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CIO interview: Simon Bateman, Allica Bank
Challenger bank has built its entire core banking system from scratch using the Azure public cloud and an API ecosystem
The UK-wide Covid-19 lockdown in March did not stop challenger bank Allica from launching new services, as the bank’s CIO, Simon Bateman, explains: “When Boris [Johnson] said we had to work from home, we had 60 staff work remotely. We did our first deposit launch and wrote our first commercial loan during lockdown. We have had a considerable amount of inquiries and seen growth in the loan book during lockdown.”
Bateman has a background in retail banking. His most recent post before Allica Bank was as CIO at Harrods Bank and he has worked as IT head at Aldermore Bank, Lloyds Banking Group and Produban SCL, part of Santander.
His experience of the limitations of IT in traditional banking has informed the IT strategy that Bateman has taken at Allica Bank.
One of the key pillars of the bank’s IT strategy has been to use the Microsoft Azure public cloud, as Bateman explains. “When I joined in May 2018, we decided to build everything from scratch in the cloud using the Microsoft suite,” he says.
Allica Bank worked closely with Microsoft’s Fast Track team to build a system within Azure that would keep customer data safe and comply with strict regulations. As well as using Azure to store customer data securely, Allica also gives its staff access to Microsoft Dynamics 365.
Talking about the difference between the IT systems at traditional banks and the approach he has taken at Allica, Bateman says: “Historically, big banks build their IT around a core banking platform.” But for Allica Bank, the goal was to avoid having all the bank’s services constrained by the core banking system, he says.
“When I set up the tech team, our aim was to be based around the application layer, rather than the core banking system,” says Bateman.
“We have the ability to offer new services without trying to get a square peg into a round hole”
Simon Bateman, Allica Bank
Being focused on the application layer rather than a core banking system, Allica’s IT team would support the bank’s growth plans better by being able to provide its target customers – small and mid-sized businesses – with a full suite of products built on banking applications based on best-of-breed back-end providers, he says. What this means for Bateman is that the bank has the flexibility to incorporate new banking software as and when it becomes available.
The bank has used FMS.next as its digital banking platform, he says. This is Allica Bank’s back-end transaction platform for lending and savings. For Bateman, among the key benefits of this platform is its flexibility, which core banking systems have traditionally lacked.
“We have the ability to offer new services on top of the back-end without trying to get a square peg into a round hole,” he says. This means Allica can look at other products in the banking software market to enable it to offer services such as asset finance or cashflow management.
From an IT architecture standpoint, Allica Bank has taken an application programming interface (API) ecosystem approach to building out the IT that underpins its banking system.
Instead of deploying an entire software stack from a major financial software platform provider, he says an API ecosystem approach means “we aren’t constrained”.
In May 2018, Allica began building out a team to develop a new type of banking service for SMEs. Bateman says: “We had a vision to provide the best SME banking service, and knew what products and channels we would use to go to market.”
The bank settled on being a broker-led business, which influenced the IT strategy that Bateman has adopted. “We knew what brokers needed,” he says. “We needed the ability to build an onboarding process that would be best in class.”
This has meant taking an API-led approach, in which broker applications offer pre-populated forms, such as automatically filling in the customer’s postal address. “We wanted to take the things that are standard in retail banking services and bring them to SME banking,” says Bateman.
As well as linking to external services and other banking software, Bateman says Allica has also developed APIs for internal use. “We also needed to expose our internal IT, such as the data in our data warehouse and core bank platform, in order to underwrite deals,” he says.
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Allica Bank has a dedicated engineering team tasked with ensuring the customer experience is seamless, says Bateman, adding: “A frictionless customer journey requires a lot of coding.”
To create seamless and new customer experiences, Allica Bank engaged MuleSoft professional services and consulting partner Whishworks to implement MuleSoft’s Anypoint Platform. Whishworks built more than 300 APIs on Anypoint Platform, enabling Allica to unlock and unify data across disparate systems, such as customer databases, document management systems and business process management systems.
By creating reusable building blocks as APIs, Allica Bank can compose new business capabilities in days or weeks, instead of taking months to build from scratch with custom code.
Allica built its digital bank twice as fast as its competitors and was granted its UK banking licence in September 2019. “To have been able to build a bank capable of this in 12 months is staggering,” says Bateman. “MuleSoft has been a vital partner to us on this journey, playing a central role as we develop a modern bank with integration at its heart.”