German cooperative bank Deutsche Apotheker- und Ärztebank (apoBank) has appointed auditors to oversee a wholesale technology transformation featuring Avaloq core banking software.
ApoBank signed up for Avaloq’s Banking Suite in October 2017. The bank had spent a year evaluating whether to go with the Swiss vendor’s software.
Yet the project at apoBank goes well beyond core banking. A majority of the bank’s legacy systems were handled by Fiducia IT, which merged with GAD in 2015.
Part of this merger, which unified a southern German tech firm with its northern counterpart, required clients to switch systems to a unified platform.
ApoBank faced a wholesale change to its technology infrastructure and has been wrestling with modernisation since. Part of that programme involves a switch to Avaloq’s core system.
According to local publications, the cost of the transformation have skyrocketed since 2016. Finanzszene reported in May that the bank had spent as much €500 million on its project so far.
When the bank went live with the Avaloq system at the start of June its online banking systems glitched, in some cases failing to respond.
Handelsblatt reports that customer frustration rose when many failed to receive an explanation from the bank, with many pharmaceutical clients unable to process payments.
“Since not only the core banking system, but also the entire IT infrastructure as well as the providers for more than 200 special applications were replaced during this highly complex IT changeover, various parties were involved in the project,” an Avaloq spokeswoman tells Fintech Futures.
“Many of the technical limitations have been addressed and already solved in close coordination with ApoBank and the focus will be shifting increasingly towards optimising user experience.”
In a letter sent to customers the ApoBank management board has apologised for “considerable difficulties” during the conversion.
“There were various unpredictable problems and not all functions of the new system ran flawlessly,” the letter reads.
Despite the launch difficulties, ApoBank’s board remains positive about its technology change: “Even if not everything went perfectly, this was an important milestone for the continuous stabilisation of the system.”
The name of the auditor has not been disclosed by the bank. ApoBank executive Olaf Klose departed the bank some weeks ago in the wake of the project’s issues.
Some customers are still reporting issues with their direct debits, standing orders and access to their accounts.
Founded in 1902, ApoBank is a cooperative bank created for pharmacists and physicians.
The bank has around 450,000 customers and a balance sheet of €4.5 billion. It is the second-largest cooperative in the country after DZ bank.
Extensions and IPOs
The new arrives as Avaloq owner Warburg Pincus prepares the technology firm for a potential sale or initial public offering (IPO).
Warburg Pincus currently owns 45% of Avaloq and could seek an auction as early as 2020. It acquired the stake in March 2017, at that time grabbing 35% in a deal valuing Avaloq at $1.1 billion.
Despite issues with ApoBank, Avaloq has seen two major Tier 1 clients resign with its systems in recent months.
People: The one constant in an ever-evolving time of change
Today, there’s no question the financial services industry, along with the entire global economy, is being disrupted by unprecedented amounts of change triggered by the COVID-19 pandemic. The pressure for businesses to digitally transform is insurmountable, and rapid adaptations have become essential for survival and success. Amidst this pressure, financial institutions continue to value working with fintech partners to support the implementation of innovative technologies to keep up with ever-changing customer demands and competitive pressures.
Despite the emphasis on speed, however, it is important that people remain a constant, central focus of the process. As such, a new, broadly applicable approach to change management is necessary to ensure clients, customers, and employees reach and maintain success. The creation of innovative solutions, made possible by tapping into lucrative fintech partnerships and digital initiatives, should be focused on building a strong, organizational culture that will effectively support people through these changes.
As we put people first in the change model, some of our partners, and one regional northeast bank in particular, recently reinforced how thinking outside the box can pay it forward for change. The CEO utilized an innovative approach to leverage the role of bankers in the process. Rather than give the core responsibility to the digital and IT teams, he provided bankers and sales professionals a seat at the transformation table. By integrating front-end bankers into the core change management team, high performing bankers were able to think about front-end, client-facing concerns that other members of the team may not have experienced.
While many foundational change practices remain critical to success, true transformation means continually evolving the process, especially for a people-first approach that is cognizant of ever-shifting disruptions facing our world today:
- Create Change Equity and Ownership: Today, it’s more important than ever that people feel valued and empowered within their organization, given the unpredictable changes they have had to withstand. Whether it’s a community bank, a national credit union, or a large enterprise bank, a change strategist must seek out ways to give professionals ownership over change. If employees understand the individual impact if a transformation fails, there’s an increased appetite for individuals to own change efforts and succeed.
- Be Inclusive of Different Experiences and Perspectives: Similar to how we approach diversity of perspective and thought in many aspects of the workplace, the same value is tangible to change management. A diversity of perspective can inform smart decision-making and change agents should come from different roles and departments to help formulate a holistic strategy. True change champions recognize the benefits of bringing different voices to the table to navigate and manage rapid change in a way that bolsters success.
- Remember to Build Trust: Normally, one of the most common reasons people in operational and other functions are resistant to digital transformation comes from fear, and mostly, fear of losing their jobs. However, in the midst of a global crisis, establishing trust before change occurs is not always possible. People have been forced to adopt changes rapidly, regardless of how uncomfortable they may feel with the application. Implementing a clear procedure that highlights benefits to the business, but also reassures the benefits to employees and their everyday roles and responsibilities is a step toward success. You need to proactively reassure your team in order to build trust that your recommendations for change transitions are credible and valued.
My own experiences with digital transformation at both big and small banks alike revealed constantly changing, industry-wide barriers to transformation, and most were actually not technical. It’s part of the reason I’ve shifted my career to focus on change management and help shine a light on the critical role people play in our success. In a globally connected, digital world facing constant, now extreme change, there is no greater investment to make than investing in your people and supporting them through times of great uncertainty.
– Greg Thompson, Director of Change Management, nCino
Learn more about nCino’s approach to change management and digital transformation by downloading the complimentary white paper “Supporting Innovation Through a Culture of Change”.
Banking-BigTech Deals Are on the Rise: Citi Partners with Amazon
Point of sale financing is all the rage in fintech right now. Consumers are looking to continue buying habits despite lower income and merchants are vying for ways to boost consumer spending.
So when it comes to one of the biggest online merchants launching a buy-now-pay-later offering, its a big deal. It is, anyway for Citi, which struck up a partnership with Amazon this week to provide a buy-now-pay-later option for Citi credit cardholders.
The tool is called the Citi Flex Plan and offers Citi credit cardholders a way to pay for larger purchases over time. Loan terms range from three to 48 months with terms ranging from 6.74% APR to 8.74% APR depending on the amount financed. Borrowers face no credit inquiries, no incremental fees, and are not required to fill out a formal application.
“Amazon is one of the most popular destinations for our customers to shop and redeem ThankYou Points,” said CEO of Citi U.S. Consumer Bank Anand Selva. “We want to meet them where they are with another instant, convenient and easy payment option.”
Essentially, Citi cardholders have two forms of credit in one when they shop on Amazon. How do the logistics work? When they place their order, the total purchase amount will be deducted from their available credit. The monthly payment– the amount that varies based on the purchase price– is due to Citi at each billing cycle.
After yesterday’s news of traditional banks tying up with Google, this announcement comes as no surprise. Challenger banks are on the rise, and consumers are opening new accounts with these alternative banking providers at a faster rate than before.
By providing its customers with the new buy-now-pay-later option, a traditional financial services provider such as Citi is appealing to the lower income group that is most attracted to challenger banks. The bank is also helping to position its card at the top of consumers’ virtual wallets when they shop at Amazon. This is key since more than one-third of active Citi cardmembers made at least one purchase on Amazon in the past year.
Additionally, partnering with a big tech company helps Citi align more with the tech side of banking. And indeed, the bank has been closer to the forefront of fintech than many of its rivals. At our developers conference Citi showcased its developer hub and sandbox.
How US Bank, TD and RBC create conversational chatbots
Share U.S. Bank entered the voice chatbot space last week with the rollout of its voice-activated tool, Smart Assistant. According to Ankit Bhatt, chief digital officer for consumer at U.S. Bank, the tool was built with input from customers and data from bank support centers. “We made a decision early on that when we designed …Read More
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