Brazil is one of the largest and most sophisticated financial markets in Latin America, with a diverse and competitive banking sector. However, many banks still rely on legacy core systems that limit their ability to innovate and offer personalised products and services to their customers. To overcome this challenge, some Brazilian banks are partnering with global technology providers to modernise their core banking services with cloud technology.
Regions Bank chooses Temenos for cloud-based core banking transformation
One of the banks that is leading the way in core banking modernisation is Regions Bank, a subsidiary of Regions Financial Corporation, one of the largest bank holding companies in the United States. Regions Bank announced on April 13, 2023, that it has selected Temenos, a leading provider of cloud-native banking software, to power its core banking transformation.
According to the announcement, Regions Bank will use Temenos Transact, a cloud-native core banking platform, to replace its legacy systems and enable faster and more efficient product development and delivery. The bank will also leverage Temenos Infinity, a digital front-office solution, to enhance its customer experience and engagement across channels. The bank expects to benefit from improved operational efficiency, scalability, security, and compliance, as well as reduced total cost of ownership.
John Owen, head of the Regional Banking Group at Regions Bank, said: “We are excited to partner with Temenos as we embark on our core banking transformation journey. Temenos has a proven track record of delivering successful core banking projects in the cloud, and we are confident that their solutions will help us achieve our strategic objectives and deliver superior value to our customers and shareholders.”
Max Chuard, CEO of Temenos, said: “We are delighted to welcome Regions Bank to the Temenos family and support them in their core banking transformation. Temenos Transact and Temenos Infinity will provide Regions Bank with the agility and speed to innovate and scale, and offer differentiated products and services to meet the evolving needs of their customers. This partnership demonstrates the momentum we are seeing in the US market, as banks of all sizes recognise the benefits of cloud-native banking software and choose Temenos as their trusted technology partner.”
Pismo raises $108 million from Amazon, SoftBank, and Accel to expand its core banking and payments platform
Another Brazilian company that is making waves in the core banking and payments space is Pismo, a cloud-native platform that provides banking, payments, and financial infrastructure solutions to banks and fintechs. Pismo announced on October 19, 2021, that it has raised $108 million in a Series B funding round led by Amazon, SoftBank, and Accel, with participation from Falabella Ventures, Headline, PruVen, and Redpoint eventures.
Pismo was founded in 2016 and has grown rapidly in the Latin American market, serving clients such as Itaú, BTG, Cora, and Falabella. The company claims to support around 25 million accounts transacting $3 billion a month, and handle more than four billion API calls monthly, ranking it among the most active worldwide in financial services. Pismo offers an all-in-one processing platform that enables its clients to launch and manage digital accounts, cards, wallets, loans, and other financial products, as well as integrate with third-party services and networks.
With the new funding, Pismo plans to expand its presence in new markets, including the US, Europe, the UK, and Southeast Asia. The company also intends to hire more than 200 new employees over the next few months and invest in product development and innovation. Pismo has also appointed Vishal Dala, a former executive at Mastercard and PayPal, as its CEO for North America, Europe, and Asia.
Ricardo Josua, co-founder and CEO of Pismo, said: “Pismo is now ready for a new phase of growth. On the back of this funding round, we will build further on the momentum and scale we already have in LATAM, and accelerate international expansion. We are thrilled to have the support of such prestigious investors, who share our vision of transforming the financial industry with cloud-native technology.”
The challenges and opportunities of core banking modernisation in Brazil
The examples of Regions Bank and Pismo show that core banking modernisation is a strategic imperative for banks and fintechs in Brazil, as they seek to gain a competitive edge and meet the changing expectations of their customers. However, core banking modernisation is not an easy task, as it involves complex and risky decisions, such as choosing the right technology partner, defining the scope and methodology, managing the change and migration, and ensuring the alignment of business and technology goals.
According to a report by Deloitte, a global consulting firm, core banking transformation requires a holistic and integrated approach that covers four key dimensions: business case, scope, methodology, and governance. The report also suggests some best practices for each dimension, such as treating the business case as a living document, choosing a package-led methodology, defining the scope by the business benefits, and establishing a strong governance structure.
The report concludes that core banking transformation can bring significant benefits to banks and fintechs, such as improved customer satisfaction, increased operational efficiency, reduced costs, enhanced compliance, and faster innovation. However, it also warns that core banking transformation is not a one-time project, but a continuous journey that requires constant adaptation and evolution.
