11FS Rebuilding Financial Services From The Inside

Rebuilding
financial services
from the inside
What tech teams in financial institutions are thinking,
that they want the rest of the business to understand.
Welcome!
This report is jam-packed with insights, You’re in the right place if:
explanations and action-points to help
Financial Institutions (FIs) increase ➔ You’re a technologist trying to explain the intricacies, challenges
and potential of financial technology to your team and
revenue and move faster.
management.
➔ You’re a non-technical person seeking to better understand the

complexities of the technology behind your business.
We’re all about taking big topics and stripping back the jargon to make
it extra clear and simple to understand. Stay up to date with all of our
latest content by following us on our social media channels, and
subscribing to our newsletter.
Enjoy
The 11:FS team

Contents
The market: Which factors are challenging FIs right now? 4
The problem: What’s preventing FIs from capturing digital growth opportunities? 10
The change: How can FIs unlock growth with faster change? 20
The solution: The 11:FS truly digital architecture 36
The action plan: Getting from where you are to where you want to be 46
How we can help: Rebuilding from the inside 52
Glossary 57
The market
Which factors
are challenging
FIs right now?
4
The market The problem The change The solution The action plan How we can help
Everything happening in Customers Competitors Tech costs

are changing are evolving are rising
the market is converging
to impact FIs
Customers are becoming Big tech has secured a The compounding costs
more demanding as their foothold in the market of building new layers of
needs evolve and competitors and fintechs are carving tech on top of yesterday's
raise the bar with new services. out new segments (and infrastructure are no
Traditional financial products dominating them). longer sustainable.
are not sufficient, and are
failing to evolve.
Lost profitability & growth
5
Customers are changing
Customers are facing increasing

Intergenerational wealth
pressure but FIs aren’t adapting Share of national wealth owned by each generation,
by median cohort age
Consumer attention is decreasing (now averaging 7 seconds). FIs

aren’t doing anything to earn a share of that attention, but fintechs
are.
Customers now expect more than simple banking services. The

likes of Square, Monzo & Chime have reset expectations for the
whole industry.
Pressure on consumers is increasing as the bottom 50% of

incomes fall in real terms, and 78% of Americans live paycheck to
paycheck.
Asset prices are soaring, making the dream of home ownership

and social mobility harder to reach for an entire generation.
Source: 11:FS, Gray Kimbrough; Federal Reserve Distributional Financial Accounts. 6

Competitors are evolving
New entrants are solving the new

J.P. Morgan Chase deposit accounts vs. Cash App and
problems faced by customers - Venmo annual active user (AAUs)
financial institutions aren’t
Many companies are now becoming primary consumer

interfaces for finance. For example; payroll providers, ride hailing
companies, e-commerce platforms, accounting providers and
car companies.
In the US, digital wallets are surpassing the number of deposit

account holders at banks, and we see similar trends globally.
These companies replace many of the features of traditional

banks, but with a much lower operating cost (e.g. Square’s Cash
App customer acquisition cost is <$5). Many of these wallets are
moving into lending and report average revenue per user (ARPU)
of ~$45.
All of these players are able to address deeper customer

problems than traditional finance products.
Source: 11:FS, Square 2020 Q4 Shareholder letter, ARK Investment Management LLC, 2020 based on data sourced from Federal Deposit Insurance Corporation 7
Company Tech spend (est) As % of FY20 5yr revenue CAGR

Tech costs are rising revenues
Amazon $28.8bn 7.3% 29%
Alphabet $21.4bn 11.7% 19.8%
FIs have to spend a fortune to stand still JP Morgan $11.5bn 8.8% 2.7%
Bank of America $9.6bn 11% 0.71%
Citigroup $8.4bn 13.9% -0.55%

The top 100 banks have spent more than $1 trillion on digital
HSBC $6.0bn 11.9% -1.16%
transformation in the past 3 years, but the majority has not led to
revenue growth.
Large investments in tech see small returns. The largest banks

Growth in revenues, costs and assets
spend almost as much on tech as big tech players, but do not CAGR 2011 - 2017, % 0x 7.1%
see the same revenue growth.

5.8%
1.2x 0.5x 5.7%
5.1%
Growth in costs is almost equal to growth in revenue (for 50% of 4.5%
4.2%
banks), and profitability growth even at the most digital banks is
3.5%
as little as 2% per year.
2.9%
The cost of maintaining tech rises with every project. New 1.6%
technology is piled on top of decades of tech debt, compounding
the complexities and therefore the costs. Revenue Costs Assets Revenue Costs Assets Revenue Costs Assets
Digital focused Digital active The rest
Note: Values calculated as simple mean of 140 banks. Outliers have been excluded
Source: Accenture Research on S&P Capital IQ data
.
Source: 11:FS, efinancialcareers, Statista, Accenture Research on S&P Capital IQ data 8

Throwing money at tech
isn’t driving revenue growth.
Something is broken.
9
The problem
What’s preventing FIs

from capturing digital
growth opportunities?
10
Three key areas create drag on the business
Short-term funding model Existing ways of working Technical debt compounding
Funding is in 12-month cycles, and Decisions are made by committee The technology estate mirrors the
almost entirely weighted towards structures, delaying productive work. organisational design, with limited
in-year return. re-use and heavy duplication.
Delivered Planning and project management Which
with leads to
Funding is allocated by business or overhead added to deal with the Cost of change is high and the
product line and driven top-down complexity of change. ability to use modern, best in class
by strategy teams. SaaS providers is limited.
Change coordination across
organisational silos is slow.
Short-term mindset
The culture, mindset and strategy of the organisations are highly geared towards quarterly and annual results
cycles. Decision making is top-down, power sits in committees and incentives are driven by product line.
11
Short-term decision making means

FIs miss out on the benefits from Annual budget cycle
consistent tech investment
The way most FIs prioritize budget hasn’t changed Impact

assessments
in decades.
More assessments
Budgets are on annual cycles, decisions are based on
until time to market
flawed ROI models, and roadmaps are prioritised satisfactory
based on what will deliver in-year return. No Yes

In-year Meets demand
return? of business
If a financial institution wants to add a new feature to a
product, it will “impact assess” or estimate 3 or 4 ways
of doing that. Then a non-technical team driven by
top-down KPIs will choose which option is developed. Right long-term architecture
Product delivered but
for pace of change and
creates more tech debt
The business prioritizes an in-year return, over the right customer outcomes
architecture. This results in an architecture that can

never go faster or deliver engaging new propositions
at low cost.
12
Slow, centralized decision-making

by committees repeatedly delays
productive work How FIs work today
The majority of process at incumbents is still

Waiting for governance Waiting for governance
not agile.
Outside of the coding and software development,

much of the way FIs work hasn’t changed since the Productive Work Productive Work Productive Work
1990s.
Time
Large central strategy teams work across

How a truly digital business works
organisational silos to agree a roadmap. This
roadmap then has to run through a gauntlet of
governance processes to get budget and resource
allocated.
Once allocated, any change must run through

Productive Work
several more governance processes before the
new product can be approved.
Truly digital businesses have the technology, culture and

processes that let them make decisions and act on them, quickly.
13
Size of change
The complexities of FIs’ technology To manage the risk of
failure FIs spend more
makes them invest disproportionate effort on planning,
with more people,
time and planning into each change and more process.
This further
FIs are making changes larger and harder, which is the increases the size
opposite of what they should be doing. of change and the
cost of failure.
To lessen the likelihood of failure, more planning, people and Cost of failure
budget goes towards each change.
Size of change
To increase the frequency of
This puts more pressure on delivery because the size of the
change, the size and complexity
change is now larger and the cost of failing is now far higher. of change must be reduced.
This needs absolute
When each release is such a large project, it results in FIs worrying commitment over time.
about “what feature made the release” instead of “is this feature
solving a customer problem?”
Frequency of change
14
Project gets
FIs’ way of working outsourced
to reduce
cost, but
loses So tech debt
They're trying to create new flexibility gets added

to previous
tech debt
products with legacy tech Legacy tech New market
that was fit demand
and old ways of working for purpose
when it was
means tech
change is
introduced needed Tech + ways
of working
aren’t
This cycle happens for every tech change Business designed for
chooses the modular
within an FI. Each time, the shortest route fastest time change
to return (on
to revenue is chosen and more tech debt paper)
is added, making all future changes more
complex, time consuming and costly.
Truly digital businesses have faster ways

Mission
of working based on customer impact Truly digital way teams
over short-term returns. of working prioritise
within the
backlog Customer
testing and
iterations
New market
demand
means tech
change is
needed
Feature
teams build
and deploy
Feature the change
available to
customer
15
Traditional financial institutions’ architectures

Tech real estate is becoming more complex,
more expensive and slower to change over time Middleware v3
Middleware v2
FI architectures mirror the org design, leading to duplication of systems Middleware v 1
across silos.
User interface User interface User interface User interface
Compliance Compliance Compliance Compliance

Conway’s Law states that organisations design technology that mirrors
their organisation structure. This can be seen in FIs’ technology Risk
management
Risk
management
Risk
management
Risk
management
architectures. Each major product line or geography is managed as its Financial Financial Financial Financial
crime crime crime crime
own business line with its own legacy tech stack as a silo.
Payments Payments Payments Payments
As FIs add new products, or do M&A, more silos are added to their Customer Customer Customer Customer
operations operations operations operations
architecture and they layer system on top of system until it begins to
Products Products Products Products
resemble sedimentary rock. Tech gets added but rarely removed.
Treasury Treasury Treasury Treasury
This makes every change more difficult, more expensive and more
General General General General
complex than the last. ledger ledger ledger ledger
Deposits Lending Insurance etc
Modern tech architecture takes a horizontal, modular approach.

We’ll dive into that in later on.
16
The architecture and ways of working

prevent them buying from a new
generation of specialist providers
Today - Large vendors win
How incumbents buy technology is broken.

Procurement and architecture
Financial institutions’ procurement processes are designed to only geared for large providers
work with large providers, often for 10+ years at a time. This Large Large
approach favours incumbent providers and often drowns vendor vendor
smaller best in class providers.
Even if a specialist provider is chosen, FIs’ architecture is too Missed opportunity - best provider regardless of size
complex and often incompatible with the technology used by
fintechs, making it an unfavourable situation for them too.
Specialists and best in
class providers mixed
This means FIs miss the opportunity to work with smaller
providers that are specialists in their area of the tech stack. Large Specialist Specialist Specialist
vendor
Forgoing this opportunity means FIs are missing out on the mix of
partners that could improve their products while reducing costs.
17
FIs lack the pace of change that the most successful

fintechs use to grow users and revenue faster
By reducing the size of change, organisations can increase the

pace of change and: Pace of change is a power law in financial services. Those shipping
features faster are also growing users and revenue faster.
Reduce the risk of each change, leaving more room for Fintech companies setting the pace shipping updates
experimentation. Number of iOS updates in last 12 months
Reduce the cost per change, opening up scope to pursue

new segments and opportunities.
Learn faster to unlock value in iterated products and

features.
Fintech
App updates
Respond to market demand faster to defend against new Incumbent
entrants.
Deliver new business models when markets are smaller &

growing faster.
Fintechs deploy changes regularly, whereas FIs work on quarterly

cycles. This gives fintechs a competitive edge. They can respond
to the market faster, iterate faster and learn faster. Incumbents
can’t compete with their current tech and ways of working.
Source: 11:FS 18
Companies
Increasing the pace of
change is the only way
to win at digital.
19
The change
How can FIs unlock

growth with faster
change?
20
There are four key success factors needed to increase the pace of change
Becoming truly Monoliths to Silos to Whales to

digital with: primitives horizontals school of fish
Three fundamentals underpin these success factors:
Digital From top-down to Incentives by P&L to From big empires to ● Fundamental 1: Moving from monoliths to primitives
1.
culture empowerment incentives for the small team sports A monolith is the large, unwieldy assortment of systems,
group and customer technology and processes that make up a business,
outcomes compared with primitives which are small, modular
components that can easily be used to build any product.
2. Digital From only big bets to From by business line From internal to
● Fundamental 2: Moving from silos to horizontals
business a digital portfolio to multi year customer led metrics
models architecture investing This refers to a shift from building business operations around
products, to building around modular capabilities, which can
then be used more effectively to build and manage products.
3. Digital From group functions From specialists only From business line to
op model to BizOps aligned to to specialists and mission and feature ● Fundamental 3: Moving from whale vendors to school of fish
(BizOps) customer outcomes generalists teams Whale vendors are large, often inflexible vendors that FIs turn
to when they outsource work, whereas a school of fish refers
to an assortment of more modern, specialist providers,
4. Truly From large code From a core platform From large vendors to
ultimately giving more flexibility.
digital tech bases to discrete per product & geo, to specialists
architecture services a shared backbone re-combined
If you benchmark your business against this, how well does it do?
21
Digital culture
Tech
Too much Marginal
AI/ML
focus here & cloud
gains
The 11:FS pyramid impactful if

used the right way.
of culture Org design

Multi-disciplinary teams
organised around solving
for customer outcomes.
Tools / Ways of working

Modern tooling (e.g. Slack, Notion)
drives team productivity, but only if
teams are empowered to use them.
Empowerment
Executing at pace requires pushing as much
decision making to the edges as possible,
including budgets, compliance and strategy.
Incentives
The wrong incentives create the wrong behaviours. FIs need to
align incentives to customer outcomes regardless of role.
Cohesion between “business and tech” follows.
Purpose and mission

Too little Businesses that have clearly defined their customer outcomes create focus on the Most
focus here common goal - the customer. The incentives, metrics and team alignment flows from important
the purpose and mission.
22
Digital culture
Tech
Increasing the pace of change
requires a truly digital culture
Org design
From:
● Shareholder value as the primary consideration

Tools / Ways of working ● Incentives by P&L
● Top-down strategy planning
● Empires and hierarchy
Empowerment
To:
● Purpose-led work delivers stakeholder value

● Incentives aligned to customer outcomes
● Empowered teams led by customer feedback
Incentives
● Small team sports
Purpose and mission
23
Digital culture
Tech
A truly digital culture supports
business objectives
Org design
Purpose and mission

Develop a clear understanding of customers’ Jobs to be Done
to align the product roadmap and internal incentive structures
Tools / Ways of working
with the outcomes that customers need, therefore becoming
mission driven.
Incentives
Empowerment
Broaden the range of metrics used to drive rewards in the
company, focussing as much (if not more) on engagement
than traditional KPIs. Factor this into budgeting and approvals
with truly digital business models.
Incentives
Empowerment
Identify what decisions can be pushed closer to the team
by building a truly digital operating model.
Purpose and mission
24
Digital business models
Increasing the pace of change requires a new business model
From: A tightly correlated portfolio of top-down, To: A diversified portfolio of longer-term, smaller bets
short-term big bets
A digital portfolio invests in enabling the mission teams with
Today’s corporate portfolio is focussed on big bets shared, horizontal infrastructure, and gives autonomy on
aiming for in-year return. This creates expensive failures. budget aligned to customer outcomes. The core metric is user
engagement not in-year return.
Large bets driven top-down Smaller bets by autonomous teams
Programme Programme Acquisition Mission Mission Mission Mission Bet Bet Bet Bet Bet Bet
Central corporate governance DevOps, BizOps, PeopleOps, CustomerOps
Only making short-term bets = only getting low returns Diversified investment portfolio = higher growth potential
Incumbents “buy back in” to a market after the markes mature. Digital businesses focus on engagement when a market
is nascent, and then look to monetize as it scales.
Example: After spending more than $100m on ChasePay

launched in 2015, JP Morgan recently closed the service. Example: Square launched Cash App in 2013 with a focus on P2P
payments to drive engagement, it now has more than 30m
monthly active users and monetizes in new and unique ways.
25
Digital business models
New business models generate new revenue streams and need new metrics
From: internal metrics first From: investing in silos first
● Cross-selling ● Investment by P&L

● Fees (FX, real-time payments, overdraft) ● Budget owned by revenue line
● Net interest income (% APY / APR) ● Tech is a “cost”
● Share of wallet
To: investing in horizontals first

To: customer led metrics first (+ internal)
● Investment in platform & mission teams
● ARPU + Unit economics ● Autonomy closer to the edge
● Customer outcomes achieved ● Tech as the competitive advantage
● Daily active use
● Engagement Shifting the goal of tech from meeting the roadmap
demands of P&L owners, to delivering the most modular
Customer-led metrics are a leading indicator of platform that serves each mission team.
success. Internal metrics are a lagging indicator. By the
time most products make sense on incumbent metrics,
the market has already moved on.
26
Digital op model (BizOps)
Increasing the pace of change requires a new operating model
From: a traditional op model To: a digital BizOps model

Centred around people, process and technology. Centred around customer outcomes, flexible teams and embedding skill sets.
Web / Mobile Web / Mobile Web / Mobile Web / Mobile Mission team:
Channels / Branch / Branch / Branch / Branch Manage my finances
Embedded channel,
Mission team:
product, technology
Products Savings Deposits Lending Mortgage Move money globally
and process
ownership.
Mission team:
Customer Customer Customer Customer …..
Defined interactions
with other teams
Complaints Complaints Complaints Complaints Mission team:
Operations …..
Collections Collections Collections Collections
operations
Customer queries / FAQ
Channels
Fraud Fraud Fraud Fraud
Complaints
Architecture
Collections & Customer Support
Engineering Engineering Engineering Engineering
Technology
Technology
Data & ML Data & ML Data & ML Data & ML Fraud & Fin Crime
People
Security Tech (Engineering, Security, Data, Architecture)
Process & Change management
people Group functions

Each team is cross-functional including skills like data, QA and
engineering. Each mission team has embedded engineering,
This model drives how teams interact, what tools they use data, product & design, and is aligned to a customer outcome.
and the experience the customer has of your technology.
It’s siloed by product and relies on specialist group functions.
27
Digital op model (BizOps)
Rebuilding with BizOps creates empowerment and autonomy,

aligned around customer outcomes
Organising horizontally leads to more

From: silos, monoliths & To: horizontal, primitives and school knowledge sharing and dynamic allocation
whale-sized processes of fish-sized processes of people as the pressures on the business
change. Ops teams are more empowered
● By business line ● By customer outcome with smaller to make decisions quickly. Over time,
teams
● Central committee structures individuals gain exposure to more parts of
● Disciplines baked into feature and the business leading to more potential
● Central new-product approval
product teams
processes career paths.
● Risks owned by each team
● Annual budget cycles & planning
● Truly agile planning There are regulatory benefits too, with risk
● Existing op model used as basis
for go to market ● Truly digital operating model reduced by sharing systems, dashboards
and controls. This clearer, data driven
● Mostly specialists ● Mix of generalists and specialists
visibility of what is happening in the FI is
● Working from a predefined ● Processes shared, evolved and
often real time and shared between teams.
process owned by teams
The new model aligns all work to customer

outcomes to grow your revenues and help
you move faster.
28
Increased pace of
change requires a
new architecture.
29
Truly digital tech architecture
Rebuilding with a new tech architecture unlocks new

fundamentals to increased pace of change
Often incumbents lift-and-shift their old code and infrastructure to the

cloud. This may cost more, be less reliable and doesn’t improve speed.
As a result most incumbents have not yet fully embraced cloud Present Opportunity
infrastructure. To get the benefits there are three fundamentals:
Hard to change API first and
blocks of code microservice
on cloud infra primitives on
Fundamental 1: Breaking monoliths into primitives reduces the cloud infra
size of services, reduces the size of every change, and reduces the
cost and risk of each change
Large org and Layers of

Fundamental 2: Shifting silos into horizontals maximises the
tech silos on horizontal
re-use of capabilities (like digital onboarding), reducing the cloud infra capability on
cloud infra
complexity of all changes
Fundamental 3: Moving from whale vendors to school of fish

providers leverages new specialist providers that have turned
Large vendors Mix of
cost centers into best in class operations and bundled specialists on
software on cloud infra
cloud infra
30
Fundamental 1: Breaking monoliths into primitives
API-first and
microservice
In software engineering a primitive is a basic
Product Product Product
primitives
interface or segment of code that can be combined
with others to make more complex programs.
User data Display Onboarding
User input balance workflow
etc etc
experience
Example primitives include storing value, moving
Compliance Verify
documents
Fraud check
Transaction
monitoring
etc etc value, exchanging value, debiting, crediting, KYC.
Payments Make Receive Local International etc When primitives are re-assembled in new
combinations, any financial product can be
Customer
operations
Chat FAQ etc etc etc constructed (and perhaps more importantly,
new innovative products too).
Product Debit Credit etc etc etc
By building from primitives, each mission team has

General Record Reg
ledger balances reporting
etc etc etc the building blocks to solve customer problems faster
without having to worry about governance or
overhead from other parts of the organisation.
The smaller the primitive, the more ways it can be

re-combined to create new products.
31
Fundamental 2: Shifting silos to horizontals
Layers of
horizontal
Instead of building each functionality multiple
capability
times for different use cases, build each one
once, in a way that means they can be used for
User data Display Onboarding
User input balance workflow
etc etc all relevant products and customer contexts.
experience
Compliance Verify
documents
Fraud check
Transaction
monitoring
etc etc Rebuilding each capability as its own layer
removes silos.
FS
Payments backbone Make Receive Local International etc
This requires an architecture that is capable of

Customer
operations
Chat FAQ etc etc etc bringing together all of these primitives. Modern
digital businesses like Monzo and Nubank use an
Product Debit Credit etc etc etc
event stream (FS Backbone) across their entire
architecture.
General Record Reg
etc etc etc
ledger balances reporting
When combined with modern techniques like

DevOps and automated testing this
architecture enables re-use of capabilities,
more innovation and faster change.
32
Fundamental 3: Moving from whale vendors to school of fish providers
Mix of
specialists
“When a company chooses to plug in a
on cloud infra
third-party API, it’s essentially deciding to hire
that entire company to handle a whole function
Incumbent User data Display Onboarding
vendor User input balance workflow
etc etc within its business. Imagine copying in some
experience
code and getting the Collison brothers to run
Internal Verify Transaction
Compliance
build documents
Fraud check
monitoring
etc etc
your finance tech team.”
FS
Specialist 1 Payments backbone Make Receive Local International etc
An increasing number of the things that firms
hired whole teams of people to do are now
Customer
Specialist 2 Chat FAQ etc etc etc
operations achievable with a few lines of code.”
- Shout out to Not Boring
Specialist 3 Product Debit Credit etc etc etc
To increase the pace of change, incumbents must

General Record Reg
etc etc etc
ledger balances reporting make more use of smaller, best in class providers.
What that really means for banks is they have to:
1. Change how they evaluate partners / vendors

2. Build a new partnership model in place of
traditional procurement
Source: Not Boring 33

We also need a new way to evaluate vendors and specialists (school of fish)
The way incumbents buy hasn’t changed to adapt to the digital world
From: current model To: new model

Procurement team buys for “economies of But when pace of change is Partnership team seeks “business and technology
scale”, so large vendors with high revenues the most important factor alignment” where the outcome a partner or vendor
come out on top. New providers require we need a new model. creates for the business is the key consideration,
new assessment and procurement models. opening the door for specialist providers.
Traditional quadrants The 11:FS Provider Map

Previous sales Business alignment
Large Modern best

traditional in class
vendors providers
Breadth of offering Technology alignment
34
To capture these opportunities we need a new map for the tech

architecture and the choices, trade-offs and interactions within it
From: FIs historically using “capabilities maps” to To: truly digital businesses using maps to
From To
understand as flat diagrams understand the trade-offs as forces
It’s very far from a ‘map’, though: it’s just lists of things, There are many forces acting on your architecture at any
in blocks. They tell you everything an architecture one time, and every capability is affected by multiple other
does, but not how it does it. They’re not wrong but not capabilities. Mapping the relationships, and how the
the whole picture either. capabilities act on each other helps define architectural
priorities in the context of the rest of the business.
Channels
Sales & Service Brand & Marketing

Data & Analytics
Proposition Development
Customer
Product Manufacturing Payments
Customer Operations
Integration Layer
Corporate Core
35
The solution
The 11:FS truly digital

architecture
36
The financial services market can be thought of as a 5 layer stack,

overlaid with customer contexts
Lower layers focus on servicing the layers above them, the more effectively they do this the more market share they win.
The further up the stack a service operates, the closer to customer problem they are. The more aligned they are with a
customer’s needs, the more differentiated they are in the eyes of that customer. Increasingly, we’re seeing non-FS
businesses leveraging specialist providers to offer highly differentiated financial products to their customers.
Customer contexts Retail Car Home Health Wealth Business
Buy, insure, service Find, buy and Protect my Plan my Start and run
Embedded journeys
and run my car protect my home family’s health retirement a small business
Risk, control & compliance

What holiday Help me build a Plan for buying On-demand Auto switch Automate my Pay bills when
Intelligent services
can I afford? savings pot a home insurance utilities investing I get paid
Products Loans Cards Deposits Funds Insurance
Know Your Payment Securities Identification &

Capabilities Credit scoring Card issuing
Customer processing trading authentication
Domestic International
Rails Card networks Bond markets Equity markets Treasury
payments Payments
37
Businesses need an Operating System for
finance that can work with the best-in-class
providers, across a horizontal architecture and
build products and services from primitives.
So they can move quickly and build
game-changing products.
11:FS Foundry is just that. A Financial Services

Operating System (FS OS).
38
To compete in FS, businesses need a toolkit that gives

them the flexibility and control they need to build new
propositions at speed
1. A Multi Asset Core Ledger system can either run as a primary system of
record or as a shadow ledger. Storing any balance (from USD, GBP to
The 11:FS reference architecture is an Operating System for finance (FS OS)
BTC).
The goal of this architecture is to create a single operating system that operates
2. Provider APIs connect you to the modern best in class school of fish across the layers of the financial market stack, in many geos with many providers.
providers for payments, identity and more without vendor lock-in.
3. FS Backbone allows organisations to move to a horizontal structure

where a single service is re-used many times across the architecture. Embedded journeys 6 Proposition Drops
4. Product Engine uses common primitives (like ‘make a payment’) to

construct and build any financial product, across many providers in
Intelligent services 3 5 Intelligent Digital Services
many geos.
5. Intelligent Digital Services are new primitives, that solve deeper

customer problems (like, get paid early, credit building, or simple Products 4 Product Engine
services like real-time payments). FS Backbone
6. Proposition Drops are ready built journeys. Either partial (e.g. Capabilities 2 Provider APIs
onboarding for a consumer), or complete (an entire Neobank for SMBs).
Rails 1 Multi Asset Core Ledger
39
Retail Challenger BNPL Lender <Your proposition>
1: Multi Asset Core Ledger Propositions

KYC Process Card Management Intl. Transfers <Micro journey>
Can either run as the system of record or as a

shadow ledger to existing systems or those of
regulatory partners.
Intelligent
The ledger can store any asset, eg. USD, GBP, ETFs, Digital Services
bonds, equities or even stablecoins.
With an event stream the ledger can be Product API & Engine
“replayed” through time, to give a perfect history
KYC Providers
Identity API
of transactions, or reverted to a prior state. The
dream of auditors everywhere.
Account Data Providers
Account Data API
By treating each transaction is an event the FS Backbone
operating system can figure out the current Fraud Tool Providers
Fraud API
Admin API
balance of an account, by reading every
transaction ever until it gets to the current Admin AML Providers
AML API
balance for that account. Interface
Payments Providers
Computers are now so fast this approach is Payments API
remarkably efficient.
Risk / Credit Providers
Risk API
Multi-Asset Core Ledger Legacy Core Bank

40
2: Provider APIs Propositions

Separate the individual provider capability from the

underlying architecture. They allow many providers
to be used for a single service (e.g. Identity,
Intelligent
Payments, Fraud). Digital Services
This reduces the impact of changing supplier on the
whole architecture, which prevents vendor lock-in.
Product API & Engine
It also allows for different providers to be used in
KYC Providers
Identity API
different geos without having to change the rest of
the product or architecture.
Account Data API
For example, if an FI (or non bank) wanted to launch FS Backbone
in the USA, they might use Alloy or Persona for Fraud Tool Providers
Fraud API
Admin API
identity. If they wanted to launch in Europe they
might use Onfido or Au10tix. If their architecture had Admin AML Providers
AML API
an Identity API, it could separate the integration of Interface
the provider from the product itself. Payments Providers
Payments API
This also works with payments providers and

allows the FI or non bank to offer consistent Risk API
service regardless of the underlying capabilities

of the provider.
41
3: FS Backbone Propositions
The spine of the architecture. It enables the

horizontals to work together and connects the
customer proposition at the top to the multi
Intelligent
asset ledger at the bottom. Digital Services
The backbone (event stream) becomes the
consistent, golden source of truth across the
entire architecture. It’s much more than balances
KYC Providers
or accounts. Identity API
The backbone joins the events for every system

Account Data API
and subsystem. In effect, a bank becomes a
FS Backbone
state machine you drive everything through.
Fraud Tool Providers
Fraud API
Admin API
11:FS CTO Ewan Silver’s core insight is that
“financial services companies are essentially Admin AML Providers
AML API
state machines.” Interface
Payments Providers
By running the backbone through the entire Payments API
architecture, FIs turn their whole organisation into

a consistent and coordinated architecture. Risk API

42
4: Product Engine Propositions

Recombines the core software primitives of

finance allowing propositions and products
to be created of any type.
Intelligent
For example primitives like store of value + Digital Services
positive balance only + using debit card rails
+ currency USD produces something that
looks like a prepaid product.
KYC Providers
Identity API
The product can take other base primitives to
create almost any financial product for any
Account Data API
customer base.
FS Backbone
With a different identity workflow (e.g. KYB Fraud Tool Providers
Fraud API
Admin API
instead of KYC), and different limits, it can
produce an SMB account. Admin AML Providers
AML API
Interface
Payments Providers
Payments API

Risk API

43
5: Intelligent Digital Services Propositions

The smart features that differentiate any

financial services proposition.
For example primitives like get paid early, smart Intelligent

payment routing or real time payments can be Digital Services
added together to make a compelling and
differentiated proposition.
Each intelligent service can be consumed as a
KYC Providers
Identity API
primitive, or combined into a wider proposition.
These primitives benefit from the banking Account Data API

backbone (horizontal event stream). FS Backbone

Any event can be fed into the system, and Fraud API
Admin API
combined with any other event to create smart
Admin AML Providers
features. For example, if you had a provider who AML API
Interface
fed weather data into the event stream, you
Payments Providers
could make a service that saves $5 every rainy Payments API
day in your geolocation.

Risk API

44
6: Proposition Drops Propositions

The “here’s one we made earlier” versions

of a journey.
A simple drop might combine a provider Intelligent

identity and verification process, with Digital Services
pre-built workflows for terms & conditions
and chat support to build a best in class
onboarding journey.
KYC Providers
Identity API
A more complex drop might be an entire
digital bank for SMBs, that combines
Account Data API
intelligent digital services primitives like
FS Backbone
accounting data integration, cash flow
Fraud API
forecasting, reconciliations, with banking Admin API
primitives like store a balance, make
Admin AML Providers
AML API
payments etc.
Interface
Payments Providers
Payments API

Risk API

45
The action plan
Getting from where

you are to where
you want to be
46
The first step towards a new architecture is choosing an approach
Once the best tech approach has been chosen, culture,

org structure and funding can be built in a way that supports it.
New world New world
Old world New world Old world Old world Old world
Growth over time
New world
01 Big Bang 02 Greenfield 03 Brownfield horizontal 04 Brownfield thin slice
Build a new FI and Build the new digital FI New tech as middleware Start with one product on
migrate all systems and outside the old one (e.g. over the legacy tech (e.g. new infrastructure (e.g.
customers in a weekend Marcus by Goldman and Nationwide Speed layer.) Commonwealth Bank
(e.g. TSB, Nordea.) Mox by Standard Australia started with
Chartered.) deposits, then savings, then
payments before moving
across the entire group.)
47
Step 1: Evaluate the old world in depth
Big Bang
Old world
Approach: Set up a new architecture then do a full migration of customers and

systems in a short space of time. The old world gets switched off and the new Old products
world gets turned on.
Step 2:
Understand how all the products
Pros Cons and services will migrate in one go
● Significant upfront costs are needed to build the new FI,

without seeing ROI until the project is complete.
Old world New world
● A massive risk of failure faces any FI trying this method. It

requires every detail to be executed perfectly. Old products
● A possible career-ender for the FI exec who spearheads

this if the transition does not go well.
● Existing culture and ways of working retained in this Step 3: Switch off the old world,
and run all customer touch
approach. The new architecture needs a new culture to points through new architecture
make it work to its full potential. A simple lift-and-shift of
staff from the old world to the new one misses the
opportunity to build a new pace of change.
Old world New world
Old products
48
Step 1: Build a new core alongside

the existing
Greenfield
Old world
Approach: To create a new FI alongside the existing one. Specialist providers
and new products are integrated with the new architecture, creating an entirely Old products New world
new business. There are two use cases here:
1. Creating a proposition that brings a new revenue stream, such as Step 2: Launch new products and
partners on new architecture
complementary product or new markets. These businesses could
run in tandem.
2. Eventually migrating all customers from the old world to the new world.
Old world New partners
New products
Pros Cons Old products New world
● Not bound by the risk-averse ● Need to hire new people and retrain
nature or existing processes of existing with the mindset needed to build
Step 3: Gradually migrate
the legacy FI. and maintain new proposition.
services and products to the new
world (when feasible)
● Opportunity to build a new ● Can lead to expensive failures without
culture and op model (e.g. new op model and culture commitment New partners
Mettle, Mox, Marcus). (e.g. Bo, Greenhouse, Finn by Chase).
New products
New world
Old products
49
Step 1: Develop horizontal and primitive

based architecture as middleware
Brownfield Horizontal New world
Old world
Approach: Introduce new horizontal, tech architecture as a middleware or
connective point in between all customer user interfaces (e.g. mobile, web and Old products
branch) and the legacy technology.
Step 2: Put it over the top of

all of the old architecture
Pros Cons
● Low risk of service interruption. ● Lack of incentive to use the New world
new technology.
● It’s the right long-term Old world
architecture. ● Mostly tech change, not
funding, op model or culture.
● Good short-term benefits Old products
case.
● Reduce dependency on
legacy tech. Step 3: Gradually move down the stack
New world
Old products
50
Step 1: Develop horizontal and

primitives based architecture
Brownfield Thin Slice New world
Old world
We recommend this approach. It creates the highest pace of change

and balances short-term and long-term gains. Old products
Approach: Build a new tech stack, one product at a time. The technology
should be built in a way that it fits all of the requirements for current Step 2: Make one product / offering truly
event driven to unlock greater benefit
products and flexible enough for future products. The optimal approach is
to launch an entirely new product on a new “thin slice” before scaling.
New world
Old world
Pros Cons
● High likelihood of success. ● May still be subject to

Old products
“group governance”
● Good incentives for each
overheads, if not carefully
area of the business to adopt
managed.
the new tech.
Step 3: Gradually move across the
● Risks SaaS vendor lock-in if organisation by SBU or product to
● Easy buy in - the first
not part of a wider unlock future value
use-case acts as an example
architecture & cultural shift.
to the rest of the business of
the benefits. New world
● Combine funding, culture and Old world

op model with tech change.
51
How we can help
Rebuilding
from the inside
52
Putting it all together
Pace of change is a power law in financial services. Achieving a higher pace

of change is not just a tech thing. It’s a whole business thing.
The market around FIs has changed, How they work hasn’t changed in The winners in fintech and digital
as customers and competitors evolve decades, and is based in governance have the highest pace of change.
from every angle, FIs cannot solve for processes that were built for an
digital with more spending. They have analogue world.
to change how they work.
To achieve pace of change, Their tech architecture must follow There are many paths from where
incumbents must build a truly digital… three fundamental concepts: you are to where you need to get to.
➔ culture ➔ from monoliths to primitives
➔ business model ➔ from silos to horizontals
➔ operating model ➔ from whales to school of fish
➔ tech architecture
53
Don’t spend time on the finance basics

We’ve built the finance workflows and user journeys so you
don’t have to. With 11:FS Foundry, you can focus on making
your products game-changing for your customers.
11:FS Foundry is the Financial Services
Operating System that enables
businesses to unlock growth
opportunities, in weeks, not years. Legacy is a thing of the past
An embedded finance toolkit that 11:FS Foundry is vendor-neutral, so your new and existing
gives them a springboard into suppliers can come along for the ride. Say goodbye to
innovation and to financial services vendor lock-in, and get ready to scale.
revenue opportunities.
Get a demo Maximum impact and control, minimum effort

11:FS Foundry gives you the springboard to accelerate your
business's growth. Configure your product so it attracts new
customers and add new features that help you scale.
54
Truly Digital Find out for your business:

➔ How to map your architecture
Diagnostic to understand forces
Our team can help you research, build,

design and deliver industry-leading
propositions at pace.
Tech Architecture Tech Architecture Digital BizOps

Our range of offerings give
Forces Mapping Reboot Configuration
you a headstart. Start with
Find out for your business: Find out for your business: Find out for your business:
a truly digital diagnostic, ➔ How to map your architecture ➔ How to create a new ➔ How to set up your operations
to understand forces architecture like a truly digital business
take advantage of our full
suite of offerings, and
come out the other side a
truly digital business.
Digital Partnership Truly Digital Truly Digital

Re-boot Culture Set up Funding & Set up
Find out for your business: Find out for your business: Find out for your business:
➔ How to benefit from specialist ➔ How to create a truly digital ➔ How to create a truly digital
providers culture funding model
55
Chat with us
David Brear Simon Taylor

We work with clients across the world with
Co-founder & CEO Co-founder & Director, Consulting
our award-winning products and services,
david@11fs.com simon@11fs.com
and a smorgasbord of industry-leading
specialists.
Reach out to our team to have a no BS chat

about your challenges and how we might
help you overcome them. Fresh insight,
unique perspectives and bold, actionable Nick Funnell Ryan Wareham Caitlin Wiblin
VP of Engineering Chief Operating Officer Marketing Manager
conversations. Guaranteed.
nick.funnell@11fs.com ryan.wareham@11fs.com caitlin.wiblin@11fs.com
11fs.com
56
Glossary
Conway’s Law Monoliths Silos

Conway’s Law states that organisations Unwieldy assortments of systems, tech The business units that form when
design technology that mirrors their and processes that’s difficult to manage operations are built around products
organisation structure. and slow to change. and geographies, leading to duplication
of each capability.
Financial Institutions (FIs) Primitives
Businesses that offer financial products Small, modular components that can Truly digital
or services such as banks, insurance easily be used to build any product. Moving beyond digitisation, to building
companies, investment firms etc. products and services with digital
Reference Architecture capabilities at their core. To be truy digital is
Horizontals Reference architecture is a reference guide to be able to offer real-time, relevant, highly
The alternative to silos, horizontals centre for the underlying technology, software and customised experiences.
operations around modular capabilities systems that underpin the technical
that can then be used to build and structure of a company. It serves as a Whale vendors
manage products. roadmap showing the technology and Large, traditional vendors that are often
systems needed to reach a desired state. inflexible and difficult to change.
Intelligent digital services
New features that are unlocked by truly School of fish providers
digital architectures. Intelligent digital An assortment of specialist providers that
services are highly relevant, differentiated offer flexibility, are easy to integrate with
customer solutions. and don’t cause vendor-lock in.
57
Digital financial services
are only 1% finished.
We’re building the next 99%.

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Rebuilding

➔ You’re a non-technical person seeking to better understand the

The 11:FS team

The market: Which factors are challenging FIs right now? 4

The solution: The 11:FS truly digital architecture 36

How we can help: Rebuilding from the inside 52

Everything happening in Customers Competitors Tech costs

Lost profitability & growth

Customers are changing

Customers are facing increasing

Consumer attention is decreasing (now averaging 7 seconds). FIs

Customers now expect more than simple banking services. The

Pressure on consumers is increasing as the bottom 50% of

Asset prices are soaring, making the dream of home ownership

Source: 11:FS, Gray Kimbrough; Federal Reserve Distributional Financial Accounts. 6

Competitors are evolving

New entrants are solving the new

financial institutions aren’t

Many companies are now becoming primary consumer

In the US, digital wallets are surpassing the number of deposit

These companies replace many of the features of traditional

All of these players are able to address deeper customer

Company Tech spend (est) As % of FY20 5yr revenue CAGR

Amazon $28.8bn 7.3% 29%

Alphabet $21.4bn 11.7% 19.8%

Bank of America $9.6bn 11% 0.71%

Citigroup $8.4bn 13.9% -0.55%

Large investments in tech see small returns. The largest banks

see the same revenue growth.

Digital focused Digital active The rest

Source: 11:FS, efinancialcareers, Statista, Accenture Research on S&P Capital IQ data 8

What’s preventing FIs

Three key areas create drag on the business

Short-term funding model Existing ways of working Technical debt compounding

Short-term decision making means

consistent tech investment

The way most FIs prioritize budget hasn’t changed Impact

based on what will deliver in-year return. No Yes

architecture. This results in an architecture that can

Slow, centralized decision-making

The majority of process at incumbents is still

Outside of the coding and software development,

Large central strategy teams work across

Once allocated, any change must run through

Truly digital businesses have the technology, culture and

time and planning into each change and more process.

They're trying to create new flexibility gets added

Truly digital businesses have faster ways

Traditional financial institutions’ architectures

Compliance Compliance Compliance Compliance

Deposits Lending Insurance etc

Modern tech architecture takes a horizontal, modular approach.

The architecture and ways of working

How incumbents buy technology is broken.

FIs lack the pace of change that the most successful

By reducing the size of change, organisations can increase the

Reduce the cost per change, opening up scope to pursue

Learn faster to unlock value in iterated products and