The Connector Podcast - DFS Digital Finance Summit - Basikon - How API-First Solutions Are Transf...

Welcome to The Connector Podcast, an ongoing conversation connecting fintechs, banks, and regulators worldwide. Join CEO and founder Koen Vanderhoydonk as you learn more about the latest available trends and solutions in the markets.

And here we are for another podcast recording straight from the offices of Belgium Fintech and of course The Connector. And today I've got with me somebody that I know for a while, Renaud, working for Basiccon.

Good morning, Koen.

Good morning to you. So tell me a bit about yourself. Tell me a bit about Basiccon.

So Basiccon is a French group, and I'm heading the North Europe branch, which is located in Brussels.

Nice.

The company is 5 years old, almost 6 actually, in a couple of weeks. And we are delivering solutions for lending and leasing We are delivering a platform to manage all that.

Wow. And you say it's a new company. So does that mean new technology, new paradigm shifts?

Exactly. So it's very— it's quite new. And if you look at the people, actually, we are all very gray-haired people in the company and we all come from large IT French group. And we witnessed some years ago that all the legacy systems and the management systems of the bank were very difficult to replace. They were costing a lot. So we said, there is room here to do something new. So we selected new technology, we selected new ways of working, and here we are today with 35 clients across Europe and Africa.

Wow, that's quite an amazing journey actually in a short period of time.

It is, it is indeed. And I would say that all the implementations have always been successful, which is very challenging, which was very challenging. And personally, I have a background in core banking. And if we would have that, have had that technology 10 years ago, we would be the master of the world because the technology is really fantastic. It is what we have been missing in the previous jobs.

So that's where the gray hair/maturity comes from.

Exactly.

Really good, good with it. And how do you then actually help these financial institutions to, to navigate to more complex/digital transformations?

So actually, if we look at the challenges that those guys, those companies are facing today, I would say that there are 2 main challenges. The first challenge is around what I could call operational rigidity. And the second one is about regulatory complexity. So if we look at the first one, those companies, they want to change their operations, they want to improve them, but they are stuck because of the system. They don't have a flexible system that allows them to change. So they are facing that. That's the first one. And the second one is the regulatory complexity, which is, well, you know that there's a burden more and more important, especially in Europe, on the financial institutions to comply with many things: security, reporting, fraud, blah, blah, blah, blah. A lot of topics. And the way we are helping those clients is thanks to the platform that is very flexible, that allows the client to modify it itself and really to adapt to make it cope 100% with what he's looking for.

And is it that flexibility that you mentioned, is that the key innovation that you bring, or are there any other bits and pieces that the world should know about?

I would say that there are a number of important topics. The first one is flexibility, but in terms of, I would say, operational processes. Usually a system is designed to cope with something very specific, and it is sometimes hardcoded. We do not work like that. We have embedded workflows in the solution that enable us really, just by changing a configuration, to have the behavior of the system completely different.

Mm-hmm.

That's the first topic, the importance of having embedded workflows that we can adapt to cope exactly with what the client is needing. That's the first one. The second thing that is very important is the possibility to interconnect with other systems. So of course, there is no financial institution worldwide that is acting solely on its own account. It's always interconnected with the clients, with the dealers, with the regulators, with the payment institutions, et cetera, et cetera. And it is fundamental to be able to interconnect. And that is only feasible thanks to the technology. And our solution is API-first. So it means that everything is API, everything is microservice, everything is available on the cloud. So it is just about, you know, that kind— I know I should not be able to quote brands, but it's like a Lego. So it's like a Lego. There are different pieces. Those pieces are APIs. You can replace them. You can replace a big one with smaller ones. You can add one, you can remove one, et cetera. It's an image, but it's a reality. That's exactly how it works. So that's the second very important thing. It is this ability to interconnect thanks to the API-first approach.

And because you make things so small, does that mean that you work with both small and large organizations, i.e., the big Goliaths in financial services and also startups?

Yeah, indeed. So we work with what we call greenfields and with incumbents, so people who are already there, and their challenges are completely different. So if you look at a greenfield company, well, usually it's a financial startup. What they want to do is as soon as possible to have a system that is able to manage their new operations. So usually they have a very clear mind of the type of products that they want to launch.

Mm-hmm.

They don't have any legacy. And what we provide them is an off-the-shelf, I would say, library of processes that are ready to use. And within a few weeks, we are able to set up a completely new system so that they can deal with the calculations of a loan, the dispersal of a loan, the collection of a loan, etc. So all their activity, that's for newcomers and greenfields. Conversely, we have the existing institutions that usually are larger, but not only, but they're The, the, the, the difference is that they are already used to, to use a system. They have a system in place. So they are used to having some processes that are already running. And what we need to do is integrate, integrate with them, but also replace them and convince the client that they have to let go of things that are not really key differentiators for them. And I can tell you, that's usually the biggest challenge that we are facing.

I can imagine.

Is that yeah, but we always did it like that. And then you start digging and you say, "But why?" Ah, because it's like that. And then you cannot get to the source and really to the center to understand exactly why. And then suddenly you say, "But can't we let it go? We have something that is far more efficient." Ah, yes, let's use it. So, but it's about convincing the people.

So it's a change process almost.

The change process is super, super important. And the late motif is keep it simple and keep it stupidly simple. Always that, always that. Reduce complexity. That is the key.

But I guess what you don't have put in the mix with this story about change, it's that obligation to be compliant. So how does BasicCon then help on that part? Because a procedural thing is one thing, but how do you help to be compliant and to stay ahead with regulations?

So if you talk about regulation and about compliance, actually it really depends on the domain. Of course, there is the basic compliance about security, which is a no-brainer. You have to be secure. You have to, you have to have a solution that ensures that the data privacy is, is, is obtained, is maintained. So that, that is, of course, the basis, the foundation of the solution. But then indeed, coming from the external world of the— there are the regulators and more and more they are coming with more and more demands. So for me, the only way to address that is to have a system that is able to change sufficiently rapidly To cope with that, and of course there is no magic wand to do that. It's about how open is the system, how can we access the data, do we have the data? All those questions, of course, they they have to be answered. And as a matter of fact, they are in a solution today. So we are addressing that. So we are helping them with all those new regulations. An example: in the financial world in Belgium, an evolution or an a local application of Ana Credit is Bcris. The credit risk is about the obligation of any entity that is going to make a loan to somebody to ask the national bank, this counterparty, is it a good counterparty or not? So does he— has he ever been late?

Creditworthiness.

Exactly. That's one thing. And then the financial institution has to report that there is a new loan. because it has to end up in the database of the National Bank. That's a nightmare for Belgian banks. Well, we did it in a couple of weeks thanks to the technology that we have. It was quite easy once we had the specifications of the API of the National Bank to connect with.

Well, I think the realms that we're talking about, it's that whole new thing that is happening around banking as a service. Although you mentioned banking as a wider scope, also leasing in there, which I think particularly is interesting. But what do you see as are the bigger challenges? Because a lot of things are happening around BaaS. But what is your view on banking as a service?

So in banking as a service, there is— I would maybe rename it finance as a service. Okay.

FaaS.

Why? It probably already exists, that acronym. But why am I saying that? Because it's not only about banking. It is, as you said, leasing institutions, but also other types of financial institutions that are— that need at a certain moment to evaluate a risk on a person and to make a decision on whether they will grant a loan, a lease, a financing contract to that counterparty, and then processing it afterwards. For me, the biggest challenge when you deliver that is, first of all, to be sufficiently attractive in having a wide range of functionalities. So it's not just about, yeah, we do leasing and that's the only thing that we do. No, no, you need to have leasing, you need to have loans, you need to have consumer loan. You have to be able to make a lot of things and in the same platform. Doesn't make any sense to rebuild or to redeploy silos for different types of operation. Everything has to be in the same. So that's the first topic, the functional coverage. The second super important thing is about connectivity, integration. Like I said, there is an ecosystem of the financial institution and we need to plug in that ecosystem, replace part of it, and continue to discuss with the other parties that remain there. That's the second very important challenge. The third important challenge, when you are providing a solution to many clients, I did not say, but of course our solution is multi-tenant, meaning that all our clients are using the same solution. but with a specific configuration that makes it unique for each one of them. But the challenge there is to be able to combine the standardization, which is what the different clients are looking for, and the differentiation, because each one has its own DNA.

Mm-hmm.

So we need to have a solution, even if it's multi-tenant, that really enables to have as many things as possible in common, But that allows really full differentiation. And I can assure you, if you look at our different clients today, the way they have set up the system, the way the system is configured for them, the screens, the access, the doc, it's completely different one to the other. You would—

But the core is the same.

The core is exactly the same. And the core represents 95% of what they are doing. But by design, and that's super important, by design, if we want to be able to have a standard product, which is what we have, we need to be able to manage what is not standard. So the standard product already has anticipated the fact that each client will do something that is not standard. And that for me is key in the way the whole system has been designed.

So a standard has been designed as non-standard by design?

No, it's more or less that, but it's more if you want to be able to have a standard, You need to foresee to do something that is not standard.

So it's—

yeah, but I can assure you it's true.

I got another tongue twister because I think there's maybe another element that we have not covered. That's OFaaS, open finance as a service. Because I'm wondering, how do you anticipate the beyond banking sort of thing that's happening around us? Embedded finance, does that also come into BasicOn?

Yeah. So there was a first step that was PSD2. There was a first step that was PSD2. Okay, that was an important milestone, but it really goes faster than that. Now it's about when we talk about full open finance, we're talking about data that has to move from one stakeholder to the other stakeholder and completely seamlessly. And that is not obvious to do. Thanks God our solution is able to do that because of the interconnectivity, because of the quality of the data, because of the follow-up and the audit trail of the evolution of all the data, et cetera. So that's the—

Makes sense.

That's the next step that we see.

Well, when I look at— no, when we look at BasicOn and the fact that you're in this industry, What do you see is the next 5 years ahead? Because I think you made a nice story where you anticipate to what is now important, but how do you see the future in front of you?

The biggest trends that we see in the market that are lying in front of us are actually, I would name 3. The first one is embedded finance. So embedded finance, it's obvious now, it's not siloed, it's really everything is mixed. Whoever is close to the client can provide him any type of services. And we tap into that, providing that connectivity and that possibility. So that's a very important first topic. The second topic in our domain is the AI-powered credit decisioning. So AI has been around for quite some while, but what we see now is that it really helps in making decisions on credits. And the challenge there is to make it a reality at an affordable cost. By cost, I do not mean euro. I mean power and delay. That's the second trend. And the third trend, which is a bit of consequence of that, is what I could call real-time lending. So we know that today, if you want to apply for a loan, it still takes some days. But why does it take some days? There's no reason for that. You could do everything online, apply for a loan, describe your project, have an AI that is pre-analyzing your data, and then you have a person that makes a decision on that, and then it's done. Why do you need to wait? And that real-time lending is really a trend that we are seeing in the market. It's a challenge that is coming ahead of us. The problem is that I think the financial institutions Cannot imagine that this is going to happen. For example, when you talk to large banks, large institutions in a specific domain, for example mortgages, they say, but it's impossible to make an online or a very short time decision process on mortgages. But it's not true. It is possible. What takes time is, okay, you need to wait to have the notary to have an appointment for you. You need to wait four months between the Compromise and the deed, et cetera. That takes time, but not in the decision processes. And that for me is a challenge.

Well, you know, we are already— you know, thank you so much. We're now at the end of our podcast. Time flies very fast, and it's nice to get some insights what's happening in the industry. You know, thank you so much for sharing all these insights. Maybe as a last question for this podcast, Who should be the ideal customer that contact you and how can they contact you?

So I think the ideal customer that can contact me is any financial institution that is facing a challenge of digitalization, of going too slow, go-to-market in their current system, with their current system. So they can contact us. And how do they— should they contact us? Just go on our website, www.

Perfect.

Thank you so much for sharing these insights.

Thank you, Koen.

Thank you also to the audience, and please stay tuned because more, more, more fintech news to come. Thank you so much.

Thank you.

Thanks for listening to another episode of the Connector Podcast. To connect and keep up to date with all the latest, head over to www.jointheconnector.com. Or hit subscribe via your podcast streaming platform.