VIDEO TRANSCRIPT:

Okay, what I want to do now is to hand over the stage temporarily to Abhishek Bhattacharya and Zach Scott. Let me tell you about them. Abhishek is the Vice President of Technology Financial Services, and Zach is the Managing Director of Strategy. And they're going to deliver a presentation which is looking at why now is the time to go coreless and how you should go about ditching your legacy core. Afterwards, I'm going to ask them a few questions. They're primed up for it. So, I'm going to hand the guys over to you. Abhishek and Zach, please give them a big welcome.

Great. Thank you very much. Hi, I'm Zach.

I'm Abhishek.

And we're very excited to be here today and to talk to you about what we're calling the coreless revolution. So, this is a trend we're seeing in all the markets we operate globally, which we feel like is going to be very disruptive for the banking industry over the next few years. And we're being somewhat deliberately provocative. So, many of you in the room probably understand the many core systems that make up a bank, the most prominent of which is the core banking system. And by coreless, what we mean is not that those systems are going to go away, but simply that they will no longer be the center of the banking ecosystem. And instead, new technologies, new approaches are going to enable data and customers to be much more central to how banks operate. And for those of you who are not technical and are thinking about kind of glazing over and, you know, leaving the room, this is affecting all elements of banking and the banking industry and the customers that they serve. And if you don't believe me, we did a survey actually globally across thousands of banks. 48% of banks globally say replacing and modernizing their core systems is the number one priority. I can guarantee you 100% of banks have already embarked on this journey or are considering it or have already considered it and maybe tried already. So, what's driving this change? And actually, Matt and Talyn already touched on a lot of this, so I'll be quick. On the one hand, there's rapidly changing customer expectations. So, customers are increasingly seeing much more seamless, personalized experiences everywhere else, and they're asking the simple question, you know, why am I not getting this from my bank? On the other hand, banks are struggling to meet those expectations. And in part, that's because, you know, all that history that, you know, they mentioned, the 330 years, that's great, but there's a lot of legacy ways of working and systems have been built up over time that have made it very, very difficult for them to change and is coming under increased pressure as, for example, the amount of volume that's getting pumped onto those systems is only increasing. You're hearing 90% of all transactions now are contactless, right? Extrapolate that out to all the pressure that's being put on how the banks are currently operating. And it's also because they have siloed product offerings, so they're not able to be as customer-centric as they'd like. And to give you another stat, because of all this challenge, they're seeing an increasing percentage of their investment and their change budget. If you look at, you know, globally across all banks, what amount of their money are they spending on actual discretionary change versus just mandatory change, i.e. change that is just helping them to stay still? For most banks, for quite a lot of banks, is actually the majority is just spent on mandatory change, and that number has been increasing year on year, which means that banks are spending more just to stay still. And so the gap that you're seeing between what customers are expecting and where the best-in-class performers are able to reach versus where a lot of banks are able to reach, given their current constructs, is only widening. And that's where coreless comes in. And so to bring it to life, we actually have a quick video, and then Abhishek and I are going to blow out a couple key bits of what we mean by coreless.

Customers have higher expectations than ever. They expect bespoke service where every touchpoint is tailored to them, as well as a seamless experience with everything they need in one place. But those expectations are becoming harder to meet for one simple reason. Banks still rely on legacy core systems where data is siloed and products disjointed. Coreless architecture could change all that. Coreless reorientates your banking system around data rather than your core systems, enabling you to tear down product silos and unify your offerings. No matter where your customer starts their journey, their data will flow into the business. Identify ways within and beyond financial services to enhance their experience and promote those opportunities in real time. Imagine a current account holder applies for a mortgage. You'll be able to leverage the data you already have to complete the application while also identifying them not as a mortgage applicant but a soon-to-be homeowner, meaning you could recommend insurance policies or budgeting tips or services that will raise the value of their future home. The possibilities are endless. Your experience will be smoother too. A coreless program would accelerate product launches, eliminate legacy costs, and ultimately incentivize innovation. And while a transition to a whole new banking architecture doesn't happen overnight, successful programs have proved that it is possible and could usher in a brighter future for banks and the communities they serve.

Great. So there you have it. That is a very quick introduction, but just to blow out a couple of key elements of what you just saw. The first is, you know, why is this a challenge for banks? If you look at most large or even midsize or any incumbent bank for that matter, their architecture will look something like the left-hand side of this page. And actually this is a simplified diagram, I would say. And the way they've oriented over their history has been around products and manufacturing products out to their customers. And their entire organizational stack is reflective of that. And it's not just the people. It's also then the underlying technology, the data, and every way they operate. And that's very problematic if, for example, as Matt had alluded to, we can't. We have to actually think about rebuilding the way we're operating, not just kind of build it again on a different tech stack. Third is, you know, often in banking there's that kind of you need to start to pilot. You need to trial it first and prove the new platform, ideally in a way that can unlock value for the bank. And then finally, you know, as Abhishek said, it's important to scale but progressively and carefully because it is risky to move from one banking approach to another. You don't want to put your customers at risk. You don't want to put your bank at risk. And so, you know, it's making sure you get that scaling up process right. So thank you very much for your time. Hope you found that interesting. We're very excited about this trend and what it will bring for the banking industry.

But look, guys, thank you so much. Can you show your appreciation? A fantastic presentation, so much to consider.