As the foremost banking software provider, Temenos serves over 3,000 firms globally by powering more than 1.2 billion banking customers’ daily transactions and client interactions. With a vision to access innovations even before they reach wide-spread market adoption, their Exchange program is on track for reaching up to 200 participating fintechs in the coming years from 50 currently enrolled.

To further assist banks towards sustainability of lending practices and finance projects alike – The Disruption House provides ESG & Business resilience ratings specific to private companies associated with this purposeful mission!

Temenos and The Disruption House (High Level)

Video transcript:

We help Temenos support its customers around sustainability and lending and sustainable finance. So the ESG and business resiliency ratings that we provide are on private companies. In the Temenos context, what is a private company? A private company could be a privately held banking group, it could be an unlisted neo bank, but most commonly it will be the corporate customers of a bank who the bank is lending to.

The challenge that we face as a planet is that 70% of the emissions that the world produces come from SMEs. SMEs are micro businesses and therefore unless there is a way to help SMEs understand the sustainability impact they can’t possibly improve. Now the great thing is banks can do that through green lending and sustainable finance. What’s that mean? Well, what’s the benefit to a bank? The benefit to a bank is if it lends sustainably, it can fund itself more cheaply in the wholesale markets because people want to lend to banks to do good.

The second part is actually it’s been proven in a number of studies, the most recent one of which was published by Rabobank, who studied 20,000 of their SME customers, that SME customers with a poor ESG score were statistically twice as likely to be in arrears on their loans as those customers with a good ESG score. Now why is that? It’s not because there is anything in an ESG metric that is a proxy for credit, but what it is, it’s a proxy for running a business well and better run businesses are better credit risk.

And lastly, it gives an opportunity for a bank to educate its customers around their own sustainability journey and improving the sustainability of their SMEs they make them more resilient, they help them to protect their export markets because ESG is increasingly becoming a non-tariff trade barrier, particularly when selling into the EU, and it also improves the bank’s own S-score in the market itself because it’s leaning in and engaging with its customer base in a positive way. So therefore what we can help Temenos and Temenos’ customers achieve is a win-win-win.

The bank gets cheaper funding, it improves its balance sheet and therefore reduces the number of losses, it improves its S-score.

The Disruption House and Temenos Exchange

Video transcript:

We are a Temenos exchange partner but we’re an unusual Temenos exchange partner because actually what we’re here to do is to help the Temenos exchange members increase their sales. So how do we do that? We provide business resiliency and ESG assessments on private companies which the majority of new members of the Temenos exchange are. Why is that important?

Well actually innovation tends to come from innovative high-growth venture-funded startups but they have high failure rates and that makes the buyers nervous about who they are engaging with. So what we’ve done is we’ve created a set of checks if you like or capability assessments that actually look at the management team and how well they’re building a business around leadership and customer engagement, the technology, will it meet the standards of sophisticated regulated banks, and how are they doing on sustainability.

So together that creates a comprehensive story which is providing transparency about your capabilities. And because there is transparency, what that means is that the buyer understands the risk they’re taking, and if they understand the risk they can manage the risk. Now everybody has a risk in their business. Temenos has a risk in the business. So it’s not like risk is a dangerous subject. What it is, it’s a dangerous subject when it’s unknown.

So the fact that we provide this transparency means that Temenos can with confidence say that the members of the exchange are curated and they’re assessed and those assessments are available to you to help you actually work out how to improve your business and be more successful and also to help your customers have confidence that you will be there for the long run as a long-term partner.