SmartStream
Embracing change: Building for the future
SmartStream prides itself on getting ahead of its customers’ challenges and looking further ahead than most fi nancial technology developers to see what is coming over the horizon. Jim Banks talks to its executive team about the big trends that are shaping the future of the banking industry – and how some of the company’s products are helping clients meet these new challenges head on.
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any of the themes in banking apply to every other industry. The need to do more with less, to get key processes to function more
quickly and cost-effectively, to build sufficient agility, to respond to changes in the competitive landscape – all of these apply to most businesses. Yet, to evolve and to survive, banks must look beyond these universal imperatives.
“There is always a drive towards greater efficiency, how to leverage data and ensure that operations are quick and deliver results to our clients, and are not too costly,” says Haytham Kaddoura, SmartStream’s CEO. “The industry wants bigger data lakes, better reporting tools and the ability to use predictive analytics to allow organisations to assess different risks and the implications of, say, a payment that does not arrive on time. “We have to build value and to understand the implications of new technologies for our clients,” he continues. “We are helping organisations to be as agile as they can be. That is our mission.” Having already started down the road of digital transformation, the banking industry has been forced to quicken its pace. This is partly due to the emergence of new challengers, but is also a result of the Covid-19 pandemic and its impact on customer expectations. “We are at the beginning of a new era and the pandemic has accelerated that change,” says Roland Brandli, strategic product manager for SmartStream’s digital payments suite TLM Aurora. “There has been a complete change in [the] customer mindset. They want the same experience with their bank as they get using Amazon or Facebook.”
Brandli draws a parallel with similar changes in the music industry, when songs became downloadable. To a large extent, the distribution of music was no longer under the control of the big music companies – which resulted in them having far less dominance in the industry as a whole.
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“Fintechs have jumped into the banking world because they understand the customer’s needs,” Brandli explains. “They use banks as the backbone but look at what the customer wants, so banks will become prehistoric or be relegated to the background and margins will get smaller unless they can compete more effectively. Competing B2B means you need to be more efficient.
“Only streamlined banks will do well, so they must achieve that or it will be their demise,” he adds. “Some are too slow and too comfortable.”
Rewrite the rules
Reinventing a business model in the banking industry is not only a technological challenge – it’s a regulatory one too. The rules are constantly changing and regulatory compliance can never be an area for compromise. Fortunately, the transition to a new technology backbone can put compliance centre stage and make banks more agile in the face of future changes to the rules. “We are looking a lot at the regulatory space, where requirements are growing more every day for banks and for any company,” suggests Andreas Burner, SmartStream’s chief innovation officer. “Regulators want more and more data from more and more workflows, so it is getting tougher to meet those requirements.”
One example of the changes for which the industry is gearing up is the third phase of the Central Securities Depositories Regulation (CSDR), which is due to come into force in the EU in February 2022.
It will introduce new measures for the authorisation and supervision of EU Central Security Depositories (CSDs) and works towards creating a common set of prudential, organisational, and conduct of business standards at a European level. Introducing a securities settlement discipline regime will harmonise operational aspects of securities settlement.
Future Banking /
www.nsbanking.com
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