Fintech and banking: Finastra BaaS solutions for a global world
In today’s financial world, institutions look at ever more efficient ways to conduct day-to-day operations. Economy Middle speaks to Finastra, a relatively new financial software company that offers a portfolio of products and solutions to the retail banking, transaction banking, lending, and treasury capital markets.
The company’s MD for the Middle East & Africa, Serge Tohme, says the solution lies in reducing complexity, cost and manual processes by providing a single platform to deliver efficiency and a clear return on investment.
To shed more light on this, Economy Middle East asked Tohme the following :
Could you tell us about Finastra, and how it all began?
Finastra was formed in 2017 via the combination of London-based Misys, a provider of financial operations software, and global payments and lending technology provider D+H. At Finastra, our purpose is to unlock the power of finance for everyone. We are building an open platform that accelerates collaboration and innovation in financial services, to not only improve customer experiences but also optimize cost and mitigate risk.
Our open architecture approach brings together a number of partners and innovators, changing how applications are written, deployed, and consumed in financial services to evolve with customers’ changing needs.
EM: What are some of the key services you provide?
We have the broadest and deepest portfolio of financial services software across banking, lending, payments, and corporate treasury, delivering this vitally important technology to financial institutions of all sizes across the globe, including 90 of the world’s top 100 banks.
Financial institutions can transform their customer propositions and drive efficiencies, while fintech and developers can accelerate new market opportunities on FusionFabric.cloud – our open and collaborative development platform. It is built on the principle of open APIs, enabling financial organizations to accelerate innovation by making products and solutions that work together in inspiring new ways.
EM: How does your presence look like in the GCC and globally?
Whilst the Finastra brand may only be a few years old, the company has a combined history of close to 100 years. We have more than 8,600 customers globally, including 90 of the top 100 banks and have been present in the Middle East for more than 20 years.
We have offices in Dubai, and Riyadh, which are key markets, and we’re also present in Egypt, Morocco, Qatar, and Bahrain as well as the wider MENA region. We continue to invest in GCC countries, and our footprint in Egypt is growing year after year.
EM: Who are some of your key clients and the ways you add value to their business?
Finastra is focused on supporting innovation through collaboration, allowing banks, fintech, and others to co-create the next generation of financial services applications.
An example of Finastra clients in the Middle East and Africa region include:
- In Egypt, Banque Misr, the second largest national bank in the country, digitalized its trade finance services through Fusion Trade Innovation and Fusion Corporate Channels to reduce operational costs and provide its customers with a premium user experience.
- Moroccan-based commercial bank, CIH Bank digitized its end-to-end corporate banking services, providing corporate customers with access to services online, rather than in-branch – a requirement that became even more critical with the pandemic.
- In KSA, Banque Saudi Fransi enhanced and automated its treasury and trading operations, enabling it to strengthen its product offering and improve its user experience, all while keeping pace with market changes.
EM: What did you intend to achieve with this year’s edition of the Finastra Forum Middle East and Africa?
One of our mandates with this year’s Finastra Forum was to bring together a community of innovators and builders to discuss the future of finance and the latest trends like Banking as a service (BaaS), Cloudification, and Environmental Social Governance (ESG) for larger financial organizations in the Middle East and Africa. The next period of evolution in financial services in MEA will be characterized by deep collaboration and institutions embracing open APIs, Open Banking, and BaaS. Finastra Forum offered industry experts the perfect platform to share experiences and gain new insights into digital transformation and the trends that will impact financial providers worldwide.
EM: What do the next 5 years look like for Finastra?
BaaS has moved to the top of our agenda as players across the BaaS value chain seek to monetize the opportunity and decide on the role they want to play.
Our recent BaaS Outlook 2022 survey highlights that almost 85% of respondents are already implementing or planning to implement BaaS over the next 12-18 months. Financial institutions can reach a larger number of customers at significantly lower costs, while distributor brands can open up new revenue lines and build deeper relationships with their customers.
At Finastra, our role as an ecosystem orchestrator means we will be focused on bringing financial services providers and distributor brands together, to create an environment where BaaS can thrive.
EM: What will it take for MEA banks to be future-ready, and what role does collaboration play?
Disruption is creating both opportunities and challenges for MEA banks. While the risk and regulatory agenda remain a significant focus, banks must also address financial performance and heightened customer expectations. Consumers want to manage their money digitally and in real-time – and through services that meet their changing demands.
As per our recent research, more than a third of BaaS providers (financial institutions) expect to increase their revenues from BaaS offerings by more than 15% per year. Additionally, to remain competitive, every MEA bank must embrace disruption and play an important role in the wider financial services ecosystem. Collaboration plays a huge role in this scenario, as banks, fintech, and consumer brands need to join hands to create innovative products and provide contextual financial services, to help them stay relevant with the new generation.
EM: Some may argue the old ways of doing business may no longer serve banks in meeting the need for faster services and the broader choice required by customers. What other new business models are banks focused on post-Covid?
COVID changed the world in many ways and reinforced the need for new-age banking solutions tailored to modern customers’ requirements. As rapid digitalization of the banking sector began, the use of technology, such as Artificial Intelligence (AI), has had real transformative potential in banking.
There has been a recent surge of 56 percent towards the adoption of AI in emerging markets, including MENA, which has helped banks enhance efficiency by reducing costs to perform core processes in areas like lending, compliance, and risk management. It has also helped reduce the risks in areas such as credit decisions, market risk, or insurance underwriting — enhancing institutional strength and systemic stability.
Banking-as-a-Service is heating up in the financial sector. Can you elaborate on how this area is progressing for the various players in the space?
BaaS is gaining momentum in the region by the day. As the MENA region continues to grow as a fintech hub, so does the demand for new, personalized, digital services how and where consumers want them. BaaS and embedded finance are poised to grow significantly, reaching $7 trillion by 2030 while increasing by 26% year on year.
Companies are already using BaaS platforms to build deeper connections with their customers and to build brand loyalty. In the UAE, several BaaS models have been brought to market by banks, consumer brands, and fintech providers. For example, Emirates Airlines offers “fly now, pay down the line” over three months of interest-free installments through Emirates NBD bank.