Finnova: Taking the strain: systems transformation made simple - Markus Waser

There is no question that financial institutions must embrace a process of transformation to keep up with the rapidly changing demands of customers in the age of digital banking. Each bank will face different challenges along the way, but, as chief product officer Markus Waser explains, with Finnova, there is a stage that enables banks to share a platform for key processes while implementing their own unique transformation strategies.

Bringing a bank into the digital age is no simple task, given the often complex architecture of legacy systems that many institutions have and the ever changing needs of customers. At the front end, banks have to offer personalised services to their customers through analysis of vast amounts of data, while, at the back end, there is a need to overhaul older systems without losing the value of their data streams or disrupting the operation of the bank.

Every bank will have examined this challenge and defined at least some part of its roadmap for change, but the complexity and the potential cost may be big barriers to getting the process of transformation under way. The modular platform provided by Swiss firm Finnova, however, can not only remove some of that complexity, but also keep operating costs to a minimum.

"It is hard to prioritise the many IT challenges that banks have faced in recent years, but from talking to customers it seems that everything boils down to digital transformation and industrialisation. These are the key drivers for all other areas such as improving consumer intimacy or competing with new entrants to the financial services market," says Markus Waser, chief product officer at Finnova.

"There are many competing issues, but the two biggest drivers are digitisation and industrialisation. It is a big challenge to take a consistent and integrated approach to issues that have different speeds of change. For instance, changes to front-end systems are very dynamic, but the back and mid-office change at a much slower rate," he adds.

Shared values, shared cost

Finnova is Switzerland's leading provider of banking software, and the modular bankware system it first released in 2003 has since been adopted by more than 100 universal and private banks. The highly scalable integrated bank-management solution has multi-tenant capability, allowing many clients to benefit from its SOA, BPO and development features, which allows banks to systematically control and monitor their profitability, growth and risks.

The platform builds on a core database and its workflow management and straight-through processing features automate bank-specific processes. Specific modules are seamlessly integrated, and the real-time kernel makes data and processes immediately available to all users. The system's multi-tenant capability allows 50 or more banks to operate on one installation and the core system can easily handle more than 10,000 active users.

"The solution helps in many ways. Tenant set-up is easy, and it is simple to maintain and operate. More than that, the total cost of ownership is very low compared with competing systems. That is a big advantage when there are many IT challenges for banks to face. Not only do we help banks to address those challenges through an open architecture, but also the low TCO makes funds available to spend on other areas," says Waser.

"The key to low TCO is the multi-tenant system in which banks share the same architecture, services, data and third-party systems, while still having a very specific set-up. That is our USP," he adds.

Many banking platforms claim to offer multi-tenancy capability, but Waser believes that Finnova has taken it to a much higher level than any competing system. This helps financial institutions of any size to overcome the many different issues that stem from having a complex systems architecture based on older technologies that are geared towards performing specific functions in discrete silos.

The era of digital banking demands that processes be integrated across a bank's systems, and that data is shared in order to derive more value for customers through more targeted services and customer segmentation.

"From the start, we developed it to drive flexibility, and we have mastered the multi-tenant set-up. The biggest multi-tenant system in Switzerland has 50 banks of different sizes. Big banks have made huge investments in their legacy systems and in the know-how of the people who use those systems, so the cost of switching to new systems is very high for them. There are two big global banks based in Switzerland that have old legacy systems and they face challenges with the peripheral systems that are integrated with them, so for banks like that, a one-to-one switch to new systems may not be possible," Waser remarks.

"Finnova can help banks to break down the silos created by their legacy systems. The multi-tenant allows them to set up separate tenants by country or by customer segment, for instance, which will then share the same underlying functionality. Also, banks can migrate step by step to the Finnova system. That is very important because migration to any new platform must be done one piece at a time. It can happen through the tenancy system or through the fully integrated approach that Finnova also offers," he adds.

On the move

The largest tenancy community of 50 banks that moved to Finnova was created through a gradual migration of systems and processes to the new platform. Indeed, that approach was adopted by the majority of banks - now totalling more than 100 - that use the Finnova platform. Switzerland's largest cantonal bank is among those that is making the move and, in doing so, it greatly improves its cost/income ratio.

"The banks that choose to use our system don't have to reinvent anything that they already have. They can use existing third-party systems if they choose. It is important that they evaluate their own systems in light of the Finnova platform, as the cost of those systems can be shared, and we have the know-how to help people set up any process from loan origination to portfolio management," explains Waser.

A guiding hand

The process of migrating to the Finnova system is made simpler by the expertise the company has in its consulting division, which does more than just help banks to move processes to its modular platform. A key part of the package is the assistance it provides to banks in defining, adjusting and optimising key processes. There is also a team of experts that can address regulatory compliance issues.

"We keep ahead of banks in terms of how to interpret new regulations, and implement them in the bank and in terms of software implications. That is a greatly appreciated value-add on the compliance front. We look at what a bank's pain points are and then we show them how to use Finnova to meet those different priorities," notes Waser.

A further string to Finnova's bow is its broad partner strategy, with respect to BPO provider. Finnova provides the high-quality integrated banking solutions, and BPO provider such as Swisscom IT Services can implement and operate those systems according to the needs of an individual client. Some of the processes provided by Finnova's systems, notably its payments engine, can be extended to banks that are not on the Finnova platform.

This becomes possible because of the modular structure of the technology. In Switzerland, Swisscom is the largest implementation partner for the Finnova core banking solution, so it acts as a bridge between the bank and the software vendor. Whether it is through tapping into specific processes via this bridge, or by migrating to the Finnova platform in a more comprehensive way, banks can make the journey from their legacy software solutions to a more cost-efficient architecture in a seamless and simple way.

Core transformation can seem like a very daunting task, even for smaller banks, but with Finnova, there is always a roadmap to cost savings, efficiency and greater flexibility, no matter what a bank's individual journey into the digital world may be.

Markus Waser, chief product officer at Finnova.