Are most banks in Asia are running on outdated core technology?
- Posted on September 10, 2020
By Karan Kapoor
The recent study conducted by Thought Machine, a Cloud's native banking core technology provider, shows that 95% of Asian Pacific banks still use banking technologies from a second or third generation, raise costs and hinder their ability to develop and keep up with more sophisticated rivals.
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New research finds that the vast majority of Asian banks use technology from previous generations that seriously restrict their innovation potential.
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Through its native cloud core banking platform, Vault. Thought Machine allows APAC banks to switch from old banking systems to embrace 4th-generation core banking technologies.
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Think Computer spread across three continents and expected to extend to Australia and Japan in 2020
Thought Machine, the cloud-based core banking development provider with its APAC offices in Singapore, aims to invest in helping tackle an investment void in the Asian banking industry which needs to be filled if banks that have not migrated to the new core banking systems stay competitive.
Banks that are not equipped to transition to the fourth wave of organic digital core technology cannot achieve their digitisation targets and are vulnerable to more technologically mature banks acquiring them over the next two to four years.
The key reasons banks are hesitant to upgrade their core banking networks to the fourth generation include recently updated core structures, budget limitations, and an incorrect belief that the internet and mobile banking can achieve digitalisation.
And as several banks delay, the study highlights that many competitive mid-sized banks are moving fast in implementing core banking structures for the fourth generation. Many banks will undergo true digital transition, improved market efficiency, non-disruptive change, and quick incorporation into external and internal processes.
Acceleration of digital transition, opportunities to monetise IT assets, collaborations with challenger banks, and Fin-techs, the cost-effectiveness of conversion to new digital product channels, and acquisition risk are the main factors for banks in the country today to replace their traditional banking.
APAC managing director APAC Nick Wilde from Thought Machine in Singapore said the Asian banking industry is witnessing fast and disruptive disruption.
"Technology is at the root of this disruption, especially cloud systems, allowing new digital banks to be developed from the ground up using cloud technologies, offering reduced costs, improved efficiency, and product innovation.
Native cloud Banking
The Thought Machine's Vault is a central banking tool for next-generation, cloud citizens. It does not have a single line of legacy or pre-cloud coding, allowing conventional banks to adapt and implement new, cloud-native systems. Its scalable, stable, and versatile API-driven technology unlocks the banking industry's potential to evolve and deliver personalised goods and tailored customer interactions while maintaining health, cost efficiency, and virtually zero downtime.
Vault is positioned to serve financial institutions and technology businesses across the continuum-from tier-one multinational banks to smaller national banks, greenfield offerings, and Fin-tech companies providing banking capabilities.
Thought Machine is bringing creativity to its clients with Vault. Banks can now introduce core banking on their terms and conveniently and efficiently customise any retail banking product, without relying on outside providers for those improvements.
"Thought Machine helps Asian financial institutions, Neo banks, and competitors to reinvent core banking services, target new customer markets, and put flexible and scalable hyper-personalised goods into the customer," he said.
In the meantime, IDC Financial Insights Associate Vice President Michael Araneta said financial services organisations need to prioritise core banking technology transformation conversations so that other projects such as digital disruption, customer-centric solutions, and personalisation can take centre stage in their future strategy.
Strengthening bank based product revolution
Thought Machine was founded in 2014 by a developer and current CEO, Paul Taylor, and is headquartered in London. In 2019, it opened its Asia Pacific Regional Office in Singapore to partner with banks around the country, enabling them to step away from the legacy platforms.
Thought Machine plans to extend in the year 2020 to Asia, Japan, and North America. The business is planning to recruit on 3 continents and hit 500 workers by the end of 2020. Customers of Thought Machine include the Lloyds Bank, SEB, Standard Chartered Bank, and Atom Fund.
The in-house Vault has recently extended its software to cover all four leading cloud systems – Google Cloud Infrastructure, Amazon Web Services, Microsoft Azure, and IBM Cloud – offering open core banking. Operating on various network solutions is compatible: SaaS, Private or Public Cloud, Virtual Cloud, and on-premise. The new SaaS platform provides greater versatility to banks who choose to run single or multiple goods on Vault's stable micro-services infrastructure, without the program maintenance and upgrades overhead.
