In July 2016 Oracle announced it has entered into a definitive agreement to acquire NetSuite, the very first cloud company. The transaction was valued at $109.00 per share in cash, or approximately $9.3 billion. For nearly 20 years, NetSuite has provided a single system for running a business in the cloud. This unique cloud-based approach enables NetSuite customers to streamline operations and benefit from increased efficiency and cost savings.
To help customers embrace new services from banks and fintechs that further streamline business operations, NetSuite announced a new Banking as a Service product at Finovate Fall NY. The Fintech Times spoke to Scott Derksen, senior director of business development, Oracle NetSuite, on how this unique open banking approach gives its customers quick and easy access to the latest innovations in financial services.
Scott, how this story has been started?
NetSuite is the original cloud company. Our strategy has always been about creating a general ledger in the cloud and we have built on that strategy over the last 20 years to support our customers changing business needs. We now offer enterprise resource planning (ERP), human capital management (HCM), ecommerce and more. We give our customers a single system, with a single view of their customers, to help them grow, scale and adapt to change.
Is NetSuite a part of Oracle’s business at the time?
NetSuite is a global business unit of Oracle.
Who are your competitors?
We don’t have any direct competitors in the cloud, but we do compete with legacy enterprise software vendors such as SAP on the high end and companies in the middle market that do ERP. It is a highly competitive market right now, but we have the industry expertise and we are experiencing very strong growth. A key part of our overall strategy on customer engagement is a methodology we call SuiteSuccess.
Could you tell more about Suite Success?
Yes, and I’m going to back up and give you a bit more context around SuiteSuccess. NetSuite has a full platform as a service that’s embedded within our product offer. That means that customers, independent software vendors, or even NetSuite, can create applications that are injected into customer accounts. We give our customers the flexibility to choose from starting with a blank page and building customizations around that; OR take advantage of pre-configured tailored applications for each vertical industry that we developed using the expertise we’ve gained over two decades. The benefits of this are faster time to value, increased business efficiency, flexibility and greater customer success. And, as we move into emerging markets, we’re getting our customers up and running quickly.
All the industries right now are facing different disruptions and transformation. Where does the biggest disruption for your industry come from?
I think the biggest disruption comes from customers…you have to evolve with them because their expectations are always changing.
What is the goal of the launched service?
We want to streamline processes, to make customers’ lives much easier. For example, if they had a payments or account payable process where they would go through their process in workflow in NetSuite and then they wanted to add a new service from a bank or fintech, integrating the systems could be very complex. We are alleviating this pain point.
Are you focused on established brands or more on disruptors?
We work with established brands and disruptors as at the end of the day, organizations of all sizes are faced with challenges as they look to grow, scale or adapt to change.
How can your newly launched NetSuite Banking as a Service program help banks and fintechs evolve?
For decades, business owners have been frustrated by the need to use disparate point solutions to run their businesses. NetSuite Banking as a Service helps solve this challenge by enabling customers to benefit from direct access to financial services, allowing them to streamline operations and experience significant cost savings.
With innovative fintech providers reshaping the financial services industry, the relationship between businesses and banks needs to evolve, and NetSuite’s Banking as a Service is supporting this change.
In fact, according to Forrester Research’s 2018 banking technology predictions, more than 50% of banks will fail to exploit open banking, starting down the slow, painful path to becoming an unintentional utility. To be successful in this new digital reality, banks must turn to open banking solutions to differentiate their services and make banking as easy as possible for customers.
NetSuite leads the cloud financials / ERP industry by extending existing ERP solutions to integrate bank processes. NetSuite customers will benefit from direct access to financial services such as embedded payments, reconciliation and lending delivered as an extension of their ERP. This will help increase operational efficiency and improve workflows, driving down cost and creating peace of mind for NetSuite customers.
How does NetSuite Banking as a Service work?
As it pertains to banking, there is a lot of disruption in business processes. I approve a bill, it becomes payable, I log into another system to complete the process, and then I take the result of that process and take it back into my ERP – overall a very nonlinear process. The announcement that we are making brings that into a single process.
If I am a JP Morgan Chase client, for example, I will install a JP Morgan Chase NetSuite app, and it will give me reconciliation in payments built into my NetSuite application. So, for all intents and purposes, it’s like I’m using a single application to do those transactions. Starting today, we are combining the power of our customization and development platform with open banking APIs that the banks are delivering to help our customers.
What are your impressions from Finovate Fall?
7-minute pitching format is fantastic. I think it is very useful for everyone to understand what everyone is doing.
Most projects seem to be focused on two directions – biometrics and voice services. Do you consider those directions as top-trends?
We are doing a fair amount of work in blockchain and AI. You might find it interesting that an author of Corda is a NetSuite customer. So, there is a lot of interesting interplay there, we are doing a lot of work with banking communities in Europe that are part of the Marco Polo consortium…
You realise definitely that the biggest problem for established banks is not only legacy systems, it is also culture and behavior inside… How do you manage that?
I would say regulation is driving some opportunities around open banking. And the problem is that these banks are spending billions of dollars to create an API infrastructure that allows fintechs and whoever to play with it, but it doesn’t actually deliver the service to commercial customers.
Once a bank has a layer of APIs, with our program, the bank can make a small marginal investment and it delivers the service right to the customer. And in fact, some of the brands that you’ll see in the upcoming news releases and things that we are doing in the next six months, show there is huge demand. They are coming to us first as part of their delivery strategy, because we are very unique in that we have that robust cloud ERP platform.
So, you are transforming banks’ strategies. Are you a disruptor or collaborator for banking industry?
We are Switzerland. We are enabling banks and fintechs to be disruptors in their industry using our tools. At the end of the day, our focus is on our customers, and if we can make any part of their lives easier, we are doing our job.
Kate Goldfinch, Science editor at The Fintech Times
