“No one ever went to college to become a plumber!”
I’d love to take credit for that line because it’s funny and true. But I can’t.
It’s Nick Ogden, founder of WorldPay and ClearBank discussing why, of all the myriad things you could tackle in financial services, he decided to create the UK’s first new clearing bank for more than 250 years.
Plumbing isn’t cool. No one strives to be in it. Clearing, core banking, the pipes that make the entire system function. The important bits that happen in the background that everyone takes for granted to make all the cool stuff happen.
I don’t care. I will happily shout it from the rooftops (and believe me I’ve come close!): core banking is a beautiful thing.
Actually, I should caveat that. It could and should be a beautiful thing, but it often isn’t. Yet. It’s a messy tangled affair that does no one any favours.
For a long time, I got very frustrated because the world started to change but the fundamental mathematics of banking stayed the same. While regulatory barriers to entry were lowered, the technical ones remained.
Whether you choose to build or buy, setting up a bank is slow and expensive. Sure, it’s getting cheaper to get started but if you want to be a fully licensed bank…well, you will need deep pockets. Choices are made today for systems that will go live in years guaranteeing a certain degree of obsolescence right out of the gate. But what can you do? What options do you have?
The way things used to be is no longer an acceptable reason for anything.
I can’t tell you how happy that makes me.
Challengers are emerging. Across the board and increasingly, finally, core banking, long-deemed too boring for innovation, too big for experimentation, too creaky and slow for hope. It was the thing that limited us, the thing that held us back.
Disclaimer: I’m working on one of those challengers: 11:FS Foundry. My love of plumbing is the reason I joined Foundry. And the capabilities of Foundry are fueling my passion about plumbing anew, because the deeper I go into it, the more I see the profound and real impact new core banking approaches could have. And indulge me for a moment here: I don’t mean impact in terms of new banks or making existing banks more efficient. I’m talking about the fundamental democratisation of financial services.
We at Foundry are by no means the only people tackling the area. And that’s a good thing. Competition is a good thing, first of all. More of us thinking about solving a certain thorny problem is a very good thing. We, directly and indirectly, push each other to do and be better. That is a very good thing.
But also, the more of us working in the space, the faster the narrative will change, the sooner ‘the way things used to be’ will cease to matter. And for someone like me, who likes a little bit of dramatic grandstanding, it is a great time to be a plumber.
The ‘U’ word
Think about it: what if, by treating the core capabilities as utilities (which is what they are: core because they are fundamental and universal not core because they are key to market differentiation) we could totally change the game.
A thing that takes, if you’re lucky, five years to build is already outmoded in technical terms by the time it is finished. It replicates what you already do because that’s the way it’s done, the same way it was 30 years ago.
Limiting your ambition to the infrastructure’s worst day is the measure of how ‘not useful’ this thing is. Not by design or malice. Just by the relentless passing of time and inadequate keeping up and futureproofing.
Costs and timings are bound to ways of doing business. Rules and systems. But it doesn’t need to take five years or £200 million to stand up a ledger. And it matters that the service should not be slow or expensive. It matters that we offer access to the system to people from all walks of life. It matters that we finally democratise finance: at all levels.
So here we are. We need infrastructure for a real-time world but for a long time, we tried to slow the world down because we just didn’t have the right tools. An infrastructure that allows us to stand up digitally native propositions. An infrastructure that pushes our ambitions, rather than limiting them.
It matters, so we are doing it. And we are not alone.
There are others fighting the good fight. Yes, I think my baby is prettier and my product better, as I would because I get to make choices towards where I believe the real problems lie, the real value can be unlocked. I think it’s better because I am dedicating every ounce of effort to make it so, but the point remains. We are on the same side, we fight for the same things: utilities are meant to be huge, functional, taken-for-granted and expected to work for the betterment of life.
Just like plumbing. Maybe that’s not romantic to you.
But to me, it’s my little slice of resistance. My own battle for freedom. Core banking infrastructure that enables real-time capability-building, at a lower cost and in a matter of minutes rather than years, is mine and my team’s little way of doing that.
Even if I don’t get to deliver a dramatic speech about what never happened, it helps me sleep at night, to know we are united by purpose.
And we are not alone
Dr Leda Glyptis is the CEO of 11:FS Foundry, 11:FS’ modular core banking offering. Leda is a recovering banker, with a long career in operations and IT across major banks, products and geographies.