EXCLUSIVE: “PoweringChoice” – Myles Bertrand, Tuum in ‘The Fintech Magazine’
Tuum, one of the latest new generation core banking providers, is making remarkable progress by providing a super-flexible platform on which others can build the future, as CEO Myles Bertrand explains
Long gone are the days when such was the lack of retail competition that car magnate Henry Ford could famously declare his customers could ‘have any colour they want as long as it’s black!’.
As consumers, our demands and expectations have grown exponentially since then and nowhere more so recently than in banking. The emergence of next-generation, Cloud-based, API-first core banking platform providers is a key driver for that, allowing new products as well as new companies, including entire banks, to be quickly brought to market.
Estonian startup Tuum is one such provider and its own rapid growth over the past four years demonstrates how fast the trend is growing for a more modular, flexible – and outsourced – infrastructure to deliver what customers need. Launched as ModularBank in 2018 and rebranded in 2021 so there was no doubt about what it does – ‘tuum’ means core in Estonian – it takes a composite approach to building the technology at the heart of a financial services provider.
The platform’s product suite comprises modules for core banking, payments, lending and cards, allowing clients – whether they’re building a new business or transforming an existing one – to choose what they need, when they need it. In that way, legacy banks can make incremental migrations, giving them the flexibility to develop unique solutions for their customers on their path to full transformation.
Unlike Henry Ford, Tuum CEO Myles Bertrand is all about giving customers real choices. Like Ford, his company builds ‘engines’, he says. “But our customers can build whatever car they want around us, and we’ll scale, horizontally or vertically, to support what they want to do.
“You want to be a Ferrari, you want to be a Toyota, you want to be a Lada… we embrace the ecosystem and work together with other brands to create a capability which, at the end of the day, allows a business to provide a great experience for its customer. That’s the number one priority for us.”
WHAT THE CUSTOMER WANTS…
No bank, large or small, legacy or neo, can afford to ignore customer expectations. Indeed, the torpid digital transformation of some legacy banks can be seen as a barrier to customer acquisition, if not a catalyst for actually losing existing customers. Providers like Tuum are only too aware that consumers have more of the whip hand and tailor their offering accordingly.
“We allow our banking customers the flexibility to provide core basic products – typically, loans and account services – but then to innovate around them and do something a little different,” says Bertrand. “They can add a great experience layer on top – gamification, for example, to incentivise customers to deposit more.”
The greatest challenge for banks that still largely run on legacy technology is finding a cost-effective way to add customer-facing, digital additions, fast. And Bertrand understands the dilemma they face. He says: “It’s really critical because with their legacy technology, by the time they innovate to do what they want to do, the market has moved on already.”
So, could more incumbents be persuaded to outsource their core to speed up response times? If it’s shown to be scalable, reliable and secure, then yes, says Bertrand.
“If you go back five to 10 years, the thought of outsourcing a mission-critical system to a vendor was just foreign,” he says. “But banks are now really shifting. They’ve seen the value of the Cloud, the flexibility, the security, and the ability to do things really quickly. So it’s not just periphery systems that they’re now outsourcing.
“But we don’t position ourselves as a rip and replace solution,“ he adds. “We help clients solve a particular problem. They might have an issue with a product, or they want to go into a new geography, or they want to go after a new demographic in the market – we help them to do that quickly, without the typical cycle times associated with legacy technology.”
Thus Tuum is proving to be a catalyst for innovation. For example, among its customers is SweepBank, owned by Finnish bank Multitude, which is bringing what it dubs the ‘Netflix experience’ to banking by using advanced analytics to provide hyper-personalised services to its customers when they spend and save.
“You want to be a Ferrari, you want to be a Toyota… We embrace the ecosystem and work with other brands to create a capability which, at the end of the day, allows a business to provide a great experience for its customer“”
Another is CrediNord which offers streamlined business loans in Finland, Sweden, Denmark and the Netherlands, using Tuum’s core banking platform, where previously such products were inhibited by its legacy technology. And Denmark-based Januar has turned to Tuum to provide the core platform for its ‘gateway’ service, which allows crypto businesses to open accounts and allow payments in and out.
“What’s exciting is how some players are targeting specific ways to approach the market,” says Bertrand. That includes financial services provided by non banks, too.
“A lot of big telcos are jumping into financial services,” points out Bertrand. “So you’re seeing a divergence of providers in the space – organisations coming to the market, trying not to just be digital versions of the well-established mainstream banks, but tackling certain segments that feel they are underserved and helping them be more successful.”
For its part Tuum has ‘no plans to go further up the value chain, or become more of an end-to-end service provider’, says Bertrand.
But it doesn’t lack ambition. It wants to broaden its reach beyond the Nordics, Europe and the UK.
“We’ll continue to invest heavily,” says Bertrand, “and go deeper into what we’re doing right now.”Right to the core, in fact!
CASE STUDY: TUUM AND LHV BANK IN THE UK
In March 2022, LHV Group, Estonia’s largest domestic financial group and capital provider, selected Tuum as the core banking platform for its emerging UK bank. Established in London in 2018, LHV UK already provided banking infrastructure and payment services to more than 200 fintechs with more than 10 million end-customers globally, including Airwallex, Coinbase, Railsbank and Wise.
In fact, in Estonia, Tuum itself was a consumer of LHV’s banking services for fintechs, allowing it to provide real-time GBP and euro payments, virtual IBANs, currency exchange accounts and currency exchange transactions.So perhaps it wasn’t entirely surprising when, shortly after signing the UK deal, LHV decided to strengthen the two companies’ relationship further by sinking €1million into the startup.
“Together with Tuum, we can give fintech startups and companies operating in other fields the opportunity to enter the market with new flexible financial products more easily and faster,” it said at the time. That flexibility and speed were to be demonstrated just a few months later when LHV UK stepped in to take over the loan book of Bank North, the pioneering regional UK business bank in which LHV Group had previously invested and which was forced to close in October 2022 when it failed to meet capital requirements.
Bank North had built technology which streamlined the lending process and approved loans to local businesses as much as 10 times faster than its competitors. LHV UK CEO Erki Kilu said the acquisition would enable LHV UK to accelerate plans to expand to servicing SME companies.
Despite the unplanned assimilation of Bank North’s loan book and clients, LHV UK still managed to acquire its full UK banking licence this May, just over a year since lodging the application. The Tuum platform has meant it can build in-house payments modules and API solutions tailored to its fintech clients. And it will allow it to enter new market segments later this year: LHV Bank plans to accept retail deposits as well as introducing banking services to e-commerce businesses in the UK.
Rivo Uibo, co-founder of Tuum, describes LHV as ‘one of the most tech-savvy and digitally advanced banks on the market’, adding that the tie-up was a perfect illustration of how ‘collaborating with core banking infrastructure providers is invaluable for banks in freeing up internal resources to focus on competitive product offerings’. “LHV UK epitomises the banks of the future,” he says, “with open architectures and exciting new business models.”
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