Published on: February 20, 2023
We recognize three themes in the market by visiting events and talking to our prospects and clients.
First, we see a trend for non-banking lending. In the past, a bank typically provided consumer and SME finance funding. Now, especially outside consumer lending, many loans are funded by crowd funds or peer-to-peer financiers. Many loans are still repaid based on linear or annuity calculations and are interest-based. But the business model is now changing. Today, it is more based on fees and influenced by funding than traditional interest margins.
The consequence is more variety among lenders, which makes the fee calculation supporting the business model diverse, primarily when the fees are related to the peer-to-peer or crowdfunding side.
Secondly, banks and financial institutions are under pressure due to the rise of fintechs. Incumbent banks are forced to replace their old core banking systems to keep up with the ongoing market demands. In the eighties or the nineties, core systems were built with limited or non-existent configurations and with codes. So, replacing, customizing them, or building an ecosystem around them is challenging.
Today, core banking platforms offer the functionality of adapting products and processes rapidly and easily through extensive configuration and parameterization.
Finally, regulations are now costing financial institutions a lot of capacity. Deploying an open-core banking system containing modern APIs and events enables the system to cater to future regulations.
We currently see a high demand for rapid change in the market. Our clients and prospects want a stable, open, and highly configurable core banking system to meet current and future needs - . Aa platform that enables its users to adapt to new propositions, regulations, and business models. To facilitate that in our platform, we use a lot of APIs and events. Our system is open and, therefore, can interact and be orchestrated from the client's perspective.
"We focus on what we do best and have multiple partners enabling us to provide our clients with the best-in-breed ecosystem. We advise partners for AI (artificial intelligence), risk assessment, or KYC. °neo's core focus is the client. The needs of each user are diverse, and the platform facilitates this."
Adjusting older legacy core banking systems to new products can be challenging. For an established financial institution, it can take up to 12 months to implement a new business idea. In contrast, a start-up or scale-up can implement any product three times faster.
Traditional banks often place an entity next to their business to build a new, open, and, highly configurable system. This so-called 'speedboat' is an entity that tests new ideas and propositions. If the concept is successful, the company continues to invest in it, parallel to the existing business. We have implemented this popular business model several times for our clients.
°neo's core focus is the client. The needs of each user are diverse, and the platform facilitates this. The user can be a developer, requiring well-documented APIs and events, or a functional administrator working for a bank, requiring high configurability possibilities to build new templates.
Roughly looking at our 2023 roadmap, our team wants to strengthen our propositions on savings accounts and the lending side - term loans and revolving credit. We strive for more functionality and automation. For example, one of the propositions we're focusing on is supporting crowd-funders.
°neo adapts its design principles to market trends. We will continue to be focused on the data capabilities of the platform. Data is essential and required in every business process. So, we work on making data accessible and easily interpreted in real time.
The °neo platform has an event-driven approach and an extensive landscape of APIs. This design enables our clients to implement °neo into their current architecture. In addition, this year, we will also keep finding opportunities to improve and extend the APIs landscape.
A flagship feature for 2023 is integrating the business rule engine into °neo. This unique feature will enable more configuration capabilities and support the automation and orchestration of client-specific business processes.
Let's look at the example of a deceased borrower. In reaction to such a situation, the business rule engine can stop sending direct debits, communications, or interest calculations. So, the engine will lead every action desired by the client's business process. For instance, it will allow clients to set up specific fee calculations or offer fine-grained control mechanisms for the compliance framework.
On top of it, the engine will have a user-friendly interface to configure and implement the business rules into the platform and, of course, a full audit.
The °neo team is on the right track. The feedback we receive from clients and prospects remains positive, but we keep pushing to build a unique next-gen, cloud-based core banking platform. While doing so, we maintain our eyes on market trends and new opportunities. The way you build a platform is important and with our team's expertise and capabilities, we can really make a difference.