AUSTRALIANS NEED GOOD HEALTHY COMPETITION IN THE BANKING INDUSTRY
– Ritesh Srivastava
I have been fortunate to spend nearly 20 years implementing software solutions in the banking industry globally. It’s amazing to see how technology has changed the way we live our life and certainly it’s changed the way we bank today.
While only a few years ago it was great to be able to withdraw cash anytime anywhere and transfer funds while being in the comfort of our home – now our expectations are much more than that.
This has led to digital revolution in the last few years in the banking industry globally and while most of the Australian Mutuals (Credit unions, Mutual banks and Building societies) were quite reluctant to acknowledge this until recently, we have now started seeing a change in that.
Australia has over 70 Mutuals and just a few years back the number was well over 100. The Mutuals are regulated like any other major banks in Australia and they have a central body – COBA (Consumer Owned Banking Association) for their collective voice and help & support.
I have had the opportunity to meet and discuss with the number of Australian Mutual CEOs and unfortunately many of the Mutuals are struggling to keep the business alive from the stiff competition they face with the major banks.
The question is WHY – when Mutuals are owned by their members and they have no other shareholders to answer and share their profits, and instead they work towards the benefit of their members and community.
It leads us to understand that Australians are no longer loyal to the old regional/community brands and they are looking for the cheapest possible way to do their banking or they are going towards all the glitters?
The reality is that most of the Mutuals probably take much more time in processing in comparison to the majors and the entire experience may not be worth sticking to with the old brands, they or their parents have been banking with.
This leads to the next question why Mutuals are not providing better experience? Why aren’t they innovating and adopting changes fast enough when they are much smaller as compared to major banks – In today’s era when start-ups can come from nowhere and disrupt the entire industry and the way we go about certain things – the mutuals can adopt the start-up model very well bringing the start-up mindset what I call triple AAA – Acknowledge, Attack and Accept!
Perhaps it’s time to change the way we look at the entire thing – instead of negatively thinking about the mindsets of the people (or millennials), regulations, no staff, no funds, too risky, locked in with the current suppliers, the current core banking system is closed and the list goes on…
I started Epictenet in Sydney in 2008 and it has been an interesting journey and great learning experience. While we spent first few years providing IT consulting specially in core banking solutions implementations, the digital revolution helped us evolve further become a true Fintech company.
Our discussions and presentations at multiple forums helped us in understanding more about the industry needs and gaps and I am very pleased to see how we have come up with some innovative & unique solutions for the mutual industry.
Mutuals work on the very premise of collaboration and we have built solutions which caters to them directly and can be adopted in collaboration since most of the mutuals’ business processes & the gaps are similar. This helped in eliminating the need to pay for the entire cost of integration and customization by one organisation.
One such example is Analytics & Reporting – in today’s big data era most of the mutuals rely on spreadsheets for their reporting and spend significant amount of time consolidating the data and make many decisions on gut feel rather than data – to address the gap we developed our own ETL tool called Intelligent Data Processing(IDP) to source data from the various systems the Mutuals use. We partnered with Qlik, an industry leading global provider of BI solutions, to provide out of the box beautiful visualized analytics saving significant cost, time and risk to the industry.
We offer digital platforms and services to the industry to innovate and compete with the majors banks and avoid losing their members to the market places by offering better experience their members/ millennials look for.
Our approach allows the mutuals to adopt the industry leading innovative features & solutions at an affordable cost and implement them in a phased manner to start realising benefits quickly. The business benefits come in the forms of efficiency, reduction in cost and increase in revenue allowing the organizations to reinvest the additional funds.
While I am very encouraged with our progress I also feel disappointed when I observe lack of awareness at times . Most of the industry complains about the lack of APIs to their core banking as a constraint for their innovation. While in today’s open technology era, it is a shame that most of the industry is battling with this situation but that shouldn’t stop them from doing what is possible. The scope of core banking solutions has been reducing considerably and they are being used more to maintain loans & deposit books rather than being a vehicle to innovate.
I have been asked numerous times if the Epictenet product origination platform can automatically create a record in the organization’s core banking system. Even if the APIs were available, for many Mutuals the cost of integration and straight through processing may not be justified at the first stance unless they receive many applications in a day that cannot be handled by their back-office staff.
The industry needs to look at it more positively and take small steps to save the industry and provide the Australians better alternatives to do banking. This would help the entire financial services industry since the major players in Australia have got too bigger share leading to monopoly. A good healthy competition will push the major banks to do more to innovate faster rather than just follow the rest of the world and the other players, and reduce the cost for their customers.
I believe that together with our domain knowledge, innovation capabilities and our relationships within the Mutual industry we will be able to bring an ecosystem of innovation and change and provide Mutuals the right tools, platforms and services to serve their members and stay relevant!
I wish everyone a very good Christmas and a great new year ahead. Looking forward to enhancing our relationships further in the industry and facilitating for good viable banking options Australia deserve!