Across the world banks are recognising the need to implement new solutions quickly and at scale, and 2020 has taught FinTechs as well as incumbents the true value of resilient technology.

It was exactly this awareness of the “need to be nimble” in fast-changing times that prompted the founders of Form3, with backgrounds in banking, payments and technology, to launch back in 2016.

“We looked at the changing landscape and where we thought banks were moving to,” recalls Co-Founder and CTO Steve Cook. “It was clear there was going to be a big shift toward cloud but the tier one banks hadn’t quite got there – so what were the challenges? We looked at all the opportunities out there and decided to focus on payments.”

Through a cloud based, end-to-end Payments-as-a-Service platform, Form3 handles processing, clearing and settlements so that organisations can serve customers without having to worry about maintenance and downtime. In just four years the business has grown to 150 staff and offers core payment processing for various banks and FinTechs across the UK, Europe and the US. Over this time it has seen investment from several strategic and institutional investors such as Barclays, Lloyds Bank, Nationwide, Draper Esprit and more.

Focus on the customer

Cook joined Form3 as an experienced engineer who had worked in a variety of startups – so what was different about this one? “There will always be more opportunities than you have time to work on,” he comments. “You tend to look for a few things. For me a big one is existing customer interest. Our CEO comes from a banking background and already understood the problems from that perspective, and how they operate. Form3 was plugged into customers from day zero. We’re solving a problem, not building technology for the sake of it and hoping people will turn up.”

When Form3 began its journey there was already angel investment from about 20 banking and financial services professionals. “We never felt we had to cut corners and it was already very much an investment for the long term.” Clearly, the team had something the industry really needed – and, says Cook, that’s no mean feat in FinTech.

“There’s so much going on in blockchain, open banking, wallets – but as a consumer I don’t think there’s much out there that would actually trigger me to switch or change my behaviour. Looking at the new digital current account offerings, there’s not much that’s better than what I get from the bank I’ve been with for years. One or two are out there of course – Revolut for example started with a customer proposition around customers travelling… that’s a great example of starting with the customer and building the business from there. Startups that focus on what’s possible rather than what the customer needs are the ones that struggle.”

Adapting to the new normal

Cook divides Form3’s customers into two groups – the challengers and digital banks that are cloud native anyway and see it as a “no brainer”, and those tier one banks for whom Form3’s offering could mark a significant transformation. Over the past few years, the latter organisations have seen the success of cloud in terms of rapidly implementing new solutions, but Cook warns against the misconception that cloud is a “magical technology that fixes everything”.

“Banks face a lot of different challenges – their infrastructure is complicated with a lot of moving pieces,” he explains. “It’s expensive to run. Over time it has become very complex.”

While many institutions talk about ‘moving to the cloud’ like it’s a process with a start and end date, Cook emphasises that there is a lot of maintenance required. “It’s not just a payments or core banking system that you put in and you’re sorted for 20 years. It all needs to be kept up to date – from security to changing customer needs. So yes, there’s a lot driving banks to embrace cloud architecture but you also have to look at other processes and techniques and technologies that are just as important.”

On this continuous and important journey to implement new solutions, Form3 partners with its customers on a long-term basis and maintains a deep understanding of where they are on that journey. “Coming from a banking and payments background we’ve really been able to operate the whole platform as a service thanks to our in-house expertise. I think for a lot of smaller FinTechs especially that’s important – to find a partner who understands the mechanics and what goes on behind the scenes.”

The benefits of partnership

The kind of relationship Form3 has with its customers reflects a wider shift in the industry to banks and FinTechs alike implementing SaaS and even “Payments as a Service” so that they can focus on what they do best. “At the end of the day, payments isn’t really a customer differentiator other than it has to work,” says Cook. “So as long as you’re able to process in real time, there’s not much space for functional differentiation.” Over the past few years Cook and Form3 have witnessed more large institutions concluding it’s more efficient to have a partner manage this aspect as a shared service.

These past few months have certainly highlighted that payments “has to work” when it comes to the support customers require from their banks and the rise of contactless and digital payments. How has this impacted Form3? “We’ve seen core transaction flow increase,” says Cook. “As banking and payments are critical technology it’s not an area businesses should be cutting back.”

Tier One banks in particular have recognised over the past few years where technology is out of date and are now realising they need to make an investment, regardless of the economic climate. “The pandemic and lockdown have also forced financial institutions, like everyone else, to think about disaster recovery, resilience, remote working and things they haven’t had to deal with before.

“What happens if there’s a data centre they suddenly can’t get into or everyone gets ill and a building is locked down? Do staff have remote access? Are all their facilities in the cloud? It’s been a real wakeup call to think more about innovation and moving things to the cloud.”

Looking forward to 2021, the need for resilience and technology that can cope with the unexpected will only continue to grow. As more and more companies recognise this, the cloud will become a solid part of the new normal – and Form3 will be there to support banks and FinTechs alike when it does.