Exclusive: ‘Redefining the future of finance’ – Wissam Khoury, Finastra in “The Fintech Magazine”
Collaborative fintech has a vital role to play in changing the world for the better, and Finastra can play a key role in helping to make that happen, says its Head of International, Wissam Khoury
SMEs have long complained of being left in a financial services and funding wilderness by incumbents. The solutions that Finastra is offering those institutions via its innovative FusionFabric.cloud aim to bring those businesses in from the cold.
In fact, as Finastra’s Wissam Khoury puts it, the company is on a mission to change the world, one app at a time, with small and medium-sized enterprises (SMEs) high on the company’s broader agenda to achieve financial inclusion for all.
The Banking for Humanity strand at this year’s virtual Sibos explores just that – the role of the finance industry in everything from better access to bank accounts and loans, to lowering carbon footprints, digital adoption and diversity. Finastra’s contribution to solving some of those issues is to use platformification.
Khoury, who is head of international at Finastra, believes banks’ previous reliance on building their own in-house solutions has been one of the main inhibitors to innovation, because building out on complex legacy systems is challenging and takes far too long. However, the new era of open banking provides a fresh opportunity for the collaboration essential to overcoming this. As well as fulfilling the needs of consumers, pulling together could fuel growth and new income streams.
FusionFabric.cloud is an open and collaborative development ecosystem bringing together banks and other financial institutions with analysts, fintechs, universities, consultants, developers and systems integrators, to find rapid-fire solutions to industry sticking points – and solve real-world problems along the way.
Among its three core components, the FusionCreator developer portal and application programming interface (API) catalogue enable users to access datasets, build applications and roll out solutions quickly – including REST (representational state transfer) API management, a sandbox environment and developer documentation. Its FusionOperate secure production environment, hosted on Microsoft Azure, allows users to connect their apps to Finastra software without building their own Cloud infrastructure, and includes monitoring tools for reliability, redundancy and security.
The FusionStore app marketplace is where apps developed within FusionFabric.cloud are ‘monetised, promoted, discovered and consumed’ – including quality checking, validation, marketing and extensive marketplace data to aid decision-making.
Committed to increasing innovation speed, Finastra’s vision is to become the ‘number one platform for financial services’ by optimising cost of ownership; driving efficiency with open standards; accelerating growth through new and improved solutions; improving customer experience; offering ‘infinite’ innovation options through APIs, and investing in data curation and growth to fuel artificial intelligence (AI)-led developments, all aided by the scale of its developer network and Fusionfabric.cloud’s diverse partnerships.
Finastra is also collaborating on a microfinance initiative in Kenya, bringing together fintechs, a UK university and wholesalers to provide better solutions for assessing SMEs’ creditworthiness, thereby lowering the estimated $19billion funding gap in the country.
As Khoury puts it: “We’re redefining the future of finance. A key aspect is finance for good and improvements to financial services and literacy… helping our customers to create positive outcomes for millions of people, with the COVID-19 pandemic creating a fresh urgency.
“The push for open banking, platforms and marketplaces… these changes, across the market, will have to happen, and will stay forever. Our CEO, Simon Paris, talks about deepening the role of financial services to help millions of individuals, SMEs and communities to navigate the future,” Khoury adds.
The moment is now
“There has been lots of progress in the last 10 years: open banking, open APIs, open communication between banks and third parties and between banks themselves. But more has to be done now, and it has to be done with a huge focus on how to do it the right way. It needs to take into account the new dynamics that have arisen during COVID, with a huge focus also on the existing challenges in finance, such as financial inclusion.”
SMEs’ restricted access to funding is an example of existing issues rendered even more difficult by recent events.
“They have probably been hit hardest as a result of the pandemic, but it has potentially made business banking for small businesses a real focus. It has to. Otherwise, we’re going to face lots of issues because SMEs rely on cash, often don’t have history for credit and struggle to access funds or negotiate better rates.
“There are two causes of this. One, it’s expensive for financial institutions to give loans to smaller organisations. The second problem is that SMEs don’t have the data required by the credit or lending models used by big banks to assess their creditworthiness and risk appetite.”
Which is where FusionFabric.cloud comes into its own, by enabling financial providers to rapidly build or access cost-effective solutions that both better serve consumers and provide the banks themselves with new income streams.
“The power of data is under-utilised by the banking sector,” believes Khoury. “We can have access to metadata to model the creditworthiness of an SME and assess its credit ratios in many different ways other than just looking at its balance sheet and income statement. This includes the nature of the business, its experience, successes and gaps in the market. By deep diving the data that’s already there, financial institutions can change the way they provide their approvals for SMEs, to contribute better to that funding gap.”
Through FusionFabric.cloud, Finastra is looking beyond financial services, to offer the kind of forward-thinking technology being utilised by other industries to great effect.
“We are not using any creative technology that doesn’t exist today, and that’s the beauty of it,” explains Khoury. “The technology that allows us to redefine the future of finance, in theory, is already being used by other industries – look at retailers or ecommerce. We’re trying to bring that technology, in a very secure way, to the banking sector, along with the regulator and banks themselves. We’re taking their history and solutions and adding these technologies on top, to provide new services.”
Collaboration is the way forward, he believes, including ‘open banking, open APIs, sharing of data’, for all of which Finastra wants FusionFabric.cloud to be a major catalyst, and all predicated on the platform-as-a-service principle.
“Moving forward, it has to be about arriving at a place where financial services, including smaller fintechs, can come together in a marketplace, exchange experiences and provide more insights, more data, more user-friendly interfaces for their client base, which is already used to getting that service from a non banking environment,” he adds.
A collaborative approach
But how can banks collaborate as he describes, without losing their essence? Banks need to offer a range of services to the end user – and not necessarily their own. With a collaborative approach, they can become one-stop shops, says Khoury. That will improve the end-user experience as well as increasing revenue.
“Today, banks face new entrants into the market, which are not traditional competitors or banks,” says Khoury. “We all know that technology providers are entering payments and lending. Over the last two years, banks have realised the only way to ride that wave is to collaborate with fintechs, rather than putting them at arm’s length, to provide a single service to their clients.
“Banks can participate in this journey in many ways. They can partner with fintechs through direct investment; buy or launch their own fintechs. Or they can open up their systems and utilise technology like ours to access multiple fintechs.
“They need an intermediary, which is what we are offering, utilising the latest technologies to enable them to develop apps, via our open APIs, within a few months to just a few days. Our store then enables them to manage their app in the Cloud. Or they can choose one that’s already there, download and use it.”
Thanks to this technology, the future is coming fast.
Khoury concludes: “Let’s collaborate, work together and, more importantly, since we are moving at a very fast pace, let’s not leave anybody behind.
“Take care of financial inclusion, narrow the gap for SMEs, get the money supply and liquidity up and running. At the same time, ride the wave of digitisation.”