As part of Fincog’s series of podcast for our Future of Banking report we spoke to Leda Glyptis. Our report outlines the recent trends and dynamics across markets and thereby provides an outlook on the future financial services market and how banks can best respond to the new reality of banking.
Leda is Chief Client Officer at 10x Banking, a cloud native bank operating system with a service solution – described as “core banking with a twist”. On the podcast we delved into discussions on traditional banking, fintech and the future of this landscape.
Q. What do you see as the main market trends shaping the world of tomorrow?
My first answer to you is that tomorrow in fact today. It a not a question of whether a digital economy is coming or is it a blend of different capabilities, no, the economy around us is digital. Out of all the components of the economy, even governments are catching up faster than banking services, commerce, news, the way we do logistics, everything has digitalized. There will be quite a lot of pressure to do the things that banks have been avoiding the last ten/fifteen years. That pressure coming both from the economy and the regulator, and ultimately the user will go with the first bank to offer those services.
Q. In terms of digital transformation and digitalization, every bank we speak to acknowledges that digital is the future, or indeed today. But the question is how they can make it happen with all these obstacles in terms of legacy organizations, how they work, product siloes, technology. Your company offers modern cloud native infrastructure, could you elaborate on this offering and how that helps banks?
Every time I talked to the CEO of a bank I worked in and I mentioned such, he would ask whether he had to learn it before he was to retire. I used to laugh at the time, but it is quite telling. This led to a realization that decision makers sitting around the table in banks must do something about all these confusing trends. They are complicated and need to be dealt with not within their lifetime but within the next few quarters. That pressure is huge. As you point out they need to start from where they are, not from where they wish they were or where they wish they could have been, but where they are, and all the constraints that come with that. They need to look at human and technology structures. The organizational siloes are even more important than the technology.
The thing that differentiates the banks that do it well from those that don’t is leadership – it is not the tech, not the jurisdiction, it is the leadership around the table. They look at the digital economy around them, the state, the complexities, the legacy, the siloes and decide where they as a bank have brand permission and vision to move and then 10x can come into the mix and make the journey to that much faster.
Q. Talking about open banking, web 3.0 and all things around it, what are the key changes when it comes to banking in this sense?
In the order of which they have hit us, the first change is the digital world. This was a combination of mindset of digital creators and regulators that drove transparency. This has little to do with the technology itself and a lot to do with what the technology enables.
Second thing that happened, particularly with the advent of the smart phone, is access. We see that less in institutional banking, more in retail and SME banking. It is easier to reach the customer and cheaper to have a very wide-ranging distribution network, we find more individuals and businesses that would not necessarily be able to access services being able to access them.
The third piece that has not quite happened yet, but that we will see in next couple of years, is the reduction in the cost of those services as the distribution machine can now reach every SME on the planet, but the cost of a loan or of invoice financing hasn’t really dropped. The need for collateral to be posted to be able to qualify for a loan has not really shifted. It is shifting, but it hasn’t shifted as dramatically as you would expect. And part of this is because the infrastructure may not have been upgraded so the cost of doing business for the bank may not be adjusted. So, the thing that will come next after transparency and access is course correction and cost.
