Interview: Jean-Michel Hilsenkopf, Temenos – seeing things differently
Ahead of the Temenos Community Forum (TCF 2018), FinTech Futures talks to Jean-Michel Hilsenkopf, chief revenue officer and member of the executive committee at Temenos, about the major themes in digital banking today.
What are the top three drivers of digital transformation?
When I’m talking to banks, three things always come up: changing customer demands, a more dynamic market and the economics of banking.
Take the first one. Our grandparents chose and stayed with a bank until they died. Today, customers go where they can get the best service at the best price.
This brings me to the second driver. We have a much more dynamic market. We’ve got banks, fintechs, platform players – such as Google and Amazon – and telcos all wanting a piece of the action.
This leads to the third driver: competition. There’s no way that banks can continue as before. They can’t afford to. The quest for profitability has intensified, and banks are now looking at technology as a key differentiator. Digitalisation is now a business imperative, not just a cost reduction exercise.
Banks are big IT spenders, but rather than spend on the maintenance of their legacy infrastructures, they can invest in new systems. This will allow them to innovative, to bring new and personalised digital products to market, and extract valuable data from their systems.
Technology is now driving the business conversation.
What are the secondary drivers?
Speed to market and product differentiation are secondary but important. Regulation is also pushing change. When a regulator opens up to a new idea it can really drive a market forward. Just look at Kenya.
A few years ago, the Kenyan regulator opened up a national database to third parties. The Commercial Bank of Africa partnered with local telecoms company Safaricom to launch a new mobile banking service that used the database to verify know your customer information. This massively simplified opening an account and cut the time required to just seconds. The whole service took five months to go live and within five months the bank had three million new customers. That’s pretty powerful.
Another example is open banking, which creates a level playing field between incumbent banks and digital start-ups. Legislation in Europe obliges banks to share customer data and to open up their payments platforms to third parties. Open banking and EU’s new payment services directive are the catalyst for banks to change their business models. Europe is the test bed, but other regions will follow.
Can you give any practical examples of successful digital transformations?
When launching Pepper, Leumi – Israel’s largest bank – took a really disruptive approach. Pepper is a digital bank, and it runs on a Temenos core platform. I really liked their approach, with no hangovers from legacy systems, no constraints. They designed it for a new generation of clients – and it was designed by that generation. It’s very refreshing.
How do different geographies compare with regard to sales?
From day one, Temenos has been a global company and we see differences and similarities across markets. Globalisation and regulation are themes common to all. Individually, European banks see digitisation and open banking as a priority.
We’re also seeing Tier 1 banks increasingly opt for packaged solutions. In some APAC countries, 60% of the population is aged under 30 and they are very tech savvy – a factor shaping banks’ strategies.
In Australia, the cloud is really important, whereas in the Middle East and Africa it’s all about mobile banking and reaching the unbanked.
In Latin America, we are seeing a renaissance in private banking, with larger banks implementing state-of-the art wealth suites to deliver a far better service to clients. The technology also allows advisors to automate compliance and back-office functions, which saves on time and costs.
North America is an interesting market as banks there want to become more sophisticated. We’re starting to see differentiation in terms of their offer and they see digital as a way of doing that.
Who are your main competitors and how does Temenos differentiate itself?
Our real competition – the big battle we have – is banks that do nothing. Only 30% of banks are using an external software vendor for their digital transformation plans.
I know it’s a big decision. But many forward thinking banks now understand they can’t do it themselves and must work with external providers. They need packaged software to innovate at scale.
There are many ways to do this. Some banks are transforming their architecture in stages. Others have chosen to launch digital-only banks built on entirely new technology platforms. At Temenos, we are specialists in banking and we adapt to our clients needs.
What big changes have you seen over your career?
I joined Temenos right at the start, even before mobile phones. Mobiles have made a massive difference. They really are part of delivering customer service today.
In that time we’ve seen a shift towards packaged software and open source. Temenos has always been about open technology – we provide the platform and APIs that will connect to and work with third-party software to give banks maximum flexibility.
No one knows the future, even five years ahead, so banks need that flexibility. And as IT has become strategic to the future of banks, decision-making has moved from the IT department to the CEO and the boardroom.
I would also say that whereas fintechs were initially regarded as a threat, they are now seen as partners. Banks are investing, buying or working with fintechs as they realise they cannot do it all on their own.
Temenos is widely known for its core banking. Are there any plans to diversify?
While we are renowned for our core banking software, we provide the full front-to-back stack. We believe that to become fully digital banks need to renovate their IT systems front-to-back office.
We are passionate about the core and our software is second to none. We have a powerful front office digital engagement suite, embedded analytics, financial crime solution, and payments hub.
We also serve multiple verticals – retail, corporate, wealth, private, fund management, inclusive and Islamic banking.
We have a very significant market opportunity ahead of us in banking and we are seeing strong growth driven by digitisation, regulation changes and the move to open banking.
How important is the cloud in Temenos’ strategy?
We’ve been in the cloud for 12 years. Initially, people thought banks would never go for it. Today, most of the requests for proposals (RFPs) we get ask for a chapter on cloud as clients are seeing cloud as a way to scale and bring agility to their business. But cloud is not just about software as a service or data processing. There are lots of ways you can use it – and we want to make sure that we can help banks in any way they need.
How would you define the culture of Temenos?
We take pride in seeing things differently. It started with our idea to sell banks packaged software and today it’s about delivering the right technology to enable banks to be the best they can.
It’s why we have the highest R&D in the industry, funded at 20% of our revenues, and we have a great track record – something like over 250 go-lives in 2017 alone.
Today we have over 3,000 clients all over the world, banks of all sizes. Half a billion people worldwide use and rely on Temenos’ software to do their banking. We have done something really useful. It makes me very proud.
Jean-Michel Hilsenkopf was appointed chief revenue officer of Temenos and member of the executive committee in January 2018. He is one of the original members of the company, having joined in 1993. His deep understanding of the company, its culture, and passion for delivery gives him the vision to drive the company’s regional strategy forward.
Prior to taking up his current role, Hilsenkopf was MD for Temenos in Europe, Middle East, Africa and Latin American regions, as well as Temenos’ cloud business. He previously held the position of regional GM for Europe and also successfully integrated several acquired companies, such as Odyssey and Viveo. Before joining Temenos, Hilsenkopf worked as a consultant in the banking sector.
Hilsenkopf holds an MBA in international marketing from the University of Geneva, Switzerland as well as a master’s degree in computer engineering from the Polytech of Clermont-Ferrand, France.
This article is also featured in the May 2018 edition of the Banking Technology magazine. Click here to read the digital edition – it is free!