A company does not automatically become digital just because it offers an app to its customers, admonishes Roland Folz, PhD, the CEO of solarisBank. Nowadays, modern consumers expect contextual banking: They want to access financial services whenever they are required. In order to meet these requirements, the concept of digitalization has to take top priority.
Roland Folz, PhD, is the CEO of solarisBank. At the 23rd Handelsblatt Banking Summit in August 2018 in Frankfurt, he will speak about the topic of digitalization in banking: platforms, tech players, cyber security.
Interview with Roland Folz
Dr. Folz, solarisBank sees itself as a tech company with a German banking license. Is that the model for the future?
Digitalization demands that all companies, including banks, completely reconsider their business model. It is not enough simply to offer an app and to think that this makes the company “digital”. The entire infrastructure – all processes up to and including the way to communicate with customers – has to be redesigned with digitalization in mind. In my view, it is therefore already essential today that banks think like tech companies. Yet so far we only see a few institutions that seriously and consistently follow this path. For any non-tech company with a banking license, however, the future will be rather challenging.
What is the difference between solarisBank and traditional financial institutions?
For us, the concept of digitalization has top priority. As a banking platform with a full banking license, we consider financial services to be contextual offerings. We provide products just where they are needed. Moreover, we are following a pure B2B2X strategy – that is to say, we offer innovative financial products to our partners that are modular and can be combined as necessary, and which businesses and other financial institutions can use to directly provide digital financial services to their customers. We also take on the job of executing the transactions in accordance with the rules. Using modern interfaces and a start-up mindset, solarisBank’s financial services can be integrated very quickly. “Time to market” is thus considerably shortened.
Do you think it is possible that banks will form partnerships or even merge with big tech corporations like Amazon, Apple, Facebook or Alphabet in the future?
Partnerships certainly are a possibility. Particularly the introduction of PSD2 and thus Open Banking will create more opportunities for cooperation between banks and tech companies in the future. After all, the big tech corporations already offer various financial services for commercial and private customers today. And the spectrum of services is getting ever broader, ranging from pure payment services to for example loan offers. But right now, many of these offers by tech companies only apply to the core business in their own ecosystem. Whether a merger in the near future could be worthwhile for both sides has to be assessed on a case-by-case basis.
So are the tech corporations a significant threat to the banks?
At the moment, this is still an open question and it has to be considered in a differentiated manner. I think the frequently invoked frontal assault is unlikely. In the long run, traditional banks will generate additional benefits for the customers in certain areas, for example where personal contact and the service thus created are paramount. In other areas, banks will consistently come under attack and lose market share. Customers nowadays expect digital offers that they can access anywhere and anytime. Whoever still fails to think digitally to this day will have considerable difficulties in the future. Most notably, it will lead to an inability to further use the data created during customer contact in the interest of the customer. Many banks have outdated and complex monoliths that hamper the integration of new digital offers and modern data management – another reason why solarisBank started with a platform model that facilitates the connection of digital services. In short, instead of the invoked conflict “Big Tech vs. banks” I believe in cooperation in this area too – but rather with platform providers like us, who are actually able to technically implement such collaborations.
Do you recommend that these tech companies should be regulated in the same way as the banks?
Tech companies these days have access to incredible amounts of data. And of course this creates a responsibility as well. For this reason, I see a general need for the regulation of tech companies. However, this has to be thought through sensibly from the outset and must not constrain innovation and the development of new products.
In your view, what are the key factors to ensuring the long-term success and profitability of a financial institution?
In future, the customer will gain center stage even more. Modern consumers these days expect to access financial services whenever and wherever they need them, based on optimal information and streamlined decision-making processes. Here, too, the keyword is contextual banking. Traditional banks are not meeting these expectations well enough to date. So whoever wants to be successful and profitable has to adapt their own infrastructure and data management accordingly as of today already.
For the original interview in German click here: Banken müssen wie Tech-Unternehmen denken