Banks Leap From Legacy Core Systems to Innovation, Real-Time Capability

In the world of open banking and open finance, core banking systems are no longer just a concern for the world’s biggest banks.

On one hand, to build the kind of innovative financial products that FinTech startups are known for, they need to be able to access and engage with core systems. On the other hand, in the era of the open APIs, data needs to be able to flow between financial institutions (FIs) without compromising security.

In other words, modern banking needs systems that are both robust and flexible.

It’s in the context of this delicate balance that SAP Fioneer enters the stage. Since breaking away from the world’s third-largest software developer in 2021, the young, cloud-focused unit has strived to combine the security and stability of SAP’s technology stack with some of the nimbleness and flexibility of a FinTech.

In a recent interview with PYMNTS, Charlie Platt, EMEA president at SAP Fioneer, pointed to the company’s robust but flexible solution as a “faster, more innovative layer on top of that great stability” for its customers — from some of the world’s biggest banks to disruptive startups — as the new venture establishes itself as a key player in the global banking ecosystem.

Related: Cloud Banking Takes Center Stage at London Tech Week

Cloud for Banking Platform

In May, global automated PayTech company COMO, which provides multicurrency payment services to customers at the intersection of banking, finance and commerce, announced that it had selected SAP Fioneer’s Cloud for Banking (C4B) application to boost its real-time transaction functionality and reduce costs for its clients.

The move demonstrates how cloud banking platforms like SAP Fioneer are helping industry players and treasury departments retain the security of centralized systems, all while migrating to a distributed architecture.

There is also a growing acceptance among bankers that if global clearing networks are to meet the growing expectation of real-time payments at the scale needed, clearing agencies will have to leverage cloud solutions’ faster connections, decreased time-to-deployment, and an increased ability to adapt to the shifting plates of financial tectonics.

Read more: The Role of a Modern Clearing Bank in Scaling Global Payments

Related news: The Bank of London to Integrate SAP Fioneer’s Cloud for Banking Platform

Against that backdrop, The Bank of London recently announced that it will integrate SAP Fioneer’s C4B application into its API, setting the stage for an anticipated launch of the new clearinghouse on the global stage in October.

The expected clearing solution uses a combination of The Bank of London’s patented technologies in parallel with SAP Fioneer’s hyper-scalable cloud banking platform, providing “the fastest connection to payment schemes in the market,” the bank said in a press release.

Emerging Markets’ Potential

With faster payments up for grabs, both domestically and across borders, the integration of cloud platforms like C4B into the world’s payment infrastructure presents a huge opportunity for emerging markets.

Report: 93% of FIs Say Embedded Finance Streamlines Corporate Cross-Border Payments Flows

As Platt told PYMNTS, emerging markets like southern Africa, where SAP Fioneer is in the process of onboarding several of SAP’s existing clients, benefit from an “ability to change more quickly … than Western European or more established markets.”

However, the dynamics of emerging markets have traditionally kept smaller banks and companies from integrating into continent-and-worldwide payment systems in the same way as bigger institutions are able to.

Platt gives the example of development banks, which typically deal in smaller transaction volumes but are essential to supporting the economic needs of emerging markets.

To solve that problem, he said COMO and other cloud-oriented companies that are coming out of developed markets and see the opportunity in emerging markets will increasingly focus their attention on addressing challenges those markets face.

Overall, he said, as is typical in big core banking or big core insurance platforms, change is difficult, and their goal is to try and simplify their infrastructures as much as possible in order to enable future innovation in a much faster way.

“We call it the clean core,” he said. “[That is] separating out some of the complexity that currently sits in the core and moving that to a business level so that we can bring innovation and real-time capability much more quickly.”

Sign up here for daily updates on all of PYMNTS’ Europe, Middle East, and Africa (EMEA) coverage.