Two of Australia’s newest digital banks are leveraging Microsoft Azure to adopt mission critical banking platforms, through a partnership with independent software vendor (ISV) Temenos.
Revealed ahead of SIBOS in Sydney - an annual banking and finance conference - Temenos is working with Judo Capital and Volt Bank to deploy its core banking platform T24, to future proof service offerings.
As a result, Judo Capital has maximised the capabilities of Temenos to tap into an API-based software-as-a-service (SaaS) operating model.
Such an approach using T24 for core banking - alongside the underlying Microsoft Azure identity management capabilities - has allowed the business to develop tools like single sign-on, big data analytics, machine learning, as well as tackle financial crime investigation without compromising security.
Meanwhile, cloud-native Volt Bank has become Temenos’ first customer in the region to be hosted on Azure, in addition to leveraging business analytics, productivity and collaboration tools.
Specifically, the digital bank leverages Power BI, Office 365 and Visual Studio Team Services, with plans in place to deepen the alliance in the months ahead.
More than 3,000 firms worldwide, including 41 of the top 50 banks, currently rely on Temenos software to process the daily transactions of more than 500 million banking customers.
According to Ross Mallace - head of cloud across Asia Pacific at Temenos - the ISV now has 28 regional cloud customers, and has signed four major deals this year with "more in the pipeline".
“Whether you're a start-up looking to launch, and looking to launch with a particular product offering, say term deposits, this solution can manage that,” Mallace said.
“But as you grow your business, in two, three, four years you might want to branch into loans, mortgages and other things, and will you know our software can do it.”
Mallace said Temenos’ “significant R&D investment” means that enhancements are instantly available to cloud users, while processing capability and geographic reach is addressed by the Azure foundations which stretch internationally.
“We have examples of very, very quick implementations,” Mallace added. “I’m talking two months in parts of the world, especially for neobanks which have no legacy systems."
Judo is the latest neobank to adopt the T24 offering, signing up for Temenos’ Core Banking, Channels, Analytics and Financial Crime Mitigation functionality.
Specifically, T24 Core Banking will be the key information platform for its challenger push into the SME market, considered to be “under-served” by the incumbent banks.
“The engine room of the Australian economy is its small and medium-sized business, which have been starved of the funding that they need to grow by the industrialisation of lending processes by the big banks,” added Alex Twigg, co-founder of Judo Capital.
“Consequently, these SME customers have lost the highly skilled banker relationship they so valued, and just haven’t had the support they need.”
Judo has established a cloud-based, API-centric, technology ecosystem which will integrate with T24 Core Banking through its zero-trust network and identity management system.
Twigg said this approach allows the bank the opportunity to connect with third parties as the business grows, and to “own” the full customer experience it can deliver through T24 Core Banking.
In addition, the move also positions the company to participate in the more open banking ecosystem that Australia is headed toward.
For SME customers, Twigg said this will help “foster rapport and relationships”, while “laying the foundations” for preferential pricing.
“Access to credit has become totally constrained by the amount of property security that they have to offer,” Twigg added.
“Judo was created to fix this problem by bringing back the craft of SME lending and building long-standing relationships using true judgement-based lending, based on the four C’s of capacity, character, cashflow and collateral.
“Being a new bank not anchored by legacy computer systems and processes, we can offer a completely different, highly trusted lending experience that is genuinely customer-centric.”
Volt has been using the Azure-based T24 since earlier this year, in a bid to provide agility, scalability and security within the cloud.
The offering has allowed the business to “launch quickly” and meet the Australian financial sector regulations while at the same time enable partnerships that offer clients a “feature rich digital experience”.
Volt was the first bank to be granted a restricted authorised deposit-taking institution (RADI) licence by Australian Prudential Regulation Authority (APRA), and will initially offer savings and transaction accounts, term deposits and foreign exchange, before moving into personal loans, mortgages and business banking as it transitions to a full licence.
According to Steve Weston - co-founder and CEO of Volt - the business hopes to secure a full banking licence by the end of 2018, at which time it will launch to the public.
“Since the arrival of the internet, customers have become used to consuming services at the speed of light,” Weston added. “This immediacy of services is expected from customers in the way we re-process payments and receive transactions.
“Volt aims to transform the way banking is done via adopting a genuinely customer-centric business model and by leveraging best in class technology and data analytics capability.
“Being cloud native, Microsoft is a key partner of Volt. Fast ramp up and easy to scale cloud services will position Volt well to partner with a range of tech providers that will facilitate the type of rapid release innovation that customers have come to expect from their digital service providers.
“By partnering with leading cloud services volt is well positioned to challenge the incumbents of Australian banking.”
Volt is Temenos’ first client in the region to be hosted on Azure, with the business also using Power BI for data analytics and Office 365, alongside new and emerging Azure services.
“Having early access to emerging technologies such as AI and machine learning we can provide our customers with a banking experience that supports them with the information and tools they need to manage their money wherever and whenever they want,” Weston added.