Banks today are under constant pressure to modernise themselves in order to keep up with agile fintechs that are quick to respond to changing consumer needs. Whilst the trend of digital transformation has fully taken hold in other sectors, many of the established players in the financial services industry have found themselves lagging.

Sergei Anikin, CEO, Tuum: “It’s ironic to think that banks were actually one of the first ones to start adopting computer technologies. They needed it the most, because of all the numbers, data, etc. But somewhere along the way they stopped. They thought they were done. Then, suddenly, when society and consumer expectations started changing faster than they did 20 years ago, banks found themselves in a position where they couldn’t keep up anymore.”

Banks’ transformation struggles

Lack of progress does not necessarily come from a lack of trying; in fact, most banks have initiated some form of a digital transformation process, but have stumbled along the way (or failed). Allocation of resources, buy-in from senior management, and method of transformation are just some of the reasons as to why banks have paused or abandoned transformation initiatives.

According to Tuum’s latest industry report “The changing face of banking”, banks are well aware of the need to digitally transform themselves. Of the 313 IT decision-makers within financial institutions across the UK, Germany and France that were surveyed, 64% said they have already started with digital transformation, and 35% have plans in place. But how to make sure that this transformation is not a one-off thing and in 20 years time, the bank is still “digitally transformed”?

“Tuum’s modular architecture is one that allows banks to make changes gradually and without having to invest a large amount of money upfront. This is also appealing from a risk management perspective, as it allows CEOs to approve small changes that carry little risk.”

Sergei Anikin, CEO, Tuum

Agility is key in making sure that the technology and processes stay modern

The agile mindset and way of working is a concept introduced by software teams back in the 90s, and has today become far more widely adopted by all kinds of businesses as a means to expedite change, improve project management and empower teams at any rank. The faster you get feedback on a solution and make changes, the quicker you get to evolve. Essentially business agility is about speeding up and improving the efficiency of evolution.

“The key to becoming an agile, “always modern” business, is first distributing the decision power by creating self-managing operational units – this allows for small quick changes within the organisation – and then have the technology in place to support this kind of distributed organisation model. Tuum’s architecture follows this same model of separation and distribution of authority.” remarks Anikin.

Tuum’s platform is built around modularity and follows an API-first approach. It is designed to follow the logical structure of a bank or financial institution, with the four primary modules being: accounts, cards, lending, and payments. The platform enables businesses to start with one specific module (or even just certain capabilities from a module) and then add additional modules later on, as needed. This convenient and cost-effective approach cuts down on implementation costs, as businesses only pay for the modules they need.

“Tuum’s modular architecture is one that allows banks to make changes gradually and without having to invest a large amount of money upfront. This is also appealing from a risk management perspective, as it allows CEOs to approve small changes that carry little risk. This methodical approach is in contrast to the traditional approach of making sweeping changes all at once, which can be costly and difficult to implement.”

Continuous innovation in banking is needed

The way customers interact with banks, the products and services offered by banks, and even the very definition of “banking” is constantly evolving. Banks need to focus on continuous innovation in order to keep up with these ongoing shifts. By doing so, they avoid future scenarios where they find themselves out-manoeuvred by more agile challengers.

“We provide the standard features that every bank needs to have. Additionally, we enable a high degree of configuration which supports continuous innovation. It is up to the individual bank to decide how they want to orchestrate these capabilities and in what form they want to interact with their customers. By combining this broad functionality and flexibility with an agile approach, banks will be able to stay ahead of the game.” states Anikin.
In keeping with this concept, Tuum is also focused on adapting and modernising its own platform.

“We are always looking for ways to improve our offering. Our future plans include adding corporate banking capabilities to our platform, and also exploring ways to connect traditional banking infrastructure with the crypto world in a compliant and regulated manner,” concludes Anikin.

About Tuum

• Tuum’s modular and API-first core banking platform enables a quick roll-out of new, customer-focused financial solutions. It covers all retail and business banking processes from accounts, deposits and lending to payments and cards. The cutting-edge technology allows for real-time operations, data-based decision-making, and personalized service offerings.
  
  Tuum was founded in 2019 by a small group of Estonian financial IT pioneers with decades of experience in digitizing and transforming large Nordic banks. The company has acquired customers throughout Europe, the customer base in the Nordics includes Januar, Sweepbank, Credinord and LHV. Tuum currently employs 100 people in its offices in Tallinn, Berlin, Malaga and London.