Johnny Cash, ATMs and beyond

At Software AG, we define freedom in terms of our customers. So, what does “Freedom as a Service”’ mean for banking customers?

Banking has come a long way since Software AG was founded 50 years ago; around then Barclays launched the first ATM in London, England. It took until 1985 for the new technology to work its way across the pond to Canada, but I remember very clearly the first time I used a Canada Trust “JOHNNYCASH Money Machine.”  

Yes, Canada Trust actually had to advertise the benefits of the new technology, and encourage adoption through a giveaway of free tickets to a Johnny Cash concert. (It was a great concert, by the way!). 

Of course, ATMs now seem as ancient as fax machines or rotary phones. In some countries like China and Sweden, ATMs are as rare as cash payments. Looking in the rear view mirror can frequently be amusing and occasionally instructive. We can see from this history lesson is that unimaginable change will continue to happen – whether we usher it in or fight it. So what trends can we expect in the next few years? And how should this influence approaches to technology?

The first trend will be the continued blurring of industry lines – for example, Uber following its Singaporean counterpart Grab into banking, payments and possibly insurance; big tech continuing their piecemeal, unlicensed movements into banking and insurance; and an affiliate of Chinese ecommerce giant Alibaba building the largest money market fund in the world in just six years. 

The second trend will be the widening scope of financial regulators. Certainly, the trend to regulation or deregulation swings back and forth like a pendulum depending on who’s in power, the strength of the economy and the financial system, and the visibility and preponderance of fraud and other bad behaviors. But over the long-term, the trend will be towards increasing scrutiny on financial services – regardless of who is providing them. 

The third trend will be a new wave of merger and acquisitions – and eventually a change of the power structure at the top of incumbent banks. Banks will merge with banks; insurers will merge with insurers; and banks and insurers will seek to buy-out the start-up fintechs and insurtechs in whom they have made early round investments. 

And just like when the banks starting snapping up the brokers some 35 years ago, there will be culture wars and departures. But eventually everything will settle down and the acquired will start to learn the business of banking or insurance. They will be impatient and creative. They will challenge business models and the traditional ways of doing things. 

And what does this mean for technology to enable financial services firms’ competitiveness in future? It means that flexibility is paramount.  There needs to be the agility to connect anything with anything in a transparent and managed fashion – be it an ecosystem with fintechs or insurtechs, demonstrating compliance, integrating acquisitions to accelerate ROI, or connecting with devices. And you’ll need insight, through analytics across the business.

Integration capability needs to agnostic and the focal point of your integration provider. That’s why Software AG, on its 50th birthday, has adopted the tagline “Freedom as a Service.”  And that is our promise to you: integration that delivers transparency, agility and insight - freedom.