A lot of progress can be made in a decade. At the start of 2010, with the global financial services industry still reeling from the effects of the financial crisis, nearly half of the world’s adults didn’t have a bank account. Ten years later, balance sheets have been repaired, regulators strengthened and at least 1.2 billion more adults have opened accounts, gaining access to the benefits and security that banks provide.
We know that financial inclusion matters. It lets people save safely, and transact efficiently, and use finance as a tool to navigate their business and personal life goals. In many parts of the world, access to essential finance and economic security go hand-in-hand. It is what allows farmers to buy seeds on credit and entrepreneurs to expand their businesses. Back in 2010, it was clear that a new wave of technology could open up banking to vast swathes of the world’s unbanked population. This technology lowered costs and made innovation possible, unlocking hitherto unprofitable markets, like SMEs. This potential was the genesis of Mambu and software-as-a-service (SaaS) was the key.
Mambu’s aim was to make a banking platform available as SaaS to people with innovative ideas about how to reach the underserved markets anywhere in the world. And we wanted our platform to be so good that the large existing banks would also want to use it not just for the cost advantages but for the speed, agility and for the more modern architectures that it would enable.
Our goal was to create a secure, scalable, agile, easy-to-use, flexible banking platform that worked on a lean operating model with a low cost-to-serve. Incorporated in December 2010, we opened for business in April 2011.
Our timing was impeccable. Regulators and venture capital had woken up to the potential of digital banking and fintechs, fuelling the rise of innovative services such as peer-to-peer groups Lending Club and Funding Circle in the US. New banks also started to open – Metro Bank was the first in 100 years to win a licence in the UK, swiftly followed by a slew of others, including OakNorth, Monzo and Revolut.
Regulators also saw the benefits that digital banking could bring. Across Europe and the Asia Pacific, banks using the principles of composability have applied for and won licences throughout the decade, from N26 in Germany to WeBank in China. Incumbent banks quickly saw the operating model benefits enjoyed by these neo banks, perceiving the long-term threat they posed. Their response has included launching their own subsidiary banks on cloud platforms. The result is a more competitive financial services landscape that is on a path to give billions more people access to services that are better and more accessible than ever.
In the course of the past 10 years, the industry has made great strides toward financial inclusion. As financial services continue to pivot away from a Wall Street-mindset towards a Silicon Valley-mindset, it will create more value for the customer and also more options in terms of financial services providers.
In addition to highly personalised neo banks, there will be a surge in ubiquitous lifestyle banking with financial services embedded into customers' lives - think Klarna, AliPay and Amazon Payments. As the next decade progresses, finance will be viewed more as a feature that is embedded in the transaction journey rather than as a standalone service. The benefits will be numerous - from greater innovation and diversification to financial inclusion, particularly in emerging markets and developing economies.
Data lies at the heart of this shift. Think about how data is already being used to ease customer pain points. Electric carmaker Tesla is looking into offering insurance. This isn’t because Tesla wants to become an insurance broker. It believes that by making the process of insuring its cars simpler it will make the buying and owning experience of cars fundamentally better. Klarna, the point-of-sale credit service, is another example. It helps people buy what they want on credit as part of the purchase to reduce the friction of the transaction
Banks will be able to use the data they collect to help people spend their money better – perhaps by offering price comparison services for utilities or insurance along with switching. They will be able to ensure businesses take out the right-sized loans to let them expand profitably without being overburdened. And they will be able to personalise what they offer to individual customers - individuals or businesses - to help them reach their unique goals. Using technology, retail banking may start to have some of the same features previously only available in personal banking for high net worth individuals but at far lower cost and with lower barriers to entry.
These developments are made possible by open ecosystems that allow banks to pick and choose which technologies they leverage to help them provide the services their customers want at a cost and operational complexity that is attractive. And Mambu will continue to enable both the new entrants and the traditional financial institutions make banking better over the next decade.