Welcome to Tuum Talks Episode #9: Digital Bridges – Connecting Financial Services and SMEs.
In this episode of Tuum Talks, we explore how digital transformation is revolutionizing financial services, particularly for small and medium-sized enterprises (SMEs), who have traditionally been among the most underserved banking clients. With a special focus on the EMEA region, this discussion will provide deep insights into how financial institutions can leverage cutting-edge technology and innovative strategies to better serve SMEs.
Recorded Live: Thursday, September 5, 2024
Host: Edgardo Torres-Caballero, CRO, Tuum
Panelist: Dave Murphy, Head of Financial Services for EMEA and APAC at Publicis Sapient
Episode Topics Include
- The drivers of digital transformation in financial services, with a focus on SMEs.
- Addressing the unique challenges and opportunities for SMEs in the EMEA region.
- Enhancing customer experiences through data-driven strategies and AI.
- The role of partner ecosystems in driving comprehensive digital transformation.
- Leveraging modern technology for operational efficiency in serving SMEs.
Key Insights
- SME Growth Potential: Banks are increasingly viewing SMEs as a major growth opportunity, especially with advancements in technology enabling greater efficiency.
- Data-Driven Efficiency: Using data and AI-driven strategies helps banks streamline services for SMEs, from onboarding to credit assessments.
- Ecosystem Innovation: Partner ecosystems are crucial in delivering comprehensive SME services, allowing banks to leverage third-party solutions for efficiency.
- Neobank Influence: Neobanks like Wio and Revolut are setting new standards for SME banking, inspiring traditional banks to follow suit.
- Hollowing Out Legacy Systems: The gradual “hollowing out” of legacy systems allows banks to improve agility and enhance data access without full system overhauls.
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Watch, read or listen to the conversation below:
Digital Bridges: Connecting Financial Services and SMEs
[Full Transcript]
[00:00:00] Edgardo: Good morning, everyone. I’m really pleased today to host a friend and a great partner of Tuum, Mr. David Murphy. David is the Head of Financial Services for the EMEA region. We are going to be discussing today financial institutions and cutting edge technology and innovation strategies to better serve SME businesses. David, welcome. Good morning. How are you?
[00:00:27] David: Morning, Ed. I’m doing well. Pleasure to be here.
[00:00:39] Edgardo: Pleasure to host you, man. Pleasure to host you. David, why don’t you share a little bit of your background and tell us a little bit about Publicis Sapient?
[00:00:39] David: Yeah, great. As Ed mentioned, my name is Dave Murphy. I head our financial services teams at Publicis Sapient. I have 25 years experience in the industry, heavy focus on large scale digital transformations, technology transformations, you name it.
Publicis Sapient, a little background on ourselves, we’re a 24,000-person firm, global coverage in terms of all our offices, 50+ offices across the globe. We’re focused exclusively on what we call digital business transformation. It’s something frankly, we’ve been focused on since our birth, but clearly it was not digital. We were founded in the early 1990s, digital was not the word in the early 1990s. We were founded just outside of MIT in Cambridge, Massachusetts, and our focus and our founding thesis for our company was how to help our clients leverage technology, and technology in the broadest sense of the word, to transform the way they serve their customers and the way they operate their business.
Today that word technology is called digital, and we cover the entire gamut for our clients across multiple industries.
[00:01:41] Edgardo: Outstanding, David. Publicis Sapient is definitely at the forefront of helping financial institutions navigate digital, as you’re saying. What do you see as the most significant drivers these days around digital transformation for financial services institutions?
[00:01:56] David: If you think about the digital transformation, in many ways the drivers that you see today are very similar to the drivers that you’ve seen maybe five or seven years ago. There’s been a fundamental shift to digital among all banks’ customer bases, not only just retail but also on the commercial and corporate side.
The reason that banks are continuing to still push this agenda is, what they need to do is be able to further digitize, further automate, which in turn is going to drive greater efficiency and reduce their costs, but then also be able to leverage that capability that they’ve created to then create new offers that are going to grow the top line.
If you look at where their focus has been really over the past five years and where we would argue banks have done a pretty good job, has been on the retail banking side of the house. There’s been a massive focus for digitization and automation. Any country you look at, you see that the level of digital usage among the customer base is easily above 80% for all types of transactions and processes and services.
Banks have done a good job at solving that challenge. Clearly there’s more to be done. There’s always more to be done, but they’ve made good headway there.
I think if you think about the SME segment, in many ways where we are now is banks are seeing this as an untapped opportunity. SMEs have been historically underserved by banks, primarily because they were not the low hanging fruit. You onboard a SME, you need to potentially onboard multiple people, multiple companies. The complexity there is much greater than onboarding a single individual. Services SMEs need and the products they need again are much more complex than what you would see on the retail side, be it cash management services or more advanced lending products.
As we think about the big drivers for banks today, it is still fundamentally about, I need to become more efficient, I need to drive top line growth. Where things are getting quite interesting is there’s starting to have this belief that I could be efficient serving SMEs, and drive top line growth. That very much represents the opportunity, and that’s what we’re seeing as a most significant driver in the conversations we have with banks today.
[00:04:03] Edgardo: Outstanding, David. I would imagine in order to customize these new offers, heavy use of data would be required. Definitely, Publicis has vast experience on doing these things from a customer experience perspective. How can banks use these data driven strategies better, especially now that you mentioned the SMEs? But maybe even including artificial intelligence tactics and technologies, how would that play out?
[00:04:33] David: I think it goes without saying, and we’ll get into a lot more of this in the conversation today, data is a clearly probably the most fundamental enabler and differentiator that can drive better customer experience for banks. It’s also a big unlock for the SME challenge. If you think about where does data come into play in serving small, medium enterprise businesses, it’s really every step of the process that a SME has with a bank.
If you look at onboarding, for instance, being able to connect to central groups or central bodies, like in the UK, D and B companies house to retrieve data about a SME company that is something you can rely on. Then using that data to pre populate fields in the onboarding process, that’s going to reduce time for customers. It’s going to improve their customer experience. Frankly, it’s going to help you start to tackle some of the big compliance challenges and operational challenges that you have as a business.
Another example would be, again if you look at the open banking systems that have been set up, which have predominantly been in Europe right now, but are now moving to the Middle East in a big way, once you have that available, if a SME has a prior banking relationship, you as a bank can use the open banking APIs to gather information about their own transactional history, then start to make assessments on credit worthiness. Is this a type of customer that you would like to have?
If you go even further beyond that, for small, medium enterprise businesses that are running themselves with various accounting systems, if you can as a bank get access to some of that information then you can start to propose new products through proactive marketing.
I think that last step is really where AI comes in. If you can access all this data, both data that you’re capturing on SMEs, data that may sit in other third parties, potentially other banks, other fintechs, data that maybe SMEs have themselves in their own accounting systems, if you can access all that; then the opportunities for AI are enormous. You very much move into this next best action world where you can just deliver immense value to customers.
That’s how banks think about that. There’s a data element to drive efficiency, and then there’s a data element to drive growth. It’s the combination that banks think they can really leverage for serving SME customers.
[00:06:49] Edgardo: Outstanding. You mentioned a few things that may touch on the operational efficiency side. What operational efficiencies and personalized services, experience, do you deliver for certain clients within the EMEA region? Any particular client that comes to mind?
[00:07:07] David: Listen, it’s interesting if you think about this operational efficiency world and you think about where things are going. The ones who have done it very well, and the ones who have been most interesting and the ones that are causing many banks to consider, maybe I can solve this SME challenge, is very much the commercial neobanks.
You have examples across every country. In the Middle East, probably the great example right now is Wio, which is a commercial bank targeting small and medium enterprise businesses, and it’s setting the standard for how to onboard and serve customers. You have multiple examples in the UK. Revolute, which many people equate to just doing FX transactions, has a very great commercial banking offer for a small or medium enterprise business.
Those are the ones that I would say are setting the standard. Then what you start to see is a lot of banks are starting to drive belief that, if they can do it, and they can do it in a way that enables them to onboard customers at high volumes, and they can do in it a way that complies with all the local banking regulations, then why can’t I as an institution do it? That is really what creates most interesting. We’re working with one client in the UK who I think is making some really good progress, but they’re still on their journey. I wouldn’t say right now there’s the reference example just yet for big banking institutions for solving this SME segment, but there are a number of them that are on the journey that we’ll be completing this year and next year. When you start to see what they’re offering, you’re going to start to see, this is as good as potentially what I could get from a neobank. That’s where it becomes interesting.
Again, it’s following the same pattern that happened in retail. The retail innovation for retail banking came out 10 years ago. Banks waited a little bit. It was probably 10, maybe 8 years ago. Saw if it was really working, realized it was working, it could deliver volumes. Now you start to see the banking services that most large banks offer today, and it’s in many ways similar to what those neobanks offer.
[00:09:14] Edgardo: I would imagine there’s a role here for ecosystem players as you build these new value propositions. The new technology decoupled, API driven, all these different things allows you to do many more things. Tuum is also part of that broader ecosystem. How important are these ecosystems then for these transformation processes? If you were to apply this to specifically the SMEs, what would that be?
[00:09:40] David: I think it’s enormously important. We should get into a topic on how do banks get there, which I won’t give you that full answer. We can use that. But, I think it’s enormously important. I would argue that it’s the ecosystem that’s available to banks, plus the reference cases that they see with these neobanks, that is building the belief in them that they can serve the SME banking circuit. Every element of the value chain that a bank uses to deliver services to customers, everything from how I identify customers and verify them, there’s an ecosystem of players out there that you can leverage. How I analyse financial transactions for anti money laundering, there’s an ecosystem of players that you can leverage for that. How I then leverage even my treasury solutions, there’s an ecosystem, core banking solutions such as yourselves, in that group. Every element has innovation, and it’s fundamental to building the SME services.
If you go beyond for SMEs just driving the efficiency, you go more into, how do I create more value for SMEs, the question is, what is value to SMEs? If I’ve solved a lot of their banking needs, what are some adjacent areas? Can I help them generate invoices? To do that I probably don’t necessarily want as a bank to build my own invoice generation capability, but again, there’s an ecosystem of players out there that I can leverage to do that.
That’s where this whole ecosystem model is fundamentally enormously important, even down to what governments offer. It’s different by every country, and some countries are stronger than others, but a lot of what they can help you in terms of both identifying bank, identifying customers, identifying businesses, being able to leverage that, again, makes the opportunity to serve SMEs that much easier.
[00:11:35] Edgardo: I would imagine. Any particular regulatory aspects that may be impacting how these digital solutions are being implemented? If you go back some time, we probably met more than a decade, deploying in the cloud was an issue. There were data residency issues. You operate in the Middle East, Saudi still has these things. You need to operate locally. You have the Googles and the Oracles that deploy there. Do you see any other trends? The ones that embrace them, Qatar or Emirates, these countries, they’ve embraced the cloud.
[00:12:08] David: I think it’s a combination of both regulators and what the industry is doing. In any country, I think regulators, and it does differ by country, take cloud as an example, I think regulators have been very clear and have become clearer over the past three or four years about what are their requirements for banks to use cloud. A lot of those requirements do anchor on the fact that even though you’re using cloud, I want the data centre of that cloud to reside in country. I want it to reside in country because I’m worried about where my data is going, I’m worried about which legal regime is going to get applied to my data.
In response to that, and this is the industry side, the cloud hyperscalers as an example, have said, okay, we get that. Therefore, I’m going to have to start building data centres across the world in markets where I see growth, which is why you see a bunch of data centres from A-W-S-G-C-P in the UK. You see a similar set that was set up in the UAE. You see this massive expansion in growth in KSA. You’re going to see it in Kuwait. You’re going to see it in Qatar. It has to be a combination of the two. I think the regulators have been more comfortable, but equally as much, they’ve said, there are certain things for me that are non negotiable. Data residency and data processing and how it is handled and what legal regime gets applied, is super important.
Now, to your point though, once the two combine, the regulators and industry combined to come up with a solution, then this ecosystem becomes quite important. But also the trick in this, and I know Tuum is very good at this, is those providers then need to recognize that challenge as well. If I’m providing a SaaS service, and I’m providing it to say a bank in the UAE, and my service is being delivered in Belgium, and it can only be delivered out of the Belgium data centre for, pick your hyperscaler, that’s not going to work for the UAE. You as a FinTech provider need to also say, I have to make sure I can deploy my service into the local geography, either data centre. Most countries are getting data centres from the hyperscalers, but if it’s not, then I’m going to have to do something on premise.
It has to be a connection between the two. It’s not just at the hyperscaler level; it is all the way down to the individual FinTech providers who are providing their products.
[00:14:37] Edgardo: In line with ecosystems, and maybe just to get from a geo perspective, as you oversee the broader EMEA region, what are the drivers in between the actual EMEA, Middle East region, as opposed to the UK, for example, or maybe Western Europe? Any particular driver that differentiates one to the other?
I’ve seen, for example, from my side from Tuum, there’s an appetite for neo within the Middle East. There’s good investment, these fintechs are heavily funded. In Europe I’ve seen a little bit more maturity. We’ve come to a point where most of these investments happen, some of them successful, others, maybe not. Revolut is a case where success happened, and that generated also an appetite for others to invest. But also, I’m seeing a trend towards banking as a service. We even have a client that has 250 fintechs posted on their site, and these fintechs have applied their investment differently. They’re not pursuing these licenses. They’re still implementing, but maybe doing different businesses.
What do you see from the Sapient side in relation to the markets and the drivers on those?
[00:15:45] David: From a purely geopolitical perspective at, I think every country is recognizing that SMEs are a source of growth for the economy, for jobs, for just people’s wellbeing. As they think about it, they are encouraging institutions to find ways to better enable them. You’ve seen that across the board.
Some regulators also believe they need to create a lot more competition to enable that. I would argue the UK has been reasonably well setting the standard for a lot of areas in terms of how they issue banking licenses, the requirements they put on companies they issue banking licenses to. They’ve been doing a great job in trying to encourage that and trying to encourage a competitive market. As you start to see other countries, I’d probably jump to the Middle East. A lot of them, and it’s slightly different by country, but a lot of them are recognizing, yes, I need to find a way to enable small, medium enterprise businesses.
Part of the challenge they have in the banking sectors, and it’s been true in the UK banking sector as well as, is if you’re a SME and you try to onboard, it could take you 45 days just to open a bank account. That’s a long time. That then becomes an enormous barrier to switching, if moving to another bank takes another 45 days to open a bank account. If you look into the Middle East, you start to see they’ve leaned in heavily in that, in terms of initially creating free trade zones where you could set up companies. All those companies usually couldn’t trade in the local currency, but now they’ve started to open up their own markets within the local currency to push more fintechs into market.
In some cases they have the benefit of not only are they putting regulation in place, they have some investment vehicles in their sovereign wealth funds to fund some of those initiatives. It’s a combination of regulators opening things up, and then the sovereign wealth funds kickstarting those processes.
Then I know it’s technically not in EMEA, you go to Australia, I’d say in some cases they’re a little bit slower. They still are very much driven by an oligopoly in the market. They are trying to open up. I would argue they’re probably being a bit more deliberate. But definitely in Europe, a big push. The UK, I would argue has been leading the way. You’re starting to see a bit more in the continent; you would maybe jump to Eastern Europe first than elsewhere. But then in the Middle East, what’s interesting is you’re seeing a big push, and then it’s not only just a regulatory push, you’re seeing investment funds put money behind it to try to accelerate, which I think makes it very interesting.
[00:18:20] Edgardo: Yeah, I agree with you. Even some of our investors, which includes commerce ventures and CD ventures and Portage out of Canada, they’ve opened up operations in the Middle East as well, channelling the investments in that region. There’s an appetite for these things to happen there.
I agree with your point in relation to SME with this customer centricity requirements. The state of technology allows us today to serve them better and faster. Hopefully that user experience is better. How do you see that evolving, these SMEs, in relation to their sophistication and the services they seek out of companies like you, from Publicis, if you serve some of them? There may be some banking institution that has an SME division. What are the things they’re asking you to do?
[00:19:08] David: This is an interesting topic. It goes back to the data conversation we had a little bit earlier. Let’s start with banks, because for us as a firm they tend to be more of the type of clients that we serve. If you look at banks, they are under the same belief that we just talked about, that data is a critical key enabler to better serving their customers, and even unlocking how they’re going to serve SMEs and how they leverage an ecosystem.
They’ve had an enormous challenge. I would argue banks sit on some of the richest sets of data, customer data, among any industry. You can maybe build a little bit of an argument on telco, but I’d argue banks have the richest set. However, even though they have all the data, it has been enormously hard to access that data. Then when you do access the data, it’s enormously hard to trust the data. A lot of it is centred in many cases around this idea of when banks started putting in their technology systems in a big way 40, 50 years ago, everything was very much a monolith – an all-in-one core banking system, that not only provided you a product ledger and did your lending, but also did your payments and hosted your customer data, maybe even did your onboarding. That creates issues. It creates issues if you can’t access your data in real time, or if you can’t even access your data at all. Or you can’t even trust your data that’s coming back to you.
A lot of banks have been on this process of, the term I think a lot of CIOs were using five years ago at the large banking institutions, is hollowing out their core, hollowing out the monolith. Taking elements of the monolith one by one away from the monolithic core banking system. I’m going to pull out payments, and I’m either going to create my own payment hub or I’m going to use a third party. I’m going to extract customer data, and I’m going to put it on my own customer data platform and I’m going to make that available. I’ll have just a linkage to my core, but I’m not going to store all my customer data in there. I’m going to move the entire onboarding, KYC out.
That hollow out process has really been focused on taking elements, moving it out of a core that was in many ways making it very difficult to access, and putting it into areas in their banking architecture around which they can place a set of APIs in which they can make the data accessible via real time, and where they potentially can then bring in another third party fintech for a specific area if they want. The term that I think a lot of people use today is, and there’s a bunch across the industry, it could be coreless banking, composable banking. If you talk to most CIOs they’d say, that’s my hollow out process.
But it’s all centred on this idea of, we as a bank, our best asset and most valuable asset is data. We need to be able to anchor on it. We need to be able to access it in near real time. We then need to be able to enhance it. Then we have to be able to leverage that data to then orchestrate a set of ecosystem partners for ourselves, to be able to deliver the types of services that they want.
As banks move to this model, this is where we are spending a lot of our time with our clients. How do you move to this model? Then we will help them implement this model. That then opens up exactly this whole ecosystem picture that we’ve talked about. The reality is sometimes when you even mention the word composable, you’ll speak to a bank CIO, and say, “Oh, I’m not doing composable,” or whatnot. They say, “Have you been hollowing out your core for the past seven years?” “Oh yeah, of course I have been doing that. I pulled out payments, I’m pulling customer data.” They’re all on that journey, and that’s where we as a firm really help our clients. Because once you do that, the promise of the greater value you can create for SMEs, the promise of the operational efficiencies you can generate become that much easier to deliver.
[00:23:03] Edgardo: I agree with you. I’ve seen progressively financial institutions, especially talking about more mature ones, they have to hollow out this legacy, all this baggage that all of a sudden became an impediment for them to grow and even maintain the TCO in a healthy space for their operations.
Does that imply then that progressively there will be hollowing up a migration in a way? Doing away from old systems, but on a progressive continuum, rather than just big bank days that had changed the dynamic? From our side it would seem similar things as well in Tuum, where you take this as this business unit and you make it efficient. You change certain technologies, that allows you to become effective at delivering value for the customers, which is at the end of the day what they were intending to do, hence grow the business.
From your side and in terms of predictions of future trends, you mentioned a few now, which are very valuable, do you see any other? Or maybe you have some predictions of what’s up coming. What’s going to happen in the coming two or three years? Is it that regulations are going to have additional impact, especially on the payment side, PSD-3 coming up soon? Are we going to see a bit more regulators getting busy with these financial institutions? Maybe the things that they didn’t plan to do, they will still have to do them because the regulator is chasing them.
What are those things that you foresee are going to be coming in the next few years?
[00:24:39] David: There’s always pushes on regulators. They’re always going to be there. Clearly on the continent, there’s a big push towards digital euro and what is that going to mean? There’s a bunch of tenders out right now by the ECB for partners to implement that. Clearly when that comes online, banks are going to need to grapple with that.
What’s interesting about a big trend, and I am going to mention generative AI, I can’t stay away from the word, is I think a lot of the conversations around generative AI has been like where to apply it. We think the most transformative place to apply it, that can potentially revolutionize the way banks deliver services, is in their own IT and change function. If you think about what is the easiest for Gen AI to solve, it’s on topics that are a bit predictive and are grammatical. That is in many ways, software writing.
If you think about that, and you think about for banks, their IT and change, you look at any bank and you look at any of their investor reports, it’ll range anywhere from some cases 5-13% of their income. You take any large regional bank, any large country bank, top four, top five, you’re looking at spends that are a billion dollars, two billion dollars. J. P. Morgan is 12 plus billion dollars a year. You’re looking at organizations that are 20, 000 people. Or conversely, you could look at an IT organization that might be in a country where the engineering talent is not strong, and they’re really struggling to have an IT change capability, to be able to build and create these services.
Our belief, and this is where we have made a ton of investment, is that Gen AI and what’s been created over the past two years, is going to be the massive unlock. The best use case is going to be in the creation of software. If you’re a CIO and you’re either sitting on a 1.5 billion dollar, 2 billion IT and change budget, or you’re a CIO who’s in a country where maybe your budget is just a few million or 10 million, and you’re like, I wish I could do more but I can’t get talent, you have something available to you that could radically transform the way you’re building software. It’s going to radically transform the skill sets that you’re offering. It’s going to radically transform the skill sets that you need as an organization. It’s going to radically transform your processes. You can start to rely more on these agents that are even tackling the modernization topic. The big challenge in legacy modernization is many ways understanding what the current system does. But if I had a generative AI agent, and this is something we as a firm have and bring to our clients, if I have a generative AI agent that can read through all your code, take the context of your own functional documents if they exist, take the context of regulation, and then take your code, generate a comprehensive specification automatically, get a human to intervene and look at it, confirm it, and then move that into a new set of code, that world has changed massively.
If you think about what we’re seeing as the big change, beyond this composable architecture that we’ve talked about, the big new thing is maybe there’s a way, and we believe there absolutely is, maybe there’s a way I can create software. That’s the whole life cycle of software, from an idea all the way to taking it live. Maybe there’s a way I could do it fundamentally different. I could save 300 million on my IT change budget and reapply it elsewhere. Or I could do the IT and change programs that I’ve always needed to do, but I haven’t had the skills to do.
That we think is probably the biggest change we’re seeing, and that is over the next 12 to 18 months. I’ll be back in a year, I’ll tell you if we’re successful at it or not. But I think that is a big change that we expect to see.
[00:28:58] Edgardo: This is a very exciting and very profound topic which is impacting our society these days. The default question is, how does institutions prepare for that? How do they embrace this? Because some of the institutions might not even have the maturity, the cultural understanding of how to apply this. The organizations definitely require partnerships such as Sapient to help them unlock this value, but what do you see are these drivers for them to embrace the changes?
[00:29:31] David: The drivers for them is, can I solve this IT software creation challenge? Can I reduce the time to go from an idea to something live by 50%? Can I make my organization more nimble? Potentially, can I change my skill set mix, where maybe I need less specialists, and more people who are experts at prompting and data and some AI elements? Which again, if you’re in a country or location where you can’t access all the engineering talent, maybe that’s okay. Maybe you can develop a set of AI engineers, if you will still. You still need specialists; it’s not that specialists are going away, but the percentages that you need are going to be significantly less.
[00:30:20] Edgardo: It’s going to be different.
[00:30:21] David: Yeah. The drivers and incentives for that is, what we believe is it’s fundamentally about creating a new type of IT organization.
Now, clearly you have to think about all the elements that means. What does that mean for the skills of my people? How do I retrain people to become more AI engineers and prompt engineers? Who are my real principal engineers that I need to continue to grow and develop and flourish? How do I think about speed? How do I think about the size of my organization, but then also all the tooling that I’m going to need? Because one of the big opportunities here, if you think about it, and in many ways maybe it’s a Holy Grail, which when everyone says it’s a Holy Grail it means it’ll always be a Holy Grail, is knowledge. Because one of the big things that Gen AI solves or should solve is knowledge of a code base, knowledge of regulations, knowledge of even your own learnings that you’ve created as an organization. Being able to access that quickly, ideally from a prompt, is an enormous unlock, whether you have a 10 person or a 20,000 organization.
I think the drivers are clear. It does require some thought in terms of how you want to approach it. What we see right now is for those who recognize this world, they’re thinking strategically about where they want to be. They’re also trailing some models. Not proof of concept. It’s not like I’m going to do a proof of concept on the side, which maybe you need to do just to get to learn, but take elements of their business and run it into this model, and then see the results that it generates, and then scale up.
We think it’s a massive area. I think most CIOs and COOs – this is a CIO-COO topic, and frankly even CEO, especially for the larger banks when they look at the size of their IT and change organizations. It is an enormously strategic topic that they’re considering today.
[00:32:18] Edgardo: I fully agree with you. As a last question to wrap up all that, any particular blueprint experience that has come through engagements, where Sapient has been engaged, producing a little bit of this journey? Because it’s a journey; you don’t get there on a seat. It might take some time to unlock that value and probably they begin doing a spinoff operation or a speed like operation where they can test drive some of these technologies. You guys have driven so many of those projects globally. Any particular experience that comes to mind that maybe is a good starting point for these organizations, to inspire them to embrace this change, this digital world, and where Sapient can be a driver for them?
[00:33:02] David: Yep. If we go back to the banking architecture, the ecosystem model, the composable model, what we recognize is, you clearly don’t want a big bang into some new model. It’s a recipe for losing your job as a CIO. You’ve got about like an 80% failure rate. It’s almost guaranteed you won’t be in charge by the time the program finishes. It needs to be progressive. I think there’s also a recognition that if you are going to, let’s say, implement a move to a bit more of a composable architecture, you have to begin a bit of the hollow out process. Which means you have to start thinking about, do I want to pull payments out? Do I want to pull customer data out? Yes to both, please. Those things you can start right away. The patterns are well understood. You’re not paving new path, because most of the large institutions have been on this journey, as I mentioned earlier for 7, 8, 9, 10 years.
Once you start that hollow out bit, the next question is that now I need to start moving to the new model. Our belief there is it needs to be done with solutions that are integrated to your existing estate. Unless you have an entirely new go to market strategy where you want to introduce a new brand or you’re going to get a new banking license. But if you’re really going to develop belief that this new model works, you need to pick an area that isstrategic and important to the bank. If you prove it, people will have the belief to continue the model.
It’s a combination of begin the hollow out process, if you haven’t. If you speak to most large banks, they’ve already begun it. They may never even call it a hollow out process; it just was a natural progression that they needed to move on because they wanted to access better innovation and payments, or they needed to access their customer data more easily. Most banks have been on that journey. But then the next question is how do I start introducing new products? Our belief is it should not be standalone. You might build net new technology and architectures, but in doing that, if you want to be able to get the belief of the organization, it has to connect into what you’re doing.
If you can follow those two general principles, you’ll get on your way. There’s a million things to consider and strategies to implement and et cetera, but those are our starting points. Do it it progressively, tackle those two areas, then over time you’re going to get to where you want to go.
[00:35:31] Edgardo: David, this has been a very insightful, thoughtful and progressive session here today. We’re really pleased to have hosted you. You’re definitely leading the pack out there in the market. You have a good vision of what to do. You have that experience, and we’re really grateful for the partnership.
Thank you for being here today. Looking forward to see you hopefully in person soon.
[00:35:54] David: Absolutely. Ed, thank you very much. It’s been a pleasure being here today.
[00:35:56] Edgardo: We totally appreciate your presence here today.
[00:35:58] David: Thank you.
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