Titien Ahmad
talks to the CEO of Callataÿ & Wouters, Marc de Groote, about
its ‘bank in a box’ platform and his thoughts on the international
banking crisis. He thinks the role of the internet in retail
financial services will become even more profound and banks need to
adapt to a changing competitive landscape.

The direct consequence of the sub-prime-induced global banking
crisis is, according to Marc de Groote, chief executive officer of
Belgian fintech Callataÿ & Wouters (C&W), that financial
institutions “do not trust each other anymore”.

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“In Europe, it has been like a [nightmare] – you wake up the
next day and things are totally different than how they were the
day before,” he added.

While the basic business of banking is about
“borrowing money from retail depositors or other banks and lending
it out”, the problem for many banks has been attracting
deposits/funding. Looking to benefit from the renewed focus on
retail deposits, C&W has been touting its ‘direct bank in a
box’. The product is an all-in-one package that allows a financial
institution to start a direct banking service with minimal
staff.

An early adopter has been Dutch mutual
Rabobank.

Edwin Van Raalte, senior manager of business
development, international direct banking (IDB) for the group, told
RBI last November (see RBI 602) that: “Rabo’s
international direct banking arm is using a low-cost operating
model based on full, straight-through processing with a global
centralised ICT backbone… This approach results in economies of
scale and cost leadership compared with our competitors. As a
result of the operational excellence approach, IDB is able to run
the local businesses with a total of 15 staff each.”

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De Groote at C&W said: “Rabobank took up
the solution and was able to run a bank with 40,000 customers and
one-and-a-half the staff in the back office – that is very cost
efficient. Their margins can be very low and their business plan
was realised in not more than two weeks… Thaler Direct Savings Bank
allows you to launch a new direct bank in not more than three
months. The banker can focus on the marketing aspects while we take
care of the rest such as channels, software, hardware, hosting and
security.”

The direct bank is a full self-service online
bank with no relationship managers and offers a basic service with
high yields. De Groote positions the direct bank as a second bank
for customers to deposit money and gain higher yields. Even if
banks do not face a problem in acquiring funds, “competitors may
come into the game and start attracting deposits away”.

De Groote believes the communication between
the bank and its customers is going to change and direct banking
will move from a transactional system of transferring funds to
‘Bank 2.0’, a service loaded with information and two-way
interaction.

He added: “We will need to understand the
digital generation, the ‘generation now’. The customers of tomorrow
will have always known the internet and will behave differently
from customers who do not know the internet from birth.

“I know that I have to queue at the bank
branch but the next generation will go to another place if they do
not find what they need in their own time. Banks also have networks
as clients as there are networks of people influencing each other’s
decisions in discussion forums online.

“There are banks that won’t see it and banks
that are on top of this trend and considering if they should put at
the customers’ disposal a place where they can chat and talk about
their experience. We have to be very agile if we are to be in that
space.”

Research and development

Nearly a third of C&W’s staff
strength is focused on research and development. De Groote believes
the current crisis will yield opportunities as banks look at cost
savings and operational efficiencies. Even though the turmoil might
also throw up opportunities for acquisition in the technology
space, he believes in organic growth and leveraging on the
collaboration with SAP that deploys Callataÿ & Wouters’ Thaler
and SAP analytics capabilities.

When de Groote joined C&W 18 years ago,
the company had 13 staff. Now, he heads more than 500 staff
worldwide and he believes there is still room for further organic
expansion.

“We have grown organically since our
inception,” he said. “We are not interested with buying stock in
Callataÿ & Wouters and selling it five years later at a higher
value. We are driven by how we can do better and how we can grow.
We have not felt the urgency or need to buy. Furthermore, our
partnership with SAP is truly an alternative to mergers and
acquisition.”

Talking about the challenges that banks will
face in the rocky economic conditions, he said: “The challenges are
still the ones that have been there before. It is important to do
basic things right and it is not always easy. It means know your
customers properly, have a 360-degree view of the customer,
understand his behaviour and make sure you give him timely
information.

“You can think about technology supporting the
development of structured products but even on the basics –
developing a good customer profile, having the ability to quickly
define new products for clients – this requires technology.”

De Groote chooses to be positive in the
current climate.

He said: “There will be an end to this crisis.
We have those that panic and stop moving but there are more of
those who see opportunities in this situation and are getting ready
for the future. We want to be with them and provide them with
solutions. I am realistic but we have to be prepared.”

 

RBI Fintech DealWatch tracks
recent major technology contract wins with a focus on the retail
financial services industry as well as fintech mergers and
acquisitions and innovative new product launches

Country

Participants

Type/value

Details

Date

Germany

Deutsche Bank, IBM

Application testing

IBM has been selected by Deutsche Bank to
transform the integration testing part of its application service
delivery for Private & Business Clients and Global Banking. In
terms of the agreement, standardised managed services will be
implemented as part of a new strategic service delivery framework.
The integration testing services will now be bundled with IBM and
delivered out of IBM India.

17-Feb

US

Bethpage Federal Credit Union, Verint

Retail banking solution

Verint Systems has won a tender by Bethpage
Federal Credit Union to implement the Impact 360 for Retail
Financial Services Workforce Management solution – which includes
forecasting, scheduling and strategic planning functionality – from
Verint Witness Actionable Solutions. The credit union is a
full-service financial institution headquartered in New York with
assets of over $3 billion and a membership base of more than
140,000 members across the US.

17-Feb

UK

Vanquis Bank, Experian

Credit scoring

Experian, the global information services
company, has won a new five-year, multi-million pound deal with
Vanquis Bank in the UK. Experian will provide the bank with
services to assist its customer acquisition and management
activities. Experian will act as Vanquis Bank’s principal credit
bureau data provider and will provide the bank with its Transact SM
application processing and decisioning system and its Detect fraud
prevention system. Vanquis Bank will also have access to Experian
Fusion, the company’s hosted database marketing system.

11-Feb

Saudi Arabia

Arab National Bank, Postilion, Dynamic Card
Solutions

Payments contracts

Arab National Bank is to use technology from
Postilion and Dynamic Card Solutions to upgrade its card management
and issuance systems to meet EMV compliance demands and local Span2
payment processing regulations. In addition to meeting the bank’s
compliance needs, the Postilion card issuance software will provide
the bank with complete life cycle management for debit cards,
including the secure preparation of production files, PIN
generation, and account status management.

9-Feb

US

SunTrust Banks, Verint

Retail banking solution

SunTrust Banks, the seventh-largest US bank
by branches, is implementing Impact 360 for Retail Financial
Services from Verint Witness Actionable Solutions. SunTrust will
deploy the forecasting and scheduling solutions to help optimise
staffing levels for both tellers and platforms/sales areas across
its entire network of over 1,600 branches.

4-Feb

US

EverBank Financial, Metavante

Core banking contract

Metavante, the leading provider of banking
and payments technology, has announced that EverBank Financial has
extended its relationship with Metavante Corporation that includes
signing up for Global Banking technology as part of the renewal of
its long-term, multi-services core banking agreement. With assets
exceeding $7 billion, EverBank is one of the fastest-growing
financial service providers in the US, and has over 450,000
customers.

4-Feb

Azerbaijan

Kapital Bank, Oracle

Retail banking solution

Oracle Financial Services Software, a
majority-owned subsidiary of Oracle Corporation, has said that
Kapital Bank, a leading bank in Azerbaijan, is to use Oracle
FlexCube Universal Banking to help expand the size and depth of its
banking operations across its network of 88 branches.

4-Feb

Turkey

HSBC, Experian

Credit application management

HSBC, the world’s largest international
retail banking and financial services group, has implemented the
software Strategy Management from Experian in Turkey. The
implementation is part of the global agreement signed to support
the bank’s lending decisions around the world. HSBC will implement
the Strategy Management business rules engine into its new business
processing environment in over 40 countries. Experian and HSBC have
a long-standing relationship spanning 21 years and six
continents.

4-Feb

US

American Express, MasterCard, Visa, JCB

Payments standardisation

American Express has joined MasterCard, Visa
and JCB as an owner-member of EMVCo, the standards body set up to
manage and maintain global EMV specifications. EMVCo was formed in
February 1999 by Europay, MasterCard and Visa to manage and
maintain EMV standards to ensure interoperability and acceptance of
chip-based payment applications on a global basis. Amex has now
acquired a one-fourth share from the holdings of the other three
and gains representation on the organisation’s executive committee
and board of managers.

3-Feb

Kenya

Kenya Commercial Bank, Temenos

Core banking contract

Kenya Commercial Bank (KCB), the largest bank
in East and Central Africa, has gone live with Temenos T24. The
bank went live with T24 in 145 branches across Kenya, supporting
approximately 675,000 accounts. Further phased roll outs of the
system are expected in 2009 to support KCB’s planned expansion to
include a further 75 branches across East Africa, as part of an
effort to grow customer accounts to over two million in the next
two years. The bank will also roll out ARC Internet Banking (ARC
IB), Temenos’ front office suite, during 2009.

2-Feb

Latvia

Latvian state banks, Tieto, First Data

Payment card solutions

Tieto and First Data have developed a card
solution for Latvian state institutions. Tieto is First Data’s
partner for a new payment card solution for state institutions in
Latvia. The solution is based on the Tieto Card Suite Acquiring
module and will substantially simplify and speed up the payment
process for both state institutions and their end customers.

27-Jan

France

Banque Populaire, Xiring

Card authentication contract

France’s Banque Populaire Group says it is
strengthening the security of its online banking operations by
equipping 400,000 customers with a bank card-based strong
authentication solution by Xiring. “Today, nearly 20 million users
are equipped with authentication solutions in Europe,” said Georges
Liberman, CEO of Xiring.

26-Jan

Italy

BNP Paribas, BNL, IBM

Infrastructure contract

IBM and BNP Paribas have signed a €318
million, six-year agreement for their existing joint venture, BP²I,
to handle the IT infrastructure operations of the French bank’s
Italian subsidiary, Banca Nazionale del Lavoro (BNL). BNP says the
move will also help to strengthen BNL’s capabilities to better
manage the globalisation requirements of the retail banking
business.

21-Jan

The Philippines

Metrobank, IBM, Vasco

Online banking contract

The largest bank in the Philippines,
Metrobank, has contracted with IBM for the implementation of a
two-factor authentication system using Vasco security tokens for
its online customers. Authentication and token management
technology will be provided by Data Security Systems Solutions.

19-Jan

South Korea

Kookmin Bank, IBM

Core banking contract

South Korea’s Kookmin Bank has selected IBM
System z10 mainframe technology and DB2 servers as the foundation
for a next-generation core banking application platform designed to
consolidate all of the bank’s different business units across the
world. The contract was signed in December 2008, following a
strenuous competitive tender involving systems and technology from
IBM and other vendors including Hewlett-Packard, Oracle and
TmaxSoft.

15-Jan

Source: RBI