Finastra sees small banks as a way to catch up in U.S. core tech

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Trailing the big three core technology providers, U.K. fintech Finastra is launching several initiatives in an effort to win more U.S. community bank business, including embracing open banking and introducing a graphical interface to collaborate on without writing code.

But the challenges facing it are multiplying, as even international competitors are beginning to make inroads into the U.S. market and other core tech firms are more quickly developing additional application programming interface options.

Finastra hopes that community banks will gravitate toward the open banking cloud platform it recently launched out of beta to collaborate with fintechs, which the firm claims will allow them to more freely link into its larger network of innovation.

“When you think about fintechs today, they attach to a bank,” said Martin Haering, chief marketing officer at Finastra. “They have to wait a lot of time before they can really access the banking infrastructure of a large tier bank for security and regulatory reasons, so it's a long time to get real access.

“The fintech on a worldwide basis wants to sell to way more banks. Our platform is available worldwide with the same coverage and security and availability, and they get access to this large ecosystem.”

The London-based company has held hackathons with large banks and universities around the globe to encourage developers to use its platform. Earlier this month, Finastra held one in London where it announced 61 new APIs, mortgage and lending products integrated into Microsoft’s products and NBKC Bank as the first bank to begin developing an app on the platform.

During that hackathon, the company released the open banking cloud platform,, to the public. Previously it had been available only to early adopters, including 300 fintechs and 19 banks that have registered developers on the platform, but no financial apps are live yet in the platform’s store.

“Our product spread, which covers almost 90% of everything that a bank needs, makes it very attractive for fintechs to test and program on,” Haering said. “This is a free platform to play around on real core banking systems.”

Of the major U.S. banking core providers, FIS and Finastra have had to focus on their open API suites because of their presence in international markets and the influence of PSD2 regulations on their business, said Brad Smith, managing director at Cornerstone Advisors.

While Finastra says that its move toward open banking was initiated by its evolution from being a product company to being a platform company, some observers say the company needs to move quickly if it wants to keep up with international competitors.

Switzerland-based Temenos has yet to go live with the U.S. banks it has signed deals with, and market leader India-based Tata Consultancy Services only has Zions Bank in Salt Lake City live on its system.

Open banking has been driven by regulation in Europe and embraced by the leading global banking core providers as a result, said Paul Schaus, the CEO and founder of CCG Catalyst. “Temenos has over 700 APIs and it’s been open since last year.”

Forty of Finastra's 61 new open APIs touch the American market because they’re specific to the Austin-based Malauzai digital banking platform. Smith said Finastra will also need to deliver better products to keep up with America’s core providers out of the box.

“Finastra’s core products don’t have a lot of market momentum for core replacement,” said Smith. “Just having hackathons and open API collaboration is not enough to get a lot of people to leave the legacy core to something that may not be as feature rich out of the box today.”

Finastra’s argues that community banks want flexibility and the ability to innovate quickly with fintechs.

The conversational app that NBKC is developing on the platform, for example, is being built along with bot messaging platform and personal finance management provider Geezeo. It will be the first conversational banking app deployed by the bank.

The Kansas City, Mo.-based bank already uses Finastra’s Phoenix core banking solution. Finastra approached NBKC to see if it would test how easy it was to use Finastra’s open application programming interfaces.

“We see this as a much better journey for fintechs to interact with the bank through open APIs,” said Eric Garretson, chief financial officer at NBKC. “As we meet founders and startups, we could work with them on this platform … There is the ability to create an app in three minutes. That’s way easier for us to work with a fintech versus trying to allow them to interface with our core.”

NBKC chose Finastra in 2005 at a time when there were only two platforms that weren’t considered “legacy,” Garretson said. The bank’s chief technology officer is evaluating the specifics of to see if the bank will create other kinds of apps on the platform.

“Finastra’s philosophy then and still today is the openness of their platform,” Garretson said. “To be clear, there are a lot more APIs in their ecosystem, but only 61 that they have built to fit their vision for a truly open API framework. In general, we think that we are going to win by staying with a good partner through their transformation to, versus migration to, a new platform.”

With a waning marketplace and not many resources to play with technology, the cloud platform may be more suited to the nbkc’s of the world than the average community bank, Schaus said. Most community banks don’t have developers on staff and are more likely to buy off-the-shelf products.

This is in part why Finastra has created a graphical interface for banks and fintechs to collaborate on without writing code.

“It's not just that we expose an API, we give them an integrated development environment at hand where you can with graphical tools create apps for mobile phones or tablets without having programming skills,” Haering said.

Potentially, the platform could allow a bank to connect clients to a service provider, like a health insurance company, and create a new commission-based business model. “That’s how you survive in this tough marketplace where so many branches are closing,” he said.

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Core systems Core conversions APIs Cloud computing Community banking FIS Jack Henry & Associates Fiserv NBKC Bank