Something a bit different in this interview as I spoke to large financial services IT supplier, Finastra, which was created when two long established firms merged in 2017.
One of these firms was actually set up in 1875, while the other was founded in 1970. Certainly not a fintech in the tech startup sense, but the last couple of years have seen the company transform itself as a result of the fintech revolution.
It is normally banks that are disrupted by fintechs and forced to change, but this is a story of a large financial services IT supplier which changed to support rather than compete with fintechs.
Finastra now has offices in 42 countries and employs over 10,000 people. It has about 9,000 customers across 130 countries and made sales worth $2.1bn in its latest financial year.
Traditionally the business offers software around treasury, payments, capital markets, retail banking and corporate banking. It still does, but what is new is it now offers a platform as a service, known as FusionFabric.cloud, aimed at fintech developers. It is a platform where they can build, test, and sell their software to banks.
I interviewed Eli Rosner, chief product and technology officer, at Finastra. He said the digital transformation in the finance sector drove the transformation at Finastra.
“With everything that is happening in the market with digitalisation and the arrival of challenger banks everyone is coming to the plate,” he said.
The FusionFabric.cloud platform offers a service to anyone that wants to develop and sell a fintech app.
It has three main components: a development portal, which gives developers access to its APIs and other resources; a cloud base run time environment for apps that developers can build and test; and a marketplace where apps can be sold to banks and other financial services companies.
The development environment is a good place to start. It is aimed at anyone that can take an API and develop code. “This could be software engineers at fintechs and banks, students or a standards body,” said Rosner.
Rosner said: “We took the core components of our software in all our lines of business and exposed then using RESTful APIs, on Microsoft Azure, and we are giving access to the fintechs and the banks through the FusionFabric.cloud platform.
But it is perhaps the marketplace that will be most attractive to fintech developers. It connects them with lots of potential customers. It helps fintechs overcome some of the major hurdles to becoming an accredited supplier to banks.
“Large banks are not going to work with the fintechs with 20 people because they just don’t have the scale, the regulation, the security,” said Rosner. “But we go through a rigorous certification process for the apps that are in our marketplace so the banks know they are good.”
He said this idea came following a forum with some of its large banking customers. “They said ‘if you can take on the process of certification from a security, privacy and performance perspective and tell us that you are standing behind the apps and that they are good, that will make the buying cycle easier for us.’”
To ensure that the very small fintechs can get involved Finastra is also providing infrastructure, through its run-time platform, the third component of the platform. This gives access to the Azure cloud.
“Some fintechs are large enough to have a presence in a cloud to deploy their apps but some are small they don’t even have an environment to run the app so we provide then with that,” said Rosner,
This cooperative approach to financial services IT will have to be adopted by all suppliers as they can’t compete with fintechs but can increase their own sales through them. Rosner said traditional financial services IT suppliers must change to work with fintechs. “A transformation is happening and is one of the reasons I joined Finastra from the tech industry. I have seen similar thing happen in the retail sector.”
Use of the FusionFabric.cloud platform is free but Finastra has a revenue sharing model with the fintechs, once their apps are commercialised. Fintechs will also be developing apps that complement Finastra’s traditional products. If a customer wants to add functionality to traditional Finastra software, it has a marketplace of accredited products.
Rosner said the platform had to be easy to understand and free to use.
“We decided we wanted to go to market with the platform in a way that was easiest for fintechs to get in, start using it, and start making money. So we give access to the environment for free, we charge a little for certification process and after that they can deploy the app into the marketplace where they are exposed to all our customers.” They then have a revenue sharing model
About 70 fintechs have integrated into the platform at various levels of maturity. Some have products on the platform while other have integrated and plan to at the right time.
Rosner said the company is adding fintechs gradually because demand is high. “When we went out and told people we had the platform a lot of fintechs knocked on our door. So we had to take a step back and harden the platform so it was enterprise ready.”
Read the previous fintech interviews
Part 13 InstaReM, Part 12 Eucaps, Part 11 AimBrain, Part 10 Meniga, Part 9 TrueLayer, Part 8 InvestCloud, Part 7 ClauseMatch, Part 6 Rebuilding Society, Part 5 Honcho, Part 4 Akoni, Part 3 Wrisk, Part 2 CreditLadder, Part 1 Taina Technology