IT Briefcase Exclusive Interview: The Changing IT Landscape in the Financial Sector

Featured Interview with Alexander Vityaz, CEO, Corezoid

The oft-stagnant financial industry is transforming. New technology is arriving to better meet the industry’s increasing needs for rapid data processing and orchestration between previously non-communicative customer-facing systems. Alexander Vityaz, CEO of Silicon Valley-based Corezoid, shares his thoughts on effects that current advances in FinTech are having on the industry, as well as the challenges that lie ahead.

• Q. What do you see as the biggest IT challenge facing banks today?

A. Banks and financial services companies are finding themselves in a very difficult situation when it comes to IT. As technology advances (and customer expectations rise alongside it), banks require world class IT capabilities in order to compete and thrive. But at the same time, much of the banking business is local by nature. This fact prevents most banks from increasing their IT competency to succeed on a global level.

Most banks follow a very well-worn path to meet their increasing IT needs – they hire more developers and build more accelerators, labs, and incubators. In short, they continue to do what banks know how to do: manage people and realty. JP Morgan has 30,000 developers. That’s more than Google has. However, I’d argue that army of developers hasn’t created anything new – the truth is they’re too busy simply performing maintenance on the bank’s many legacy IT systems. They aren’t presented as such, but in a sense they’re really a vast support team. It’s also fair to say that high-level engineering talent doesn’t naturally see employment at a bank as a top choice. The talent with the top-most potential to really change IT would likely rather go somewhere like Facebook or Google.

Banks do have a form of IT salvation approaching on the horizon, and it has nothing to do with their internal development capabilities. What’s likely to happen is that the major financial services players like Visa and MasterCard will refashion themselves as global IT companies that serve banks by providing not just card technology, but just about every IT solution they require.

• Q. APIs in the FinTech space are a hot topic right now – what’s your take on their growth and efficacy in the space?

A. APIs are now essential for just about any business that deals with technology, and especially so for increasingly digital businesses like those in the financial services industry. There’s no question whether or not APIs are important or if they will become more popular – APIs are a must have.

Following from the previous question, what’s most exciting about APIs is their potential – when paired with digital core and cloud process technology – to evolve into ready-made FinTech solutions that banks can utilize without the current development challenges associated with putting APIs to work. The ultimate goal of APIs is to ease adoption of new tools and capabilities. When the technology reaches the point where new solutions can be implemented with plug-and-play simplicity, it will have major ramifications for how banks structure their IT departments – to the degree that they even need them anymore. So the growth and evolution of API-based FinTech solutions should certainly be considered essential to the future of the industry.

• Q. How does Corezoid fit in to the FinTech ecosystem?

A. We see Corezoid as a cloud-based operating system able to provide any enterprise with a digital core that can deliver business process management, computational capabilities, and the ability to easily integrate new IT solutions. We think these features are especially valuable in the financial industry, where superior IT tools and computational speed are held at a premium and can be essential differentiators.

In this way, Corezoid fits right into the center of the FinTech ecosystem – it’s a solution for those businesses that want to be ahead of technology trends and prepared to adopt new solutions as needs arise. As a company we began with a focus on Corezoid as a solution for the financial industry, because our technical leaders have 20 years of acumen and experience producing innovations in e-banking and e-commerce. The truth is that, overall, most of the banking industry is lagging behind technically. It’s also a very fragmented space that consists of many retail banks. We know that Corezoid can help solve the main banking and payment system issues that banks are grappling with.

• Q. Where do you see traditional retail banking heading in the future?

A. Traditional retail banking looks to be headed for a transformation that will be driven by technology, and is all but inevitable because of the extreme fragmentation of the industry we see currently. There are 30,000 banks operating today worldwide. Almost all of them control a local sphere of influence, and use internal IT teams to develop FinTech solutions – at tremendous expense – that are no better or much different than the solutions developed at the next bank over.

As I’ve alluded to, when API-based cloud process technology fully arrives to offer all of these banks plug-and-play solutions that they can simply purchase off the market and implement with ease, there will be an unbelievably rapid sea change in how banks source their technology. What happens in the aftermath is that we’ll likely see a period of consolidation, as neighboring banks that use the same purchased technology anyway will seek to strengthen their capabilities and refocus to compete not on IT, but on the core business of banking.

• Q. How are financial companies using Corezoid? What’s a use case look like?

A. One such example is the use of the Corezoid platform as the basis of Western Union’s recently launched online money transfer service in Ukraine. As far as banks are concerned, our largest bank customer is PrivatBank, one of the largest banks in Eastern Europe – it’s a classic retail bank with 25 million issued payment cards, 30 million deposit accounts, 8,000 ATMs, 12,000 self-service kiosks, and 2,500 branches. Using Corezoid, PrivatBank is now perhaps the first bank in the world with a fully cloud-based back-end to support the entirety of its operations.

Getting into the specifics of some use cases, PrivatBank has utilized Corezoid to implement an incredibly wide variety of new FinTech solutions at a timely pace, completing the following projects in about 1-2 months each. Some examples include:

– Creating shared access to credit cards (Visa Challenge winner)
– Processing and scanning 1.2 million digital discount cards
– Creating virtual mobile operator cosmos.mobi – Contactless gas station payments
– Mobile NFC-wallet with messenger and bots
– Enriched financial transactions with marketing communications (handling 1,000 transactions per second)
– Solutions for ordering taxis, food, and buying tickets for trains, buses, air travel, movies, and sports events
– Multi-bot architecture (allowing clients to talk with PrivatBank through bots in popular messengers like Facebook messenger, Skype, Telegram, Viber, etc)
– P2P money transfers via chat in Apple iMessage, Telegram and other messengers
– Online credit scoring
– Payments templates
– ATM and self-service kiosk network monitoring (18,000 devices)
– Real-time deposits and portfolio management
– Omnichannel integrated marketing communications (call center/email/online banners/branch advertising/ATM advertising/mobile apps)
– Distribution of promo-codes and coupons on discount pages

About the Author

Alexander Vityaz is the CEO of Corezoid, a Platform-as-a-Service cloud process engine that enables companies to build agile processes that are triggered by real-time events. Since 2000, Vityaz has also served as the head of E-Business for Ukraine-based PrivatBank, which is the 8^th largest bank in Eastern Europe with 25 million clients.

Prior to Corezoid, Vityaz helped launched the first P2P money transfer service in the world (in partnership with Visa), and has created and patented dozens of other innovations in Finance, including SiteHeart, Liqpay, Deepmemo, and Sender. Vityaz has a degree in Applied Mathematics from Donetsk National Technical University.