Software provider Fiserv and 'digital-only' lender Atom Bank have launched a software as a service platform aimed at overcoming a major barrier to new entrants in the UK banking sector — IT costs.
Despite recent government efforts to open up competition in the retail banking sector — such as reduced capital requirements and improved access to payments systems for new entrants — the 28 banks currently applying for UK licences are required to make significant investments in reliable IT infrastructure.
The collaboration between Fiserv and Atom Bank — which is to be launched by Metro Bank founder Anthony Thompson next year — aims to provide easier access to the necessary banking systems without requiring a large initial outlay, which can typically reach tens of millions of pounds, and require significant in-house support.
"It is great that there are 28 applications with the regulator to become banks but they all face one insurmountable hurdle, the creation of IT infrastructure to support a bank," Atom Bank's Thompson said at an event in London yesterday evening.
Dubbed Agiliti, the cloud platform offers the software functionality required to support a range of financial products — from current accounts to loans, mortgages and small business services — through volume-based pricing.
"The ability to pay on a 'pay-as-you-grow' basis means that organisations from very large to very small can come into the banking market. We are going to see more new banks like Atom, and new credit unions, and this is what will facilitate that change," Thompson added.
Thompson will serve as a non-executive director for Agiliti, which has been set up through a subsidiary of Fiserv, while Atom Bank - which sells itself as the first bank to offer only digital services - will also be a customer. Another user of the service upon launch will be Manchester-based financial services firm Think Money.
The platform itself will tie together a number of elements of existing Fiserv software, such as the Signature core banking platform, already used in the UK by Tesco Bank.
It will also support a variety of channels as part of a modular approach. This includes branch, call centre, back office and ATM operations, as well as mobile and online banking, which will be available through Fiserv's Mobiliti service.
The service is aimed at enabling lenders to focus on the job of being a bank, rather than a technology firm, said Fiserv's EMEA managing director, Travers Clarke-Walker.
"Although there is a lot of talk about differentiation in the banking market, a lot of that differentiation happens at the customer experience level," said Clarke-Walker, who formerly led digital initiatives such as Pingit at Barclays. "95 percent of anything that is in a bank is utility."
Sign up for MIS Asia eNewsletters.