In the aftermath of regulation encouraging competition and collaboration among fintech firms, what are the long-established core banking suppliers doing? John Smith, managing director for the EMEA region, Fiserv, tells us about innovation, regulation and his favourite part of the world when it comes to financial services.

Tell us about yourself and how you ended up where you are at Fiserv.

I’ve been at Fiserv for over two years, having worked in the IT services business for well over 30 years – always in financial services, and looking to help clients innovate. I saw a great opportunity with Fiserv, to bring some of the strengths and capabilities that we have as a firm to the EMEA marketplace in financial services. So two years ago, I moved to lead the EMEA business in Fiserv.


What trends would you highlight at the moment in the financial technology industry?

Firstly, from an industry perspective, we see multiple areas of change at the moment. But most notably, within that change, are PSD2 and Open Banking. A lot of new business models are being considered to meet the demands in that area. We also see the payments landscape changing, as a result of that legislation and other initiatives in the payments world. And all things digital, which continue to be relevant to our clients. And also we see business models changing, where many of our clients are now looking to provide their consumer services in a more serviced way. For example, Pay-as-you-go, which I think mirrors what’s happening in terms of the demand from the consumer. I think these are the demands that we see in the marketplace, at the moment.

What is Fiserv’s view and approach to these changes?

Regarding Fiserv’s response, we have a range of existing technology solutions for our clients that help meet all of those needs. But we also recently made a couple of acquisitions which would allow us to do that more broadly. The first thing to say in regards to this is that we see our marketplace as both the traditional financial institutions, but also some of the newer challenger institutions that are growing in EMEA, and we see both of these sectors as our targets.

There are three things, specifically, that we are doing to address the demands that I mentioned earlier. The first one is what we call Agility, which is a banking solution that allows our clients to consume banking services – and that’s a broad range of banking services, everything from core banking, digital front end, risk solutions, as well as partner solutions such as credit card – and we offer it to our clients as a service where they pay as they go. So that’s the first thing we’re doing as a business to respond to what we see as trends in the marketplace. That’s a solution that I think is of its time, and that we will see more of these types of solutions used in the future. We might come back to that in a bit.

The second thing we’ve done during the last few months is acquired two businesses, which happen to be in the UK. The first one is Finkit Technologies, which allows us to position our clients more around servicing the API economy, which is growing because of PSD2 and Open Banking and allows our clients to take advantage of that new API economy. The second acquisition that we’ve made is one called, which is in the payments area. That’s really to allow our clients to have the payments infrastructure in place to meet their particular needs in EMEA, as well as elsewhere in the world, and connect to those payment systems more efficiently. Overall, what we see is Fiserv offering more and more of these services in a Pay-as-you-go basis, which apparently mirrors the trends that we see in the marketplace, but also what Fiserv and its clients are demanding.

Let’s discuss PSD2 and Open Banking. How do you think it will affect the industry?

I think that the purpose of these sets of regulation is to drive competition in the financial services area, I think that’s the primary purpose of the legislation. In that sense, you can look at it both as a mandatory requirement to achieve and as an opportunity. Many of our clients are looking at it in both ways. For institutions that have legacy systems and need to amend these systems to be able to meet the regulation, then it’s a mandatory thing for them – they have no choice. But many of our calm customers, who know the marketplace in general, are looking at PSD2 and Open Banking as a way to take advantage, to find the opportunities to serve their customers better and in different ways. And many of our clients are doing that.

So, yes, I think it’s both a mandatory thing that people have to do, but the more innovative of our clients, and Fiserv, are looking at Open Banking and PSD2 as an opportunity. I think it will change the landscape in the financial services, and allow different business models to come to the fore, and allow different companies to take advantage of what is now a much more open ability to engage with the customer on the front end, and get transactional data from institutions on the back end. It will undoubtedly drive a significant change, in my opinion.

PSD2 is giving way to the rise of challenger banks? What is your opinion of them? How does Fiserv cater to their needs?

I think there is a space for challenger banks in the marketplace in the UK. And some of our clients are in fact in that sector and are themselves taking advantage of some of the very things we have just been talking about. So I think there will be challenger banks coming in a taking market share from some traditional organisations, but I also feel the need to be conscious that those existing financial institutions have scale, they have many customers, they have funding. So they can respond if they choose to, to compete with these challenger organisations which tend to be focus on some specific areas of the market.

Regarding Fiserv’s response, I mentioned a minute ago our Agility banking solution, which is an ideal solution for challenger banks, because it essentially allows them to take all of their IT services from one supplier on a pay-as-you-go basis – that being Fiserv. So it gives them effortless access to IT services to cover all of their banking requirements – that’s the first thing. The second thing I would say is, as we were talking about it, is Finkit. Finkit also allows banks to take advantage of PSD2 really, to make sure that they can implement their business models, be it a disruptor or a challenger in the marketplace, and Finkit technology will support them in doing that from an API perspective. So I think we allow our clients, challenger or otherwise, actually, to take advantage of our technology. In the particular case of challenger banks, both Agility and Finkit will allow them to develop new business models, and be new competition in the market.

How do you offer Agility to customers? Is it an entirely serviced/full-stack solution, or provided by areas?

From Fiserv’s perspective, we think that the future is all about offering choice to our clients. Whether they want to take it all on-premise themselves, and implement it within their environments, or if they’re going to take bit by bit, in a consumption-based model. So yes, we want to offer choice to clients. Regarding the way in which we offer Agility – well, it can be considered a full stack. By that I mean we offer the broadest range of applications that the client needs to run the bank, but also the full service from infrastructure, all the way to managing services, where if they have a problem they just call us and we resolve it. So that’s the full-stack of Agility.

But, clients can also choose to take a subset of that stack. So they can choose to take, for example, anti-money laundering as a service, or fraud as a service. So we can provide that as a slice, through our Agility banking suite. We end up giving our client a choice regarding the way in which they want to take those products forward.

I think that that is what our job should be: to support innovation, support people who disrupt the industry, but also help our existing client base of financial institutions in whatever way they choose to run their business.

What regional differences and trends do you see in EMEA that make it different from the rest of the world?

I may be a bit biased here since I run and live in EMEA, but I do think that EMEA is moving faster than other parts of the world right now. I give credit to regulators, in some degree, in that they have responded to the need for more competition in financial services. Thus, they have driven regulation, including PSD2 and Open Banking, to facilitate that. We, as a service provider, and the financial institutions, are more in line to take advantage of it than other parts of the world. I think that all this makes EMEA the hotbed for innovators – many fintechs originate from EMEA, and in particular, London. You will see, in the future, with a continued drive for innovation coming from this part of the world.

New business models are coming through with the new regulation, and they will be seen for the first time here in EMEA. For example, real-time payments as the norm, in EMEA, which is unlike any other part of the world. These waves of innovation coming from EMEA will continue, and other regions will also adopt similar types of regulation and similar types of change that come with that. For example, as you will know, Australia is already looking at Open Banking as we speak, and they are likely to follow a similar model to what we have here in EMEA.

When I say EMEA, I refer to the Middle East and Africa too, mainly from Fiserv’s perspective, but it’s fair to say that Europe has driven legislation. However, once that disruption starts and those new business models start to roll out and evolve, and technology starts to drive change, they expand outwards, which means that most of the MEA geographies will quickly take advantage – if they aren’t yet – of all the stuff we have been talking about. When you go beyond regulation, and think about innovation, the “as-a-service” model, I think is a trend and a model that will reach many places across the world, not only Europe.

What does the future hold, not only for EMEA but worldwide? What trends will we see the future?

Indeed, in Fiserv, we spend a lot of time thinking about what the future will hold for financial services. And one of the critical things is that the consumer will be increasingly more in control, and consumer expectations will be growing all the time significantly, and they have higher expectations of what they can do and when they can do it. They expect to be able to transact with financial institutions in the same way they interact with other types of services. Which pretty much means – whichever channel they want and immediately. I believe the consumer will be driving the agenda in the years to come.

The other thing that goes with that, though, is that both financial institutions and companies like that, who support financial institutions, will be thinking more not so much about financial services, but other types. What are those consumers thinking? They are thinking about how and when to buy their first home, or how they can put their children through university, or even more immediate things, like whether they’re able to pay their most recent bill. So as we think about innovation in the financial services, it’s all really about trying to help our clients help our customers about the real world day-to-day problems that they have. And of course, their expectations are growing all of the time, so we do think a lot about what services or technologies we can utilise to make those things occur.

We always say we are committed to driving what we call purposeful and focused innovation. We do that through the development of solution in-house, the technology that we build, but also through partners – strategic partners. We also always keep an out for new up and coming technology that might be in an early stage, such as blockchain. All this helps us understand what will happen in the future, but also influence it for the better.

And there’s one other thing, which is that we have what we call Fiserv Innovation Network, which allows our associates and people we do business with, to help and come up with ideas about how innovation is going to help our clients in the future – and we get a lot of good innovative ideas coming through that, which are then taken forward into our products. And this helps our product line-up not next year, but in the next few years.

Any examples?

There’s one correct example I like to talk about which is IMV Fintech Accelerator. We are a partner in this accelerator, and it acts as a point of connection between financial institutions, fintechs, and of course Fiserv. IT bring those organisations together to allow what might be, for example, a financial institution running legacy technology to get in touch with financial services start-ups, so they can leverage new ideas and innovation.

by Bill Boyle
IBS Intelligence Senior Editor