Without a doubt, for most, the silver lining of the pandemic is the acceleration of digitalisation of the economy and business. The adoption of fintech (financial technology) has been hastened during the past 2 years and, it is predicted that with the advent and AI and further advancement in Fintech, the future of banking and financial industry is excitingly evolving.
Coupled with the evolving adoption of fintech is the urgent question of cyber-safety and security for info and data transmission. With this, we have interviewed Ivo Ivanov, the Chief Executive Officer of DE-CIX International.
Ivo Ivanov would address the issues of data security and secured connectivity and the mitigation of risks to reap the benefits of digital banking.
Q: As most financial institutions are notoriously conservative when it comes to digital innovation, how does DE-CIX ensure that they act as a reliable mediator for the bank’s customers, while securing opportunities for banks to sell their products through a third-party provider?
Ivo: DE-CIX with its world-leading infrastructure and more than 25 years of interconnection know-how, has the capacity to make such ambitions become possible for financial institutions. In a nutshell, the interconnection services provided by DE-CIX allow for direct connections to other networks and improve the speed, performance, and security of data transfer between partners. To generate new revenue streams, the financial institution can create its own private and secure interconnection ecosystem of partners (a Closed User Group’) which bypasses the public Internet.
Having set up this connectivity with partners, a bank can then embed itself more and more deeply into each of the value chains represented. Through their partners, banks can then offer services and products to new customer groups (e.g. for specific niche markets), sell their services as white-label products to be branded accordingly, and support the development of financial management and other types of applications, using an API based on open banking, for example.
Q: What are some of the exciting trends that DE-CIX foresee to come in 5 years’ time within the banking industry?
Ivo: Over the coming years, banks and other financial service providers need to reduce their costs, develop new business models, activate new revenue streams beyond the standard set of financial services, and meet the needs and expectations of increasingly tech-savvy customers. They need to achieve full digitalization.
Customers are demanding easy-to-use digital systems and flexible access to banking products, and are more willing to shop around for a better deal – for example, through the growing range of in Tech companies on the market. And with increasing competition from new players, banks and other financial service providers need to look into creating new revenue streams. They will achieve this by working with trusted partners. With robust interconnection in place, banks will have the capacity to broaden their portfolios to offer services and products to new customer groups (e.g. for specific niche markets) through partners. They will be able to sell their services as white-label products so that another bank (e.g. a Neo bank) can brand them and sell them to new customer groups. They will be able to manage relationships with FinTechs, in order to support the development of financial management and other types of applications, using an API based on open banking. What’s more, by separating customer management from service management, they will be able to deepen their market penetration by offering their services through partner banks to customers in other geographical locations, where they themselves do not have a banking license. But to do that, it must first ensure its digital infrastructure is up to the task.
For the full interview check out our BusinessToday March 2022 issue.
