Banking trends in 2024


Monras Community Day 23 Hauptbild Ohne Overlay

At the Finstar Community Day in November 2023, Finstar CEO Daniel Monras spoke about the company's ongoing transformation. Collaborative visions and trending topics such as banking-as-a-service, open banking and embedded finance are crucial for the future development of the industry.

The Finstar community met on the last day of November 2023 at the Kultur- und Kongresshaus in Aarau. The key topics on the agenda: The Lenzburg-based banking software developer has recently been incorporated as an independent public limited company. "However, Finstar AG remains a wholly owned subsidiary of Hypothekarbank Lenzburg," Finstar Managing Director Daniel Monras says in his speech. Enough time is being taken to transfer the existing organization to the new company to ensure that the needs of employees and partner companies are adequately taken into account in the transformation process.

"In the third and fourth quarters of 2023, we will have completed the formation of the new public limited company and defined the rough basic structures of the new company," says Monras. The plan is also to transfer the employment contracts of Finstar employees from Hypothekarbank Lenzburg to Finstar AG. As Finstar was until recently a department of the Lenzburg regional bank, Finstar employees were employed by the bank. The modalities of the contracts with partner institutions would subsequently be determined.

Independence creates more potential

"As the parent company, Hypothekarbank Lenzburg continues to offer economic stability, we have better growth potential thanks to the decoupling and can better focus on the needs of our customers," Monras continued in Aarau. The existing maintenance and development work will continue unchanged. Employees will be involved in positioning the new company, as will customers and partners. "The goal of the new company is to improve all areas for our customers," Monras says.

The new company consists of the Development, Professional Services and Cyber-Security & Technology departments. Professional Services is responsible for the operation, maintenance and further development of the IT platforms for all Finstar banks. The foundation for future growth was laid with the migration of the old data center in Wildegg to a new data center (read more here). This is accompanied by further innovations such as an update of the server operating systems, system hardening and new organizational structures. "Finstar now has higher infrastructure availability than before and is ready for further growth," Michael Schwab, Co-Head of Finstar Professional Services, said at the Community Day in Aarau.

"The goal of the new company is to improve all areas for our customers."

Daniel Monras, CEO Finstar AG

Monras Community Day 23

Best-practice results and collaborative visions

The development of new solutions is based on best-practice results and collaborative visions. Finstar is supported in this by Innofactory, a joint venture between Berner Kantonalbank and Hypothekarbank Lenzburg. The development processes are agile, as the Innofactory team headed by Mark Chardonnens explained in Aarau.

Finstar is to be developed in line with customer needs by actively involving the Finstar partners in the innovation process. The Innofactory manages the agile process and evaluates, coordinates and tests ideas together with the partners. "We ran through this with the topic of balancing, which will enter the implementation phase at Finstar in the first and second quarters of 2024," Chardonnens says.

Instant payments, sustainability preferences and security tokens

Overarching market trends are also decisive for the development of the Finstar system. In recent months, for example, Finstar has been prepared for the fifth generation of the Swiss payment system Swiss Interbank Clearing (SIC5), which will introduce instant payments in Switzerland (read more here). A function for regular investment savings was also implemented, the BX Swiss was connected as a new stock exchange and the function for sustainability preferences in accordance with the ESG model was introduced for investment clients.

A prototype of the advisory suite was also developed, which provides digital support to bank employees in their advisory discussions with customers. In the area of digital assets, the safekeeping of security tokens in the Finstar system was put into operation. The open banking functions were also expanded with programming interfaces (API) for stock exchange trading and foreign currencies (FX).

Numerous projects are also in the development pipeline. For example, for the administration of multibanking queries at various banks with a connection to the SIX b.Link platform, for the administration of new e-commerce-enabled payment cards, for the custody of cryptocurrencies, for the expansion of the security token offering and for the introduction of instant payments as the standard for bank transfers.

Embedded finance conquers everyday customer life

André Renfer, who has driven forward the open banking business at Hypothekarbank Lenzburg in recent years and will support the bank as an external consultant in future, concludes by taking a look at the future of the banking business. The buzzword of the moment is embedded finance. "Customers want financial products and services that are seamlessly integrated into their daily activities," Renfer said at the Finstar Community Day. Embedded finance integrates financial services and products into the value chains of companies that do not offer financial services.

"The change with embedded finance is forcing banks to focus on the customer rather than the product," Renfer said. Data and information management will be the key to success. "Companies that gain insights from data to improve the customer experience and offer customized products will develop more successful strategies."

Artificial intelligence and a new risk culture

The use of innovative technologies and artificial intelligence will help to increase productivity and improve products and services. Banks that use such technologies could differentiate themselves from the competition and gain a competitive advantage. However, this was also accompanied by a change in risk culture. "In future, credit and market risks will no longer be a separate business model. Other risk categories such as operational or cyber risks will become relevant," Renfer said.

The Finstar platform enables third-party providers of financial services to access banking business, transactions and banking data by using the open application programming interfaces. Open banking transactions are already part of everyday life in 87 percent of countries. According to Renfer, open banking is the best instrument for the future of the financial sector. "The coming years will be more dynamic than the immediate past," Renfer is convinced.