Core and digital banking provider Temenos is seeing a surge of interest in new cores from financial institutions looking to retool for digital.

The evidence is in the recent increase in core banking sales cycles, Jacqueline White, president of the Americas at Temenos, told Bank Automation News. The Geneva-based Temenos is currently engaged in about a dozen conversations with banks that want to convert their core — an unusually high number, White said.

“Right now we have over seven very large, big global customers who are looking to replace or upgrade their core banking solution, some piece of it or all of it, and that’s unprecedented,” White told BAN. “They’re very expensive technology upgrades. And to me, that’s just indicative of how the market is heating up.”

Such conversions are typically once-in-a-career events, she said.

“You only do that once in a lifetime, once in a career,” White said. “You can upgrade them, you can modernize them, you can customize them, but to really do these wholesale transformations is rare. But there’s a lot of that going on right now.”

A few factors are driving this trend. First, banks have been on a digital journey for years, but COVID-19 temporarily put a chill on core conversions while making it clear that digital banking is a long-term priority. FIs often find they have “legacy spaghetti,” or complicated systems strung together by integration. Employees who initially supported the system may have retired or moved on from the company, leaving it without anyone who can code and support the system.

“Those products are at the end of their lifecycle and they need to be upgraded, they need to be modernized,” White said. “A lot of it is this, you know, evolution on the digital journey of transforming into a more modern … environment.”

FIs seek BNPL strategy

Another trend that White sees taking off in 2022 is the buy now, pay later (BNPL) movement. Fintechs focusing on BNPL have received significant funding this year and financial institutions are looking to leverage that same approach, White said, adding that BNPL is “just getting started.”

“Almost all organizations are trying to figure out what their buy now, pay later solution and offering will be,” White said. “So we’re having a lot of customers come to us to talk about that particular solution.”

New deals

Silicon Valley-based fintech Mbanq in early October partnered with Temenos Banking Cloud to create a credit union-as-a-service (CUaaS) offering, allowing credit unions to deploy digital services faster at a reduced total cost of ownership, according to a company statement. “This powerful combination will also reduce the time required to launch and operate a de novo [newly chartered] credit union,” Temenos noted in its release with Mbanq.

Temenos Banking Cloud incorporates Temenos Transact, a core processing engine, infinity digital banking and lifecycle management banking services, which provides a holistic view of account holders and includes underwriting and workflow capabilities. The solutions will connect via application programming interface (API) to the Mbanq cloud platform.

Meanwhile, the core provider last month also signed Green Dot as a core customer.

And during last week’s Money 20/20 conference, Temenos announced that finance “super app” M1 has chosen to deploy new services on Temenos Banking Cloud.

M1 currently offers investment options to customers but wanted to expand its services using a cloud platform that could connect to its front-end and scale quickly. Temenos’ open cloud banking platform will serve as the foundation for M1 to launch banking services, starting with deposits and payments. An unnamed, third-party bank will provide the licensing required. M1 will also partner with an unnamed bank to offer the services.

The finance app eventually plans to expand its financial services to include lending, according to a release.

“M1 chose Temenos because it allows them to pivot, and to combine their financial institution with the bank … to offer solutions like payments, lending and suddenly become much more than what they were before,” White told BAN. “We’re really excited to partner with them.”