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