and brave approach when it comes to meeting changing customer needs. No longer do they have to be held back by unresponsive and inflexible systems.

Yobota has developed a cloud-native banking platform that enables clients to run financial products. What does this new platform mean for financial services companies looking to thrive despite heavy competition?

Yobota offers financial services companies a distinct advantage: the power of flexibility. Our cloud-native banking platform enables progressive and innovative businesses to take advantage of proven technologies so they can stand out from their competitors. With our platform, they can create more responsible, customisable and customer-friendly products and experiences. Fintech is evolving all the time, and so are the demands of banking customers. Finance companies must be able to adapt quickly—our platform enables them to be responsive and spin out new offerings at a high-speed and low-cost, which is essential if they are to gain a competitive advantage.

Are challenger financial institutions in the UK overtaking high street banks and what are the attributable reasons for their swift development in a highly competitive industry?

The debate is not so much about whether challenger financial institutions will take over the UK’s high street banks, but rather how the two will work together to push the whole sector forwards. Already we are seeing more and more partnerships being forged between the two parties, which will be encouraged further by developments like the open banking initiative that require a mutual understanding of best practices. Collaboration has become unavoidable in the financial services space. Another area for observation is the changing dynamic between banks and their customers. The way in which people engage with and remain loyal to a particular financial institution is markedly different today than it was 20 or even 10 years ago.

So, while traditional banks often enjoy the benefits of established reputations and proven user base, they cannot be complacent. They must work together with smaller and nimbler counterparts that can help them move forward into the digital age, and most importantly, offer a better user experience for their customers. Indeed, it is in this area that challenger banks have a leg up. They typically recognise the importance of an unencumbered, sleek user experience.

Is Yobota planning to expand into emerging markets and why are those markets being considered?
Our platform is not tied to any particular geography, and many of the challenges faced by banks and fintechs are the same across the globe—namely innovation, regulation, modernisation, and competition from big tech. As such, we are confident that we can help clients in other regions in the same way that we support our UK clients.

How has the coronavirus pandemic disrupted digital banking in the UK and how is Yobota planning to capitalise on those industry disruptions?

The coronavirus pandemic has highlighted the importance of digital banking. Indeed, it has brought about a sharp rise in people’s reliance on financial technology. An independent study of more than 2,000 UK consumers by Yobota earlier this year offered some insight into the issue. For one, it showed that 66 percent of people were regularly using fintech between March and July 2020 at the height of the pandemic—an increase of over 50 percent compared to 2019’s usage figures.

Rather than inspiring new trends, however, the pandemic has accelerated trends that were already taking shape. The reliance on legacy IT and on-premise data storage has been highlighted as a weakness within many institutions. On the positive side, however, the pandemic has provided an impetus to make more progressive technology choices going forward. As customers become accustomed to new technologies and ways of managing their finances, the appeal of a bank will no doubt be shaped by the online and mobile banking solutions it provides going forward. Yobota is on hand to offer modern solutions to modern problems. We will continue to help the financial services sector keep pace with the demand for better technology, and support their long-term digital transformation plans. Importantly, we provide interoperable fintech built on a cloud platform, which not only breaks down the geographical barriers imposed by legacy IT systems, but also removes the roadblocks standing in the way of people accessing and managing their financial products.

What are Yobota’s plans for challenger financial institutions in the next two years, given that the UK is in a tough position over Brexit?

The UK’s fintech sector will remain strong. It has an inherent ability to adapt to challenges that are thrown its way: whether this is Brexit or a global pandemic. Indeed, Atomico’s latest State of European Tech report highlights that a massive $25 billion has been invested in European fintech companies since 2015, even in the midst of ongoing political and economic uncertainty. While it is important to have contingency plans in place to mitigate any potential fallouts from the transition, fintech companies are entering 2021 from a position of strength. At Yobota, we will continue to bridge the gap between traditional banks and their younger counterparts, and continue pushing the financial services sector into the digital age through innovative applications of technology.

As we do so, we will continue to focus on hiring top talent. At Yobota, we pride ourselves on being a very diverse company with a team of extremely talented and motivated people behind our platform. Regardless of the challenges that Brexit will bring, we will continue to look for the best talent to power our future growth and support our clients.

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