View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Technology
October 23, 2015

‘Off the shelf IT’ is driving the new banking revolution

Analysis: No longer a 'sunk cost' - technology is now causing a shake up of the sleepy banking sector.

By Charlotte Henry

Tech based disruptor banks built on ‘off the shelf’ enterprise IT are threatening traditional banks still stuck with ageing and expensive legacy systems.

In a report on the UK retail banking sector the Competition and Market’s Authority (CMA) highlighted low cost technological innovation as the catalyst for more competition.

UK customers are adopting tech based banking with vast numbers using mobile banking. The report said that "the UK has one of the highest rates of mobile banking adoption in the world", with customers in the UK estimated to be logging on to banking mobile apps 10.5m times day, transferring £2.9bn each week.

The report says instead of IT just being a "sunk cost", firms who want to operate in the retail banking market "are now able to purchase preconfigured (‘off the shelf’) IT solutions and outsource the hosting of IT platforms and applications to third parties."

The CMA said there was no evidence that such solutions could not be scaled up as the banks expand. It said such systems "appear to be less costly than many established banks’ existing legacy systems in enabling expansion and the development of new products and services."

Disrupter banks entering the UK retail banking market include Metro Bank, which was the first entirely new UK bank in 100 years when it launched and Atom Bank, a wholly digital offering that received its banking license earlier this year.

Atom’s chief innovation officer Edward Twiddy said: "Technology is a huge help. A massive proportion of banking services can be processed very quickly and very efficiently by the bank using ever increasing capacity and connectivity. But now this is matched with incredible processing power and connectivity in the pockets of many people.

Content from our partners
Unlocking growth through hybrid cloud: 5 key takeaways
How businesses can safeguard themselves on the cyber frontline
How hackers’ tactics are evolving in an increasingly complex landscape

"So new banks get the chance to design for a technologically empowered age, which is also a more democratic age with power and information that is less asymmetrical. "

Richard Gadd, MD UK & Ireland at Hitachi Data Systems, who have major banking clients revealed his ongoing discussions around technology with the Lloyds CIO.

At a roundtable, Gadd said: "Business strategy in [Lloyds] is very much being driven by technology. The new competitors that Lloyds refer to are being enabled by technology. The changing demands and expectations of the customers are based on access to and adoption of new technologies."

A CMA spokesperson told CBR. "We’re very supportive of [new banks] being in the market. We’re a competition authority!"

Mark Gunning, global business solutions director at banking software outfit Tenemos told CBR: "Our smallest and largest customers use exactly the same Temenos software. As a result, our smallest customers can grow to an unlimited extent using the same software as the large tier one organisations."

 

Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.
THANK YOU