ME ups its fintech game by outsourcing core banking capabilities
The bank has decided to outsource to avoid being "spread too thinly".
Industry super fund-owned ME is investing in digital innovation by outsourcing part of its core banking capabilities. The bank has signed a five-year deal with global technology consultant Capgemini which will see it managing parts of its core banking functions as well as streamline the process of launching products and services.
While ME will retain the design and security elements of its core banking system, Capgemini will provide a managed service for its infrastructure.
Speaking to the Australian Financial Review, the bank's chief technology officer Mark Gay said the decision was strategic.
"We are a small bank with all of the same technology and overheads that a big bank has. If we hadn't taken this approach, we were going to be spread very thinly, so by doing this we really believe that we can focus on the stuff that matters to customers."
The "stuff that matters" includes technology that will compete with other online-only banks as well as the Big Four.
Gay says ME's banking competitors usually innovate with the wrong focus in mind.
"If you look at the way technology companies work and the way that they interact with their customers, it's that kind of ease of use we want for our banking customers," he said.
"The way banks traditionally digitise is they build processes for themselves, not from a customer perspective."
ME Bank is not the first niche bank to openly invest in digital innovation. In July 2016, KPMG announced a new accelerator program to bring together credit unions, mutual banks and fintech startups. Two key partnerships were also announced, with CUA partnering with fintech hub Stone & Chalk in April and Beyond Bank taking an equity stake in SocietyOne in September.
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