COVID-19 has accelerated a trend which had already begun in many parts of APAC – the closure of branches. At the same time though, we are seeing an increasing number of new names in retail banking in the form of digital challenger banks. Whether they are referred to as called ‘virtual banks’ or ‘neobanks’, these disruptive banks are digital-first and are differentiated by their focus on enhancing the customer experience.

Despite the challenges of the pandemic, it is increasingly important for new entrants to come to market as quickly as possible given the increasing amount of competition in the digital banking space. A faster launch means more time to become well known, and new banks can begin ‘road testing’ the viability of their offerings 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.

Delays in bringing a bank to market cost time and money, which is an issue for new banks with limited funding. The longer an implementation takes, the greater the costs and the greater the risk that another new bank will emerge with a similar proposition, risking the loss of market share.

The 100-day plan

For new digital banks, Finastra’s Fusion Essence Cloud core banking solution enables a 100-day implementation from start to finish, which can result in rapid and secure delivery, optimizing time and value. This process includes four key steps:

1. Conduct a workshop with the bank to understand its needs, then clearly define the minimum viable product (MVP).
2. Agree that the defined scope can fit into the 100-day cycle, using out-of-the-box capabilities where possible in order to minimize the number of time-consuming applications and 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.
3. 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-User Acceptance Testing (UAT) environment for bank testing.
4. Once the testing is complete, the functions are migrated to a cloud UAT environment, and the bank goes live.

Why success is built in the cloud

Successful banks, both digital and incumbent, are building their new solutions in the cloud. By hosting solutions in the cloud instead of on-premise, the implementation process can be accelerated by enabling an agile development methodology, as well as reducing time-consuming issues significantly, with Finastra managing the development environment.

Cloud implementation also mitigates external risks of on-premise implementations, such as bugs, incorrect configurations, defects and errors, which can take a long time to detect, analyze and fix. Additionally, cloud implementation means the project can be scaled up or down quickly, easily and inexpensively, depending on the needs of the project.

A cloud environment enables Finastra to have full control and a holistic view of the environment, meaning we can track any issues and know that there have been no interferences that might cause development to grind to a halt. By completely removing these potential challenges, which is not possible with an on-premise implementation, the timeframe is significantly reduced.

In a way, a bank going live is just the beginning, as new 100-day cycles can be put in place to add new solutions. As a bank grows, the cloud environment enables it to add new products and services quickly to meet customer need and capitalize on opportunities, as well as scale up quickly and effortlessly to accommodate the number of users, all the time ensuring the required security measures are in place.

In today’s banking environment where time to market is key, it is clear that the new generation of banks will be built on cloud-based core banking solutions. A timely example of this is Tonik, the first licensed neobank in Southeast Asia, which launched to the public in March 2021. Built on Finastra’s a Fusion Essence Cloud core banking solution, the bank was able to launch successfully despite the challenges of the pandemic, and is now ready to expand its offerings and capacity as it grows, thanks to the flexibility and agility of its software and the cloud. This is the model we will see across the region in the coming months and years.