Banking and Fintech Players Embrace Cloud-Based Core Banking Platforms


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2022 has seen a large number of banks and fintech companies embrace cloud-native architectures, inking strategic partnerships with modern core banking providers and technology specialists to modernize their core infrastructure and evolve for the digital age, a new analysis by fintech research company Whitesight shows.

This year, incumbents and fintech companies from across the globe have accelerated the move of their core functions to the cloud, waking up to the urgency to embrace cloud-native architecture to create higher customer expectations, gain agility and cut costs.

The Whitesight analysis notes that tech providers like Temenos and Finastra have seen increased interest from banks, showcasing that financial incumbents are increasing turning to cloud-native architectures as they seek to improve customer experience, enable business continuity, and achieve operational efficiencies and resilience.

Temenos, a Swiss banking software company that offers cloud-native, cloud-agnostic, and artificial intelligence (AI)-driven front office, core banking, payments and fund administration software, claims that over 3,000 banks, including 41 of the top 50 banks, use its products.

And Finastra, a London-based provider of financial software applications and marketplaces, says it serves about 8,600 institutions, providing them with software solutions and services across lending, payments, treasury and capital markets and universal banking.

Besides banking incumbents and traditional financial institutions, fintech companies and digital challengers as well are leveraging cloud-native core banking systems from providers like Mambu and Thought Machine. These are seeking increased flexibility, cost-effective scalability as well as the ability to offer superior specialist propositions for niche market segments.

This year, software-as-a-service (SaaS) cloud banking platform Mambu has onboarded a number of new customers, including names such as Bob Finance, a Swiss digital consumer finance offering, Ashman, a new entrant bank serving small and medium-sized enterprises (SMEs), and Okeo, a digital payment service provider for European entrepreneurs and businesses.

Designed to fast-track the development of nearly any type of financial offering for banks, lenders, fintech companies, retailers, telcos and more, Mambu’s banking platform is said to be used by 230 customers, including N26, Raiffeisen Bank, ABN AMRO, Bank Islam and Orange Bank.

Similarly, Thought Machine, a cloud-native banking technology company, has enrolled several notable names in the industry this year, onboarding the likes of C6 Bank, one of Brazil’s fastest growing digital banks, Trust Bank, a new digital bank in Singapore, and Payset, an online payment platform and provider of multi-currency accounts from the UK.

Thought Machine’s cloud-native banking platform, called Vault Core, is also being used by large-scale multinational banks, including JPMorgan Chase, Standard Chartered and Intesa Sanpaolo.

Partnerships between tech providers themselves are also being signed, the Whitesight report notes. Typically, these tie-ups aim to provide banks and financial service providers with solutions that address emerging trends like open banking.

For example, open banking startups like Salt Edge and Trade Ledger have curated strategic partnerships with core banking providers such as Thought Machine and Neo by Five Degrees to enable banks to comply with open banking regulations and access API capabilities.

Others are collaborating to increase their capabilities, provide their customers with specialist niche products and differentiate from competitors. Such partnerships include the collaborations between core banking platform providers Skaleet, Neo by Five Degrees and Tuum with the likes of Thunes, a business-to-business (B2B) cross-border payments network, Fourthline, a provider of digital know-your-customer (KYC) and anti-money laundering (AML) compliance solutions, and Bricknode, a brokerage-as-a-service provider.

Core banking camaraderie in 2022, Source: Whitesight, Dec 2022

Core banking camaraderie in 2022, Source: Whitesight, Dec 2022

According to an Accenture study, 82% of executives at banks polled by the consulting firm said they planned to have at least half of their mainframe workloads in the cloud 10 years from now, and 31% of them had already reached that stage.

SaaS cloud banking platform Mambu and research and advisory firm Celent estimate that financial institutions globally could save up to US$246.1 billion running a cloud-native core over five years, a 76% reduction in core spend and a 15% savings in total IT costs over the same period.

Featured image credit: Edited from Freepik

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