Temenos Community Forum 2019: gone to the cloud
I asked him about the growth of the cloud and services market in various geographies. “America is more mature on the cloud on the servicing model. That’s clear. But in terms of highlights in the last period, Europe has grown a lot over the last few years in the tier one space. To enable that growth we have added a lot in terms of investment and experienced staff,” he says.
“The team has been expanded, and we cover the market better today than we ever did. And we continue to invest. In 2019 we increased the sales team by 50% and in 2018 we had already increased it by 40%.
“The tier one banks are looking to use the most modern solution nowadays, i.e. cloud marketing, cloud native, all of the sophisticated solutions.”
I asked him about the sales cycle – has it shortened or lengthened because of the cloud elements? “The sales side takes longer and we need to be able to concentrate on that and provide our potential customers with the right level of time and the right level of seniority. And so, we have built up to be able to do this. But we also need to execute more to accelerate the growth in Europe.”
And what about the tier one bank’s attitudes to getting rid of their data centers in favour of cloud platforms? “There are two things here to say,” according to Mergeai. “We just had a panel discussion with Cognizant where I discussed how to use the various platforms available and how can we spread their usage. Cognizant has bought Samlink in Finland, so that they can use the platform to serve as many small and medium sized clients as possible.”
It is worth saying here that US-based Cognizant has signed a deal with three mid-sized Finnish banks – Savings Banks Group, Oma Savings Bank Plc and POP Bank Group – to construct a cloud-based shared ledger based on Temenos T24 and Savings Hub products.
Samlink is these banks’ current technology services provider, previously owned by Savings Banks Group (42%), Aktia Bank (22.56%), Oma Savings Bank (15.45%), Handelsbanken (7.53%), Posti Group (5.88%), POP Bank Group (5.24%) and several other minority shareholders.
“On a panel today we discussed cloud,” he continues. “And you have to divide it into two distinct approaches at present, because most of the regulators today still have difficulties in approving production environments in the cloud. Banks such as ABN Amro go with our DevOps solution that is hosted in the public cloud and the Temenos cloud for them to build up development and test systems. But as soon as it comes to the production environment, that’s then put in the ABN Amro cloud.
“The other approach is typified by the smaller banks at present. We have a client in Gibraltar, a regulated private bank which is running on the public cloud, so it can be done succesfully. We also have a bank In Norway that has gone live in the public cloud, also on T24. It is a small, niche bank, but the process needs to start somewhere.”
He continues: “I would assume that the next two to three years will see the production data in the private clouds. And then thereafter, I think regulators will open up; the way that I look at it, regulators do not say no. And they cannot say yes. And they cannot come up with a set of criteria of frameworks you need to operate within to be able to be in the public cloud. That’s the feedback I get from clients all over Europe.”
He adds: “But with the way we are able to provide our solutions, that’s not going to stop us. So if I look at where I believe that we will continue to be strong in Europe, moving forward, it will still be focused on a lot of core replacements on the retail side. I think the wealth area is going to be a key element. The third area of growth would be payments with instant payments and PSD2 being strong.
“It’s also clear that with our new Infinity product we need to execute on digitalisations as well, and customer journeys. But I do see that as part of the process when we do retail renovation anyway. So we have the new prospects the new clients, and when you do a full retail renovation, the clients usually like us to include digitalisation as well. But we still have a major client base that we need to service as well. And there we should go in and look at the digital part only.
“I think that there are a few that have started off as greenfield within the last year to do that can claim that they are digital. One of them is Pepper which I would call very close to being a digital background. Because it started off with that with that focus. I think they have about 400,000 customers now.”
Pepper was launched by Leumi, a well-established bank in Israel. “One of the other strategies is how you can, as an established bank, create a greenfield area where you can be ‘careful’, but you can create a brand that is modern and digital. There is huge pressure from customers to replicate the good service they get from other online providers they use,” Mergeai concludes.
By Don Van McTraffic