From turbulence to triumph

A survey by the World Economic Forum (WEF) found that geopolitical instability was one of the top risks facing businesses. Furthermore, a survey by Resilience360 reported that 73% of companies experienced a detrimental supply-side disruption due to the pandemic.

These factors have contributed to a global slowdown in demand and increased interest rates, prompting the IMF to have a pessimistic view on the world economy.

Traditionally, businesses have responded to disruption by prioritising short and medium-term earnings and expecting eventual stability but this approach may no longer be effective in the face of ongoing turbulence. To emerge stronger from change, businesses must develop resilience to withstand long-term uncertainty. Adaptability is key to building endurance, allowing businesses to respond and absorb changes in their environment.

How can financial institutions (FIs) increase their adaptability? The secret lies in the systems they utilise to develop their offerings.

SaaS customers recover twice as fast

Our recent analysis shows that SaaS-powered financial institutions are more resilient, able to better withstand market shocks and return to growth more quickly - as demonstrated during the pandemic period.

We identified two key factors that drive the out performance we see in this data:

• Differentiation in market: Customers using Mambu build differentiated offerings by selecting best of breed components, meaning they can offer their customers a richer, more personalised experience.

• Speed in market: Building with Mambu means there is no reliance on a stretched DevOps team when it comes to updating and launching products; it can therefore be done in a fraction of the time.

In 2019, FIs using Mambu averaged 47% revenue growth, dropping to 14% when the pandemic hit in 2020, their non-Mambu competitors, however, only achieved 1% growth. The flexibility of the platform not only helped manage the downturn, but also enabled a stronger rate of recovery. In fact, Mambu customers experienced a growth rate of 34% in 2021, compared to the market's 10%.

Globally, the future outlook is highly uncertain. However, the benchmarking results show that Mambu's cloud-native banking system provides the agility and responsiveness needed to navigate future events. This is supported by comparison data across various sectors in Mambu's global population.

• Personal lenders: While the pandemic dealt a major blow to personal lenders as consumer spending declined and unemployment rates soared, our findings show that Mambu’s personal lending customers were better insulated from this disruption.
  By 2021 Mambu customers continued to grow their portfolios, and although there were some positive developments, the overall market still struggled. This shows Mambu customers were better equipped to adapt to challenges in real time, which enabled them to maintain and in many cases even continue to grow their portfolios.

• SME lenders: Similar to other segments, SME lenders rushed to react to the pandemic in 2020. As governmental schemes provided most of the liquidity in this segment through larger lenders, both Mambu customers and the market experienced minimal growth in 2020. Nonetheless, the value of the Mambu platform is evident in the recovery phase - our customers returned to a 28% growth in 2021, compared to 5% in the market.
  Despite the global recession, SMEs can continue to grow by addressing both short and long-term concerns with innovative and personalised features. This will help them attract customers and outperform competitors in an uncertain market.

• Neobanks: Apart from a growth slowdown, the pandemic-induced disruption has also led to an increase in demand for digital banking due to lockdowns and social distancing measures. Mambu customers were able to take advantage of this trend and their growth rates surged during the pandemic, in contrast to the overall market.

Financial institutions that adopt innovation and can pivot rapidly are more likely to thrive during times of disruption. Mambu has helped FIs worldwide in developing resilience and mitigating the impact of major economic shocks.

You can learn more in our latest research Turning turbulence into triumph.