banking challenger

Jan 29 2021

Schroders Wealth Management to Use Banking Software from Temenos to Enhance its Financial Advisory Business

Temenos (SIX: TEMN), a banking software company, has revealed that Schroders Wealth Management in Switzerland has decided to use its solution in order to automate and improve its financial advisory business.

Schroders Wealth Management will reportedly launch the Temenos Wealth Front Office which is described as a portfolio or investment management system. The solution will be deployed on the Temenos Transact core banking platform in order to streamline the capabilities of relationship managers, financial advisers, and portfolio managers.

With Temenos Wealth Front Office, Schroders Wealth Management will be able to standardize its financial advisory services.

The solution will reportedly include various dashboards for relationship managers and portfolio managers, client and investment profiling, investment proposal process, advanced order generation, extensive pre- and post-trade compliance checks, flexible benchmarking and performance reporting.

The solution also offers a wide range of portfolio modeling and rebalancing tools, covering various asset types, in an intuitive or user-friendly manner.

Schroders Wealth Management stated that they have £65.7 billion of assets under management (AUM) from clients based in the UK, Channel Islands, Switzerland, Singapore and Hong Kong.

Giovanni Leonardo, Head of Investment, Schroders Wealth Management, Switzerland, remarked:

“We chose Temenos Wealth Front Office following a selection process to support our advisory business in Switzerland. The software handles all the complex processes and stringent regulations involved in advisory portfolio management, allowing our relationship managers to focus on the needs of our clients. It also provides the flexibility and efficiency we need in discretionary portfolio management.”

David Macdonald, President of Europe, Temenos, noted that they’re pleased to extend their long-term business relationship with Schroders Wealth Management. As the banking institution continues to grow and expand its line of products and services, the Temenos Wealth Front Office will help to “deliver an enhanced service, greater efficiency and consistent experience for its high and ultra-high net worth clients, leading to greater customer longevity and new business opportunities,” Macdonald added.

As reported recently, Temenos now supports 60 banking challenger clients. Temenos has confirmed that digital banks, such as Alba, Alpian, Banco del Sol, Flowe, FlowBank, Lunar, Next Commercial Bank, Pepper, Varo Bank, and WeLab Bank, have selected the company’s Cloud-native, Cloud-agnostic technology, joining more than 3,000 Temenos customers around the globe.

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Jan 02 2021

Fintech Professional Says Challenger Banks are Disrupting Banking Sector in a “Big Way” by Improving Customer Experience

Last year, we saw many banking challengers offering services to customers who might not have been satisfied with their traditional bank. Many more people also began to use online banking services due to the COVID-19 pandemic which forced many physical business locations to shut down.

Marwan Forzley, Co-Founder and CEO at Align Commerce, a payment service provider for global commerce, notes in a blog post published by Payments Source that challenger banks are still quite small when compared to traditional financial institutions. But they’re “disrupting” the banking sector in a “big way” by changing “the fundamental and antiquated experience we’ve come to expect.”

Forzley points out that Deloitte’s “DNA of Digital Challenger Banks” report states that “challengers have developed a product offering and channel experience that targets the points of the value chain where incumbents’ weaknesses are most exposed and often not easy to fix.” In 2020, we saw Fintech challengers (like Current) offer certain services that cater to the financially underserved — such as SMEs, Millennials and underbanked consumers, Forzley confirmed.

He added that digital-only banks (like Revolut) have launched services that specifically aim to serve corporate or business clients. They may offer advanced tools and features (for example, access to working capital, accounting integrations, online wallets, and payment scheduling). These tools may be accessed from a laptop or mobile device — “without the processes, complexities or red tape that incumbents are known for,” Forzley claims.

He also mentioned that there’s a “wide open market with plenty of opportunity not just for challenger banks but for financial technology as an industry to set themselves apart from incumbents to gain market share.”

In 2020, we saw an “unprecedented” level of investment into Fintech firms, Forzley noted. He pointed out that the opportunity for growth within the payment and banking sector is driven by the need to solve or address clear problems and develop “tech-forward solutions” that are “readily available” to serve individuals and companies. He claims that VCs and incumbents are interested in funding “innovative, agile products and services that improve on the speed, accessibility and transparency issues that are widespread throughout traditional financial institutions.”

He concluded:

“[The] winners will be determined by how novel their offering is. In order for the leaders in the space to survive against incumbents and against each other, challengers will need to focus on ensuring their services are more innovative and different compared to what exists today. If the service is going to yield minor incremental changes, it won’t be enough for the challenger to truly take off. The services that will do well are the ones providing a fundamentally different and forward-thinking customer experience.”

As reported recently, digital banks and Fintech challengers must show they can generate profits, because investors are expecting returns.

Investors have been pushing banking challengers to show them how they can generate sizable profits by effectively monetizing their products and services. Industry analysts expect that the neo-banking sector will have to consider consolidation opportunities and seriously begin to focus on achieving profitability in a post COVID environment.

As covered, Fintech adoption is on the rise globally with over 250 digital banks operating in major financial markets, according to a new report from Exton.

The report noted:

“On their quest for monetizing customer relationships neobanks have learned a first lesson: payment transaction fees, premium account subscription fees, or open banking commissions from brokering 3rd party services will in most cases not be sufficient to generate profits or breach beyond operational break-even. Our expectation much rather is that Neobanks will need to offer additional products to jump the gap to sizable profitability.”

The report added:

“Irrespective of which path neobanks will take, we remain convinced that they will need to shift into profitability mode quickly as investor patience will not be unlimited. But for those that select the paths right for them, stay focused on it and grow up as an organization, the future remains bright and full of opportunities.”

Exton suggests that some Fintechs or neobanks may want to consider offering digital or lending services which should help them diversify their business. Financial technology firms can also look into developing their own super app or offer investment services to the mass affluent market, Exton noted.

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Oct 28 2020

Cale Johnston from Fintech Firm ClickSwitch Reveals that Banking Challengers are Now Interested Only in Handling Direct Deposits

ClickSwitch, a U.S. fintech that claims it simplifies and automates the switch of direct deposits and recurring payments for financial institutions’ new and existing account holders, recently acquired $2 million through its Series B investment round led by USAA subsidiary. The investment round brings ClickSwitch’s total funding to more than $21 million.

ClickSwitch describes itself as an automated account holding acquisition technology provider for financial institutions and fintechs. The company aims to simplify the process of bringing new depositors onboard by quickly, safely, and efficiently switching their deposits and recurring payments from their old accounts to new ones.

Cale Johnston from ClickSwitch claims that banking challengers are only interested in handling direct deposits now. He reveals that banks have become more aggressive when it comes to onboarding new customers.

As reported by Tearsheet, ClickSwitch has been helping customers of challenger and traditional banks with switching over their direct deposits to their new accounts.

As banking challengers continue to focus on acquiring more customers, they’ve also started to provide better services to their existing clients (so that they can continue to earn their business). Digital banks and other financial service providers are now being judged or evaluated on whether these new account openings can actually turn into new clients. Financial institutions are also being assessed on whether their new customers can rely on them to provide comprehensive banking services.

ClickSwitch aims to assist large challenger banks and incumbents with converting new account openings into loyal customers. The Fintech firm’s proprietary technology has been designed to help new customers with seamlessly switching over their direct deposits and bill pay to their new banking service provider.

The ongoing competition between digital banking solution providers has started to mature. The Fintech and banking industry is not only focusing on acquiring new customers. They also want to onboard and provide quality services to consumers that have already signed up. Banking challengers are making substantial investments into getting a new customer to consider their new digital accounts as their primary bank accounts.

Cale Johnston, founder and CEO of ClickSwitch, says that customers are able to easily open new checking accounts. He adds that banks are sort of forced with this “dilemma” as to how they can identify a primary bank account holder.

One way to check how engaged a customer might be with a service provider is to see if they’ve got their direct deposit set up. ClickSwitch aims to assist challenger banks and incumbents with figuring out which of their customers are primary bank account holders and are not just maintaining inactive checking accounts.

ClickSwitch’s platform and services can integrate with banks in order to interact with customers directly after they’ve signed up for a new account. ClickSwitch’s management explains that the company uses data aggregation to show new account holders they’ve got a direct deposit of their paychecks setup.

The Fintech company claims that it has a fast approval process, after which customers are ready to move their direct deposit to the new account via integrations with payroll processors.

ClickSwitch claims that it’s currently working with more than 500 financial institutions, which includes some of the largest banking challengers.

In statements shared with Tearsheet, Johnston noted:

“It’s not just about direct deposit — it’s about the downstream effect, as well. Creating the ROI metrics for our financial institutions has been critical in getting us in the front door of our 500 clients and signing 10 to 15 new net financial institutions a month right now.”

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Oct 18 2020

Accenture to Invest $3 Billion in Fintech Initiatives that Will Help Companies become Cloud First Businesses

David Jimenez Maireles, Customer Experience Officer at TNEX, a Vietnam based digital bank, claims that despite the skeptics, banks have been “no laggard when it comes to cloud adoption.”

Banks have been migrating incrementally, and today “the average bank has 58% of its workloads in the cloud—mostly in private cloud centers,” according to a recent report from Accenture.

The report notes:

“Many banking CEOs today believe if they had been more in the public cloud, the last few months (during the Coronavirus pandemic) would have been a lot easier. The Cloud will be both transformational and disruptive post-COVID-19, offering banks improved scalability, efficiency, agility and security. Cloud maturity is becoming a hallmark of the world’s best-performing banks.”

Cloud-powered technologies are increasingly being adopted by financial service providers across the globe. As covered, Australian SME banking challenger Judo Bank will be using the Cloud based bank operating system developed by nCino.

The Qatar Financial Center Regulatory Authority (QFCRA) recently revealed that it will be migrating its online services to the Microsoft Cloud in order to move forward with its digital transformation strategy.

There are many other related technologies such as low-code platforms that are being developed around Cloud solutions so that businesses are able to streamline their operations.

In a recent interview with Crowdfund Insider, Michael Rennie, Product Manager at Mendix, a Siemens business and global leader in enterprise low-code, explained that low-code enables organizations to move quickly to deliver unique and useful cloud-native applications that can scale and take on high volumes of traffic.

As noted in Accenture’s report, the skeptics or industry participants who doubted that Cloud based models could work had pointed out that there were security issues, lack of regulatory clarity, and “potential competitive issues with the largest cloud service providers and the seductive economics of fully depreciated data centers.”

The report also mentioned:

“The [Cloud] debate continues, but the evangelists have gradually gained the upper hand: Cloud investment has grown strongly in recent years and is forecast to continue at 15 percent a year between now and 2022.”

It added:

“More than half of [Accenture’s] top banking clients have adopted a multi-cloud strategy. We believe that, to an increasing degree, this suits the requirements of most banks. Key benefits include: best-of-breed services, autonomy and agility, regulatory compliance, and cost reduction.”

The report from Accenture further noted that Cloud solutions help reduce operational costs up to 20%. They can also reduce time to market by as much as 50% while offering around 50% quicker provisional speed.

Accenture revealed that it’s planning to invest $3 billion, over the next 3 years, in projects that will help its clients with becoming “Cloud first” businesses.

Source

Oct 17 2020

Multi Billion Dollar Merger between Russian Tech Firm Yandex and Challenger Bank Tinkoff has been Scrapped

The recently proposed merger between Yandex, a major Russia-based tech firm, and banking challenger Tinkoff will not be finalized because the bank’s founder Oleg Tinkov has walked away from the deal.

Tinkoff’s management confirmed that all negotiations between the two parties have now been “terminated, effective immediately.” Yandex and Tinkoff had previously reached an agreement “in principle” which would have led to the tech giant acquiring the challenger bank in a $5.5 billion cash-and-shares deal.

The shares of both Yandex and Tinkoff were down by around 4% and 6%, respectively (on October 16, 2020 following the news update that the acquisition deal had been called off).

As stated in a release published by the London Stock Exchange (where Tinkoff’s holding company TCS has been listed):

“TCS Group Holding PLC refers to its announcement of 22 September 2020 that it was in discussions with Yandex N.V. regarding a possible cash and share offer by Yandex for the entire issued and to be issued share capital of Tinkoff. Following further discussions, including with Tinkoff’s controlling shareholder, the parties have agreed not to proceed with the Potential Transaction. Negotiations between the parties with respect to the Potential Transaction have therefore been terminated.”

The announcement also noted that Tinkoff would be looking forward to continue to working cooperatively with Yandex on current and future initiatives.

There were some signs or indications that the proposed deal would not materialize. Tinkov had reportedly consulted several parties about acquiring the lender which generated approximately $500 million during the past 18 months. As reported by the Moscow Times, one of the potential buyers may have been telecom company MTS, which currently operates a small banking institution.

Tinkoff also claims that it’s not negotiating any deals with other parties and that it will continue to operate independently (at least for now).

One of the issues that may have led to the negotiations being called off could have been related to Tinkov’s expected role after the deal had been finalized. At present, Tinkov is being treated for acute leukemia at a hospital in London. He’s also dealing with U.S. led extradition charges because he may owe as much as $1 billion in taxes.

Tinkov wrote a letter to the bank’s workers in which he noted:

“Today, I decided to cancel the potential deal with Yandex. Why? We started talking about merging, a search for synergies and rapid growth of customers. They wanted to build the largest private company in Russia. In fact, it turned into a sale. They just wanted to buy Tinkoff, with all the resulting negative consequences for us. Tinkoff will not be sold to Yandex or MTS.”

Tigran Khudaverdyan, deputy CEO at Yandex, stated:

“We agreed that after the deal Oleg [Tinkov] would have participated in the management of the bank and helped Yandex. It was logical, because after the deal Oleg would have become a major shareholder in Yandex. Unfortunately, after every stage of the negotiations, more and more requirements appeared. Therefore, when we learnt today that Oleg decided to back out of the deal, we were not surprised.”

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