How the ABC created a money app for kids in five months

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This “hollowing out” of core banking systems is an essential ingredient to becoming more nimble and nimble, and creating more engaging experiences for customers. This will allow banks to reduce the costs of technology projects while bringing new products to market much faster, helping to fend off the fintech threat.

building blocks

It was during the first half of last year that the ABC realized it wanted a kids’ money app and card. National Australia Bank announced one in partnership with a fintech called Spriggy in July last year – the same month the CBA launched a “request for proposals” to build its new product.

Despite the risk — the ABC’s Dollarmites program, which had been teaching school children about money since 1931, was shut down last year after coming under fire from state governments — the ABC understood Shaype could deliver the product. faster and more compliantly.

Shaype started writing code in December. The start-up has assembled a system of building blocks, which allow different parts of a bank to be stacked together to create whatever a customer wants. It can support licensing, payments, fraud detection, and dozens of other services.

To get to market quickly, Kit Visa cards are issued using Shaype’s Financial Services License (they may switch to ABC in the future). The process is flexible, reliable and relatively inexpensive. Kit reportedly cost single-digit millions of dollars to develop.

At Shaype’s warehouse in Surry Hills, which was once a design studio for Collette Dinnigan, Laycock explains how demanding the IT architecture of banks is.

Toby Norton-Smith, managing director of x15 ventures: “There is an increased aspiration to take advantage of the best technologies.” Jessica Hromas

“It’s an insular, monolithic design. The banks’ problem is that they tried to use the core [system] as an orchestration layer. But we can give control to the banks, and they don’t have to build everything themselves,” he says.

Laycock is a former hedge fund manager who backed early London-based fintechs including Revolut and Monzo. Then he understood that the future of banking would be a matter of components.

After just five months in development, Kit was launched in beta form in May and revealed at the bank’s Strategy Day on May 17 by CBA CEO Matt Comyn.

“It’s exceptionally quick work,” says Toby Norton-Smith, who runs x15 ventures, which develops start-ups for CBA.

“There is an increased aspiration to take advantage of best-in-breed technology, wherever it makes sense.”

New technics

When x15 decided two years ago that it needed to build a digital home loan — Unloan, also revealed in May — it also turned to new tech techniques.

A key feature was xStack, which CBA created last year, a platform that allows a company (its own or an external one) to ingest CBA Group services, such as compliance checks. It’s another example of the Lego block approach, where various services – monitoring transactions or issuing cards or settling payments – can be plugged elsewhere.

Unloan has also appealed to outsiders: it runs on Mambu, one of the new specialized financial technologies that have built new basic banking records in the cloud. Other companies in the space include 10x Banking and Thought Machine.

“Banks are looking for highly composable technology: various components are built, so the bank isn’t stuck with an aging architecture,” says Paul Apolony, managing director of Mambu Australia and New Zealand.

“We provide a fast and scalable product registry. It is an API-rich environment, which allows banks to grow using their own platforms and applications, and key to this is the ease for the business to consume the products. »

The competition is not about banking products but rather about consumer experiences, he says. “Banking is basic, a loan product is simple, interest is calculated in a certain way. You don’t know the difference with that. You differentiate yourself from your customer experience.

Regulatory obligation

This new world of rapid product innovation was made possible when the Australian Prudential Regulation Authority approved banks using more cloud services in a revised cloud computing policy released in September 2018. Laycock says he advised APRA in 2017 to help her change her way of thinking.

The National Australia Bank is even more advanced than the CBA and not only experiments with start-ups, but integrates this new technological philosophy into the heart of its bank.

During his interim results in May, CEO Ross McEwan introduced his Simple Home Loans to the market for the first time, bringing to life more than four years of cloud-based microservices development and API investment.

NAB places 90% of its home loans through its new platform, which approves around a third of clients unconditionally within an hour. This is possible because it integrates individual NAB services, including credit decision and optical character recognition to read statements.

“We have these building blocks, we’ve embraced the cloud, we’ve built a set of microservices that leverage this utility, and now we’ve assembled these microservices to create end-to-end experiences,” says Ana Cammaroto, Director of NAB’s information in retail banking. .

Westpac and ANZ are also jumping on the same dynamic. Westpac is using 10x Banking, a cloud platform founded by former Barclays chief executive Antony Jenkins, to create a new core banking system for its institutional bank and could expand it to simplify its retail banking systems.

The ANZ Plus project is also creating a modular technology stack, which ANZ CEO Shayne Elliot said in March will move the bank from technology “that was frankly rigid, slow and extremely expensive to maintain to our new platform. -Plus shape that is nimble, adaptable, and less expensive to operate”.

An engineer’s dream

For banking engineers, it’s an exciting new world. Brendan Hopper, CIO for technology at CBA, says running core banking services as software as a service “has huge potential in the future.”

In addition to experimenting with Mambu, CBA is also toying with Thought Machine, which it describes as an “engineers dream” by enabling smart contracts, written in Python, to solve complex problems.

“We are experimenting with both companies because they both have a role to play,” says Hopper. “As you dig into your core, you use basic banking as your main ledger, but you do as little as possible, and you have other levels to make products and design things quickly.”

It is not just the banks that will be able to exploit this emerging dynamic of “integrated finance”. Shaype has 45 customers, half of which are non-banks.

Thus, it can help bring financial services to sports clubs, retailers or airlines, to help them increase customer loyalty and engagement. “It’s about providing control — a top notch toolkit,” says Laycock.

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