It’s crunch time for banks’ technology, says 10x executive

10x chief customer officer Leda Glyptis says banks face growing pressure from regulators and customers to move towards faster and real-time banking, data and payments processing.

10x’s Leda Glyptis says it’s getting to “crunch time” for banks to improve their technology. Picture: John Feder

The banking sector is confronting “crunch time” to improve ageing technology platforms, even as systemic events in the US and expected higher credit losses in many markets risk slowing innovation.

That’s the view of 10x chief customer officer Leda Glyptis, who believes despite a challenging external environment, financial institutions face growing pressure from regulators and customers to move towards faster and real-time banking, data and payments processing.

Westpac-backed 10x was founded by former Barclays chief executive Antony Jenkins, who set up the global company in 2016.

It’s based on the premise that banking and its related platforms could become at least 10 times better through the use of cloud-native technology.

Westpac owns a minority stake in 10x and is also drawing on the company to operate a banking-as-a-service model and to build a transaction banking platform for its institutional customers.

Ms Glyptis told The Australian many banks around the world had missed opportunities to upgrade their technology and were dragging the chain on making change, despite the accelerated shift to digital channels.

“Banks have spent a long time fearing disintermediation from fintechs, trying to emulate certain aspects of fintechs, and a lot of time and money on horizon scanning trying to find essentially a silver bullet,” she said.

“Over the last few years a realisation has come that you can’t emulate a fintech because what makes a fintech is that urgency, and you can only have that if you have the fear that you might run out of money or the fear you’ll run out of chances.

“Also the fail fast model really doesn’t work in a bank and what you need to do is start thinking from first principles about a digital world.”

The collapse last week of Silicon Valley Bank and the demise of two other US financial institutions sent shudders through financial markets, putting the focus on the long-term viability of smaller banks. Panic has somewhat calmed after US regulators agreed to back all bank deposits but investors and bank customers are treading cautiously.

A 10x spokeswoman said the company “is unaffected by the SVB situation”.

Ms Glyptis said while banks were navigating factors including rising interest rates it was getting to “crunch time” to improve technology and facilitate real-time and faster transactions and open banking, where customers have greater control of their data.

“The minute that your customers have a choice, you’ll have a problem,” she added, noting often when banks were distracted on systemic events or rising credit losses they felt “less urgency” around technology transformation.

Ms Glyptis highlighted a “simmering anxiety” about fintechs as access to capital became scarcer and some digital banks, including in Australia, retreated from the market.

“The attitude that a lot of players in the space had that banks are stupid and start-ups will show you how it’s done is both unhelpful and misguided,” she said.

“We’ve always looked to start-ups for innovation and energy but funding mechanisms haven’t focused on business viability … You need to really know the space that you’re trying to solve for.”

Given Mr Jenkins’ experience in banking and that she has worked across players including Qatar’s QNB and BNY Mellon, Ms Glyptis expects 10x to gain more traction.

In 2021, JPMorgan’s consumer and commercial banking arm Chase partnered with 10x to create a technology platform to spearhead its digital entry into the United Kingdom’s banking market. South Africa’s Old Mutual is also among firms working with 10x on a banking project, albeit that is in its early stages.

Ms Glyptis said there were about three further banks in the 10x pipeline.

While Westpac’s institutional bank chief Anthony Miller declined to be specific on the timing of the 10x rollout within his division, he said it was a “multi-year build” and the bank was pleased with its progress.

“Last year we announced plans to build a new transactional banking platform for our institutional clients, recognising a growing need for quick and secure digital transaction service,” he said.

“We are working with 10x Banking to provide the core technology, ensuring a market-leading digital experience with access to key tools including advanced liquidity management, cash flow forecasting and real-time payments processing.”

Ms Glyptis outlined that the “alpha part” of Westpac’s institutional bank project was live.

“It really starts with the problems of the customers they serve.”

Ms Glyptis said 10x had about 35 employees in Australia and noted its partnership with Westpac was not bound by exclusivity arrangements.

“Westpac was an early investor and one of our foundational clients, but because of what we do … there is actually no upside to exclusivity,” she added. “We like to think of ourselves as a utility that enables our partners to do really great things, faster, with better unit economics, better security at scale.”

Westpac has, however, had patchy results in its efforts to become a banking-as-a-service provider. Following the takeover of Afterpay by Block, the company ditched a banking partnership with Westpac.

The bank counts personal lender SocietyOne, which was purchased by MoneyMe, as a banking-as-a-service customer.

Westpac’s investment in 10x was made in 2019 while the bank was led by former CEO Brian Hartzer. In an odd turn of events former Barclays chair John McFarlane – who was involved in ousting Mr Jenkins from the bank – took the reins at the head of Westpac’s board in 2020.