FinTechFinastra: adapt or die

Finastra: adapt or die

The Global Treasurer reporter Tom Lemmon reviews the Finastra Universe London conference and speaks to Chief Product and Technology Officer, Eli Rosner.

Finastra held their London instalment of the Finastra Universe conferences earlier this month, putting on a show for the delegates that reflected their supreme confidence.

Loud, powerful music accompanied a Finastra-themed pink and purple high-tech stage where numerous senior members of the Finastra team stepped up to exude the confidence of a company that knows where it’s going.

Eric Duffaut, President and Global Head of Field Operations at Finastra kicked off the conference with a presentation entitled “The Future of Finance is Open”. In it, he warned the audience that 80% of traditional banks could become “extinct” by 2030 as new, agile and innovative competitors took their place.

The message was clear: ‘The world is changing, and you must adapt or die’.

The remedy, according to Finastra, for this existential threat was not just to take your firm on a digital transformation journey, but to collaborate on that journey.

Indeed, as part of Finastra’s “Finance is open” pitch, collaboration was the key. Much of this appears to stem from learning from the big tech companies which have been so successful over the past few years.

So, when I ask Finastra’s Chief Product and Technology Officer, Eli Rosner why collaboration is so important now, he begins by looking at Apple and BlackBerry.

“BlackBerry is just a $1 billion company. They’re small today, they missed a huge opportunity. Why? Because BlackBerry had 8,000 engineers and they built very nice apps for the BlackBerry,” he says. “But while they had 8,000 engineers, Apple had 800,000 engineers innovating on top of iOS.”

“They [BlackBerry] wanted to contain innovation. But the nice thing about innovation is that you don’t know who’s going to develop the next best thing, we don’t know what student is sitting in the garage and developing a very creative solution with something that’s going to go to market in the next two years, we have no idea.

“That’s the beautiful thing about innovation, you can’t contain it, so you provide a flexible solution that anybody can use and recognise the fact that you just can’t be good at everything,” Rosner adds.

The big techs were what Rosner called “platform companies”, companies which are a one-stop-shops for customers and where vendors can sell their products, like Amazon or Apple’s App Store.

“All those companies that are platform based, have what they call core and long tail. You want to own the core. There are things that you don’t want people to take away from you because that’s your fort, that’s where you want to build a little bit of a protection.

“But there are long tail capabilities where we say, we’re not going to focus here, but our customers need it so we’re integrating it into our solutions. And we’re proud of the fact that it’s not even ours,” he added.

The Uber of financial services?

Learning from the big techs is a theme that runs through so much of the Finastra Universe conference. When presenting the Finastra platform, Rosner says that it works “just like Uber”.

Could it be that Rosner sees Finastra as the platform business of the financial services world? The Uber of financial services?

“The short answer to the question is yes,” he says.

“I want in five years for every company in the world that would look to be providing financial services to say, ‘let me check what Finastra has, let me go to the App Store, maybe I can get it there, maybe I don’t have to develop it’. That would be victory. Because then we created a very rich library of banking services that anybody can use.”

‘Everything is reversible’

Traditional banks, as is perhaps to be expected at events like this, come in for a bit of a hammering. They are frequently discussed in existential terms, they don’t go bust or out of business, they become “extinct”, like dinosaurs waiting for the meteors to hit.

Indeed, in Rosner’s presentation, a picture appears of three fish getting progressively smaller from right to left, like Russian Dolls about to consume one another. The legacy banks are apparently becoming the smallest fish as they face increasing pressure from fintechs and big techs to provide a better customer-focused service.

Yet, amidst the existential emergency, Finastra want to project a message of hope. Rosner is adamant that the changing world needn’t represent an irreversible decline for banks.

“I was trained to think everything is reversible,” he says. “It really depends on your business strategy. If you stand still today, you will be one of the 80% who will be extinct. But if you want to change, and if you decide how you want to change, you can change. It’s absolutely reversible.

“It’s not about a technology, it’s about a business model transformation. And if you’re interested, then we can take you through the journey, we can educate you and we can provide you with the tools to go through the journey.

“How fast? It’s your call. If you don’t move fast enough, you’ll be the fish in the middle or the fish on the left,” Rosner added.

Culture versus technology

The contrast between how Finastra present themselves and how they see the banks is clearly stark. But Rosner believes they have more in common than first meets the eye and face similar challenges.

“We’re not that much different from the banks,” he says. “We’ve been in business several decades, put together with two companies that were each a billion dollars in revenue. But we had some challenges, and we had to decide how to transform.”

“One of the primary challenges we had is about talent upgrade, bringing new talent to the table, educating banks and our employees about cloud-based technologies and data.”

Perhaps most importantly was the challenge of adapting to the benefits of a digital transformation, something financial services providers continue to struggle with.

“In most cases, it’s not the technology that’s difficult to understand, it’s the cultural adjustment that you have to go through to accept that fact, to recognise it and to take actions to correct it – that was the hardest thing.

“In every company where people have developed and invested years of thinking about something in a certain way, if somebody comes up and says ‘hey, there’s a cheaper, faster, better way to do it’ and I say ‘no that wasn’t invented here, ours is better’, that’s a big problem.”

Perhaps going through a digital transformation itself is why Finastra is so bullish in its approach now.

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