North America has a newcomer in core banking — Technisys, originally from Argentina. It is implementing a digital first system at Alberta’s ATB in a new subsidiary bank called Brightside, and it recently raised a $50 million Series C investment round from Riverwood, a Silicon Valley fund.
Co-founders Miguel Santos, CEO and co-founder Adrián Iglesias, COO both came out of IBM Argentina while a third co-founder German Pugliese Bassi, CMO & Alliances is a well-known entrepreneur in Latin America. The company now makes its headquarters in Miami.
Santos said the company will use the new round of funding to pursue business worldwide disrupting the market in financial services.
“We are helping banks transform to digital and powering new challenger banks.”
He thinks the funding shows two major trends — continued growth in technology and continued expansion into North America.
North American banks are so dissatisfied with the big three core providers — FIS, Fiserv, and Jack Henry — that the American Banking Association (ABA) and the Independent Community Bankers of America (ICBA) are each backing new vendors.
The ICBA is investing in, and supporting through an incubator, Agora which provides real-time banking that sits in front of legacy core banking platforms and provides such features as mobile accounts, shared accounts, children/parent accounts, advanced real time card controls, budgeting and saving tools and money pooling.
Meanwhile the ABA is in a consortium behind Finxact, developed by fintech industry veteran Frank Sanchez. It has announced $30 million in equity financing from the ABA, Accenture Ventures, SunTrust Bank, and Finxact’s existing investors, including Live Oak Ventures, First Data, Woodforest National Bank, and T.N. Incorporation Ltd (TNI) of Thailand.
Rob Nichols who has been CEO of the American Bankers Association for three years, said in his travels around talking to banks, the core banking systems were a common source of dissatisfaction.
“Early on I learned that outside public priorities, their chief desire is to have a nimble and agile core offering. We saw this (Finxact) as an opportunity to invest in an innovation which could push the whole core processing dialogue in an interesting direction.”
So Technisys is well-positioned for a market that is unhappy with incumbents.
In addition to ATB in Canada, Technisys has non-disclosed clients in the U.S. and is dealing with mid-size American banks, Santos said.
“We are seeing many small and medium banks tied to FIS, Fiserv and Jack Henry, which are old technologies. We have a lot to offer Tier 2 and Tier 3 banks that want to differentiate.”
Technisys has projects in more than 15 countries including U.S, Canada, Brazil, Colombia, Argentina, Chile, Mexico, Perú and Ecuador.
One challenge for non-American banking vendors is the complexity of the U.S. regulation, including state regulations. Some firms have been reluctant to invest without a bank committed to buying their technology, and banks don’t want to contract for a system that hasn’t been developed yet.
Santos said the Technisys platform has been readied to meet U.S. financial regulatory requirements.
Technisys offers a modern fully digital core and a digital front end for a 100% customizable customer interface and a layer for Open APIs to plug into, giving flexibility to the banks to offer their clients a superior experience while being able to innovate. The core and digital platform can be installed separately or implemented together. The digital platform provides the opportunity for banks to differentiate and emphasize their brand or create special services or new financial products.
“We can actually install the digital platform into a customer’s operations and interact with their existing core banking system, and make them free to create new experiences and differentiate from the competition, which is going to be harder and harder,” Santos said.
“The value proposition on the digital banking platform, we are convinced, is differentiation for not only banks, but technology firms going into finance. Having a platform that lets you create, that allows you to differentiate is key. More than key, it will be mandatory.”