With Temenos recently launching their new banking cloud features, Ross Mallace, Business Line Director – SaaS, Temenos sat down with The Fintech Times to discuss the Temenos Banking Cloud and the impact of SaaS.
What is the Temenos Banking Cloud is, and why the introduction of this technology is important?
The Temenos Banking Cloud is the next generation in SaaS. It combines the industry’s most complete set of banking services, covering all segments and all geographies, with a Sandbox for instant innovation and the Temenos MarketPlace for fintech collaboration, all powered by a new AI-enabled engine to drive banks’ business growth and accelerate time to market. For the first time, with Temenos Banking Cloud, banks now have the power to self-provision always-on banking services and scale instantly and securely.
What technologies are in place to protect consumer data?
Client Data is encrypted, at rest and in transit, using modern encryption algorithms, such as Transparent Data Encryption (TDE) and Transport Layer Security (TLS 1.2+), role-based access controls (RBAC), and secure key management processes. Encryption may happen at a more granular levels, depending on the service and requirements of the Temenos client. Any public interface is protected by Web Application Firewalls and Denial-of-Service protections. These processes are reviewed, externally by a third-party, and SOC compliant. Additional access controls may include a Zero Trust Network and/or a Virtual Private Network, with all access conducted over Hypertext Transfer Protocol Secure (HTTPS) protocol.
What are the long-term benefits of this technology to consumers?
With The Temenos Banking Cloud, banking customers will see more innovation, faster. Ultimately, better banking services are tailored to what they need. This will lead to more choices, with products available when needed, not 6 months too late. Products based around customer needs and not limited to a bank’s in-house capabilities. Also, keener product pricing resulting from scaled bank costs.
What were the key drivers present in its creation?
Banks are facing three major structural challenges. First, intense pressure on cost. They need to increase their Return on Equity and reduce their Cost to Income ratios. We estimate that 70% of banks cannot cover their cost of capital and that’s clearly not sustainable. Second, there’s increasing competition, including from big tech and new entrants. And thirdly, customer expectations are increasing. They’re demanding fast, seamless personalized experiences just like they get from Google or Amazon.
These changes have created a perfect storm where banks have a strategic need to modernize but find their existing technology prevents them from being able to do this. This is a general crisis to the industry. To survive, banks need to continuously innovate, have greater speed to market and collaborate with the broader ecosystem. In today’s world, this is essential to improve customer satisfaction, but also a huge opportunity to acquire more customers and gain increased wallet share.
Technology is a key component in achieving this, along with having extensive business capabilities, which can be enabled and changed on-demand to unlock speed of innovation and rapid time to market. It is imperative for banks to take action now and for many banks, SaaS is the perfect answer to enable digital innovation at speed.
AI is making an increasing appearance in the use of financial technology. How has the technology been developed to provide accurate, practical, and secure information?
Temenos is the first to bring transparency and explainability of AI automated decision making to the banking industry. XAI systems are highly transparent models that can be analysed, understood and augmented by business users.
True Explainable AI (XAI) systems enable merging data-based and human expert knowledge to generate fair, safe, unbiased, and highly accurate models. XAI technology is vital in helping organisations’ build trust with customers and regulators and identifies issues as they arise.
By embedding AI and Machine Learning into its products, Temenos has accelerated the release of explainable models that underpin new AI use cases focused on creating seamless customer journeys and automating manual processes with self-learning capabilities.
With transparency comes the opportunity to develop a new wave of personalised applications speaking the human language. Banking apps that go beyond simply managing money in and money out to become trusted financial advisers. Using XAI, for example, to buy a car, by predicting future cash flow, offering suggestions to make up for any shortfall based on spending behaviour and a plan to achieve your goal. Here, XAI is helping improve our financial well-being and ensuring we always understand how our data is used and how advice is provided. Equally, XAI is beneficial to the organisation as it can provide customers with the correct services at the right time.
What elements of the Cloud are you most excited to announce?
The Temenos Banking Cloud brings the unmatched breadth of Temenos front-to-back Banking Services, an innovation Sandbox, and the most complete fintech Marketplace, powered by an Explainable AI-enabled engine all through an easy-to-access, self-service portal. With the touch of a button, banks can turn on new banking services, scale instantly, build new applications, collaborate with the richest fintech marketplace, and proactively manage usage and service health.
What will fintech’s relationship with Cloud technology look like in 10 years?
Cloud technology enables fintechs, and banks, to move more quickly with introducing new ideas and changes, because they don’t have to worry about the operational and fixed investment areas of delivering their solution – the cloud makes these areas available on demand. The flexible nature of the provisioning also helps them to try out new ideas, since the solution which they propose can scale whether it enjoys runaway success or only modest success. By doing this, it allows for a circular innovation cycle to be used, whereby it is possible to quickly learn from initial product adoption and to rapidly make adjustments to any product. This speed and constant innovation have been key enablers for fintechs, and one could argue that without the rapid growth in cloud availability and adoption, the fintech revolution could not have happened at the scale and speed which it has.
Predicting 10 years into the future in this rapidly evolving space is a risky business because the acceleration of innovation and the inventiveness of the sector have exceeded all predictions and expectations which were being made 10 years ago. One thing which is certain is that the cloud platforms will in themselves become richer and more capable. More “enabling services” will become available, in the same way that databases are available on cloud service provider platforms today – more analytics and data management certainly, but also possibly more AI, more end-customer insights and automation and more capabilities for cross-industry functions such as end-customer marketing and ecosystem integration. It is also an interesting question whether some cloud service providers will start to provide more specialist offerings for different sectors, combining both different pricing and commercial arrangements as well as different packages of more focussed business support services. If this does happen, it will only make it easier for fintechs to start up and to take new ideas to market quickly, although whether this happens independently (leading to a convergence of fintechs and banks) or in concert with cloud providers is an interesting question.
What would you say to someone who was apprehensive of adopting this type of technology?
As the cloud moves from a maybe to a must, we are seeing the continued acceleration all geographies and all types of banks looking to innovate and consume capabilities on-demand.
Temenos has a long successful history providing SaaS. With 10 years of operation, we have amassed over 700 SaaS clients across all of Temenos solutions, and more than 70 of them challenger banks.
Our SaaS clients all get ongoing benefit of our significant investment in R&D totalling over 1 billion dollars, delivered on a continuous basis.