A joint article by Jonathan Croft, Chief Information Officer, Societe Generale Factoring and Kevin Day, CEO, Lendscape
Today, all forms of businesses rely upon technology to deliver their products and services in a global market. To what extent is technology merely a tool or an intrinsic component of the offering is a sliding scale, from completely unimportant at one end, to the technology is the product at the other. We see this today in the world of short-term credit with the arrival of FinTechs, where the provision of finance and its technology are entwined to make a single solution for customers. The technology is bespoke and focused on a customer journey that tries to eliminate friction to maximise customer satisfaction and, therefore, retention.
Historically, this concept of building technology in-house was how it used to be, especially for large institutions with dedicated IT resources. Packaged and off-the-shelf application software has been around a long time, but there has always been a “build vs. buy” debate. Many major banks still have legacy in-house systems, many of which are batch oriented and architected on both main-frame and server technologies. Often, these are single footprint monolithic or hybrid solutions, integrated with countless other specialist systems, with many points of failure of which some are still unknown! Above all else, incredibly difficult and costly to replace, but “legacy will not kill us”.
Of course, the benefit of internally built technology is the perception of agility and destiny in the market place. This in-house approach has a cost associated based on supporting the technology, on sharing critical technology and critical knowledge, especially when you move from the exciting “build-phase” change mode to the more “business as usual” running mode. Technology innovation and ongoing investment is driven by business and obsolescence, with no automatic access to new releases of the software.
In contrast, “off the shelf” solutions can be quickly deployed (and integrated), especially for start-up businesses where there are no legacy systems to worry about. Even more so now with the advent of Software (or Platform) as a Service and Pay-as-you-go subscription models. The solution will generally have a user base that creates demand for improvements, new features and a continuous road map. The software provider has a vested interest in providing its users with value and creating a solution that it can continue to sell globally.
The downside is that there are constraints in terms of what an individual customer can do with the product. Certainly, new features and ideas can be requested and bespoke enhancements can be developed at the customer’s cost, but for many organisations, the “me too” world is not acceptable and there is an appetite and desire to use technology to create Unique Selling Points to differentiate from competitors.
So, is that it? The world is split between the in-house builders and off-the-shelf consumers. No.
In our experience, there is a third way. And this is because our technology embraces the concept of Application Program Interfaces. APIs provide a gateway such that the functionality and features of a computer system may be accessed to create and define how they are represented to other systems and to the outside world. They also enable the integration of “expertise” and “intellectual property” of the business.
If we take the experience of Societe Generale Factoring, APIs have really enabled the company to have the benefits of an off-the-shelf system, with a unique flavour that enables the organisation to “out-tech” its competitors where this gives it a competitive advantage. Lendscape is the core operating platform for the receivables finance business offered by the company, but Societe Generale Factoring has consciously decided to engineer parts of the overall solution where individuality was strategically important to the business.
For example, customer experience was really important, such that it wanted to be in control of how customers interact on-line. This is not to say that the Lendscape standard offering was deficient in any way, but more about creating unique digital customer experiences, different to any other provider. Societe Generale Factoring built its “in’Fact” digitised platform, which effectively delivers the functionality of Lendscape in a Societe Generale Factoring unique and “Open Factoring” way. Moreover, “in’Fact” moves at its own pace, responding to customer needs and providing Societe Generale Factoring with agility, comparable to that enjoyed by the FinTechs, always with the security of a robust, industry-standard solution “under the covers”.
Societe Generale Factoring has also developed “Bots” through APIs to enable it to move data between applications both internally with the core Lendscape platform and with Group applications. This approach has served the organisation well, as its portfolio and range of financial solutions have rapidly expanded.
Now, with the “Open Banking” directives, Societe Generale Factoringis ideally placed both to consume and serve data and services, using “Open Factoring” APIs as the strategic way upon which to do this. A well-practiced and proven approach.
More than just the technology, there is also the need for a collaborative approach to how great technology solutions can be created for the business and their customers. Robust, fast and secure on one hand and agile and flexible on the other. This has certainly been the story of the Societe Generale Factoring and Lendscape partnership.
For all businesses, it’s about technology choices – there are no rights or wrongs. You can build, you can buy, but most importantly, with the right partner, you can selectively build and integrate the technology that really matters to your customers, you and your employees.