Partnering up to drive innovation in the marketplace: Interview with Martin Haring, CMO at Temenos

By Gaia Lamperti

Banking services have gone through a profound change in the past year, a change driven by rising competition from Big Tech and challenger market entrants, shifting customer behaviours, and cutting-edge API technology. We are now witnessing the creation of innovative business models that are having an impact on how these services are delivered to end customers.

Temenos is a leader in the market of providing banking software systems and works with retail, corporate, universal, private, Islamic and microfinance and community banks. IBS Intelligence spoke to the newly appointed Chief Marketing Officer Martin Haring discussing breaking insights on Banking-as-a-Service, the shift to the Cloud, and the company’s partnering strategy.

Temenos is now recognized as one of the major global players in the BaaS sector, how has the transition to the Cloud been?

Temenos is accelerating its transformation to the Cloud, pushing all our software into the Cloud and developing Cloud-native software. So, probably we are one of the few vendors who really have rewritten a lot of code for the Cloud. As of today, we are serving in total 3000 customers worldwide, 700 of which are using our SaaS offering and 70 of them are challenger banks that are, more or less, Cloud-native.

What we have realised in the last year or so is that the notion of Banking-as-a-Service is becoming more and more evident, and I think that the fun part is that is when you look back, in 1994 Bill Gates said that banks will fade away, but banking will stay and I think now, many years after, this is really becoming true.

We are seeing branches closing at a rate of between 3-5% per year just in the UK alone in the last five years 4000 branches have closed and that trend is going on and on therefore this notion of Open Banking, which in the UK kick-started 6-7 years ago, is now becoming a reality, not just as the technology, but also enabling new banking business models. So, BaaS or embedded finance is a megatrend for us right now and probably the megatrend for this decade of banking. I think it has the potential to really change the financial services industry as it is today.

We are now witnessing the rise of new business models for banks, including the manufacturing of new services, the integration of new services and the distribution of platforms. Where does Temenos position itself in this landscape? 

We see four kinds of business models; the first one is the full-service provider which is when banks really try to take care of customers’ entire lives. They want to act as a generic super app that owns the complete customer’s lifecycle. Here is where the fresh digital banking model goes a step further and thinks “how can I embed services that I don’t own today?” maybe even non-financial services and offer them through connectivity to the platform.

The next business model is when you just want to be a manufacturer of products. You concentrate on delivering banking services and offering recommendations about modern banking architecture. So, they are not just a bank, they are also platforms that offer new services to the outside world. It’s a commodity model, almost like energy providers.

But another model could be that you are a pure distributor of services, so you don’t own the back-end and you are simply a Bass, offering the APIs level and letting others decide what to do with them.

And lastly, you could offer a platform. An example of that is our Temenos Banking Cloud where we are exposing APIs to our transact and digital banking core engines and now, we are asking FinTechs to put their applications on top of that platform so that they can offer their services to banks or, in some cases, even to end customers. This is our approach to offer a platform for developers worldwide to build new services and get access to our 3000 customers in over 150 countries. Our APIs are public, so everyone can access our Temenos Banking Cloud and start developing new services.

Our idea at Temenos is that all the four areas of banking models, so either a manufacturer, a distributor, a platform, or the traditional bank, should have an open back-end infrastructure based on open APIs and run in a Cloud. And this is more or less what really Temenos has done in the last 2-3 years to make that swap to have a standardised set of banking services and a standardised set of APIs.

Another Temenos service is Payments, an area where the bar for customer expectations is really high and the competition is fierce. How is Temenos’ responding to this challenge? 

Temenos has done a lot also in the past few years to grow from maybe a niche vendor in payments to becoming mainstream right now. Because basically if you are in this sector but you don’t offer payments, you can’t survive in the long run, right?

Now the question is, overall, where is the payment industry heading going forward? When you think about connectivity to SWIFT or other rails, it’s just very expensive for banks and more and more with open API’s you can make payment connectivity from bank to bank directly.

For us, payments is a major building block on top, it’s not the core of our business. I’d say 80% of our business is focused on digital banking and on core banking and the other 20% is equally distributed between fraud and crime mitigation, payments, and wealth management. But you have to have those components to offer a holistic solution stack for the clients.

Temenos this year has announced a series of partnerships, could you give us an overview of this year’s new collaborations and a preview of what is coming up soon? 

At Temenos we have a partner-first strategy because we believe that 95% of financial innovation will probably not happen at Temenos, but outside, and if we don’t make use of all that innovation outside, I think we are missing out. The innovation is driven by the FinTech ecosystem, at a faster and higher pace than we do, from a solution perspective. And we want to add new solutions to our stack in order to deliver the best customer experience, so by partnering up we drive innovation faster in the marketplace.

In the past few weeks, we have announced two strategic partnerships with BaaS providers. With Mbanq, which will allow us to enter the US BaaS market with a pioneering Credit-Union-as-a-Service offering. The second with Vodeno, which is targeting the European BaaS market.

Today, we have around 50 partners and we want to grow this every year to a very reasonable size. We are also orchestrating conferences for developers, the next upcoming one is called ‘Temenos Scale’ where we’ll have hundreds or even thousands of developers attending to learn how to program on top of our platform.

We also partner up in the context of selling. The traditional model of Temenos was more a direct sales approach but we started a large initiative to start tapping into territories that we don’t cover today or into market segments that are so large that we simply don’t have enough sales coverage on the ground. And therefore, we are working with partners like DXC, IBM, Tech Mahindra to be a part of their blueprint and their salesforce with the intention really to multiply our internal sales force.

And we also partner with influencing organisations like McKenzie, Gartner, Forrester, all the known names, because traditionally we have not been seen under a consultative perspective, but we also want to approach these companies and be on their radar when it comes to important banking projects.

So, under this umbrella of partnering-first, there is a market perspective, a co-selling perspective and a co-innovation perspective. And we can do all of this easier, faster and less costly by partnering up.