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There’s certainly no shortage of fintechs these days. Thousands have popped up in the last few years, and all are working hard to serve the needs of an increasingly tech-savvy and financially astute customer base.

The supply of financial services via digital channels has never been greater, thanks largely to fintechs. Corporate and consumer finance will never be the same as a result, but the fintech space is still young, meaning there is room for growth.

When it comes to creating new offerings, especially for the unbanked and the young, fintechs are often more agile than incumbents. However, to secure investments, they must go beyond that and demonstrate clear differentiators that empower them to attract and retain more customers, partners and employees.

In the current landscape, fintechs are under intense scrutiny from investors, who meticulously examine every aspect of their business, leaving no room for exceeding targeted budgets. This requires developing flexible and diverse offerings, hosted in the cloud, to meet various customers' needs while controlling costs.

To compose or to customise?

There are many paths to the cloud and away from on-premise IT systems, but to summarise, a financial institution can:

  1. buy a traditional core that is expensive, rigid and locked to a vendor,
  2. build a custom core from scratch but one that is dependent on programmers and is not scalable,
  3. compose with the best-in-breed components and partners for each area of the business.

Choices one and two are not scalable, and they may become obsolete. According to The State of Digital Banking 2022 study conducted by global research and advisory giant Forrester, almost half of the organisations that decided to build their technology took more than 12 months to get to market. Similarly, of those respondents, 88% indicated their projects failed to meet budgetary expectations.

The third path, also known as the composable approach, is the most economically and technologically feasible. Instead of building a complex, expensive and time-consuming product, fintechs can work with cloud-native partners like Mambu that enable them to focus on growing their business. Mambu, as a strategic partner, offers a robust, up-to-date, secure and flexible core, so fintechs can invest their time in the areas of differentiation, which allows them to stand out in the market and not spend time and resources maintaining the core.

The temptation to build, especially as a tech-savvy fintech, can be strong. Comparing only a few costs, like licences or maintenance, may falsely suggest that the pure SaaS model is more expensive. However, consider all expenses related to a traditional core, from infrastructure to downtime, and the value of the SaaS model becomes clearer. In the SaaS model everything is included and supported by high standards and global experts. There are no additional costs to the subscription, and everyone is connected with the latest updated versions. Configurations and adjustments are done in minutes, hours and days (vs. months and years), and it is always online, backed up and uptime. As a result, total costs of ownership savings with Mambu, concluded in conjunction with internal analysis and Accenture’s research, can run as high as 30-50%.

Conquering challenges across borders

Many fintechs have plans to expand geographically, but to succeed they must face business, economic, and numerous social and regulatory challenges present in other countries. This is another area where the flexibility of the SaaS core shines, as it allows for staggered organic growth aligned with the needs of the business.

To illustrate, take our customer Platcorp that in 2014, already established in Kenya, Tanzania, and Uganda, aimed to enter new African markets and offer financial support to the unbanked. Adopting Mambu allowed Platcorp to automate processes, reduce IT expenses, boost efficiency, and expand to three more markets with 15 subsidiaries.

Somewhat alike, having successfully transformed TymeBank into South Africa's first digital-only bank, Mambu helped bring its digital banking concept to the Philippines with GoTyme Bank. Born in the cloud and powered by Mambu, GoTyme has the potential to become seamlessly integrated into the lives of Filipino consumers.

In Latin America, Argentine fintech unicorn Ualá efficiently integrated Mambu into its existing ecosystem within just two months. The new offering was introduced gradually, and later, the company successfully expanded its winning business model to Colombia and Mexico.

The SaaS model empowers customers to seize new revenue opportunities through rapid product launches and seamless adaptations to partner and customer needs, giving fintechs full control over their operations.

To achieve genuine differentiation among peers, continuous improvements are essential to drive growth. By embracing the right core platform, fintechs gain the ability to meticulously craft product roadmaps, efficiently bring them to market, and seamlessly adapt with the support of thoughtfully chosen ecosystem partners. Finding the right cloud-native partner can help them navigate current economic woes.

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