The Connector Podcast - WealthTech Live in Zürich 2024 - Revolutionizing Core Banking and Embracing Innovation in Switzerland by SaaScada

Unlock the future of fintech with us, Koen Vanderhoydonk, as we invite the astute Nelson Wootton, CEO and co-founder of Saascada, into our conversation. Prepare to have your perspective on banking innovation revolutionized as we dissect SaaScada's minimalist yet powerful approach to core banking solutions. Their cloud-native platform is a game-changer, providing a solid backbone for both fledgling challenger banks and established behemoths undergoing the daunting task of system upgrades. Nelson lays out the intricacies of product offerings and ledger management that form the pillars of SaaScada's strategy and elucidates how their reliance on event sourcing can slash infrastructure costs, making them a beacon for financial institutions navigating the stormy seas of modernization.

Step into Switzerland's financial haven, where we shine a light on SaaScada's groundbreaking event-driven system. With agility at the forefront, this innovative approach to data management empowers Swiss banking to embrace AI and regulatory reporting like never before, all while upholding its legendary financial stability. The episode goes beyond just tech talk - Nelson unveils our strategic plans to entrench ourselves in the European market, including opening a new Zurich office and the potential of instant payment systems to shake up the banking landscape. Please tune in for an auditory expedition that offers a unique blend of technological prowess, business acumen, and a rare insider view of Swiss banking's fintech evolution.

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Koen Vanderhoydonk
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#FinTech #RegTech #Scaleup #WealthTech

Transcript

Speaker 1: 0:01

Welcome to the Connector podcast, an ongoing conversation connecting fintechs, banks and regulators worldwide. Join CEO and founder Koen van der Hoidon as you learn more about the latest available trends and solutions in the markets.

Speaker 2: 0:21

Welcome for another podcast episode with Weld Mozaik. Live from Swiss Weltech here in Zurich. I've got with me Nelson. Nelson is working for Saskata. Nelson, can you explain me a bit more what you do, who you are and where you come from?

Speaker 3: 0:37

Hi, yeah, really great to be here. My name is Nelson Wooten. I am the CEO and co-founder of Saskata. Saskata provide a core banking platform. We are very focused about what we do in that space. Traditional core banking systems might extend into user experience, the RM systems, loan origination systems, credit decisioning. We don't do any of that At Saskata. We focus on the products that a bank offers to its customers.

Speaker 3: 1:10

We focus on the ledgers required to run all of that, including their own treasury general ledger, etc. And we focus on integration into local payment systems card processes if you want to credit debit product in there, and exchanges, if you want to bring those other assets onto the core platform. So it's an incredibly focused core platform. We tend to talk about it as being the boring bit of banking. If you step back and think about banks, these things are common across banks everywhere in the world. The stuff that sits on top of our platform is what differentiates one bank from another, and we believe that's where banks should be investing their time, energy and money.

Speaker 2: 1:52

So you literally take the term core banking to its essence, but would you then also look at it from a cloud perspective? Are you guys, cloud based? Are you like API based? Obviously, I think, but cloud based not.

Speaker 3: 2:10

Yeah, so we are a modern platform and consequently we are what we call cloud native and that's worth unpacking for a minute. Taking a piece of software that's running on a server in a data center and copying that and moving it into cloud. That is cloud, yes, but it's not really utilizing the upside of cloud. Cloud is an incredibly clever, useful set of technologies that allow you to really lower your cost of IT infrastructure, and the way I describe it we use I'm a bit of a techie, so I'll occasionally leak in small techie terms. We use a system called event sourcing at the heart of our architecture and, from a cloud point of view, what that really means no events, no infrastructure.

Speaker 3: 3:00

Is it similar than modular approaches? Very different to modular? Okay, so modular banking is the stuff that vendors will sell you. So a modular platform provider will sell you a lending module so you can do your loans and mortgages, and they'll send you a deposit module for your deposit accounts and savings accounts, and they might well sell you a current account module. We don't do that. Once you're on our platform, you can launch any kind of account you like. There is no extra charge from us. We don't seek to charge customers for these different types of accounts. That's their business, not ours.

Speaker 2: 3:38

Okay, makes sense. I guess the term that I was looking for and I was wrong in my mind it's probably microservices rather than modular.

Speaker 3: 3:46

It is absolutely microservices. But even that is slightly disingenuous, because when you think of a service, you think of something that's running 24 hours a day. That's not how our platform works. It utilizes cloud in as much as if there are no transactions happening.

Speaker 2: 4:01

There's nothing wrong, there's nothing happening. Okay, cool, cool, cool cool. Would that then bring you naturally to the more greenfield banks, the challenger banks to the market, or they're more tempted to use a platform like yours?

Speaker 3: 4:15

Let's be clear Core banking, if you're an existing bank, is a frightening piece of your infrastructure, it's brain surgery.

Speaker 3: 4:24

Yeah, we talk about it as heart surgery. Changing core banking platform is open heart surgery while the customer's walking around, which is pretty much as scary as it gets. We are dealing with more and more banks. What we tend to do as we approach a new market is we will work with greenfield new bank startups to start with, primarily because they are much more what we would call risk on. They have very different challenges to an incumbent bank to overcome. We're uniquely positioned to solve both of them, but your conversation with an incumbent bank in country is an awful lot easier if you've got half a dozen neo banks behind you and proven that the technology works and it connects to everything they need it to connect to. Actually, there isn't really anything here to be scared of, apart from the fact that you're talking about a new core.

Speaker 2: 5:20

Yeah, that's not only to be sort of know that it works on a banking and product point of view, but also the regulatory part.

Speaker 2: 5:28

You know that also regulations are being taken care of I guess, absolutely, I think, particularly being today here in Zurich, while Switzerland is a very traditional market with traditional players and a little bit cloud aversive in a way. I think that is changing over the last few years, but there are many core banking providers already active in the market over 30 years, so is that not a very complex market for you guys to get in?

Speaker 3: 5:55

It's a really good market for us to get in. You're right. Switzerland, particularly its wealth, is quite traditional and I know that from a technical point of view people sort of roll their eyes and go it's all very traditional, but the truth is that's a good thing. If I'm staggeringly rich, I'm not, but if I am staggeringly rich, I'd like someone really safe to look after my money, not someone really risky. I want a really safe pair of hands so that I don't have to be frightened or worried about my money. So that traditional, not being on the bleeding edge is a completely understandable position for banks to take and I totally get it, particularly in wealth.

Speaker 3: 6:42

Now the challenge that we see in this market is the incumbent players are difficult to work with, very slow to implement change and staggeringly expensive, and I would say that we are seeing as many as a new application into Fnmar a month. I've no idea what the actual data is, but that's pretty much how often we'll get a new Swiss opportunity hit our business one a month, and I'm sure we don't get all of them right. I'm very sure we don't get all of them Now. Will all of those guys make it? No, but some will, and some of them will become quite big and some are definitely attacking the existing banks and their lack of innovation in this space. And you know, actually sitting here today, wealth mosaic, there's been some really good. There's been some really good pieces on stage and one of them was Julius Bear, a very big, very big wealth bank, and they're talking about the innovation they're doing there. So it is good to see.

Speaker 2: 7:44

It just isn't always obvious to everyone and what would be the obvious for you in terms of bringing innovation into this space.

Speaker 3: 7:52

So I think for us, it's about providing agility to a bank. We aren't best placed to tell you how to manage wealth.

Speaker 2: 8:01

That's not what we do. That's looking, then, towards the core side of the bank, the engine, if you want, but what about the car itself, the look and feel for the users? Is that something you also help?

Speaker 3: 8:12

Well, they're in. Yeah, no, we don't do that, but it's. The two things are intrinsically linked, right? So typically, currently, people are buying core banking platforms that do the full stack and then, when they try to go into those core banking platforms and get an API so they can do something slightly different with their origination journey or their customer onboarding or their user experience, it becomes very expensive, very difficult and very challenging to do. It's not for me to say whether those players are making it deliberately difficult or architecturally. They're stuck in a cul-de-sac. That means it's very difficult, but either way, it's very difficult and that's preventing innovation, that's preventing these organizations from fully digitizing in the way that they can see they need to do and consequently, it's holding them back and consequently, that creates a discussion that is there a different way of looking at core banking, and that's where Cascada sits.

Speaker 2: 9:08

Is the magic bullet that, not data?

Speaker 3: 9:10

Yeah, data is a key part of it. I think data is not only today's solves an awful lot of today's challenges. Cascada was built because my co-founder and I we built a bank in the UK and building that bank there were several challenges, but without a shadow of a doubt, reporting was one of the real pain points, and Cascada's event-driven system allows us to create an infinite set of templates for data reporting. So, as a core banking system, we process transactions as unstructured data, meaning that there's nothing particularly one transaction can look completely different from another in our call. That makes no difference to us at all. We then process those after the transactions happened and turn them into data structures, and these data structures can be customer statements, management information reporting, reg reporting, loyalty doesn't matter, makes no difference to us and we kind of refer to those as templates. And what's really powerful about our system is that you can build new templates on the fly.

Speaker 3: 10:14

And what's really powerful about?

Speaker 2: 10:15

that, based on the existing data, I would say imagine yeah well, actually, you can enrich it as well.

Speaker 3: 10:20

So look the ludicrous example that I give. This has never happened. But if a bank woke up one day and said you know what we need to understand what the weather was like when any transaction happened, you can go into our eventing system, enrich the data with weather at time and location transaction happened to build a new report that will instantly get populated when the next transaction runs through. Then you can take that template and apply it to all the historic data we've ever processed for you.

Speaker 2: 10:47

Wow impressive.

Speaker 3: 10:48

Yeah, it's really, really, really powerful tool and I think not only does it unlock an awful lot of value now, but it actually the future, when AI and data plays are going to become much more prevalent than they are now and, much better understood, it is going to be an absolute cornerstone for those organizations.

Speaker 2: 11:06

And, frankly, I think it will still apply rubbish in, rubbish out. So if you have a very bad soft foundation, it's very difficult to be at par with AI, absolutely true. Well, talking about AI, and already coming to my last question, and a very interesting one, I've heard before from you actually, that you could speak for hours and hours on this. So I would like to just a few bullet points. What's still on the plan? What's the future look like?

Speaker 3: 11:35

Yeah for the business. We will be looking to open offices in Zurich now. We've got a lot of our client base here. I would say nearly half, if not slightly over half of our clients, the Swiss clients now, which is really exciting.

Speaker 2: 11:50

So that's yeah it's really good.

Speaker 3: 11:51

It's a super exciting time to be here in Switzerland. There is a tonne of innovation going on. I think partly that's because Finmar have done something slightly different to the European regulators and that's attracting an awful lot of innovation here as a consequence of it. Could you elaborate a little bit on that? Yeah, of course. So if you're an EMI is kind of the regulatory status that perhaps a new business, a new financial business, might adopt in Europe. As an EMI, you will hold your funds with an agency bank and there's a set of protocols built around that. In Switzerland, a FinTech, which is the equivalent of an EMI, holds their funds at the Swiss National Bank.

Speaker 2: 12:45

Now, that means it's sovereign.

Speaker 3: 12:47

Okay, now we're talking. You know that is an additional layer of protection that you don't get, because it's unthinkable that these big banks credit Swiss could disappear one day, right. Yeah, I agree, but it happens, and so this, I think it's really important, and so what we're seeing is an awful lot of innovators creating financial services businesses here and taking them out to Europe, which I'm sure is partially what the Swiss regulator would like them to do.

Speaker 2: 13:15

And that's really important and can then they also passport out of Switzerland into?

Speaker 3: 13:20

Europe? Yes, absolutely, and we're starting to see some of that stuff happen too now.

Speaker 2: 13:24

Wow.

Speaker 3: 13:24

Yeah, it's really interesting, really super interesting, so I think it's making Switzerland a really exciting place to be for FinTech. I can see an awful lot happening here.

Speaker 2: 13:34

Well, I didn't know that particular part, because there is a lot, indeed a lot a big race at the moment in the market for e-money licenses. Yeah, we see a lot of things happening in Ireland. Yeah, there were the Baltics before, which are a little bit less at the moment in my opinion, but there is a race happening for having a good place to be able to passport in Europe.

Speaker 3: 13:55

And coupled with that, of course, is separate or instant payments are coming now to Swiss, so is it called six, six, instant or instant six? I can't remember what they call it instant sick or something, but yeah, faster payments.

Speaker 2: 14:08

We should know because we're in the six buildings.

Speaker 3: 14:10

I know we really should know. I know the protocols and how quick you've got to be, but I don't know what it's called. That's terrible, isn't it? But it's super interesting and I think that is going to foster another generation of kind of real innovation. So what I would expect to see then? I know that the FinTechs are desperate to get their hands on it because they're talking to us about it. I know the big banks have got to do it because the regulator's gone. Hurry up you lot. You're dragging your feet and eventually, once that happens, they will put pressure on the smaller banks as well. I think it's great right. There is no excuse for a bank to be sitting on money. It should move from A to B instantly.

Speaker 2: 14:45

It's you know like sense makes sense. Nelson, thank you very much for joining me here in the podcast.

Speaker 3: 14:54

Thank you for having me Is there any way people can contact you. Yeah, absolutely. So. You can get hold of me on LinkedIn, NelsonWoodson, so you find me on LinkedIn. I'm also on Saskada, so that is wwwsaskadacoms-a-a-s-c-a-d-a.

Speaker 2: 15:12

Perfect. Thank you once again. Thank you also to the audience and please stay tuned.

Speaker 3: 15:17

Thank you, cheers.

Speaker 2: 15:18

Bye-bye, bye-bye.

Speaker 1: 15:20

Thanks for listening to another episode of the Connector podcast. To connect and keep up to date with all the latest, head over to wwwjointheconnectorcom or hit subscribe via your podcast streaming platform.