During the Financial Cloud Summit’s afternoon Optimise session, titled ‘BaaS: Entering new and niche markets,’ Finextra reporter Niamh Curran guided panellists through a technical discussion that explored how embedded finance and BaaS can help to transform the backbone of business operations.
After contextualising the topics with definitions of both BaaS and embedded finance, Curran encouraged the audience to participate in the discussion through Sli.do. Posing a submitted question to the panel, Curran asked Ainsley Ward, industry thought leader and business development lead, CGI, about the importance of avoiding lock-in with your ‘as-a-service’ provider.
“The reality is,” stated Ward, “to avoid lock-in you have to have infrastructure that enables you to work with many providers. You don’t want to have technology or those pieces that are very proprietary to the organisation.”
He says that having an API that allows an organisation to send the same data to one provider as you can to another is important. “We’ve been solving those same problems for a long time in the banking industry, and some banks prefer the security of having a variety of technology that does not keep, and others prefer to keep things open. Certainly, when it comes to finance, those layers that create the API environment are actually facilitators of getting into open finance. The technologies that prevent lock-in are also the ones that offer opportunity.”
Following Ward’s comments, Avinash Kumar, product director, Temenos Banking Cloud continued that BaaS is a platform, API and a distribution plan. It’s a solution from a business perspective, platform and technology perspective, but when talking APIs, the whole pattern of BaaS has been about experience and entreprise. This pattern enables BaaS players to integrate with a lot of vendors or partners cheaply. Even if you’re locked in, for transition from one vendor to another is quite cheap, because the experience layer is the only layer that would change thanks to standardisation.”
Kumar also picked up on the next question posed by Curran around the necessity of cloud in a BaaS context, to which he responded that while it would be possible to traverse the BaaS space without cloud, it would not be strategically successful. “The reason I say this is because BaaS is really hard. It’s volumes, it’s a consumption model, and all of this is enable by cloud.”
Kumar’s view was echoed by each of the panellists, with Filipe Teixeira, chief information officer at Illimity Bank adding that it is a huge advantage when you want to enable innovation in your company. “When we look at cloud adoption and banking as a service over other models, the key point is around flexibility. Cloud based solutions are the entry to trying something many times. When we want to utilise important innovation models, there is often a fear of failure. Buying infrastructure requires a risk of failure, of damage to the company if it doesn’t work. If you have the right BaaS model, you can leverage on volumes, and if it doesn’t work, it doesn’t work.”
Turning to Billy Ferguson, chief technical officer at Thincats, Curran asked what exactly clients should be looking for in a technology partner to accelerate the BaaS adoption.
Ferguson noted that it isn’t all about acceleration. It’s more about moving in a manner that is reliable and can be continued safely. “These are financial products that are heavily regulated - it’s a difficult area. For me, finding a partner is about shared outcomes. When we looking for a partner its for those who can share in that deliverable.”
This would include having parity around the relationship and working together, and then to understand what the business is trying to execute against.
“For me, its about trying to find partners to work with that can deliver the boundaries of the product - where the product works well and where it has its failings. None of these things work in isolation, you need to have a combination to work together,” Ferguson stated.
The second Optimise panel covered the IT talent. Moderator Madhvi Mavadiya was joined by Jason Maude, chief technology advocate, Starling Bank; Ben Scowen, VP of cloud and core enterprise, Kyndryl UK & Ireland; Charles Wood, chief architect, Mettle; and Mani Nagasundaram, senior vice president, head strategic initiatives and cloud ecosystems, financial services, HCLTech.
Discussing acquiring and maintaining technical talent, Scowen covered what he what he had explored in his keynote session earlier in the day, and added: “I think it never has been more difficult because once you’ve built and created that talent, and you’ve taught them a way of building something that’s effective.
“For example, I lost a couple of my team to Monzo, they were great software engineers. They had five yOears in the saddle of building cloud solutions at an incredible level, so they fitted really well into the culture that needed exactly that skill set. I think if you can get five years out of the people who work for you then you’re doing well.”
Nagasundaram agreed with Scowen but continued to say: “it has always been difficult to hire good technical talent, it’s not just now it has always been difficult.” Maude elaborated on this sentiment, “I’m not sure I would say it has never been harder, it’s different. Differently difficult. In the past it looking for tech talent would be more general, asking for a software engineer. Whereas nowadays, everything’s much more specialised.”
When asked about how IT talent acquisition challenges are influencing technology investment, Wood commented, “it does make it more challenging, but the question is do you go for a big team, with possibly simpler technology choices? Or do you have a smaller team of hyper-specialised people who are significantly more expensive?”
Maude added to this discussion: “I agree that you have to have a sort of a simplified path. But one of the things that we have not done as Starling is we haven't decided to base our decisions on what changes our technical stack looks like on what people want to cope with we we've avoided doing that, because we know that we based on our back end services are written in boring old Java, because hiring Java engineers is something that we don't see running out anytime soon.”
The panel turned the topic of what the key organisational success factors to operating on the cloud would be. Wood commented, “lifting and shifting a piece of software that is not designed for a cloud environment is not likely to breed success. […] That requires a cultural shift.” He continued: “I think one of the biggest success factors is to be willing to ‘re-architect’ legacy architectures.”
Nagasundaram added to this, “it’s about learning, unlearning, and relearning. Unless you do that you’re not going to be successful because the pace of change is so high today.”
Concluding the session and the first Financial Cloud Summit, Maude said that he does think that multidisciplinary teams are needed, “especially if you're dealing with somebody with software, you will have people who understand the technical side of it, but aren't experts on the business side of it, and vice versa. If you just have a thing where you segregate these two groups and make them write reports to each other, rather than talking to each other, you're going to get misunderstandings and bad results.”