Sopra Steria Financial Services Analyst Day

Sopra Steria held its second Financial Services Analyst Day the 23rd of March 2023.

This virtual event is dedicated to market analysts. 

Our Executive team and Experts presented and illustrated our ambition and offering strategy in the financial services market. We highlighted how banks can create value for their customers as well as turning that value into revenues and putting emphasis on 3 axes:

  • Digital Banking
  • Compliance & Cyber
  • Payment & Credit
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Sopra Steria Financial Services Analyst Day 2023 - Introduction

Speaker: Pierre Lahbabi - Group Financial Services Lead - Sopra Steria

Good morning. Good afternoon. Hello, everyone. I'm glad to welcome you today for a second and that is day. We are live today in our Paris studio. So, we plan to make this a yearly event to provide you with updates on your business, on your new product release, and about key market trends. We value very much the interactions that we have with you as market analyst and therefore it's a pleasure to be again with you today and to exchange about your views and also have some exchanges on market trends.

I will start to introduce myself so I'm piano ready. I'm group financial services leader and my role is to coordinate all of our activities intended to serve of financials, services, clients across all geographies and business line so that we can deliver more value. And to to our clients, we continue our introduction by presenting an overview of our activities in financial services.

So first, with a so posterior as a group. So posterior is a technology company with three called Businesses Consulting Digital Services and tech services and software. You see on the slide here a few key figures about scale and or European and global footprint at so the idea last year 2022 was a year of major achievement for the company and we had two important milestones that we came over.

The first one is that we are now a company of more than 50,000 employees and we also reach the milestone of €5 billion of revenues. But these are not the figures which are so important. This means that last year we attracted more than 10,000 new talents joining and reaching all competencies in the company. And this means also as regards the turnover revenue that the clients, they continue to trust us and to be in line with us for their strategic transformation projects.

I have also to say that last year was a year where we achieved significant acquisitions. The first one is the one of six, which is becoming a reality this week, a company dedicated to aerospace and two critical mission systems that we cybersecurity capabilities. And we also are starting to walk with our colleagues, new colleagues from two Vienna, a company of digital services in the bay in Belgium, which is very active in financial services.

Finally, just this week, we announced a project to also acquire another important company in the Benelux regions on demand. And all of these capabilities will strengthen and will help us to deliver more value to our banking clients. So now move to support in financial services. What do we do for our banking clients? So, we are active across these three business lines consulting, tax services and software.

Of course, we have a global footprint, thanks mainly to our software business. As you see on the map on the slide, we are also very strong in Europe in your consulting and in your digital services business. So, this means that in Europe we have a complete end to end offering regarding financial services managing. So, three types of activities.

We have extended client relationship across the globe and an exceptional coverage of the largest European bank as well, be it in one of the businesses. These positions have been built off as a year and I'm glad that we also can gather more than 10,000 individuals and professionals addressing or banking clients. If we look at organization, you may have heard and, you know, some of our brands and capabilities for banks and financial services.

Let's have a short overview of what are the different capabilities that we can put together. You have fast banking software that was introduced by Erik, the CEO, and this is one of the leading software, Ed, globally with more than 400 million revenues in software for financial institutions. So, this is more or less 35 or 40% of the revenues that we generate in financial services.

You have surpassed Daniel providing integration services and IT capabilities for all banking clients. So, past your next or consulting brand specialized in management consulting and in digital transformation and consulting will have a number of examples of the type of assignments that they realize. Now coming on the other part of the slide, you have a safety, so financial technology companies that was set up in the context of the project which was found at banks, and which is delivering for German banks full as a service banking platform.

You have developed a specialized company in payments with consulting services and dedicated software for all payments clients. And finally, so Posterior Ventures. And you will see that we are very involved with the fintech ecosystem looking at all your capabilities. We also have some transversal entities across the industries that address and support banking clients. Among them, you have the CTO and his teams, a center of excellence for technologies that gather world class expertize and capabilities around advanced technologies such as blockchain or other technologies.

We have then dedicated teams for cyber security and infrastructure and management will also have examples of our projects. And finally, three delivery centers, global delivery centers, one in Spain, one in Poland and one in India. I would also like to mention X, Y or sister company and preferred partner and this is a company and reaching on offering with middleware, software and API management platforms.

So, all in all, as introduced by Eric, we are putting together a unique set of capabilities and competencies for clients in financial services. We will now take a step back and look at the ecosystem. If we are so strong in financial services, we need also to be very involved and to have an active role in the financial services industry in Europe.

And this is exactly what we are doing, looking at the different ways we are involved. We are involved with third parties, first with fintechs. You see here a number of logos we invest directly in fintechs, as we did recently in Algon credit scoring company based in France, all indirectly through this fund. But the most important part of our relationship with fintechs is not about capital gain and investment.

It's about driving extended value proposition and partnership with them for banking clients. I will give two examples. So, the first one is, we think that allows us to reach more than 3000 financial institutions across Europe through their APIs and another one with Chainalysis. We announced this partnership last year, which enables us to bring state of the art compliance solution about crypto.

We combined expertize in crypto and all knowledge of institutions, financial institutions in Europe. And if we move then to the second type of partners, we are of course having strong relationships with Hyperscalers for the cloud services and we software provider which are very active and involved in financial services. You have the names here and we have professionals which are ex-pats integrating our technologies, supporting our clients in move to cloud approaches with these partners being present in the ecosystems.

This also means being active in leading industry associations. This means also publishing thought leadership documents. We'll come back to that. And this means also being able to share and to gather clients and stakeholders. And this is what we are doing with this super banking summit. And I'm pleased to say that we will have the sound editions this year.

She sees a major event in the industry with more than 5000 participants at the event last year. So, as you see, we are very involved in the ecosystem and clearly I also include you as market analyst as playing a key role in this ecosystem. And I would like to thank you again for the insight. The discussions help us to build our vision, to drive our product roadmaps, and also to help our client to make a good decision about the choices of their supplier.

So, this was for the overview of supply area in financial services. We now come to our ambition and to our priorities. So, for ambition, you see here the text that was validated by the Board of Supply Group, and which reflects high ambition that we have across all businesses for financial services. I'm not going to comment this text, but maybe to pick a few keys wants.

So first one here is a long term. We are a European player with a long-term strategy. We have long term relationship with our clients, and we are here to stay. This is something that is a key characteristic of the company. Second one I would like to think is a digital battle. We know all that banks have a lot of competition from newcomers and that this competition is taking place on digital field.

We want to help banks in this digital battle. We are clearly on their side supporting them to take all the benefits that the digital can bring. Beat for optimization of internal processes. All for developing new solutions and new services. And finally, the last one would be suffering. We are a European company, and it can be very important for banks during these troubled times.

Sovereignty is a major topic as well for banking in Europe. So, as you see, we don't lack ambition in financial services. Let's have a look now at how we deliver this ambition about and what are our priorities to define our priorities. We set up a framework with a three dimension. First one is about transformation going on at banks, which concerns all of their business lines.

So, as you see the first dimension, we want to address topics that really matters for banks. Second dimension is about the business lines that we address for banks. And the third one about core technological capabilities. Looking at a first dimension, you see here a number of topics that Eric already mentioned. They are major challenges for banks and the good news is that for each of them, we have an offering, we have capabilities, and we have references to support them and deliver value.

We help them to become more agile, to be more efficient, to optimize their process, to make cut savings despite their I.T. legacy systems. We are also involved in helping them to gain the digital better of the customer experience by designing mobile application, looking at new use case and their overall customer experience. We are involved as well in data.

This is a key area where we have specialists helping banks. We also have specialists in the field of regulation, in the field of compliance and cybersecurity. We give a number of examples today. I would like to say a few thoughts then. On ESG, ESG, we have seen this topic becoming a major topic in the strategy of banks in a very short timeframe, maybe 2 to 3 years.

So, this is clearly one of the area with which they will concentrate their investment both on it, but also on innovative services. And we are convinced that the bank can play a major role in helping our society to become more sustainable. So here we are starting with a consulting approach to help them, for instance, to define eco projects that will help their clients to be more environmentally friendly.

We are also helping them with its solutions, for instance, to evaluate the impact of their IT systems. Currently, we are building a comprehensive consulting and solution offering for banks related to ESG. And finally, the last topic here on innovation and open banking, we will discuss extensively in our roundtable. It's maybe not as a major part of the client’s revenue yet, but we all know we have to continue to invest and to find new use cases and monetize those services.

Moving now to the two of the dimensions of our framework for financial services. We have a very short overview of the business lines that we address at banks. Banks are very large organizations, and we are more focused on their retail business. So, you see that for how we are addressing that digital. And I'm paying open banking department. We are we have a strong expertize, business expertize on lending and credit.

We support them for their payment operations, which are critical because they have a lot of interaction with our clients on payments. On compliance, we already touch a while, done this and of course digital channels on the tech capabilities. As you see, we are a very large tech company. So, we have a lot of capabilities that we can mobilize to support our clients.

I would just highlight one around the I.T. modernization and go to cloud. This is a very broad domain, and we know it's a hurt or today of the priorities of banks, CIOs and also chief executive officers. So, in this domain, we can include some application modernization projects. We include the data migration project. We include as well go to cloud strategies and implementation.

So, there are a lot of capabilities that we need to put together to make an assessment, see what should be the end result and game for this modernization of the I.T. system and build and support them in this journey. I think that we are probably one of the companies which gathers most of the capabilities to address these topics for large European banks.

And I just comment, I say if you want onto to others. So, the one on data, the one also on cyber, which are very important topic data, it comes also together with I and but it's not only about AI, it's also about data architecture, as we said, data migration and data platform and technological stacks. So, this was for the overview of how capabilities and offering for financial services.

Sopra Steria, The world is how we shape it
Leadership Panel - Focus Compliance and Cyber - Sopra Steria Financial Services Analyst Day 2023

Leadership Panel - Focus Compliance and Cyber

Financial Services Analyst Day 2023

 

Speaker: Pierre Lahbabi

So now we move to some consequence about compliance and cybersecurity. So there has been a wave of new regulation after the financial crisis in 2008 2009. Fabrice, you mentioned this was a very specific time as well. Now it is for for banks, for sure. So we thought that this would be maybe a can period, but it is not. 

And we have a number of regulation which are already planned for banks in the coming years. If we focus on Europe. So we have to have, for instance, for operational resilience. We have nice tool for cybersecurity. We have new regulation coming up for payments. We have the one coming from tokenization, for instance, MCM. So there is a lot on the working place for for banks on regulation. 

Then Richard I would like to understand on your side as a software company are this business opportunities, this new regulation. How do you cope with them? Do you need to update your software?

 

Speaker: Richard Broadbent

Yeah, I think first and foremost, it's important that we support our customers, resolve the business problems. And, you know, quite often a lot of the challenges that that financial organizations faced are driven out of regulatory change. 

Just a couple to mention, if we think about instant payments and perhaps reporting, so from a an instant payments perspective, you know, that will become mandatory in Europe within the next two years. But it will enable new services to be launched on top. Whether we are talking about request to pay or API. So we have rewritten our payments platform in a cloud native way and there's a proof point later on this afternoon around Finland's got to and now using our cloud native solution. 

So that is absolutely going to help us help our customers address these challenges from an instant payments perspective. And then similarly, when we think about reporting, the ECB is now looking for a lot more granularity in how reports are produced. And legacy technology won't support that. So, again, we've we've rewritten technology in a cloud native way that enables us to fully leverage big data, but still have the synthetic reporting on top. 

So a new way of tackling that challenge around kind of regulatory change.

 

Speaker: Pierre Lahbabi

Fabrice, I'm coming back to you is a again, a difficult question. If you had to pick one of these major new regulation coming up in Europe for banks, which what would you comment and would you choose and why?

 

Speaker: Fabrice Asvazadourian

Good question again. I think regulation, new regulation can be seen as business as usual for a bank because, I mean, I won't be able to name all the new types of regulation that's been around for the last 15 years. Right. And you could even see that for some bankers, regulation is not a bad thing from a business standpoint. But this being said, I think there is a new one that is opening a new avenue for for for banks. It's easy. I think it was the banks of all promise to be to play a major role to accompany the transformation of the economy. 

And that's what the banks are for. So the question is, how can I be not the naked man when the tide goes down, so goes low. So that's the big question for all banks. Everybody's starting to work very seriously on that. It's not by making sure you can monitor where you are. All your portfolio are evolving and so on and so on. 

So we see a lot of attention and today probably focus is more on the ESG data management, anything or data related to ESG. Some of the data are already owned by banks, but they we are not. Well, DAG will organize will tweeted. Some data will have to come from outside of the bank and banks are not so used to use external data. 

So that's the challenge. That's where today we had the most of our client, so that they are ready to then very seriously deliver what they have promised in terms of transition.

 

Speaker: Pierre Lahbabi

Okay. And you are right. We cannot mention all of the regulation. I even did not mention the ESG part in my introduction. Maybe Richard. It's a good timing also to have a few words on your side about your new support banking platform. Because dealing with cybersecurity, dealing with regulation, you have this program, which is a major change for clients.

 

Speaker: Richard Broadbent

Yeah, absolutely. And we've been on the journey for quite a while. And so we started back in 2017 with our software banking client platform, which is now mature, and it's where we build all our new cloud native assets. So it's a if you think of it, it's a development framework where we build cloud Native Micro Services. 

But we've approached the, I guess, the technology change in a very modular way, which allows us to either solve very specific and small business problems or by joining the microservices together we can solve more holistic either problems or business opportunities that banks have and are looking to work to address. We started first of all with our front office assets and that's now progressively moving into into the back office, particularly where we seen parts of the solution that has unpredictable flows. 

So for example, account management or payments to examples where there's a lot of variability and the benefits of cloud really come to the fore on other assets doing that, such as lending, where you have, you know, really rich functionality. And the business case doesn't stand as strong as days of their assets. We've moved them to the cloud as opposed to as yet rewriting them. 

 

Speaker: Pierre Lahbabi

Okay. Thank you. 
Leadership Panel - Focus Payment and Credit - Sopra Steria Financial Services Analyst Day 2023

Sopra Steria Financial Services Analyst Day 2023

Leadership Panel - Focus Payment and Credit

 

Speaker: Pierre Lahbabi

So we move to the last sequence of our round table about payments and credits ,two very important businesses for banks and the two businesses where the banks have been innovating most being also,I have to say, challenged by newcomers. And this especially is a case for payments. You have a number of new payment services coming up. 

We talked about instant payment, so real time payment, request to pay, crypto also coming probably into play on lending.  This is also a major business for Sopra Steria as a group, we have a strong expertise and here we have spoken a lot about BNPL, which was a hot topic a few months ago. Maybe it's more of a challenge now given the spread in the interest rates and so on this business - maybe on payments, Fabrice? 

Again what would be your view on the trends that will most impact our banks and us as end users for payments in Europe ? 

 

Speaker: Fabrice Asvazadourian

So talking about payments in front of UPI is a challenge. I think your background so we try payment used to be a fully owned space for banks and this is the moment where it's really started to change big time. So that's I think the massive trends we're always going to be able to to captures is this new space that is now appearing with Eastern Payment is it's about also question about partnering ecosystem play that banks need to open up. 

It's it's really an area where we see a revolution in not an evolution banks doesn't I mean if you're a bank's you don't you don't like revolution we'll continue to evolve. But revolution is not an easy thing to do and not the good one. But payment is going to go through this. It may be we are probably at an inflection point because you could say "oh, come on, Fabrice, this would be three years back". 

You would have said about the same things, which is not completely wrong, but because I'm visionary, so I can this year ahead of time, we use two  years ago. 

But I think we we have getting very close to an inflection point that is creating some of the thing that we all believe in. Maybe less strong now than they used to. Or maybe they will just lend more softly than maybe we are doing off of. Also think about to to we take off and we see the the GAFA really entering big, big time in that space. 

So this is a new game that maybe the fintechs are suffering a bit and are probably going to be more partners than competitors in that space. So that's a good news for the one that I able to team. Well, with this with these fintechs on payment. But we see as we get far more and more willing to to grab a part of the value chain now and probably is a juicy one now. 

So that's that's a for me the major trend. 

 

Speaker: Pierre Lahbabi

And they have so large client base as well that to deploy payment solution it's it's a big advantage

 

Speaker: Fabrice Asvazadourian

and they also have trust the different trust from the customers a different yeah but there's also some trust. So it's interesting to see how things will evolve. This is definitely a my view that this is different in the space we have. Banks needs to team together to be stronger and not stay too much on their alone strategy. That's my view. 

 

Speaker: Pierre Lahbabi

Good advice for banks to team up for payments. Richard, You already touched upon instant payments, which also is becoming a major player in in Europe for the next 2 to 3 years. Can you provide a little bit more detail about how you developed your products for payments?

 

 Speaker: Richard Broadbent

Yeah, and just use a few words to start payments. Is a central function for banks. It's also a core part of our software. And from an instant payments perspective, today, we we support 40% of instant payments in France, for example, and we have a number of customers in the Benelux region that we also support from a from an instant payments perspective. 

The I think first and foremost, though, it's incredibly important that payments are seen as safe, secure and fully available from a service perspective. So, you know, innovation is great, but without that solidity, it just doesn't work. So a big focus is is still maintaining that in a very changing and challenging environment from a cybersecurity perspective as well. In terms of how we think about innovation, though, because, you know, we have to think about that as well. 

We we spend a lot of time focused on upcoming regulatory change. So for example, in the UK, the shift to Eastleigh standards or speaking about now instant payments as well. And that was one of the other motivations behind rewriting our our payments engine in a, in a cloud native fashion, instant payments though is I think it's a really interesting one. 

You speak about the value of certain services. It will become mandatory volumes will rise. But you know the business case isn't there on its own for banks around instant payments. It will be the additional services that sit on top of instant payments that really start to create a difference for banks. And again I mentioned requests to pay all API are just two examples of of that. 

 

Speaker: Pierre Lahbabi

Thank you Richard, Fabrice, earlier in the first question, you insisted that in the current context, lending maybe will be more challenge and that two banks will focus on deposits. Can you please elaborate on that? No giving perspective because it is true that so much is happening nowadays on interest rates and and banking crisis in a way. 

 

Speaker: Fabrice Asvazadourian

Yeah. So you're picking on the fact that I'm older than you. So I remember the time where deposits are important for banks that whether even sometimes a prerequisite for for doing the rest of the banking business. Obviously this if we're not going back to the seventies or the sixties or even before, but I think this yeah, we will we will see significant part of profit for banks coming from deposits, especially from sticky deposits. 

And not all deposits are sticky. Oh, well, we will see some banks, you know, thinking about their brand strategy. If deposit and especially sticky deposits are going to be a profit engine for banks and the driver of lending and the major driver of lending for tomorrow, do I need to maybe be a bit less aggressive on my branch reduction strategy, which we have seen at different speed across Europe? 

It's a good question. It's a good question. Today. I haven't seen a very is a very convincing detail engine for deposit gathering. For sticky deposit gathering. I have still see a lot of deposit gathering engine digital on digital, but none where cheap. So that's an issue. And then lending lending is going to be also interesting because first you would need the deposit, but also you would need to rethink about risk. 

Maybe we had to and risk including liquidity risk cost associated with that. So we will probably see a repricing of credit to better integrate some of the risk that we're either forgotten or underpriced for a for now, a decade. So I'm not sure I know exactly what will come tomorrow because I would have never bet that these fees will disappear. 

So we are also entering a maybe some of the new areas, but I, I am quite convinced that we will see a kind of old banking coming back, but fully powered by tech. And I think that's something we need to to invent really we haven't seen yet. 

 

Speaker: Pierre Lahbabi

Okay. Well, thank you Fabrice. Thank you, Richard.

Leadership Panel - Focus Digital - Banking Sopra Steria Financial Services Analyst Day 2023

Sopra Steria Financial Services Analyst Day 2023

Leadership Panel - Focus Digital Banking 

Speaker: Pierre Lahbabi

Starting with core banking and digital banking domain. I would like to to ask a question about the way banks interact with their clients. So, what we have seen in the past year, and this is reflected in what the banks have been successful in shifting every single most of their interactions to digital. More than 70% of their clients are looking and interacting with their mobile app every week.

But the level of satisfaction may be a little bit more mixed. Six. Expecting more services, more personalization. So, Fabrice, to start with, how do you view this? What are the implications of this shift to what's in digital interactions and how can banks to relevance and continue to advise their clients?

Speaker: Fabrice Asvazadourian

So, I think the core question for banks, let's start by being kind.
We need to acknowledge all the progress made by banks in providing to their customers more and more digital native interaction. Still a long way to go, but if we remember where we start from this, this is, I think, a good progress made. But it creates a new situation. It created a situation of trust, fragmentation of the relationship between the client and its bank and the direction chief manager in the branch, the guy in charge.

I mean, you see 1 to 3% of all the interaction the banks have with this client. So how can you still be in this role of advising client? How can we continue to have in Europe, an advisory led banking model, very different from the Anglo-Saxon banking model, that it's a lot about real time data. It's a lot also about looking at what is today, the day today routine of an advisor in a branch.

And we will see that they are more reactive than proactive because they have so many things that they are forced to do. So how can we use technology to make our life easier and give them the ability to play their advisory role? For me, that's the two major questions that head of distribution at all banks and of marketing's are on the table.

And technology is part of the solution. Even so, today, we use technology more outside of the branch. So now it's time for things to enter the branch.

Speaker: Pierre Lahbabi

Speaking of technology, we again time to reach out. And we mentioned at the introduction all the fintechs with whom we are working. And as part of the digital interactions, one of the potential benefits is to develop new services with these fintechs.

So how do you walk at banking with third parties and fintechs and for what reason?

Speaker: Richard Broadbent

So, I think fintech is hugely important to both our banking customers, but also to ourselves. I think there is a general realization now that banks can't provide everything themselves, and as a software vendor, we also can't do everything ourselves. So, our role is to is to orchestrate and embed services that we that we create with our fintech partners to deliver further value for our financial services excuse me, financial services customers.

So, we, we work with around 50 and we also have quite an active VC program within the group as well that is constantly looking at monitoring at fintech organizations. To give you an example. Open banking is a service we work very closely with an organization called Tech that provide access to over 4000 banks globally. But we also work with our sister company way to manage the APIs that are required from an open banking perspective externally into the market as well.

So yeah, fintech is really important in terms of how we create additional value within the solutions that we offer to market.

Speaker: Pierre Lahbabi

Fabrice. Speaking about the consulting business, we are supporting banks in our business challenges, but you are also involved on the I.T. strategy and I.T. transformation. So here we often speak about go to cloud and as a must for the banks to follow of this transformation.

What is your view about now the move to cloud strategy of banks and where they stand today?

Speaker: Fabrice Asvazadourian

Having a view on the move to cloud for banks is probably a very dangerous. I'm not game. Well if you had to share some of I think I see it my cloud first it's about peeling the onions as it started by the DG your spot think we saw and most of the banks now we've made some really good progress on putting in the cloud some of the support function support system they are now accelerating a lot are on the data infrastructure using not only the flexibility but also the solution, the tools that are available in the cloud for stepping up the way they are able to deal with data from data supply chain management to date and transforming data into insight. And we see more and more bank daring to attack the core. This is really tough. This is not easy, right? If it's a pure 8480 project, it  doesn't fly. So, we need to put business value in your Go to Clouds 2G.

How do you convince the business leaders they can leverage this move to cloud to create new business opportunities? So, this is a what we try to do with all our client when we enter this topic. My view is that it's easier today to convince business that they are a product driven consumer finance, leasing and so on to accelerate on the go to cloud compared to more relationship driven business models.

Well, that's why we see banks in the US a bit ahead of European banks regarding cloud migration is going to be on the desk for many years to go mean for  banks and for us as consultant. Of course, we are happy to help, but I think we need to be humble. It's a learning by doing.

Speaker: Pierre Lahbabi

Okay.

Thank you.

Sopra Steria, The world is how we shape it

Guest Speakers

Fabrice Asvazadourian
Group Consulting CEO Sopra Steria Next​ and Executive Committee member at Sopra Steria