The rise of FinTech brought along a new technology trend which is often understated and yet of pivotal essence in the current wave of disruption. This trend or industry vertical is commonly referred to as Banking-as-a-Service (BaaS). To discover what we can expect from BaaS, how banks should and can react to it, Eggsplore had the pleasure to interview Stefan Dierckx, co-founder of The Glue, to gain insights on his thoughts about the subject.
Eggsplore: Could you introduce yourself and The Glue?
Stefan: I'm Stefan Dierckx, co-founder of The Glue. The Glue is a solution that offers an integration layer between banking legacy systems and the front-end channels of a bank. So, what we offer is a solution that will allow banks to implement their digital agenda much faster by keeping the legacy platforms running in the bank, but which allow them to build and access new value adding services, using The Glue as a framework.
Eggsplore: What is the vision of The Glue?
Stefan: The vision of The Glue is that the current services that are being offered by the bank, into what we call the legacy environments, are more and more considered as commodity services. Services like account keeping, payments, this are services that on our point of view not gaining any new clients, so our view is that the competition will be more in what we call value added services that are built on top of the legacy environment of the banks. So, the value-added services are where the competition is going to be. We will not gain any more clients by just having commodity banking services in place. Just look at the combination of real estate services in combination with mortgage requests. Those are typically services that are a combination of banking services with market services. That is what we will see more and more popping up, not only in the banking world, but also in the insurance world: all the services around the Internet of Things, putting devices in your car, and building new services around these devices is what we believe is the future.
Eggsplore: So, with that in mind, how do traditional banks compete in a BaaS environment?
Stefan: The banks are going to compete at the level of this added value services, so they have to make sure that their commodity services are simple, customer friendly and very cost efficient. But above all, they will have to be flexible in order to be able to keep adding or changing these new value added services, because this is exactly where the competition is going to be. So, our message for the banks is: make your internal commodity services streamlined and as efficient as possible and concentrate on your digital agenda by building these value-added services.
Eggsplore: what challenges still lie ahead to enable a BaaS environment?
Stefan: I think that the biggest challenge will be the flexibility and interoperability. Every organization, and especially every tier-one bank, already has a huge environment in place, but that environment is not standardized. So, building that standardized consolidated platform is going to be a huge challenge. But if you think "babysteps": on a smaller scale we do already see a number of initiatives popping up where banks are working together on non-competitive services, such as compliance, regulation, etc. These are the initial initiatives that we see popping up, and I’m sure that in the future, there will be more of these initiatives.
Eggsplore: which regions are ahead of others in term of BaaS development?
Stefan: in general I would say manly the Scandinavian banks are much more advanced from value added services or digitization point of view. Compared to the traditional, I would say more southern European banks. There is already a huge gap, that we need to close fast.
Eggsplore: why would banks and fintechs benefit from working with each other?
Stefan: we have a lot of startups and fintechs that have a very appealing idea or concept, but that struggle with the integration of this concept into to the environment of the bank. So, the combination of these fintech players, that have the more radial way of working and a more digital focus, together with these commodities services from the banks, is a very powerful combination.
About the author
| Stefan Dierckx is the co-founder of The Glue, founding partner and CEO of Projective and co-Founder of Minos Capital. This experience helps him to further shape his view on the financial industry’s trends and issues. Stefan holds a Master of Science degree in Applied Economics from the University of Antwerp.
The Glue connects front-end channels and API-ecosystems to the banking legacy environments and supports rapid creation of new services. Rich digital banking services, accelerated delivery, embedded non-functionals and innovative data capabilities are key features of our platform. The Glue empowers banks to become active players in a fast moving mobile and digitized landscape.