‘Transformation isn’t just about the glass window in front of you’: Temenos’ Alexa Guenoun on accelerating bank digital roadmaps

Americas in a global organization

Temenos is a global organization. We have about 3000 banks across 150 countries using our solution. And the Americas region is about a quarter of our business, with the US accounting for basically all of it. In the US, we have over 1300 customers, banks and credit unions. They vary in size, from very small banks to challenger banks to new banks to larger organizations across our portfolio.

We combine the richest banking functionalities that we offer for our solutions with the most advanced technology. And when we say most advanced, for us, it has to be cloud, and it has to be AI driven. This is really what we do. And and our passion, which really is so fitting with the times we're in, is to drive and accelerate the digital transformation of things from the entire stack perspective and not to just look at the glass window in front of you. It's really how you transform the entire organization, bank or credit unions into the digital era that we are in.

Increased demand

We've seen two things happen during the pandemic. First, we've seen how our customers, who were already well advanced in their transformation, could leverage what they have and could service their clients. We've seen customers that were on that journey using our products, leveraging them to a full extent. That was really a proof point for us.

We've also seen people coming to us saying, okay, we're probably a bit late in our transformation. What can we do now? What can we do quickly? Where do we start? And the way we architecture our solution, we can very easily and very quickly start from the front, and then address the back later. We've seen a lot of demand, obviously.

People realize that they have to do something and it's twofold. Really, it's the screen, and how you interact and how you personalize the interaction with your customers, as well as your technology and cloud. For people who were already in the cloud, it's been completely seamless to them. Nobody needs to go to a server room to restart a server.

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Starting the digital transformation

Where to start really depends on where a financial institution is in their transformation, because we have seen banks that had already done the screen path and are now hindered by the capabilities of their back office. They are in a situation where, as nimble as their front is, they have at the back a solution that cannot create new products quickly. That cannot be agile enough to launch these new products. For these types of firms, yes, we advise them to look at the back from a micro services standpoint. They don't need to replace the entire stack.

If you want to be able to do something in a short timeframe, which a lot of institutions are willing to do, overhauling your entire core might not be what you need to do now. But if you have a specific area of issue, like the account servicing parts or on the lending side, then maybe it's worth investigating that direction if you already have the front end up and working.

Some banks have their back offices put together using duct tape. It's been duct tape for 20 years, so it can go for one more year. What they're missing is the interaction with the client. And in that case, we'll start from the front. We have that flexibility. That's that's really what it is to start from wherever the pain point is the most pressing.

Getting a bank charter

I can take Varo's journey. It's a good exercise. I think it will be different for fintechs now because we've educated the market -- from the vendors, to the regulators to the other actors. Working with us, I think the path was probably -- and I'm not trying to discount anything -- the easiest in the sense that we are market ready for the US and have a US model bank that has all the standard products that you would market, that you just need to tailor to your offering. I think what took some time for Varo was educating the regulators that this was available, educating them on the cloud, because it's something new. And that took a little bit of time.

And I think now, at least with us, the regulator is comfortable, they understand what we do and they understand what we bring. We've been working hand in hand with Varo and it's been an incredible experience. They are now running. They went live. They are in the process of converting their customers from the partner bank into their own stack. The stacks been running for a while now. It's more a question of converting customers.

'A bank on the side'

We really see the model of creating a bank on the side as a way forward for large incumbents. It's really something that we've been seeing globally for the last five years. We've had a lot of experiences with banks, like Santander and Bank Leumi in Israel. They're all doing the same thing. They're all thinking about transforming the bank completely, and overhauling the core completely. But when you're a major and you're a key player in your domestic market, it's seen as too much of a risk.

So finding a niche and a place on the side, where you can test the technology, you can test your organization, you can get comfortable with cloud. You can also capitalize on the solutions, which will not disappear, because you're talking about things that have 400 or 500 systems. Not all of them are part of what they call the core. You'll need to make sure that you connect with those applications when you decide to change your core, and that the integration works.

You're piloting pretty much everything. You're doing a pilot for your integration, you're doing a pilot for your new technology, you're doing a pilot for your people. How are they going to cope, how are you going to redeploy people, and as you said, all of that while not hurting the brand, and not risking basically your existing business. So it is a very popular thing that we're seeing.

Acquisitions as part of expansion in the Americas

When it comes to the Americas, and the US market specifically, we spent about a billion dollars in the last five years. We acquired Avoka about two years ago. And Kony, we acquired only in December of last year. So, we've invested a lot of money.

The reason why it's in the US is really twofold. The first one is because the US is the most important market with half of the spend on third party product. We cannot afford not to be here. And as a result, you also have a lot of assets available.

Also, we make acquisitions because they are the right product for us to acquire for the US and also globally. We don't make acquisitions just to get a customer base, or just to get a presence. Of course, we'll take the added benefit.

We acquire companies that are going to accelerate our roadmap. We had launched Infinity about a year ago when we acquired Kony. We were missing the experience itself. Kony came along and it was a perfect asset for us because it gives us the platform with Quantum and it gave us the banking applications for DBX that they launched. We put all of that in our Infinity portfolio and probably gain a couple of years on our go to market.

We want to be big in the US and the assets are here, so there is a big likelihood that the next acquisitions will also end up being in the US. I can't guarantee it, but with all the characteristics I just mentioned, it would lead us to acquire more assets in the US.

Looking out to 2021

From a business perspective, it's about capitalizing on all the good things that have been happening over the last two to three years. This year, in the middle of this pandemic, we really had a turning point on our cloud and SaaS development with customers like Varo, who started with us, and we're now just increasing the use and the volume and how they work with us. That's obviously giving us great references and great credibility. It's giving the whole salesforce a boost having such references.

From a product standpoint, we've done a lot for our US model banks. We want to make sure that our products are fit to market, but we haven't yet covered all the asset classes and all the products, obviously, because it's always based on demand. We don't believe in shelf ware terminals. We don't believe in building something and just putting it in there until somebody looks at it and says, Oh, yeah, that might be interesting.

We want to find partners who are going to bring our products to the next level of evolution and work with them to make sure that what we're doing is tested by somebody who's going to be using it. There are some areas where we're going to have to probably do more. And I'm thinking about wealth management here, because we're very big on the private banking side of wealth management. But the rest probably needs to be more Americanized. That's something that we're looking at in conjunction with some of our prospects and clients.