A regtech has partnered with Australian neobanks Xinja and Novatti Group in a bid to help the disruptors tackle the “largest problem” in financial services globally.
According to Melbourne-based FrankieFinancial, 70% of the IT budget at banks globally is spent on maintaining legacy systems, a strategic mistake that costs the big four Australian banks up to $4bn each year.
Traditional institutions are struggling to integrate their legacy systems with updated internal procedures, external software or data providers.
FrankieFinancial CEO Simon Costello said, “The rise of neobanks in Australia has been led by consumers’ dissatisfaction of banks being unable to do seemingly basic tasks. Customers who apply for credit cards or mortgages are often frustrated when the bank asks for a 100 point check and statements even when they’ve been a customer for 15 plus years.
“It's not that banks aren't aware of these inefficiencies or poor customer experience, it's that they’re hamstrung by legacy systems that don’t communicate well, store data in silos and are expensive to maintain,” he added.
The financial systems aggregator has connected more than 100 different vendors and data sources in a single hub that leads to “intelligent, data led” decision-making around programming, as well as to better-informed compliance and risk assessments.
Xinja CEO Eric Wilson said, “We are excited about using Frankie's platform to maintain our zero legacy state. Connecting the best of breed technologies and reducing cumbersome interdependencies to ultimately service our customers better, is perfectly aligned with Xinja's mission.”
FrankieFinancial began as a challenger bank itself, before it identified a larger market demand for its back-end platform from competitors.
A report by Juniper Research estimates that regtech firms will outnumber fintechs by 2023, with global spending exceeding $115bn.
FrankieFinancial has expressed interest in expanding internationally in the near future, with the US and APAC likely among the first overseas markets to be explored.