Recently at Money20/20, we hosted our first Banking Infrastructure Summit – a day of sessions which brought together practitioners from leading banks and technology companies to unpack the challenges of running legacy technology and opportunities on the horizon.
The first session of the day, 'Building a Modern Technology Stack', invited John Froese of Google Cloud, Porfirio Sanchez Talavera of Trafalgar Fintech and Reetika Grewal of Wells Fargo to the stage. They joined our CMO, Travers Clarke-Walker, to discuss the issues facing banks as they embarked upon technology transformation projects.
All the panellists agreed that cloud infrastructure is the only technology choice to deliver the flexibility, scalability, and efficiency banks need to remain competitive. Travers highlighted a clear consensus in the industry that 'thousands of banks are expected to rapidly migrate to the cloud, making it very difficult for those who don't.' Our founder and CEO, Paul Taylor, echoed this sentiment in a recent BBC StoryWorks production commissioned by Thought Machine.
While many next-generation technology companies are now building proper cloud-native technology, others are merely porting legacy software into cloud environments. Travers noted that this 'lift-and-shift' approach to core system transformation does not unlock any benefits of the cloud infrastructure, such as horizontal scaling or the self-healing capabilities of microservices.
In terms of the banking experience, it’s evident that traditional banking has failed to match the pace of innovation set by the upstarts. John stated that ‘consumers have been trained by their expectations of apps that we use for all the other things in our personal life, of the speed of their delivery of features’. Companies like Airbnb, Uber, and Spotify have leveraged the power of cloud infrastructure and cloud-native software to achieve this. While in banking, it is the challengers who have set the bar high for digital experiences.
While it's true that the banking sector has been slower in adopting innovation, the reality is more promising among several top-tier banks. Many leading institutions actively run Thought Machine's cloud-native core banking platform, Vault Core. Our next-generation technology has empowered these banks to deliver exceptional new banking experiences. Like Mox Bank and Trust Bank becoming the fastest-growing digital banks in their respective regions or C6 Bank launching an innovative carbon offset tool on our platform.
The panel discussed speed-to-market and the need to move quickly in contrast to the risks this may present to the bank and its customers. Banks can achieve faster delivery speeds by forging partnerships that combine the bank's domain expertise with modern technology. These partnerships can be in several domains – with enterprise technology companies such as Thought Machine, who have the expertise and pedigree in building robust software – or with specialist system integrators or delivery partners who can support getting our software into production.
Technology transformation projects demand expertise with the banks and leadership priorities. Banks must invest in re-skilling staff while bringing on people with modern tech skills. Getting executives and business units bought into the vision and milestones is equally important.
Senior buy-in for a large-scale transformation project builds momentum for multi-year modernisation roadmaps. Quick wins are key to getting these projects off the ground. As noted in the panel, ‘70% of digital transformations fail – if you don’t have quick wins that are delivering value in a multi-year roadmap and which aren’t giving ROI – leadership can change the conversation’. That’s why it’s critical to implement a platform that can show results quickly. We worked with Intesa Sanpaolo to launch Isybank within 12 months after our initial scoping of the project. Mox Bank went live 18 months after we initially contracted with Standard Chartered. That is the speed of delivery we offer to banks.
Standing still is not an option. Banks must take concrete steps to modernise – via partnerships if needed – or risk disappointing customers, missing opportunities and losing competitiveness.
