Listen: The big news this week? Banks and cores move to the cloud

In this Weekly Wrap episode of “The Buzz” podcast, the Bank Automation News team discusses the big trend this week in banking technology: the shift to cloud services. The cloud-focused news started Monday, with news that Fiserv will acquire cloud-native digital banking solution Finxact. This is the first true cloud-native core banking solution running on Amazon Web Services (AWS) for Fiserv, said David Albertazzi, director of Aite-Novarica Group’s retail banking and payments practice. BAN shares his insights into the core market’s race to the cloud. Core provider Jack Henry and Associates also revealed this week that they’ve been pursuing a cloud strategy for two years. Associate Editor Alijah Poindexter provides the details about that plan, gleaned from this week’s Jack Henry earnings call. The team also notes the historical significance of NCR’s plan to shift the bulk of its revenue to services and software from hardware. Tune in for a discussion of more finance-related cloud news, as well as a peek at what’s ahead, in today’s episode of the Weekly Wrap with Poindexter and BAN Deputy Editor Loraine Lawson for the week ended Feb. 11, 2022. Learn more and register here for Bank Automation Summit 2022 . Subscribe to The Buzz Podcast on iTunes , Spotify , Google podcast , or download the episode .

The following is a transcript generated by AI technology that has been lightly edited but still contains errors. Loraine Lawson Hi everyone, I'm Deputy Editor Loraine Lawson. And welcome to the Buzz from Bank Automation News where we explore how automation and emerging technology is transforming the banking industry. It is February 11 2022. And this is our weekly wrapup of what's happening. First, I'd like to say thank you to our sponsor Glia for your support. This week, I'm pleased to be joined by Associate Editor, Alijah Poindexter Alijah, Hello. Alijah Poindexter Hello. Loraine Lawson The big news this week on BAN: The shift to the cloud. So the first news came on Monday with core provider Fiserv announcing it would acquire cloud native solution bins act. I spoke to David advertiser of the at Numerica group about the deal and he pointed out that this is the first true cloud native core banking solution running on AWS for Fiserv, as other core processing platforms are cloud enabled, or have been adapted to the cloud. He also said the acquisition will help Fiserv strengthen its digital offer, offering address the needs of more progressive financial institutions, digital only challenger banks and other fintechs now according to advertising the core us core banking market has seen the entrance of several new US based vendors over the last few years and examples include Corelation Inc., Nymbus, and Finxact. These providers have developed new core processing platforms from the ground up with API first capabilities and no weight of any Legacy product he said. And that allows for a modern architecture, and they position position themselves as a new kind of courses. So he also said that other fintechs Finxact competitors include some regional providers that offer more traditional courses, some such as s: Synergent, COCC, CU-Answers, EPL are examples. all examples of these kinds of new vendors. For most of these vendors, he added the software, so just small banks and credit unions, and it's either offered in a SaaS, it's just software as a service or a service bureau environment, giving institutions the opportunity to outsource to smaller providers in the industry, and feel that they can influence the Production Direction, get better service and have more control over the product roadmap that they would then they would with the larger providers. That may also help explain the next announcement, which was Jack Henry's big reveal this week that is spent more than two years working on a cloud native technology strategy that will target community regional financial institutions, but leveraging third party fintechs they talked about that during their earnings call Alijah, you covered that what did you learn? Alijah Poindexter Yeah, Lorenzo, you know, this was a super interesting earnings call, no doubt about it. The financials, they were, you know, great for the company revenues, especially both, they were all double digit range a year over year. So that's great. And of course, a large factor driving that was, you know, core processing fees, mergers and acquisitions, that type of stuff, payment processing card, ACH transactions, but the focus of the call. And you know, what a lot of the questions were kind of centered around was their new strategy announcement. So essentially, what the strategy is Lorraine, it's a cloud enabled open banking strategy. They plan to use it to sort of digitalize their portfolio of local and regional banking clients, giving them access to hundreds of fintechs. I believe the number is around 850. And, you know, along with the ability to customize and create their own unique banking platforms, which are enabled with obviously, your API's or FinTech access, stuff like that. David fosse who is Jack Henry see, oh, he went into some great detail during the call. It was it was pretty awesome. The strategy that enables them to create this open banking application. But again, the call itself was not really a product announcement, you know, it was more about the strategy, and the strategy will lead up eventually, to this application. And Mr. Foss, he was quick to point out that this is not going to be overnight. This is a long term process that they're looking to sort of enhance their, you know, broader strategy. And it's a four part strategy. The first part is unbundled core processes for you know, for a public cloud migration. The second part is providing an open Banking Integration for their clients. Third, they're going to try and deliver services through a single platform. And then finally, they they're going to facilitate and continue to work on that environment. And the end result of that, of course, is a component based making ecosystem. And that's going to provide insights and customizable platforms to local and regional community banks who are you know, looking for, for innovative pipeline to enhance their banking processes. So really exciting news. It's sort of rare that you hear an earnings call go into such amazing tech detail, but we certainly had that in spades this week. No, Loraine Lawson it was It's interesting to me that that a lot is made of this whole cloud enabled versus cloud native. And vendors use these terms very specifically to mean something. So Cloud enabled is usually where you take more of a legacy application. And you enable it in the cloud, adding some API's, maybe creating some services. But usually, when we talk about cloud native, we talk about something that was built for the cloud and leverages micro services, which are finite, easier to, it's what embedded finance will rely on. So it's interesting to me to see how they position themselves as cloud native or cloud enabled. And that does have meaning. Now, the cores aren't the only ones shifting to the cloud banking hardware better in NCR, which offered had an earnings call this week, they offer a scanners ATM and point of sale solutions. They're very much known as a hardware company revealed on its earnings call that it will focus on growing digital banking and services lead strategies, which, of course, is going to be a cloud based strategy, you can offer services and software as a service without going to the cloud. That's huge. And to put some historical context around that. Here's a company that was founded in 1884 on cash registers, and they're now saying their strategy will be to have 80% of their revenue shift to services and software. I think, you know, just to pause a minute and and realize where we are in time with this cloud shift. It is a significant shift. And it is automation driven. A lot of it is drives automation. So in other news this week, we did a deep dive with true CEO of consumer technology kin Meyer on how it leveraged hybrid cloud to manage its merger of SunTrust and bb&t. Finally, last, this last week, he bank announced it would migrate its primary applications and platforms to Google Cloud. So we got in touch with them this week to follow up and say, why Google, over all the other cloud providers? And their answer was that they had a long partnership with Google. It's interesting, because a lot of these, these cloud services do seem to favor Google or Amazon Web Services. You do occasionally here or there. But with, for instance, truist. When I asked them, they they pick and choose. So people are still trying to go with best of breed when they look at these solutions. But I do hear Google a lot. Elijah, what are you digging into for next week. Alijah Poindexter So Loriane, I've got some good stuff in the pipeline. But the first thing I'll mention, and it's going to be going up on the site, hopefully on Monday, I'll be taking a deep look at across rivers, new partnership with pay tile, this is going to throw across rivers, very dynamic banking as a service stack behind the fintechs really cool geolocation based payment services. So, you know, a way a concise way to explain it is just the fact that, you know, sometimes say it's like a street performer or something like that. If you want to give them money, you don't necessarily want that you don't want them knowing all of your information. And of course, they could glean this if you're using a traditional payment service. Well, paid tile sort of takes that away, and it makes things anonymous that makes things secure, and it makes things fast, so I spoke to cross river, and I'm super excited to get the story out for everybody. Loraine Lawson I look forward to reading that. And I'll be looking at how Scotiabank is using technology to really democratize wealth management, Wealth Management has often been something that's aimed at a certain clientele higher in you know, income. And they're looking at bringing it to more of their consumers by using technology. And it's a sort of hybrid approach that also employees you know, their their info, visors, but frees them up to focus on where they're needed rather than handling some of the tasks that people can self serve. So it's an interesting look at using technology that way. Thank you so much for joining us for the weekly wrap on the buzz don't forget to attend our bank automation Summit, which is March 1 through second in Charlotte, North Carolina legend I will be there. You can learn more about the bank automation summit at Bank automation summit.com. For more podcast content, check out bank automation news and search the buzz from Baker automation news on iTunes and Spotify.

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