Building a bank in 100 days: why time is of the Essence
As quickly as physical bank branches are being closed, challenger banks continue to come to market globally, leveraging all the benefits that being cloud native offers. Sometimes called ‘virtual banks’ or ‘neobanks’, they are characterized by their digital-first nature and customer centricity, with no physical branches – only websites and apps.
As more and more of these competitors spring up, the need for a new challenger bank to bring its services to market quickly is ever more critical. The benefits of launching as early as possible are essential vis a vis investor funding and time to value. The result is that the challenger’s brand has more time to become well known, and it can begin ‘road testing’ its product viability much earlier. ‘Friends and family launches’ or ‘soft launches’, where the product is only available to a small group by invitation or recommendation, are tried and tested methods to start drumming up feedback that can be acted upon, and the software fine-tuned and upgraded. The earlier these soft launches can take place, the more relevant the product will be when it becomes publicly available.
Every day that passes before the bank is brought to market costs valuable time and money, and with limited funding, minimizing costs is essential. Long implementation cycles burn through cash and are therefore risky, not to mention the added risk of losing market share; and the potential scenario of other businesses coming out with a similar proposition much earlier.
How is Finastra helping challengers to mitigate these risks?
With a 100-day implementation from start to finish, Finastra’s Fusion Essence demonstrates that building in the cloud equals rapid and secure delivery, optimizing time and value. The implementation process can be broken down into four key steps.
- A workshop with the bank to understand the business requirements, then define the minimum viable product (MVP).
- The next step is to agree that the defined scope can fit into the 100-day cycle, using out-of-the-box capabilities where possible so there are not too many time-consuming applications or integrations. Having very clearly defined goals is absolutely crucial to the success of the 100-day cycle. Once these goals are secured and milestones laid out, it is time to begin development and testing.
- Development is achieved using an agile methodology, along a series of sprint cycles each lasting two to three weeks. Every few weeks, validations are given back to the bank to demonstrate the new capabilities and milestones achieved. The cloud-based environment of Fusion Essence supports these capabilities, deploying the new business feature functions in a pre-UAT environment for bank testing.
- Once the testing is complete, the functions are migrated to a cloud UAT environment, and the bank goes live.
What’s the benefit of building in the cloud?
The Fusion Essence Cloud environment is vital to accelerating the process because it facilitates an agile development methodology, and significantly reduces time-consuming issues, with Finastra managing the development environment.
This approach mitigates on-premise development external risks such as bugs, incorrect configurations, defects and errors. In these situations, it can take a long time to analyze and detect what has gone wrong. There is also the added burden of having to scale up and down according to project needs.
Having full oversight and control of the environment enables Finastra to track all issues; knowing there have been no interferences that might grind development to a halt. By completely removing these potential challenges, the timeframe is significantly reduced – this is only possible with cloud.
Once the bank goes live, development doesn’t stop, and a new 100-day cycle can be put in place to bring in other aspects. As time goes on, the cloud environment enables the bank to scale up quickly and effortlessly in terms of these new services and features, as well as the number of users, all the time ensuring and assuring the required security measures are in place.
It’s clear to me that the next generation of banks will be cloud-based. It’s the best way to get to market at speed using a lean operating model that reduces total cost of ownership (TCO).
Take a look at our challenger bank white paper to find out more.