Banks of all sizes recognize the need to have open APIs to connect to Fintechs so they have immediate access to a range of innovative solutions, such as BNPL, earned wage access, and other new technology-driven products. Traditional core processors are moving to deploy similar cloud-based micro-services architectures, but some deliberately limit connectivity to key partners deemed strategic while others are simply challenged by the scope of the problem in refactoring the software inventory associated with the multiple host-based core systems sold to banks of different size and in different markets:
“Using Thought Machine’s APIs, Mascoma will be able to connect separate systems, including loans, cash management and digital banking, into its core system, and offer customized products and pricing.
“All our data will live in one space so staff can use it to understand our customers and make better decisions,” said Pause. “We can give them products they need instead of throwing the product of the month at them.”
A bigger market through the cloud
Seattle Bank, a boutique bank with a single branch in Seattle, migrated to London, U.K.-based Finastra’s cloud-based banking platform in February 2020.
“We knew technology would be important in enabling us to compete with larger banks and fintechs,” said Josh Williams, Seattle Bank’s chief banking officer and head of partnerships.
The bank is working to expand beyond its high-net-worth client base into the mass market and target other U.S. geographies beyond its core market of the Pacific Northwest with services such as consumer lending and early salary payments. It also wants to offer customized credit limits for high-net-worth customers, Williams said.
Seattle Bank, which has $762 million of assets, plans to use Finastra’s APIs to integrate via banking-as-a-service with fintechs that want to leverage its license and liquidity to provide services where they own the client relationship. It also aims to provide embedded banking to marketplaces that want to place its brand into their platform without owning the customer relationship, said Williams.
“We’re looking at cases where merchants want to add point-of-sale financing solutions for larger-ticket purchases and need credit underwriting for longer-term loans than are provided through BNPL platforms,” Williams said.
Because it migrated to the cloud before COVID, Seattle Bank introduced its Paycheck Protection Program platform two weeks after the CARES (Coronavirus Aid, Relief, and Economic Security) Act came into effect. “We couldn’t have done that with our old system,” Williams said.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
