The biggest bank technology providers are revamping their most popular platforms to offer new features and reach more financial service sectors — all in the name of protecting market share from insurgent fintechs and pivoting peers.
Oracle joined the fray last week, announcing it was adding banking as a service to NetSuite, the venerable cloud-based enterprise resource planning platform it acquired for $9.3 billion in 2016.
Available to all enterprises on the platform, the addition will help banks serve commercial customers using NetSuite, the firm said, acknowledging the demand from banks seeing fintechs nibbling away at customers and the strides competitors have made in revamping their own ERP software.
Adding the service within the software — which already offers global financials, customer relationships management, production management, supply chain management, professional services automation and omnichannel commerce functionality — provides a convenient way for banks and their commercial customers to develop services in tandem, said Scott Derksen, senior director of business development at NetSuite.
It was always "a do-it-yourself application world or you would hire Accenture to figure out how to plug all that stuff together,” he said. “Instead of that universal business adapter with a set of application programming interfaces out there that you go to, we’re delivering the full value in a user experience that’s right inside of NetSuite.”
The ERP system works on top of a data platform that delivers analytics to clients. The company’s SuiteCloud platform allows banks and their business customers to work with developers to customize solutions even within the centralized platform. Companies have been developing applications on NetSuite’s SuiteCloud since 2006 and NetSuite offers an ecosystem of development partners.
“You can create a customer experience right in Netsuite,” Derksen said. “Think of it as installing an app on your phone, if your phone was NetSuite.”
NetSuite is the first ERP platform to feature a cloud-based, banking-as-a-service offering that institutions and fintechs can develop applications on together, said Ray Wang, the principal analyst, founder and chairman of Constellation Research.
From cash forecasting, to trade finance, instant business loans and credit lines, NetSuite’s banking as a service tool allows banks to leverage their data assets to offer these features as part of their own services.
"People have been dealing with this pain point for 10 years," Wang said. "They want to extend and build and connect to partners, dealers and brokers."
What spurred the new feature was feedback NetSuite received from bankers who said they no longer wanted their customers to sign into disparate systems.
JPMorgan Chase began discussions with NetSuite about a banking as a service partnership when it went on a roadshow and surveyed its middle market clients about how the bank could better embed itself into their clients’ own digital environment.
“It became apparent that our clients that used NetSuite were intrigued about pulling banking services into NetSuite,” said Jason Tiede, innovation head for treasury services at JPMorgan.
“If you think about it in their current environment, they had a payments or account payable process where they would go through their process in workflow in NetSuite, then they would need to shift gears and take the next step and engage their bank through a traditional banking channel to initiate payments.”
Competition was another impetus for change, Derksen added.
“I was sitting with 100 bank executives, we went through the overall concept, and they said, 'Well, look, when one of our customers becomes a NetSuite customer, our ACH business dies, our merchant services business dies, we’re left holding a savings account and that’s about it. They are all going to fintech partners that are already part of the NetSuite ecosystem.’
“What this allows for them to do as they onboard a client to NetSuite is to be able to maintain and grow all of those revenue streams that they have historically had, where they would have been disintermediated before.”
The new feature will help NetSuite keep commercial customers centralized in its platform, but those same customers stand to benefit too, said Gilles Ubaghs, senior analyst at Aite’s wholesale banking and payments practice.
“This is kind of a win-win, as banks can tie into their customer more readily and easily, and they can expand those bank services more directly,” Ubaghs said. “For NetSuite, that becomes, 'Look how easily we can plug into your bank.' "
With partnerships between banks and fintechs on the rise, he noted, banks feel less compelled to build new technology in-house.
“Banks are more willing to partner with startups and established fintechs,” Ubaghs said. “Even the fintechs that began by marketing themselves as disruptive have quickly changed their tune.”
