Five Degrees reinvents core banking with Microsoft Azure–native banking solution suite

By bankers, for bankers

Banking is a traditional business, and many financial institutions are running their systems on a 30- to 40-year-old legacy technical infrastructure. Since only a handful of bank employees still understand what is going on, there is a huge risk to business continuity. In the past five years, these organizations have begun moving their business-critical infrastructure to the cloud and are transitioning towards standardized platforms.

Offering digital banking with a human touch, Five Degrees specializes in information technology for banking institutions, fintech (financial technology) companies, and nonbank financial institutions (NBFIs) that want to deploy banking features. Founded in 2010 and headquartered in the Netherlands, the company quickly established itself as a market leader, providing innovative core banking solutions to clients around the world. 

Five Degrees recognized the opportunity to be part of the major change to cloud-based infrastructure and created its own cloud-native core banking platform based on their proven banking technology components. Maurits van Schooneveld, Head of Strategy and Business Development for Five Degrees, is responsible for business development and contributes to the company’s overall strategy and corporate development initiatives. He and his team also coordinate with external partners who provide solutions for functional domains that Five Degrees deliberately does not cover. “We believe in the ecosystem that exists within the financial technology sector. We aim to standardize the back end of banks,” van Schooneveld says.

A new Microsoft Azure cloud-native core banking platform

Five Degrees introduced its Microsoft Azure–native core banking platform designed for banks and fintech companies who want seamless loan- and account-management technology. Five Degrees’ solution suite brings together a flexible, highly configurable, and open modular platform including features that banks and lenders need (see Figure 1). The suite provides faster and more flexible lending, orchestration infrastructure, task and workflow management, accounts, and payment gateways. By embracing Microsoft as its technology of choice for the new cloud-native platform, Five Degrees takes advantage of many services and tooling that Azure offers, allowing focus on banking technology. Five Degrees’ whole suite of banking solutions now runs on Azure. The aim is to support every organization that wants to offer banking features to its clients.

Figure 1 - ° neo Cloud native principles

“Your core banking engine needs to be stable and resilient,” explains van Schooneveld.  “Thanks to the cloud-native Azure services we use, we can now build a scalable platform that works for any size of business. Previously, we focused only on mid-sized banks, but we’ve now expanded our target customer base to all organizations that aim to provide financial services to their customers, such as smaller retail and small and midsized enterprise (SME) finance companies, e-commerce businesses that aim to provide financial services (like embedded banking), and other tech companies.” 

“After several years of developing feature-rich back-office systems for banks and spending a lot of time on technology, our team learned Azure fundamentals so we could successfully deploy the Azure stack,” says van Schooneveld. "Once we invested in that training, we found Azure to be fast, straightforward, innovative, and easy to integrate with different technologies. Help and support have always been available at Microsoft. Today, none of our developers want to work any other way.”

Compliance is an essential component of all Five Degrees’ solutions. Banks undergo yearly audits to retain certifications and meet regulatory standards. Since the regulatory climate is always changing, the biggest challenge for bank IT departments is supporting the new requirements. Five Degrees puts a lot of effort into helping clients with their compliance and ever-changing regulatory environment. Azure helps in making updates to the environments smooth and effortless.  

Building a bright future with personalized experiences

Building and modernizing intelligent banking applications with Azure allowed Five Degrees to take advantage of industry-leading technology and a cloud-based data and app platform to deliver adaptive, responsive, and personalized experiences. Five Degrees allows banks to release and deploy new financial products within hours to days rather than months to years. The configuration portal includes a product builder, allowing customers to set all the specific parameters for the financial products needed for their business. This includes everything from interest calculations to penalty fees that they may want to apply—all requiring no code. Rather than focusing on building and coding or waiting for progress on the IT roadmap, banks can concentrate on innovation and seamlessly test new services before they become available to their customers. “We provide our customers with state-of-the-art banking features, support with implementation, and orchestration of banking processes and integration capabilities. Our customers are offering retail and SME lending, both secured and unsecured direct deposit accounts, savings accounts, term deposits, FX contracts, and more," says van Schooneveld.

The Azure cloud-native solution has been showing valuable dividends for the customers of Five Degrees. They are realizing that the fully digital platform is highly scalable and decreases time-to-market of new propositions significantly (see Figure 2). This relieves IT staff from the hassle of managing the technology environments. Though Five Degrees does not yet have the precise percentages for the increases in fully automated loans and the volume of loans processed, both areas show improvements in the right direction. Five Degrees has seen a cultural transformation as teams have become more collaborative and are experimenting with how to be more efficient instead of only focusing on getting things up and running. With the behavioral change has come an ”innovation mindset” that makes it easier for Five Degrees and its customers to launch new propositions and think creatively. Five Degrees is more attractive to talent after the shift to Azure cloud-native technology.

Figure 2 - ° neo Cloud native platform architecture

“Best of all,” says van Schooneveld, “Five Degrees can offer a fit-for-purpose, lean core banking platform that’s suited for fintechs, larger banking operations, and embedded finance propositions of NBFIs—a fully standardized, highly configurable platform that eliminates the need for customization, and an ecosystem of fintech point solutions focused on a specific business domain.” Five Degrees aims to evolve its service offerings to expand the breadth of its lending, accounts, and payments functionality.

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