Sunday, June 16, 2024

Exclusive: ‘The door is now ‘open” – Anders Christensen, Avaloq in “The Fintech Magazine”

The platform has seen increased demand from all parts of the banking and wealth management industry as fintechs and institutions address issues exaggerated by the pandemic. Heading up the platform is Anders Christensen, who believes the API-first approach will lead inevitably to ‘open’ finance 

Competition isn’t the enemy; mediocrity is. And innovation is the cure. That could summarise the view of the man heading up, the platform bringing banks and wealth managers together with fintechs to create fast, powerful solutions to real-world bankers’ problems.

Anders Christensen used to sit in a banker’s chair. He knows how complex things can get; and with complexity comes delay – and cost.

“We’ve all seen the proofs of concept dying deaths after 18 months of trying to create something. Avaloq wanted to change that,” he says. “We wanted to not only speed it up, but do it in a way that you can scale. And we wanted to do it with impact.” And so, was born in April 2019: an ecosystem whose lifeblood is application programme interfaces (APIs).

“I think everyone is interested in the one thing none of us has, and that’s time,” says Christensen. “Everyone wants to innovate faster. So, if you can now do 100 steps in 50 and you can scale it to five fintechs instead of one, potentially deploy it to your other geographical locations very quickly… all these things help everyone.”

It would be disingenuous if Avaloq’s own internal onboarding and development timescales weren’t constantly being challenged themselves – and they are.

“It used to take us three to six months to onboard a fintech to the Avaloq platform. Now we’re down to two weeks with a standard contract of five pages, which gives you a lot of the screening, scouting, onboarding, commercialisation – and it’s browsable, for everyone to see. That leads into the scale argument, which is really about technology off the shelf. We have many different types of APIs and with AMI Web Services that all comes together and connects the Avaloq platform, securely and safely. In the future we will also be able to measure the data flow from it, to any third-party provider.”

The world’s ‘fintech finest’

Avaloq, the Switzerland-based digital banking specialist, offers powerful

Cloud based core banking and wealth management technology to clients worldwide. In Switzerland alone, it hosts 35 banks in the Cloud. Around the world, it has four service centres offering business processes as service (BPaaS) and software as a service (SaaS) operations, handling the back office as well as frontend solutions for several of the world’s top wealth managers and private banks. But by 2019 it was becoming increasingly obvious that the infrastructure on which these  institutions ran could not respond fast enough to keep up with services from emerging neo banks and other financial services providers.

So, was launched as a platform to which fintechs could self-onboard and self-integrate with open APIs and access to sandbox capabilities.Once a solution was proven to work, fintechs only needed to integrate their solution to the Avaloq Banking Suite once to engage with Avaloq’s clients, who would themselves then have access to proven screened fintech applications, and all available in one marketplace. They could also collaborate with those techs on bespoke solutions.

The person chosen to ensure continuous screening of emerging innovations and validation of fintech solutions as Avaloq set out to build this ecosystem of the world’s ‘fintech finest’, was Christensen.

For him, everything starts in the sandbox. A testing environment for code and technology changes, it’s where Avaloq will soon be creating fully realised avatars – models of a client’s bank in the Cloud that allows its own developers and third-party fintechs to test technology and solve practical issues in as close to a real-life environment as possible, using anonymised data.  The company has just completed a successful pilot for this advanced testing, reveals Christensen.

“We’re bringing to market an advanced sandbox, which will be a synthesised version of the bank, anonymised of customer identifying data, in the Cloud. So that means you will have your front, your middle and back ends – we will recreate what you really are, and you will be able to use this as your playground to work with multiple fintechs, connecting to your tech stack. The front end, of course, takes some graphical user interface (GUI) integration, if you want to build it into your web banking. If you connect straight in to the Avaloq core platform, then you could also just exchange fields of data.”

It’s in the area of wealth management that Christensen is witnessing some of the most exciting demonstrations of the power of this approach. He points to Delio, a white label private market wealthtech from Wales that onboarded to the ecosystem last year. It has now successfully connected to a number of Avaloq clients.

“We’re currently looking at how we put Delio’s environment, social and governance (ESG) solution into production with more Avaloq banks worldwide,” says Christensen.  “Delio provides a marketplace for private placements, which fits nicely with the Avaloq stack at the front end. At the back end, you have companies like NetGuardians, which does AI fraud detection. It’s something you never see, but it’s ever present.”

As well as making technology more accessible to wealth managers, Christensen is keen to see the use of APIs make wealth management more accessible to clients.

“One of our mottos is to democratise wealth management,” he says. “We believe that everyone should have access to the same level of service, at a much cheaper cost, through technology.”

In May 2020, India-based specialist in next-generation digital services and consulting, Infosys, entered a strategic partnership with Avaloq to provide clients with end-to-end wealth management capabilities through digital platforms, deliver efficient scaling, standardise implementation via proprietary Infosys tools, and help wealth management clients transform legacy systems into cutting-edge digital advisory platforms.

And in July 2020, Avaloq collaborated with Investment Navigator to extend the platform’s regtech capabilities. The target is to offer checks for fitness and suitability while distributing investment products, offering regulatory guidance on cross-border business activities, and simplifying compliance while driving operational efficiencies for wealth managers at a reduced cost.

This year, Avaloq also launched its own product for wealth managers, Engage. It enables  conversational banking through WhatsApp, WeChat, and other social platforms and it took off during the pandemic as customers began engaging in a new way with relationship managers, securely trading and reviewing portfolios over their smartphones.

The COVID era many more changes in the fintech space. Remote working and social distancing led to an increased demand for digital onboarding and banking tools. At Avaloq, too, requests for digital tools and particularly those around ESG products and decentralised finance, have increased.

“Banks had more time to think, so they’re coming to us with requests for fintechs. We thought we would be impacted by little or no sales during the pandemic, instead we are going through a tonne of different conversations on both sides,” says Christensen.

Where all this is heading, he believes, is open finance.

“All our ecosystems are converging. We  see a future of switchboards; API management platforms enabling traffic to and from different ecosystems where you no longer own your clients or need to protect them,” he says. “They are your clients, but they can also be other’s clients and vice versa by virtue of having access to other ecosystems.”

Today, the Avaloq platform has banks developing solutions together with fintechs and selling them to other banks.

“For example, we had a bank, a non-Avaloq client in Liechtenstein that’s really strong in blockchain. It’s not interested in our banking stack per se but it would like to place its blockchain service which it developed for itself, in the marketplace and sell to other banks,” Christensen says. “For me, this is the definition of open banking; when partners come together to develop a solution that is sellable to others in the ecosystem. It’s a solution that no one could’ve come up with on their own. Then you know you are truly entering into an innovation ecosystem.”


This article was published in The Fintech Magazine: Issue #18, Page 80-81

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