If you study the evolution of the some of the top performing global banking and financial institutions, you will hardly find anyone seemingly successful who performs banking on a third party owned cloud or cloud delivered “white label” service. The concerns when you ask various stakeholders range from data ownership, security, sustainability, agility and IP amongst the many. Although, all these institutions have a ‘boatload’ of IT staff and budget their systems are in most cases built by third-party professional development organizations and most of the heavy lifting being performed using a combination of internal developers and professional services. I should admit though that due to the decades of these traditional banks being in business with multiple M&A, their various department work in their individual silos and matters move at snail’s pace. The lesson learned is that these successful institutions have learned to focus on their core business and leave the core banking IT to the specialists.
When we consider FinTech, we are all witnessing this slow and sure disruption in the banking sector with the advent of OnDeck, Lending Club, Prosper and Quick Bridge Funding of the world; one common observation from a technology standpoint is that they have all gone full-stack development in-house. As I study these organizations and accelerators, the “white label” strategy (or even simple Excel spreadsheets) was where some of them started but eventually evolved towards the route of high risk/high reward “shoot for the moon” strategy.
When it comes to developing a brand equity and delivering a high quality of service to consumers’ full-stack custom development is the way to go. The days when consumers or business “apply” for a loan are soon going to be over with the advent of the new economy of lenders equipped with FinTech. Banking would be as simple as shopping and customers would have choices with every process being so simple, minimal or no paperwork with a plethora of choices to pick from.
Having said this, I do not want to undermine the need for solid management with operational effectiveness, a precision-guided modeling and analytics team, an ever learning marketing and sales team, a strategic finance team alongside a FinTech which is supported by a solid IT team which drives technological excellence. These are exciting times for FinTech and what we all know is that “we are just getting started”. Exciting times ahead!