Banking and Fintech players are embracing cloud-based core banking platforms

By 2022, a large number of banks and fintech companies have embraced cloud-based architectures, forming strategic partnerships with modern core banking vendors and technology specialists to modernize their core infrastructure and evolve for the digital age, according to a new analysis by fintech research firm Whitesight.

This year, incumbents and fintech companies from around the world have accelerated the move of their core functions to the cloud, waking up to the urgency of embracing cloud-based architecture to create higher customer expectations, achieve agility and cut costs.

The Whitesight analysis notes that technology providers such as Temenos and Finastra have seen increased interest from banks, showing that financial players are increasingly turning to cloud-based architectures as they seek to improve customer experience, enable business continuity and achieve operational efficiency and resilience.

Temenos, a Swiss banking software company that offers cloud-based, cloud-agnostic and artificial intelligence (AI)-powered front office, core banking, payments and fund management software, claims that over 3,000 banks, including 41 of the top 50 banks, use its products.

And Finastra, a London-based provider of financial software applications and marketplaces, says it serves around 8,600 institutions, providing them with software solutions and services across lending, payments, financial and capital markets and universal banking.

Besides established banks and traditional financial institutions, fintech companies and digital challengers are also leveraging cloud-based core banking systems from vendors such as Mambu and Thought Machine. These seek increased flexibility, cost-effective scalability as well as the ability to offer superior specialist proposals for niche market segments.

This year, software-as-a-service (SaaS) cloud banking platform Mambu has brought on board a number of new clients, including names like Bob Finance, a Swiss digital consumer finance offering, Ashman, a newcomer bank serving small and medium-sized clients. large enterprises (SMBs), and Okeo, a digital payment service provider for European entrepreneurs and businesses.

Mambu’s banking platform is said to be used by 230 customers, including N26, Raiffeisen Bank, ABN AMRO, Bank, designed to accelerate the development of almost any type of financial offering for banks, lenders, fintech companies, retailers, telcos and more. Islam and Orange Bank.

Similarly, Thought Machine, a cloud-based banking technology company, has signed up several notable names in the industry this year, including C6 Bank, one of Brazil’s fastest-growing digital banks, Trust Bank, a new digital bank in Singapore, and Payset, an online payment platform and provider of multi-currency accounts from the UK.

Thought Machine’s cloud-based banking platform, called Vault Core, is also used by major multinational banks, including JPMorgan Chase, Standard Chartered and Intesa Sanpaolo.

Partnerships between technology providers themselves are also being signed, notes the Whitesight report. Typically, these tie-ups aim to provide banks and financial service providers with solutions that address new trends such as open banking.

For example, open banking startups such as Salt Edge and Trade Ledger have curated strategic partnerships with core banking vendors such as Thought Machine and Neo by Five Degrees to enable banks to comply with open banking regulations and access API capabilities.

Others collaborate to increase their capabilities, provide their customers with specialized niche products, and differentiate themselves from their competitors. Such partnerships include the collaboration of core banking platform providers Skaleet, Neo by Five Degrees and Tuum with the likes of Thunes, a business-to-business (B2B) cross-border payment network, Fourthline, a digital know-your-customer provider. (KYC) and anti-money laundering (AML) solutions, and Bricknode, a broker-as-a-service provider.

Core Bank Fellowship in 2022, Source: Whitesight, December 2022

According to an Accenture survey, 82% of bank executives surveyed by the consulting firm said they planned to have at least half of their mainframe workload in the cloud in 10 years, and 31% of them had already reached that stage.

SaaS cloud banking platform Mambu and research and advisory firm Celent estimate that financial institutions globally could save up to US$246.1 billion running a cloud-based core over five years, a 76% reduction in core consumption and a 15% savings in total IT costs over the same period .

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