Is a startup and a bank relationship resembling the story of David and Goliath? Or is it more of a collaborative relation? Blockchain, AI, Big Data, to name a few, are the buzz words that actually change the way banks do business, and fintechs have a lot to do with it. We asked Jakub Kachlicki, Director of the Department of Electronic Banking Applications at PKO Bank Polski, the largest bank in CEE, how startups, with their agility and new ideas, influence banks’ IT systems.
On one hand, a startup created by a couple of IT professionals, on the other – a huge bank with an extensive IT department. Can the bank learn something from the small fintech?
Fintech startups certainly influence the pace at which IT systems in banks are developed.
In what way?
Firstly, startups are flexible, they easily adapt to customers’ expectations, they enter market with new solutions that compete for bank customers’ attention, i.e. startups that offer simple cash loans or provide aggregated bank account information. Because of such fintechs, the banks must become more agile and adapt to the changing market faster. Secondly, fintechs create many new technologies that large financial organizations can implement in their own operations. Here the impact on bank’s IT is more direct and therefore stronger – by investing in the development of its systems, a bank utilizes the IT solutions invented by a startup.
Does it also apply to the IT departments at PKO Bank Polski?
Definately yes. On one hand we want to be more agile and be able to provide our customers with the latest solutions faster. On the other hand we want to enrich our applications with new tools and functions developed by startups.
What specifically is the bank looking for? Are there any IT areas, that you have particularly high hopes for?
Recently we have had a lot of startups that want to develop solutions based on open API, using the PSD2 directive. But there are no rules. There are a few „hot” topics in banking at the moment. For example, robotization. In a perfect world, all the systems in a bank are perfectly connected to one another, and data put into one system, automatically update information in the other.
But we do not live in a perfect world, so how does it really work?
Exactly. In the bank, the IT systems have been built for years, their elements are not all interconnected and in practice it is often necessary to manually copy data from paper and PDFs to the system, or from one system to another, or even compare data between systems. And after all, the people who do it today could be used for more creative tasks, and such simple, but demanding precision work, could be performed by machines.
The other area is big data, so various ways to collect and process large amounts of data. The first idea to utilize this is to prepare customer risk profiles and detect fraud. But one can also imagine that big data analysis could help in observing how our complex banking systems work. This will allow us to know in advance that something bad is happening and what shall we do to avoid a breakdown.
Onether promising field are technologies associated with blockchain.
Is the bank considering getting involved in bitcoins?
Blockchain is not just for cryptocurrencies. This technology allows you to record transactions by number of users and store them in a distributed database. This allows all users to track the transaction history and verify that no one has tampered with it. For financial institutions it has a big potential.
The next hot topic is artificial intelligence. Most often AI is to aid in communication with the customer through chatbots. The challenge here is to prepare a mechanism that will analyze the customer’s intentions, compare them to what we know about them in our systems, and then be able to handle them automatically.
In the future, AI can help bank employees with their conversations with customers, for example, suggest what products they can offer to a particular person, or read emotions and tell employees how to keep in touch with their customers.
How does cooperation with a startup work in these fields?
Startups usually come to us with solutions that are not mature enough to be used directly in an organization such as a bank – large entity, operating in a regulated environment. Therefore, we first work with them on their solution – we analyze them from the security side, from the architecture side, we look at how it was constructed and how it should be adjusted to the needs of the bank. The second area of activity is the integration of the startup’s solution with the bank’s systems. The third area is the preparation of the startup to conclude agreement for software provision. This is often a challenge, because often these young companies have never signed an agreement with such a large partner before. We sign a lot of such agreements, so we share good practices – regarding what should be included in such contract, and what are the organizational and business conditions of delivering services or products.