bobsguide spoke to Hans Tesselaar, executive director at BIAN about standardising banking infrastructure and what this means for the fintech ecosystem. Have the fintechs got it easy in a world full of incumbent legacy financial players? Tesselaar explores.
What does BIAN do?
I am the executive director of the Banking Infrastructure Architecture Network (BIAN) and we are an ecosystem of banks, software vendors and integrators, and we partner with companies around the globe. The aim of our association is to lower or diminish the integration costs that banks and other financial institutions are currently facing when implanting an “of the shelf” software solution and we have a model that represents how a bank should effectively integrate internally so that the information flow within the bank is standardised. Technology providers and banks can then promote an ideal landscape and form a plug and play environment to develop the App Store for banking.
How important is standardising the overall banking architecture?
The first benefit of doing so is you create a common language. So, if you, as a bank, discuss with a software vendor and say that you want to replace your core banking system, then both sides of the table will have two completely different views of what core banking, mortgages or payments is. This will result in what you’re asking for being different to what you’re getting. However, if you use a common model as a starting point, which is what we have developed, definitions do not need to be so specific and the speed of the discussion between two entities will be improved.
The second benefit is that if you agree with all the interactions and all the issues that need to be taken into consideration in order to build their solutions towards the common model, you have the opportunity to integrate at a much lower cost. Today, if you want to integrate, you have to pay eight to 10 times the purchasing cost to integrate the solution into your landscape and you don’t get any value added after spending the money. It does not improve the customer satisfaction but only the plumbing, but you need to work on the rest.
If banks take on the model and improve customer services, what does this mean for fintech?
In my opinion, what we see today is the majority of fintechs working in the payments industry and this is one of the easiest things that can be done, because you don’t need to know much about banking. If you, as a fintech, want to offer more real banking functionality, then you need to understand how a bank operates and create a model that will give people the opportunity to pick and choose functionalities where they think they can make a difference and interact with banks efficiently. Therefore, we introduced a new membership category for fintechs who want to be part of the BIAN network in February.
Lowering the bar for them to enter because they usually are small and don’t have many financial resources, will make it easier for them to partner with a bank. In this way, we also grow our ecosystem, but on the other hand, everything that we establish as an association is important for designing the future of banking. Our aim is to facilitate the industry to reduce costs and improve efficiency and speed to innovation.