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Having A Great Website Or App Doesn’t Mean You Are A Digital Bank

Watch The Wall Street Journal l The Business Debate video with Martijn Hohmann, who is leading in transforming banks for the modern world!

If you don’t have time or no availability to play sound, we provide the 5 key takeouts of the video below.

1. You are at the cutting edge of what we call Fintech, it’s a buzzword we hear every time we are talking about technology and Finance. What do you think the most exciting future prospect Fintech can bring?

Fintech is a really wide used term. I would like to divide the Fintech scenes into two different categories. The ones that actually attack the banks, and the ones that enable the banks to step into the next era of digitalization. Obviously, we are one of the second group. Some of the Fintechs that attacks the banks are quite successful, but at the end of the day, all the big banks have all the clients. It’s quite hardship to move over to a simple alternative, and have many different providers of many different products. I think the future is where we try to modernize all the banks. Some banks will not innovate, and I am not sure what their prospect is. Some will, and I think the labels will be the same in the future. How banks operate and what they offer will change dramatically. You will not recognize your same bank in ten years anymore.

2. Will digital banking mean the end of traditional banks?

I do not see a time that there will no longer be physical banks in high streets. I wouldn’t say a digital bank automatically means there are no physical presences anymore.
Internally, banks are digital, but you could imagine talking to staff still. However, they have the best systems behind them, and offer the best possible services to their clients. It’s always a choice of the bank whether or not they want to offer these services. But everything comes at a cost. There might be other banks that only go digital, we see a lot of examples like that in the market right now.

3. How do you build a (digital) bank?

What is a digital bank? Banks can only be digital if all operations, front to back, are digitalized. Otherwise I would call it ‘lipstick on a pig’.

Digital banking seems like science fiction, and it is in a way: banks are really complex. Many processes that need to be automated, so many activities that need to be performed to make sure that clients can access a bank via any channel. What we basically do is that we really start at the core of the bank, with the old processes.
Five Degrees does a number of things:

  • Mid-size banks are quite comprehensive. What we can do best is use their old product systems and put a new bank on top of that. We can open the doors of that bank the next day.
  • We don’t run the two systems in parallel. There is no risk for the bank at all, because we keep the financial integrity intact. All processes and channels are renewed, the old bank is still there. Therefore, a rollback scenario is always possible. Clients will migrate themselves easily to the new bank.
  • We have never needed to use the rollbacks. Every project was a success.

4. Why aren’t all banks going digital, if it is truly that simple?

Because they are afraid. Bankers are traditionally a little bit risk averse. This is new technology, this is new trends. There are players coming to the market with modern technology.
This trend is happening right now. We have done 13 banks today, and we see a lot of traction and influx coming up now because bankers feel comfortable that it can be done. They have examples of their predecessors that this can actually be done.

5. Can any bank be a digital bank?

The thing is, they should all become a digital bank, because otherwise they will get extinct. The thing is, the bigger the bank, the more complex it is migrating from the old legacy bank that they are today, to a modern, digital bank that has all its processes automated, that the client can access every day via any channel.

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