Cloud technologies and APIs are the building blocks of the bank of the future

This article was contributed by Ben Goldin, the CTO and CPO at Mambu as part of Tearsheet’s new Thought Leaders contributor program. The days of lengthy and expensive core implementations are numbered. Traditionally the journey to launching new products or entering new markets was arduous with years to delivery and significant resources spent defining, implementing and managing systems. This legacy technology is complex and cumbersome, both to implement and change, with limited ability to test before implementation which introduces significant risk. Once delivered, markets and requirements would have probably moved on and financial institutions would be left trying to catch up again. Now is the time for cloud-based services and an API-enabled composable architecture which offers a quick and cost effective route to building a versatile core solution. Rather than having to buy, build and maintain a collection of poorly-connected systems, an API-enabled composable architecture lets institutions leverage solutions built on a flexible cloud infrastructure, completely managed and provided as a service by a trusted provider. Open banking and the growth of the use of APIs attests to its utility. It lets information flow between applications, whether internally developed or third party, giving different business areas the ability to easily access customer data, draw insights and create innovative products tailored to market and regulatory needs. New products or iterations of existing offerings can be rolled out, integrated and modified at a fraction of the cost and time it would take with a legacy system. These tools offer considerable benefits. The right technology can give institutions the flexibility to enhance the customer experience, streamline operations and create opportunities to diversify and differentiate. This could range from launching a digital banking spinoff to quickly launching products and testing new markets, all with the built-in ability to scale and grow. The technology also provides a quicker time to market and the ability to create and illustrate business value in months instead of years. These could lead to alternative revenue streams particularly for institutions that have achieved success utilizing in-house technology but have reached a point where their ability to grow and scale is now critically limited by that same technology and internal capacity for development. Specialized IT or technical teams can shift focus from legacy maintenance and ‘keeping the lights on’ to continuous customer and market-driven innovations in products and services. They can concentrate on helping the business to move forward, prioritizing and developing differentiated products and services and create better value for customers rapidly, assuring its place as a champion in a digital-first world. Initial costs are low and subscription-based with providers managing all upgrades, taking the strain off internal resources. This approach is already being adopted. Dutch banking giant, ABN AMRO recently launched New10, an SMB-lending fintech which went from concept to launch in just 10 months. They were able to build a lean, agile and innovative fintech on cloud-based technology, supported by partners and best of breed suppliers to make the leap from legacy to digital. By leveraging best of two worlds, the knowledge and resources of ABN AMRO along with new technology, New10 is able to offer new products and a unique customer experience, feeding learnings back to its parent. Apart from flexibility, the composable architecture approach prepares organizations for innovation and the next market shift. It puts them in control of how they react and when. It also keeps organizations current with the latest technology through continuous delivery. Easily interchangeable building blocks mean the smallest change can be delivered directly into product development and is infinitely simpler than rolling back multiple changes, reducing risk, costs and improving the response to customer needs and competition. Financial technology has evolved to provide a vehicle that quickly responds to changing customer demands and market pressures, helping institutions navigate an ever evolving market. Those stuck in the past will quickly find themselves left behind by competitors and customers.