The financial industry is at a turning point. Emerging technologies, evolving regulations, and shifting customer expectations demand bold leadership. That was a key takeaway of Temenos’ TCF25 in Madrid.
Banking has witnessed many a turning point in the past 30 years or so. The 1990s witnessed mass liberalisation of banking regulation. Then there was the abolition of interest rate controls and of barriers to the entry of foreign banks. The rise of non-bank competitors and a reduction in state ownership and in politically directed loans, often at concessionary rates, followed. The period following the financial crisis of 2007-2009 was another turning point. The digital drive including the mass adoption of mobile banking was another such turning point.
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And now the rise of emerging technologies such as AI, evolving regulations, and shifting customer expectations represents another genuinely transformative turning point.
There are few, if any, more impressive and significant vendor-run annual banking conferences than Temenos’ celebrated Community Forum. The latest event attracted over 1,400 C-level executives, decision-makers, and industry pioneers and it remains an annual highlight of the conference circuit. Not for the first time, in the 20 years or so of regular attendance, one was left with the impression that TCF was bigger and better than ever before.
Sai Rangachari, Temenos’ Chief Product Officer speaks with RBI editor Douglas Blakey
Rangachari: high profile hire
One highlight was a discussion with Sai Rangachari, Temenos’ Chief Product Officer. His appointment, back in January, was a high-profile hire as he leads the development of Temenos’ solutions and defines the company’s overall product strategy. It was also a headline-grabbing appointment given his track record. His CV includes over 20 years of experience and an in-depth knowledge of the US financial landscape from start-ups to leadership roles in Tier 1 US banks and leading vendors.
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By GlobalDataAs Managing Director at JPMorgan, he led the bank’s digital channels platform and open banking strategy. At FIS, as Chief Product Officer for Banking and Payments, he spearheaded cloud banking initiatives and growth in the payments business.
During his time at Capital One, he launched next-generation digital origination and servicing platforms increasing origination volumes and customer engagement. Most recently, he founded and led the product and technology function at Tandym, a digital payment wallet provider.
‘This time it is different…this is a paradigm and mindset shift’: Rangachari
Rangachari has enjoyed a ring side seat during past industry turning points. He argues that AI and emerging technologies go far beyond the ability to offer increased efficiency and cost savings, new revenue opportunities, improved risk management, greater personalisation and increased customer engagement.
“This is a paradigm and a mindset shift. In the past, banks have always talked about efficiencies, and what we’re hearing from our clients this time is different. Previously, it was all about say, how can I go from 10 steps in loan origination to seven steps so I can cut off two hours of processing or two days. Take it from seven days to maybe, one day or two days. Now the conversation really is about, how do I eliminate those steps so I can have more real time functionality? So even from an efficiency perspective, the vision and the asks and the conversations have gotten way bolder than before in terms of what they want as outcomes.
“With the power of AI and what it is able to enable, I think we’re just scratching the surface, but it’s getting started. The other thing that’s really happened and we saw this with mobile is that people are using AI to advance their daily productivity, their non-professional life productivity. So, when they come into work, the expectations are changing quite a bit. The mindset is already baking in that I can eliminate these steps. I can automate, I can become a superhuman.”
TCF25 highlights
AI’s potential to be truly transformative was highlighted in a number of key sessions during TCF25, such as the presentation from Srinivasan Seshadri of HCLTech. It does rather boost Temenos’ credentials as sector leaders when it can draw on high profile and longstanding tier one clients. For example, Santander’s Jose Manuel de la Chica, discussed how the bank was working with Temenos to implement AI systematically across banking functions.
The head of Canada’s EQ Bank, Dan Broten, explained how near-instant insights is giving it a competitive advantage thanks to innovating with Temenos Data Hub. And Marnix Tummers, IT Director for Wealth at ABN AMRO highlighted the bank’s near-20-year partnership with Temenos and how the bank continued to benefit from the shared focus on innovation, co-design and customer centricity.
Other key takeaways included an example of the Temenos design partner programme. Specifically, work with clients Commerce Bank and BIL. The Temenos Product Manager Copilot solution empowers the Gen AI knowhow of Microsoft and helps customer teams move from idea to product faster, with less effort and more confidence.
General availability of FCM AI Agent
News of the general availability of the advanced screening solution built with AI, real-time evaluation, and robust compliance frameworks, also merits a mention.
With Temenos FCM AI Agent, financial institutions can detect, investigate, and prevent sanctions transgressions against global and domestic watchlists using advanced AI to reduce false positives and evaluate screening alerts in real time with augmenting human capabilities.
The tool ticks a lot of boxes: it boosts customer satisfaction, reduces compliance risk and cost, increases employee productivity and boosts revenue. Specifically, Temenos says that FCM AI Agent is achieving less than 2% false positives rates against industry average false positive rates for customer screening of 5% to 8%.
Core transformation, Gen AI and co-innovation
Super-regional US bank, Regions, completed its core transformation on the Temenos core banking platform in early 2022. At the time, Temenos’ contract win from Regions represented a strategic win in such a competitive and key market. TCF25 featured a positive presentation from the top30 US bank as it shared key learnings from its journey replacing its core on Temenos SaaS. Post TCF25, Temenos again ranked the best-selling core banking provider in the IBSi sales league table, for the 20th consecutive year. It also tops the table for categories covering digital, payments, wealth and Islamic banking. So, sales remain healthy. More than that; Rangachari says that core banking is about to become “really cool.”
Core banking as ‘cool’ is arguably a novel concept but Rangachari makes his pitch with gusto and explains why Temenos is so well positioned to benefit.
“Now there’s a cultural mindset aspect to it and as core banking providers, we’re in a prime spot to enable a lot of the integrations and innovations. So, I’m really excited about the core banking space.
“The kind of demand we have seen from clients, the amount of chatter that we’ve seen around co-innovation has been fascinating. We are extremely motivated to co-innovate so we don’t build products in silos. We are building solutions that matter for our customers.”
Three standout themes dominate TCF25m namely, acceleration in the adoption of AI, continued investment in its core banking product experience and the benefits of co-innovation.
Looking ahead, this turning point has some way to go when once considers just one stat from a recent Temenos survey. It highlighted that about 80% of its banking clients are experimenting with AI, but only a third of them have taken it to production.
There are, says Rangachari, the early adopters, the wait and watchers and the fast and slow followers.
A large number of factors are holding back some of the more cautious banks as they look for more proof in the market, especially from their peers, on what works and what are the lessons before they would do a fast follow, or a slow follow.
Leading Banking Forward
If Temenos is to deliver on its tagline, namely, Leading Banking Forward, much depends on the success of AI initiatives such as FCM AI Agent. And then then there is Temenos AI Studio.
“We’re actually beginning to partner with clients in our Temenos AI studio, where they can start creating this their own use cases, and servicing their own use cases, leveraging the same Explainable AI infrastructure that we use behind the scenes.”
He says that in the past, Temenos would have conversations with customers and they would explains what Temenos needed us to build and it would say okay. But now, the vendor can provide its AI Studio so that banks have the ability to develop, customise, deploy and monitor their own models. Temenos can preload it with banking modules that the bank can start from and Temenos will provide training and support that then allow the bank to build those for themselves.
Just how the initiatives announced in Madrid pan out will be hot topics for debate at future TCFs. The wise money would be not to bet against Rangachari being able to deliver. Whether core banking will ever pass muster as ‘cool’ is another matter entirely.
