At the beginning of March, Mambu announced its partnerships with TrueNorth, a global fintech software development company, and Solarisbank, a Berlin-based fintech company that offers a Banking-as-a-Service Platform with its German banking license.
Solarisbank needed to find a scalable solution to help serve as the customer account sub-ledger system for their lending business, and ideally one that was hosted in the cloud. Following an integration period of four months, Solarisbank began using Mambu’s technology to run the lending-load of some of their largest partners like Samsung Pay.
The TrueNorth/Mambu venture is well-timed as Covid-19 signalled the accelerated need for digital technologies at small and medium-size financial institutions, many of whom may have found themselves priced-out of upgrading their technologies and customer experience.
Following the announcement of these partnerships, Elliott Limb, the Chief Customer Officer at Mambu here discusses how building societies are breaking free due to the emergence of new technologies.
While the emergence of fintech has brought many positive changes to the financial services industry, the change and innovation has been focused on mainstream payments and accounts, overlooking building societies and their loyal member base. However, with the arrival and widespread adoption of emerging technologies, we are starting to see a transformation of building society products and services as they continue wading further into the digital world.
Playing catch up with emerging technology
We are seeing an increase in fintechs looking to help customers manage their finances by offering more personal and integrated experiences as an alternative to traditional banking. However, building societies tend to be risk-averse and are often held back by the burden of legacy systems. It’s no longer enough to just have a website and access to your accounts online; to address the problem of modernisation, building societies are turning to emerging technologies like APIs to bridge the gap between their legacy systems and consumers’ desire for accessible banking.
Our partnership with Tandem, one of the UK’s earliest digital banks, is a great example of a financial institution updating their technology to keep up with consumer demand. Tandem wanted to quickly introduce new financial services by building a new innovative product within their existing product and embracing open banking.
All of this is fully digital via an API-driven architecture and composable, cloud-native solution, allowing Tandem to innovate and build services their customers want. In doing this, we are helping fintechs like Tandem to focus on innovative customer experiences and benefits for their customers.
The democratising tech that everyone is talking about
APIs have become a democratising force within financial services, acting as the enabler for innovation and value creation in the industry. This provides a cost-effective way to create nimble ecosystems in which fintechs, banks and building societies can be seen as level players.
The cost of serving a customer can be upwards of $500 (£360) per year, and technology can reduce this significantly, allowing banks to better serve segments that were previously underserved. This has been a motivator for building societies to put a dedicated focus on innovation.
In order to meet the challenges presented by the fintech revolution head-on, they must take advantage of emerging technologies and make innovation the core of their long-term business strategy, or prepare to be left behind. We are committed to delivering rapid speed to market by adopting true SaaS technologies.
Transparent consumption or bust
We are still seeing, though, that building societies remain shy of change and locked into their legacy IT systems. While they know their monolithic systems are no longer working for them, there is hesitation to adopt the technologies that will help them become more nimble and maintain a competitive edge.
From a cost perspective, building societies have an unbalanced cost-income ratio because their legacy systems are so expensive, and the manual burden of non-integrated/non-automated systems, SaaS removes the expensive customisation and maintenance costs by automating traditionally manual processes that then give companies a completely transparent consumption model.
The only way forward
As we have seen over the last year, the future of banking is a moving target that will continue to evolve. In order to keep up with the ever-changing customer demands, we are envisioning a building society of the future that will outgrow single-vendor monoliths and embrace partner ecosystems that can provide reach and scale, further leveraging emerging technologies to drive innovation. An organisation’s freedom of change and choice is not only critical to their digitalisation journey, but to their overall success.