ABN AMRO and banking software vendor Temenos have partnered to co-develop a new payments system – built in conjunction with Temenos’ software platform – to be implemented globally. Group product director for Temenos, Mark Winterburn, tells Meghna Mukerjee about the joint venture and how the vendor plans to differentiate itself in the payments market


ABN AMRO has partnered with banking software vendor Temenos to develop a new payments system to be implemented globally, and built in conjunction with the new Temenos Enterprise Frameworks Architecture (TEFA) – a platform for Temenos’ T24 core banking software.

The plan to co-develop the new payments system was announced at the Temenos Community Forum in Barcelona on 24 May. The payments system aims to be available as a standalone solution, to enable “seamless operations in real-time” with any core banking or current accounts system.

The jointly developed payments solution – a first for Temenos – aims to be fully integrated with the T24 core banking system, allowing ABN AMRO to use all the core banking functionality including cash management, liquidity, business intelligence, AML, payment repair and account and risk management capabilities.

Mark Winterburn, group product director for Temenos says the project entails a great amount of “commitment” from both parties and the collaboration brings together “ABN AMRO’s deep experience in using sophisticated payment engines inside the bank, with Temenos’ integrated approach and technology expertise”.

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“I don’t believe Temenos has ever done a co-development before. ABN AMRO had a vision of what a payments hub should be. When we went into it we had not thought through a co-development, but as we went through the idea of the solution it became obvious that a co-development was what it was about.”

ABN AMRO has previously completed a complete roll out of Temenos’ T24 software. According to Temenos, this “global 24/7 solution” will enable ABN AMRO to handle greater volumes of payments and “support its business growth and expansion into new and existing lines of business and new territories, while lowering cost of ownership, maintenance costs and risks”.

“The thing that ABN AMRO wanted to do is to change their business model and use Temenos technology to achieve that. I think the trick in Temenos is to be able to offer a full front to back out of the box solution for a variety of platforms. To me it is core banking plus,” says Winterburn.

The development of this fundamentally new payment services hub will deliver “a robust, fully automated system” which will be able to process high volumes of payments.

“What ABN AMRO has asked us to do is to build an international wholesale payments hub – 50,000-60,000 transactions per day that kind of thing. But we are taking an opportunity to build a payments hub with retail and commercial capabilities of potentially millions of transaction,” added Winterburn.

The payment gateway will be capable of handling different payment schemes, formats and protocols and will allow new payment channels to be linked. The solution will be made available on all standard platforms, according to Temenos.

Winterburn says the development of the new payments hub is bringing together ABN AMRO’s industry experience with Temenos’ expertise to build a “packaged software that is attractive for a lot of banks”. However, Temenos has not approached other lenders with this concept just yet.

“We are now at that stage when we know what we are building. Once we have timelines in place, then we can decide how we go to market with it. I want us to get far enough in the process with ABN AMRO before we go to anybody else. I do honestly believe there is a good market for it,” says Winterburn.

Stepping into the payments space is not new for Temenos, Winterburn stresses, and what differentiates the vendor from its competitors is the new architecture of Temenos’ T24 platform and its components.

“We are not recasting Temenos. We do payments – now we are just beefing up our offer,” says Winterburn.

Compliance with regulatory changes is “always going to be an issue”, says Winterburn, but Temenos has taken into account all the upcoming regulatory changes – such as SEPA – and is “ready for it”.

Regulatory challenges are also country specific and to best deal with them, Temenos has “changed the game” internally by treating different country specific platforms as products.

“I don’t see the country differences as an issue. We have the core product, then the country platform and then the local development,” says Winterburn.

Though the first half of 2012 has seen the introduction of other mobile payments platforms such as Barclays Pingit, Winterburn is not worried.

“We have got a lot of products, depth and breadth. What we are trying to do is make mobile banking transactional. So if I get a text form a bank updating me about something I can do something with it. Once you are in that situation not only am I getting what I want as a customer, the bank is also reducing costs because it needs less people in its call centres.

“Mobile banking customers are typically better customers, more profitable customers. So if you are good at understanding who these customers are, you can target them very specifically,” says Winterburn.

According to Winterburn, what has been encouraging about the payments space is banks readily talk about and accepting packaged products.

“It would not be unusual for a Tier 1 or Tier 2 banking providers to talk about payments or the ability to use a package environment. We are not quite there yet in core banking,” says Winterburn.

Winterburn says that older banks with complicated legacy systems struggle with core banking transformations and packages systems in comparison with newer banks, but a part by part transformation is possible.

“What TEFA and our investment in the individual components is allowing us to do is to offer modules – so we go in and say we have a lot of good stuff and what you are trying to do you can buy that component.

“For large, older banks, what we say is let’s start with what your payment point is – whatever is the most expensive and most difficult to offer your customers. With the T24 is a package we can interact with the other systems very easily and then over time we can progressively renovate what they have – no big bang. I think that is the key.”

Going forward, the focus for Temenos remains user experience, adds Winterburn.

“The great thing for me is when you look at what banking customers want it is often self service channels. And that is the cheapest channel you have got – –a channel that builds loyalty. So it’s a real win-win. It’s just getting those channels right.”