Banking on Happiness?

A new cloud-first financial institution, ORO Bank, has launched to serve Individuals and businesses in Bhutan, and around the world, with a specific focus on safe, innovative and sustainable banking

The bank is part of a visionary strategic initiative - the Gelephu Mindfulness City Special Administrative Region (SAR), announced in December 2023 by His Majesty the King of Bhutan. The development envisions a thriving economic centre, integrating the core principles of Bhutan’s philosophy of Gross National Happiness (GNH) - equitable economic growth, cultural preservation, environmental sustainability and good governance.

IBS Intelligence spoke to Mike Kayamori (MK), CEO at ORO Bank and John Guest (JG), MD, Universal Banking at Finastra to learn more about Asia’s first full reserve digital bank. First, we asked Mike Kayamori to tell us more about ORO Bank’s ethos and how the bank integrates the principles of Gross National Happiness into its day-to-day banking operations and services.

MK: Our belief is simple - banks are here to provide the financial infrastructure to enable personal, corporate and financial growth. ORO Bank’s foundational principles align with Bhutan’s core philosophy of Gross National Happiness (GNH), which calls for equitable socioeconomic development, cultural preservation, ecological sustainability and good governance.

Operating within Bhutan’s Mindfulness City SAR, we offer global individuals and businesses a unique opportunity to bank in an ecosystem that promotes innovation, sustainability and mindfulness. In line with these values, ORO Bank will actively monitor and offset its carbon footprint and will donate 1% of our profits to initiatives that promote sustainability.

Bhutan’s Mindfulness City offers the opportunity to do business in a new way. Similarly, ORO Bank represents a transformative experience, delivering financial stability through our full reserve model, peace of mind and a solid growth foundation for innovators and entrepreneurs in Bhutan and around the world.

ORO Bank is described as Asia’s first full reserve digital bank - why did you choose this model?

MK: Full reserve banking and fractional reserve banking differ primarily in how banks manage deposits and loans. In full reserve banking, banks must keep 100% of deposits in reserve, meaning they cannot lend out depositors’ money, ensuring complete liquidity and minimising the risk of bank runs. This system prioritises stability and safety, but limits banks’ profitability. Conversely, fractional reserve banking sees banks lending out the majority of deposits. This method supports economic growth through increased lending and money creation but carries higher risks.

As Asia’s first full reserve digital bank, we believe in safe and sustainable banking and providing peace of mind for our customers. In addition to serving the Mindfulness City, we aspire to become the preferred bank for global startups in Bhutan and innovative emerging businesses around the world.

What were the unique challenges and opportunities in deploying the Finastra Essence for a new digital institution like ORO Bank?

JG: Compared to traditional banks’ digitalisation efforts, the process is different. An established bank often has a lot of legacy technology architecture and products, which can be a challenge for a bank to overhaul due to scattered data across the business, difficulty in suspending key products during the change and data compatibility issues.

The upside to starting a new digital bank is that you can build up functions ‘on a fresh page’ and, as a result, the time to market is a lot faster. Using Finastra Essence in the cloud, ORO Bank has been able to tap into a SaaS core banking solution and launch to a global market within just 6 months. Finastra’s rich, broad and deep banking functionality combined with advanced technology provides a compelling proposition which gives the bank a competitive edge and contributes to its sustainability goals through the cloud.

It is also a pleasure to work with a bank which shares a mantra similar to our own open finance vision and bringing finance to people and communities who need it, supporting positive societal change.

How does Finastra ensure the operational resilience of its SaaS core banking solutions?

JG: Finastra’s SaaS core banking solution, Essence is designed to address the needs of retail and commercial banks in an increasingly digital world. First, Finastra’s technology and deep banking functionalities provide ORO Bank with a comprehensive suite of banking solutions that cover a wide range of financial services.

Essence acts as the backbone for banks, managing fundamental banking functions such as account management, transactions, customer data, and financial products. By leveraging these tools, ORO Bank can offer a diversified portfolio of services to its global customers, enhancing its competitive edge in the market.

Second, the cloud-based core banking solution enables ORO Bank to benefit from a scalable and flexible infrastructure, reducing the complexity and costs associated with maintaining systems on-premise, but also ensuring that the bank can quickly adapt to changing market conditions and customer needs. The modular architecture of Finastra’s cloud-first platform allows ORO Bank to easily integrate new capabilities and services as they evolve, ensuring that the bank remains agile and innovative.

Lastly, Finastra’s platform is designed to adhere to global regulatory standards, providing a secure and compliant banking environment. Advanced security measures embedded within Finastra’s solution allow for ORO Bank to focus on its strategic goals.

What key milestones do ORO Bank and Finastra aim to reach over the next 2-3 years?

MK: Looking ahead, we anticipate the integration of yield-generating savings accounts and investment products to the system, offering customers the voluntary option to lock in their funds for higher yields, with the bank charging small fees. The bank will target citizens and global customers in the city of Gelephu, as well as global startups and entrepreneurs who want a different model for deposits.

JG: Enhanced technological integration will be a cornerstone of deepening our collaboration, and the ongoing use of Finastra’s cloud-based core banking solution, Essence, ensures that ORO Bank remains at the forefront of digital innovation. We expect the expansion of digital services will be another key area of focus.

Traditional financial services will continue to be optimised and digitised for seamless and efficient banking experiences, including improvements in digital payments, cross-border transactions, and investment products. The partnership will particularly benefit global startups and next-gen tech companies by providing robust financial infrastructure and tailored financial products to meet their specific needs. This will help to create a vibrant ecosystem fostering innovation and entrepreneurship, offering the tools and support these businesses need to thrive in a competitive global market.