Welcome to Steve Francis
The latest SaaScada recruit, Steve Francis, joined us as Senior Sales Director in March. Here he shares his views on the changes in the Fintech space and the importance of harnessing the benefits of next generation technology…
Since entering the fintech space in 2017, I have seen and been part of the explosion of cloud based fintech solutions coming to the market. This rapid expansion has been fuelled, in part, by the public’s demand for better banking services, but also to fulfil the evermore creative ideas coming from the banks themselves.
We have witnessed the birth of the digital challenger, the multi-currency wallet, BNPL and more, all of which have been facilitated and honed through the merging of great ideas and great tech. But there is a bigger issue at play here, which is now starting to stifle creativity and limit new players from entering the market. Cost.
Not too long ago, investment was being handed out like penny sweets and tech players were by and large embryonic and in customer acquisition phase. This meant that every £ went a long way and the neo’s and challengers of the day could build out their ecosystem at a price point which was aligned to their likely income ratios from their end-customer products.
Six short years later and investment is harder to come by and more expensive, and tech prices have skyrocketed, meaning that for many neo’s and challengers, they simply fail to acquire enough funding from the get go to build out and launch or, as has been the case for a number of banks going through the licence application process, they have simply failed because they either had to pare back their offering and ended up with vanilla products, or they simply failed to gain enough traction, interest and ongoing investment and simply withered on the vine.
The strange thing is, that in this world of unicorn chasing, the cost of the tech offered by some of the earlier providers seems set to keep rising, despite what is happening in the market, thus making their cost:value ratio even more skewed, and ever harder for the latest batch of neo’s and challengers to even get their projects off the ground, let alone make a profit.
The big win for all banks and FI’s is to have great customers who generate revenue and, ideally, profit for them. But to do this the bank needs to be able to offer a service which costs less than the revenue they will receive, else it all ends up in a bit of a mess, as we are now seeing with the sharp change in interest rates, investment mindset and costs. Technology has a massive part to play here as the like for like costs for solutions has typically gone up 300-400% over that time, whereas the bank’s revenue / customer has remained largely quite flat, and this is likely to be the single greatest challenge for any new bank or new product release
So, what can be done? Well, one of the biggest opportunities for banks and FI’s is to look for new technology partners who are offering genuine next generation technology that leverage the benefits of being cloud native to deliver more affordable, scalable solutions. This is one of the reasons I was keen to join SaaScada, great technology doesn’t have to cost the earth and will deliver exactly what you need but without the inflated price tag of some of the older systems. The benefit of being next generation means that not only is the technology superior but also they have benefitted by learning all of the ‘not to do’s’ from the early day vendors, for everything from core build, through to data design and integration methodologies.
Building out their product offering with next gen core banking providers such as SaaScada, will enable banks and FI’s to reset their technology cost base back a number of years which, for many, could be the difference between launching and folding, especially in the early days.
Therefore, in the day of volatile markets, rising interest and inflation rates and evermore demanding customer expectations, choosing the right core banking software is essential. I’ve joined SaaScada to help customers to build marketing leading solutions and to support ongoing banking innovation.