Core providers have heard their fair share of complaints from smaller banks and credit unions eager to innovate.
Chief among them is that they want help improving their online and mobile customer experience, according to a recent study by Accenture.
Bruce Lowthers, president of banking solutions at core provider FIS, says he's received the message, and wants institutions to know he isn't ignoring their demands. But he said other concerns, including boosting cyberdefenses, data center consolidation and core modernization, need to be dealt with first.
"I certainly appreciate the frustrations that everybody has," Lowthers said. "It goes back to that changing expectation of technology and what their clients are looking for."
In an interview with American Banker, Lowthers discussed how his company's recent upgrades align with a changing industry, concerns about the safety of the cloud, and what's next. Following is an edited transcript of the conversation.
From FIS’ perspective, what are the biggest issues in the industry right now?
BRUCE LOWTHERS: The level of sophistication around cybersecurity really has had to escalate. It's taken a tremendous amount of capital and will continue to take a tremendous amount of capital.
We have helped lead the charge in the industry to figure out how to work together as these cyberattacks have become more sophisticated and more organized. For us, cyber is certainly one of the things that is first and foremost in everybody's mind.
The other major trend is around end customer expectations. That has really changed. That’s driving the vast majority of the noise in the marketplace. We can argue that technology is the driver. But I really think it's the expectation of every consumer that is really the driver of how we look at client experiences.
What progress has FIS made in its modernization efforts? A common complaint we hear from small institutions is that the cores are not doing enough to help with their digital efforts.
I certainly appreciate the frustrations that everybody has. I think it goes back to that changing expectation of technology and what their clients are looking for.
Those banks have certainly invested a lot in the past to build out their businesses as however they see appropriate. And what they see is these large organizations are spending huge amounts of money transforming themselves. [The smaller banks] are a little bit handicapped in that they don't have that same access to capital. They have companies like FIS, Fiserv and others to step forward and drive that.
From our perspective, we feel that we've been leading that charge over the last few years. And personally I feel that we've driven a lot of change in in that regard. We’re moving to the cloud and have been driving that initiative first. We’ve brought over 50 products to the market in the last 18 months.
When I go around and listen to our clients, what they’re looking for is how they can benefit from the modernization that’s going on and benefit from the products we’re introducing so they can improve.
How does a cybersecurity focus affect how the industry handles the management of customer data?
There's the overarching cybersecurity methodology that we have and deploy. Over the last few years, what we did was probably a little bit different than the industry as we really started our modernization efforts. Without going into too much detail on that, there was a ground-up approach to data, the platforms and how they worked. Security was the underlying theme as we were rebuilding these platforms.
Our CIO has led this initiative on data center consolidation and modernization. For me, that really changed fundamentally how we were approaching cybersecurity and how our platforms work. For our banking solutions group, the company has moved 80% of my client-facing, consumer-facing applications to the cloud.
After the data breach with Capital One and its use of Amazon Web Services occurred, did you take a step back and re-evaluate what FIS is doing with the cloud?
For us, we build a private cloud and we try to control that environment ourselves. We have the benefits of additional security layers versus a public cloud. We fundamentally believe that’s the right way to do forward.
But when any event happens, I can assure you that everyone on our team is huddling very quickly and saying, "OK, what's going on? How do we stack up against what happened?" One of the things I would say that I've been proud about with our group is that we've reached out to try to help others as well.
Adoption of real-time payments and open banking are expected to give rise to new products. Where do you think we’ll end up there?
I do think they're intertwined a little bit, but they’re very different at the same time.
On the RTP side, you have 50 countries that have stepped into the RTP process. We participate in quite a number of them, close to 25. We are participating in the infrastructure of those RTP platforms. We're very well dialed into how that's moving forward.
I would agree that the success of RTP is going to be around what the use cases will be, but so far there hasn't been anything that has been introduced that has broad-scale applicability as a use case. But RTP does come up in almost every single client meeting.
As far as open banking, there are some forward-thinking banks in the U.S. that are doing some of that. Some of the things that Steve Streit is doing at Green Dot have been creative and innovative. Jay Sidhu at Customers Bank is very creative about how to go to market as a financial institution.
What will the industry buzz be about in 2020?
Client expectations will continue to evolve. I don't think that noise will subside. It's going to get stronger.
You're going to hear more and more about data. There's going to be a lot of discussion around data, what you can do with data, how do people manage data.
What’s emerging on a broader technical perspective is autonomy. You're going to see more dialogue around autonomous technology and its impact, both within the fintech industry and society in general. Whether it be self-driving cars or self-healing operating systems, there are plenty of examples.
