In the first interview conducted for the EMEA version of the Fintech Disruptors Report, Ilkka Korkiakoski, VP Transaction Banking, at Tieto, shared his thoughts on the dominant trends in financial service delivery, how the business is adapting in the new environment and its roadmap to success.
What are the dominant themes and growth trends in financial technology today?
Instant, real-time payment will change the payment landscape. We are noticing fintech companies entering those areas where friction appears in the value chain and the customer experience is not ideal. Customer experience, real-time payments, open banking are driven by technologies such as blockchain and analytics. The banks are seeing that this kind of digitisation is profoundly changing the landscape and are embracing collaboration with fintechs. The regulators are also forcing the landscape to change, with PSD2 and SEPA Inst two important drivers for payments market.
As one of the ‘old guard’, what is Tieto’s role in the new environment?
For me Tieto’s role is two-fold: when banks look at industry players they are torn between what is new core and what is old core. Disruption is forcing them to look at what they want to do, creating opportunities to work more closely with partners. Tieto has been in financial services for fifty years. In the past we’ve been seen as an IT player but now the company is positioning itself as a business renewal partner – a player enabling transformation and digitalisation in the full value chain. In a world that is more platform-driven and where e.g. payment infrastructures and services are converging, we are actively taking a new role as an industry player instead of just running IT.
How do you see the future?
Looking five years ahead, any player that has traditionally been servicing large banks, insurance companies and other financial institutions, need to take a stand if they want be part of the value chain. In my opinion that is the end game and Tieto has decided that we want to be a partner in the business, not in IT only, and that could mean that we have to be licensed, take risks and share them with customers by e.g. offering full banking as a service. Particularly new banks are more like a skeleton and everything they need in order to operate could come from our platform that is provisioned on a transaction basis and the banks know how the business model works. This model will be mainstream in five to ten years’ time.
What is Tieto’s roadmap to success?
We have for several years been transforming industry products into platforms and will be investing more in this area. We are also introducing more analytics and new technology into the platform. Looking at the payments market, the new data-driven value add is becoming extremely important and our focus is on attaining this value add over the basic transactions processing.
If you don’t have a value add in your platform, e.g. analytics, how can you create a highly visible, trusted network? We are looking at blockchain and working with a number of partners such as Ripple and experimenting with other value-add initiatives.
Cash management, for instance, is quite costly and rigid at the moment. Today’s bank model is not matching the expectation of corporates – they want a platform that accommodates a number of different use cases. We have developed a globally leading virtual account management solution to enable us to provide completely new capabilities to banks and corporates.