IBS Journal April 2017
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be written onto it as needed. “For example if someone writes a nice credit rating application using some AI … people can have their own apps modelled on top of the system.”
As for the overall trends in the lending market, Singh believes the industry is finally realising that there is a real need for “open integration”. “There’s $10 to $15 billion going into FinTech and neither Misys nor our customers – even though they have large budgets – can keep up with this. This approach provides FinTech an opportunity to collaborate with the banks.”
A lot of FinTech investment has gone into disrupting the exist- ing vendors. “That’s a lot of money going into disrupting banks – who happen to be our customers – so our goal here is to bring innovation and core banking expertise together.”
The opportunity for collaboration is one that Singh is keen to stress. Misys is giving FinTechs the ability to build on top of solid foundational core banking platforms and immediate ac- cess to high profile customers; in return the banks gain support from the latest in technology from FinTechs. “There are startups sitting there in Silicon Valley who have great products but are thinking ‘how do I access a bank? What does their system look like?’ We’re answering those questions for them and making their progress possible.”
Gaining maturity
When it comes to cloud technology, Singh believes that people have a mature outlook, especially banks: “Banks now, even when implementing something internally, it’s on the cloud.” Cloud has gone past the point where people are discussing whether it is a technology that can be useful to the industry – it’s proven itself as a necessary technology. There is a decision still to be made, though, on whether firms want to use a public or private cloud. Multiple factors come into the picture – secu- rity, data privacy, risk – and each one of those worries is asked of any vendor. “I have had to satisfy the worries of hundreds of CIOs,” Singh says with a smile. “If there is a risk question, I’ve been asked it by 10 CIOs before them.” Cloud is still on a journey, despite increased acceptance, he adds.
A lot of the major concerns to do with cloud-based technology have more to do with inertia than real concern. For a large part, most of the usual data privacy and security questions have already been answered. “Capital One has said it will put all of its systems on the cloud, for example, which shows that these
questions have already been solved by the larger banks.”
Now the question is “how comfortable are you?” and it’s a question that has to be answered by each bank individually, says Singh. “It varies from system to system. In some areas for some banks one department might be more willing to out- source than others.”
Data privacy concerns are also driven by several factors and there are different attitudes when it comes to the technology in different regions. “In Asia definitely there are much newer banks who are more open to innovation and cloud. This also bleeds into Australia which is very open to going ahead and doing things on cloud.”
Europe is an outlier in the way that the regulators are driving the change instead of banks. “With PSD2 and other regula- tions, they are saying to the banks ‘you have to give access to these third-parties who may use the cloud.” Regulators and governments in Europe are breaking down the mental barriers that some of the older institutions have.
Misys’ changing approach, from monolithic core banking jack-of-all trades to modular service provider, has meant that its move towards the cloud has been inevitable. “Having this modular architecture allows us to take a much more effective stance when it comes to cloud-based technology,” says Singh. “More importantly, our Platform-as-a-Service is more easily dis- seminated to customers because it is modularised. Putting that small layer on top was easy for us because we had taken care of all of our architecture issues and were on the cusp of launching the platform.”
Turning to matters Stateside, Singh believes the approach that Misys is taking and the platform it offers is a great method for US-based banks and credit unions to modernise themselves as customers begin to demand more digital services. It helps, of course, if the credit unions in question switch to Misys’ core banking solutions. Before the smaller financial institutions may have looked at a modernised system and waved it away due to cost problems. Now, with a cloud-first approach, efficient, modern and digital-ready core systems can be implemented at a fraction of the price. Misys says that it is currently in talks with a “number” of US-based banks about their cloud-based lending services and, though discussions are in the early stages, the offering is mature and ready to be implemented once the green light is given.
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