Finastra has gone live with a new platform in order to accelerate innovation for its 9,000 bank clients by allowing them to easily connect to fintech applications within an open marketplace.
The launch of FusionFabric.cloud is a move which will help its clients embrace open banking. The platform enables fintech companies and other “creators” of financial applications (including banks, universities, system integrators and individual developers) to easily build, deploy and operate cloud applications, through open APIs to Finastra’s core banking infrastructure.
Finastra has been running an early adopters programme on the platform since July 2017, which has seen over 60 fintech firms and software providers sign up.
Announcing the launch of the platform at the Money2020 fintech conference in Amsterdam this week, FusionFabric.cloud is now available to banks.
This includes the three core components of the platform: FusionCreator, FusionOperate and FusionStore.
FusionCreator is where a fintech firm can programme applications. Finastra refers to this component as a “rapid development environment for applications”, with integrated API management tools. In the early adopter programme, Finastra says the platform allowed fintech firms to reduce application development time “from months to weeks”.
Once the application has been programmed, the fintech firm will take the app to the second component, FusionOperate, a management system to deploy and operate applications in a secure cloud infrastructure, underpinned by Microsoft Azure.
Speaking to GTR on the sidelines of Money2020, Martin Häring, Finastra’s chief marketing officer, says the final step involves the fintech company pushing its applications into FusionStore – an online marketplace for banks to search, try and buy applications by connecting to them through the cloud
“You can think about this like the Apple app store,” he says. “The bank can look at the app catalogue and say ‘I need an automatic onboarding procedure for my bank – I don’t have it, so do I want to build it on my own, or do I want to use an application on the platform?”
The creators will have access to the development platform for free. Only when they sell the application in the app store, Finastra will take a 30% share, according to Häring.
New opportunities for fintechs and banks
For the fintech firms involved in the new project, FusionFabric.cloud provides a whole new platform to sell their applications to banks, without needing to build a global sales team or worrying about a scalable infrastructure.
“Fintechs are desperately looking for collaboration and for access to banking systems,” Häring says. “When you are a small fintech, you can’t knock on the door of a large tier-one bank and say ‘hey, give me access to your banking infrastructure’. They’ll say no. And if they say yes, maybe they are looking more at finally acquiring the firm rather than a collaboration in the long run.”
The new marketplace-approach to innovating is a proposition that is appealing to players in the trade finance space – a sector that is starting to receive some much-awaited innovation. One of the fintech companies already on Finastra’s platform is Conpend, which has used it to develop its e-documentation solution, which digitises trade documents using OCR and AI. Another is Coriolis Technologies, whose app provides trade, trade finance and risk data, allowing banks to tailor their products to specific requirements of their clients and markets.
“It’s a new channel that gives us access to clients that we would otherwise maybe have to put a lot more effort into getting to. So it gives us reach,” Marc Smith, Conpend founder and MD, tells GTR. “I hope that banks see this as an opportunity to experiment and innovate, because the entry barriers are so low. The problem is that if you look at a typical bank environment, it’s extremely controlled from an IT perspective and there’s always pressure on resources.”
Banks, in turn, will be able to more easily access innovative solutions and extend product capabilities. The way the platform is set up, Häring explains, gives them “a path to faster innovation” without them having to change their core banking system. Rather, they “API-enable their core” and thus let third parties “innovate around the core”.
“A bank sometimes need a year to develop a little new functionality inside their product spectrum. This is because of long release cycles of software, quality assurance, risk management, and even upgrading core banking system: it takes forever,” he says.
As opposed to entering a direct partnership with a fintech firm, the cloud solution is much more flexible, he adds. “If you don’t like that fintech anymore, you just terminate that service and you go to another, just like the app store.”
However, changing banks’ mindset around the way they innovate – and enticing them to move towards an open banking approach – will not necessarily be an easy task. “What is still a little bit of a hurdle is to get the bank to say, ‘our strategy of innovation going forward is open banking’, because this is a fundamentally different idea,” Häring says.
Finastra’s next focus will be to get more fintech firms on the platform, while working with banks to define business cases and pilot the platform on their end.
“As of today, we have around 60 fintechs which are playing around with the platform and developing new applications. Once we are crossing the 100 or so, we will try to get more banks to the platform. Because if you are a bank and you want to test the platform and there are no apps in the store, you can’t use it. So the first 12-18 months is really focused more on fintechs, and then going into the next calendar year, we are focusing more and more on banks,” Häring says.