Madiston News

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What is the safest, quickest way to launch a new online lender or digital bank?

 There are a number of obvious hurdles like regulation, prudential requirements, experienced workforce but gone are the days that "technology" is one of those hurdles.You used to see eye-watering sums of money spent on technology just to get to launch, only to discover six months later, the tech that you thought you needed, only does half the job.Are those business-limiting mistakes becoming fewer?We think so and here is why…

Instead of technology being a hurdle in its own right, new "kit-style" technology can actually help resolve some of the other challenges:

  • Operational systems: Choose the functionality that you need, but only when you need it – think of it as "just-in-time-technology"!
  • Hold onto your funds: Keep initial tech and staff costs to a bare minimum to launch, add more when you're ready to grow.
  • Regulation: With demonstrable proof that pre-configured software automatically follows compliant processing rules, FCA approval can be substantially eased
  • Experienced workforce:This type of system should be seen as part of your experienced workforce, part of the team, giving you hyper-automated compliant processing, triggers for actions and monitoring, and regulatory reporting.These well-chosen systems, should shoulder the heaviest workload.

If all this can be achieved by utilising proven "kit-style" technology, what exactly is it?

The kit should comprise low-code modules, with thousands of configurable settings that will operate like the switches on a rail network, to manage your compliant processing.The switches will be automatically triggered based on the business model, the products and financial services on offer, the type of clients (consumers, high net worth individuals, businesses, institutions etc) and the regulatory framework.

What will be needed in the kit?

General banking and finance functions (available on a self-select basis) covering basic requirements like client accounts, ID, KYC, AML, multi-currency, multi-location/company, loan types & lending scenarios, business, asset, property, primary & secondary markets, various lending models like embedded finance, Peer-to-Peer, Buy Now Pay Later, salary deducted loans, credit risk decision engine, underwriting, banking and payments.

Can a kit be assembled from multiple vendors?

Yes, of course, but with each vendor comes another layer of cost, eating into resources and margins.Payments is a key area and if your kit technology provider includes payments, (and possibly via Open Banking e.g. account-to-account, A2A, transactions), why would you need to add an extra vendor layer to your costs and complexity?Look for a provider, like Madiston, that offers a holistic kit-style solution including payments, so you have all the elements you need now, and in the areas you expect to grow going forward.

So, the quickest way to launch a new bank or digital lenders is:

  • Find a small FCA-regulated entity that is ripe for collaboration or acquisition (get in touch if this is of interest to you)
  • Deploy kit-style technology to deliver a business model that satisfies the FCA permissions you need
  • Keep your overheads to the barest minimum by making your kit-style tech do the work, thinking carefully about any external vendors diluting your resources
  • Where those few humans are needed, offer hybrid working because your tech is safely accessible remotely, attract the best talent and limit your need for expensive offices
  • Add to the kit-style technology, only when you are ready to grow, as a sustainable, profitable investment.

Kit-style tech is the way forward. Low-code, configuration-rich, modular, hyper-automated holistic banking and digital lending technology that gets firms up-and-running quickly and without the eye-watering tech and staff outlay.

We believe this is the right approach, so we developed the Madiston technology to deliver this for those looking for digital lending applications which, with Madiston's regulatory experience, can help launch your new online lending start-up or digital bank, quicker, safer and at lower cost and commitment. Get in touch if you'd like to know more. 

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