Being the first company to build the first-ever core-banking cloud platform to the market, Ohpen is uniquely positioned as a leader in cloud-based solutions to evolve its role into new areas, such as mortgage and lending.
Speaking to Payment Expert, Jerry Mulle, UK Managing Director of Ohpen, discussed what went into building the first-ever core-banking cloud platform, the hurdles financial institutions are still mulling over when adopting these solutions, and the role of Open Finance and how it is still yet to realise its full potential.
Payment Expert: Firstly, can you reveal what went into Ohpen building the first core-banking cloud platform and what elements went into the infrastructure?
Jerry Mulle: Ohpen was the first company to build a core-banking cloud platform. For the founding team at the time, there was a huge educational need to explain to prospective users about the advantages of building new functionality from scratch.
The team was also a small company launching a market-first solution, so there would have been a lot of work to do to convince prospects to trust us over more established larger tech brands, such as IBM, that might on the surface be more appealing just for being well-known.
On the technical side, the team had to do a lot of missionary work on the benefits of having an API-first strategy, convincing prospects with load-testing results and vulnerabilities.
Launching the first proposition in the Dutch market, Ohpen also had to convince the Dutch regulator that cloud infrastructure was safe and would not form a hurdle in their regulatory duties at the time. The leadership team also had to negotiate with AWS and DNB (Dutch Central Bank) a right to audit and a right to examine.
For AWS, this was also relatively new: they had to agree that auditors would be granted access instantaneously to their premises. So in many ways, Ohpen has been the pioneers not just in terms of the original technology, but also in shaping the wider regulations that have allowed cloud platforms to excel since.
PE: Since the launch of the core-banking platform, how has cloud banking, in your opinion, evolved since then and how has Ohpen responded to such changes within the sector?
JM: Cloud banking has evolved significantly since the launch of our core-banking platform 15 years ago. Banks have shifted from monolithic systems to cloud-native, microservices-driven architectures, enabling faster innovation and better scalability.
The rise of API-native solutions, Open Banking, and lately AI-powered solutions, made banks realise that cloud infrastructure provides more efficiency and flexibility comparing with the legacy on-premise software. And it’s all at lower costs and even better security.
Ohpen has responded by evolving our architecture and adopting more cloud-native services provided by AWS, ensuring the platform remains agile, scalable, and compliant with modern banking needs. This has allowed us to leverage the full potential of AWS for rapid adaptation to new trends and increasing customer demands to offer personalised services.
PE: For those uninitiated with cloud banking when it pertains to mortgages, lending, etc., why should they consider switching to a cloud-based platform?
JM: There are several reasons why financial institutions should be using cloud-based platforms; starting by looking at the challenges around mortgages and lending can help provide some context here.
The mortgage lending market is facing multiple challenges from economic volatility, changes in regulation and government policy (with a new UK government focusing on the housing market) through to increased competition as new players enter the market and pressure on volumes increase.
All these challenges require a different operating model for lenders. It is now about creating agile and responsive organisations that can react quickly as opportunities present themselves or challenges materialise. Technology has a key part to play here, and it is clear that legacy technology has stifled mortgage lenders’ abilities to meet financial institutions, brokers and consumers’ strategies.
The industry has been crying out for less complex and more streamlined end-to-end processes for a long time, to ease and speed up the challenging journeys that we ask customers and brokers to go through.
Our proposition at Ohpen is to provide the best user experience for clients, employees and brokers by taking in data across the full journey (and working with partners who will expose their APIs) and validating in real time. As well as this, we aim to provide lenders with all the tools required for them to rapidly make changes to products and processes so they can gain competitive advantage.
The business case works from both a cost perspective – freeing up underwriters and operational staff to focus on added value activity – and from a revenue perspective, enabling financial institutions to take advantage of new opportunities.
PE: How has the role of Open Finance helped users control more of their data and can it automate cloud banking even further?
JM: While Open Banking has long taken hold in the UK, there is still a way to go for organisations and industries, as well as consumers, to realise the benefits of Open Finance.
While there is work to be done, the benefits for the mortgage lending market are clear. The secure sharing of financial information is one of the opportunities helping lenders drive forward accountability in the lending process, particularly for brokers helping consumers go through the painstaking processes involved in buying a house.
In situations where there is a lot of data and multiple documents to be shared, the process can be made significantly smoother and faster if it can all be shared between organisations more securely.
PE: For Ohpen, what are some of the ongoing challenges in the UK market that businesses and customers alike are still struggling with in order to switch from legacy systems in favour of cloud-based solutions?
JM: Lenders are going through the internal battle of finally making decisions to move off platforms which are more than 30 years old. For many years the balance of risk has been in favour of putting up with less and less flexibility and mounting costs.
I think the big change came during COVID, with lenders realising that they require much more flexibility moving forward and that putting a frontend across a legacy platform is no longer meeting their needs. There have never been more lenders ready to invest in cloud-based solutions.
So, most conversations concern questions of ‘how’ rather than ‘what’ or ‘why’. If lenders are replacing their platform, they require a clear strategy to ensure that the business objectives and the IT strategy are aligned, and there needs to be clarity around the organisation on the digitalisation they will be going through.
Often the greatest challenge is winning the hearts and minds of people within the financial institution who have used the same legacy platform for most of their career, and just want a more modern version of the same process rather than true transformation.
As we dive into automation and AI, we talk about how the process can be improved for underwriters and brokers – and whether the lender is willing to jump straight there or wants to adopt a more staggered approach. Real-time document validation is a key example.
Lenders/brokers have been taking in physical documents for so long that some will decide to put an underwriter check in before allowing validated documents to flow straight through.
PE: Lastly Jerry, and thank you for your time, within your experience at many banks, such as NatWest, are banks embracing cloud-banking more than they were before? What are some of the benefits for banks but what are some of the persistent challenges in adoption?
JM: There is no doubt that cloud-based technology is being adopted more than ever before, from the largest banks through to the smallest building societies.
There remains, however, a lack of understanding and confidence in security, especially from the C-suite. This means there are still some consistent challenges around adopting opportunities to ensure IT strategy meets where the business strategy is, and not the other way around.
By working closely with experienced vendors, financial organisations can make sure to digitise processes and the wider business without compromising on privacy controls.
