The financial sector has been undergoing significant business and technological changes for several years. Recent months have accelerated their pace and have exposed areas where banks and financial institutions need to develop in order to remain competitive in the market. Today, due to the largest socio-financial crisis since 2008, financial institutions have learned that building market value is not only about providing an attractive offer for customers, but also about having a technological basis, which, on the one hand, optimizes costs and automates work, and, on the other hand, provides a significant business advantage, which is reflected in financial results.
Optimization of internal processes, advanced analysis and aggregation of data, automation of customer service and implementation of attractive functionalities are challenges that most financial institutions face every day. The role of systems such as BOS is therefore support in identifying business challenges and providing solutions that address these problems. Through a set of basic functionalities, BOS helps to comprehensively build a business advantage, both in the area of back-office management and expanding business offers. In the article below, you will learn about BOS technologies that support development and help you successfully scale your financial business.
What technologies are we talking about?
1. Microservices architecture
2. Event Manager
3. Open API
4. Cloud Ready
5. Unique functionalities
6. Multibranding/Multi-institutionality
7. Integrated General Ledger
1. Microservices architecture
Today’s dynamic business environment, driven by technological development and customers’ openness to new solutions, requires the world of finance to quickly adapt to changing market expectations. There is space for new business ideas, provided both by banks and modern financial entities, such as fintechs and challenger banks. These entities build their business advantage based on technological solutions that offer a new quality in a specific segment of the financial business. Identifying the needs of a modern, technologically aware customer is a challenge, because the growing requirements of customers change much faster than a few years ago. Competitiveness in the financial services market forces market players to be ready to quickly change the offer, customer service processes, or even modify their business model. Classic transaction and back-office systems cope with such a dynamic financial ecosystem relatively poorly, so there is a need to implement solutions that address this problem. This approach requires technology that is functionally flexible, efficient and at the same time provides inexpensive support for a wide range of financial services, but with the possibility of using only selected elements to reduce the costs of business entities.
The answer to this demand may be a properly implemented microservice architecture that supports business and technological scalability. An organization that decides to base its IT architecture on microservices provides its business with the flexibility it needs today thanks to the ability to scale the system, both in terms of its performance and offer development. It is also important that microservices are a cost-optimal solution — thanks to this approach, you can tailor an IT solution to your goals and financial and organizational capabilities, without having to harness the full spectrum of solutions.
BOS, as a system based on microservices, allows you to freely configure functionalities covering individual business processes. Depending on the services offered, the financial institution selects a set of tools to support the processes. At any time, along with the development of the offer or its renewal, these tools can be replaced without significant investment outlays and complicated implementation procedures. The architecture of microservices in BOS is a universal solution both for entities that support a small volume of customers and their transactions, as well as for those large businesses that handle millions of financial operations.
2. Event Manager
Business flexibility, about which so much has been written, is not possible without the support of appropriate tools and systems. At the same time, increasing competition in the financial services market also requires optimization of costs, while introducing changes in the existing and new customer service processes and their activities. Event manager is a solution that can face the above-mentioned challenges. This functionality allows authorized system users to model processes and manage events of the entire system from the level of one, clear interface. Event manager is a great help in the context of introducing changes and new financial products and services. Measuring KPIs for individual processes and offer elements also allows for quick business verification, with little risk and optimization of implementation costs.
3. Open API
Each organization that provides financial services is a complex organism made up of teams of specialists, procedures, legislation, but also a network of complex connections between technological tools. Very often, the full architecture of IT solutions consists of several dozen smaller and larger systems, cooperating with each other — both inside and outside the organization. Reliable integration within these systems is the key to business success and the development of an institution that must be sure of the continuity of operation and security of its solution, as well as its easy expansion with new elements required for new business ideas. Open API built into the system means easy integration and open access to data and object management in the system without the need to involve development teams or the system provider ‘s resources. Integration in accordance with the standards of open banking (PSD2) facilitates the transaction processes within the API, while giving access to full documentation of all transactions. Open API significantly speeds up the process of implementing the required integrations, which is particularly important when creating new functionality — thanks to this, market verification takes place relatively quickly and in the cost-optimal way.
4. Cloud Ready
Fintechs and challenger banks, unlike traditional banks, do not have to focus on extensive technical infrastructure. The key for such organizations is the business idea and how to make it available to end customers quickly. They focus their efforts on this, because it is their competitive advantage. Technology is very important, but still only one of the elements for the efficient offering of business services. In the case of all kinds of neo-banks, both cost optimization and the reduction of resources necessary to bring the product to the market are key. Non-bank organizations operate in a slightly different reality than traditional banks — they have smaller budgets at their disposal, focus on the maximum reduction of fixed costs, and do not need to invest in infrastructure and resources — they are not limited by such strict legislation as in the case of banks, which means that they often use outsourcing in many areas of activity. And although it gives them a lot of freedom, it can also be a trap, because the lack of extensive infrastructure limits the development and scaling of the solutions offered. In this case, it may be a good solution to move the entire system infrastructure to the cloud.
First of all, running BOS in the cloud is a huge saving — there is no need to build or sublet server rooms or maintain the teams necessary to manage the infrastructure. The undoubted advantage of cloud solutions is their lower entry threshold, which is very significant especially in the initial stage of business development. It is also worth paying attention to the fact that the smaller the investment of time and resources, the greater the chance of quick feedback from the market.
Easy, cost-effective scaling makes it possible to increase or decrease the requirements for the efficiency of data processing and storage. The system is ready to work with both public clouds (including key major players in the market such as Microsoft Azure, Google Cloud Platform, Amazon Web Services) and private clouds.
5. Unique functionalities – Currency Cascade, Pooling, Account Virtualization
The key to the success of new financial institutions is the creation of a unique service or set of unique services that identify and address customer needs in an attractive way. The idea and the business perspective are one thing, but the big challenge is to cover the offered functionalities in technological solutions. In a nutshell, IT systems should support the ability to build a complementary set of services for which the demand exists in the market or will be created by a given institution. In addition to standard banking processes, BOS also performs unique business functions, designed to support and, in a way, anticipate customer needs. Deep process automation and high-level parameterization of the system provide space for the development of functionalities and adapting them to market requirements. BOS implements this goal through a set of unique solutions, such as: currency cascade, pooling and account virtualization.
Currency cascade is the automatic use of the client’s funds accumulated in various currencies during the execution of the transaction, in the case of lack of funds on the main account or on the account kept in the transaction currency.
Pooling consists in collecting funds from the indicated accounts required to make a transfer transaction, regardless of the transaction currency.
Account virtualization is a mechanism for creating virtual accounts within the groups of available identifiers, in order to reflect balances and transactions on accounts held e.g. in other banks (this is important from the point of view of PSD2) or to enable analytical breakdown into individual clients for synthetic accounts (e.g. mass payment).
6. Multibranding/Multi-institutionality
Searching for niches in today’s market is a challenge that often leads to the offering of financial services by institutions from outside this industry, e.g. payment services, granting loans and credits, or enabling funds to be deposited (saving, prepaid services, etc.). These entities find ideas for the optimization of these processes, but are unable to implement them or do not have sufficient financial resources to implement them on their own. The solution is provided by specialized institutions (banks, fintechs) that can offer financial services (white-labeling) on behalf of companies from outside the industry. However, they must implement it in a transparent manner, but at the same time tightly separated from their own financial activities and those carried out for other external entities.
White-labeling, provided by the BOS system, is a very interesting option for companies wishing to provide services to other entities in the financial services market, as it gives the opportunity to create brands and institutions that are functionally separated from each other. It is also the ease of defining subsequent units while maintaining the possibility of aggregation within the entire institution, at the level of independent system parameterization. Advanced parameterization also allows for an independent product and price offer, along with full separation of the chart of accounts, main books as well as data and reports of individual institutions.
7. Integrated General Ledger
One of the key and also complex contact points of transaction systems is their integration with the general ledger, which synthesizes accounting entries from transactions. It is a critical element in terms of responsibilities and reporting requirements at every level of business management in the financial area. Each transaction that takes place in the transaction system must be reflected at the level of accounts, which in turn must be managed by the financial and accounting services of the institution. Integration with the general ledger is therefore a set of multi-level and complex operations that must be linked in an efficient and flexible manner with the general ledger accounts. When addressing this problem, BOS offers fully automated integration with its own general ledger as standard. The solution includes both creating a dedicated chart of accounts, defining basic reporting attributes and full freedom in creating connections between operations on bank accounts and ledger accounts through a comprehensive transaction creation mechanism in the system. Moreover, the parameterization of all elements and processes is possible from the level of the system user interface. The result of the General Ledger system is automatic generation of postings and a complete picture of all General Ledger transactions. By offering multi-institutionality, the system guarantees full data separation also at the General Ledger level, allowing for the aggregation of accounting data for all brands within the institution that provides these services.
High scalability and flexibility are elements that are necessary for financial institutions to be able to successfully operate in a changing business environment. The ability to test various business models, the ease of modifying the offer, and creating solutions attractive from the customer’s point of view allows you to build a market advantage in the competitive world of finance. However, in order to successfully implement business assumptions, they must be supported by technology that will not only be reliable, but also provide a set of tools addressing current and future market challenges. BOS is a response to the challenges that financial institutions face on a daily basis — the functionalities of the system cover the key areas of the financial ecosystem’s operations, while maintaining cost optimization and the necessary business and development orientation.