Finance Derivative Magazine

Issue 1

Standardization in Surety and Trade Credit Insurance –

WHAT IS HOLDING US BACK?

What’s Ahead in 2020 for INVESTORS ?

UK £11.00 EU €16.00 USA $20.50 CAN $21.00 SGD 22.00 AED 50.00

THE DIGITAL BANKING REVOLUTION IS RESHAPING WHAT IT MEANS TO BE A BANK

www.financederivative.com

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CONTENTS BANKING 10 The digital banking revolution is reshaping what it means to be a bank

25 Reasons to take out a business loan 64 Putting Banks Back on Track with Robot Help

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BUSINESS 15 How Can Business Leaders Utilise Existing

Financial Data To Make More Informed Decisions

34 What’s the real cost of a data breach for your business?

40 The key strategies that ensure lasting business growth

58 Are your web and mobile APIs putting your business at risk?

68 Excel best practice: how it affects your team,

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your professional network and your brand

84 6 Benefits of CSR for Small Businesses

FINANCE 22 Digital Disruption: The Future of Fintech 28 Choosing the Right Fintech Partner – A Guide for Financial Institutions

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30 It’s time to end the payments price war 32

“ Automation and Financial Close – a Smart Equation for Mitigating Risk

44 How data is making the finance team key business innovators

50 How connected reporting is revolutionising financial services by eliminating risk

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54 Delivering SCA in the travel industry 66

Money matters, but so does working comfortably

74 Managing cash flow loopholes for

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52 Financial Services leading on ‘Voice First’ technology strategy, but there is work to be done

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60 Why more financial firms are building their own software

SMEs

INSURANCE 46 Disruption in the Insurance Sector:

How Artificial Intelligence is making waves in the ways we measure risk

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Standardization in Surety and Trade Credit Insurance – what is holding us back?

INVESTMENT 8

Move over FinTech, corporate travel is the new sector exciting investors

12 How to spot Insider Threats in investment management

76 Easing the burden of technology transformation

78 Unleashing the power of AI in the banking industry

86 Why Failing To Implement AI And Ml In Credit Management Could Be A Costly Mistake

88 Fintech App Development: 7 Insights That Will Delight Your Users

TRADING 38 Will intermediaries still be

necessary in the future of stock exchanges?

20 What’s Ahead in 2020 for Investors

49 How digitised trade documents

TECHNOLOGY

56 As volatility stagnates, forex

18 How to prevent and manage IT failures in an always-on world

36 Innovation must continue to be a key priority for FS firms

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can drive the UK’s SME exports

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brokers need to become more creative to fulfil traders’ needs

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FROM THE CEO

CEO and Publisher Mehtab Chisti Editor Mara KI Web Development and Maintenance Deepak Ghatage

NEW YEAR, NEW CHALLENGES

Head of Distribution Stefan Stavic

Hello & Welcome to the first Edition of Finance Derivative Magazine !

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We closed out 2019 on a high and we are looking forward to support you throughout for another important year of business & financial sector.

This edition of the Finance Derivative Magazine includes our worthy Award winners across the Globe, who share their stories , visions and success in different sectors . We’ve been delighted by the positive response from viewers all over the world.

In this issue we also bring some very interesting content in various sections containing what’s ahead in 2020 for investors, how to prevent and manage IT failures and the insider threats in investment management. We also explore the disruptions in the digital & Insurance Sector and the future of Fintech.

Looking to the year 2020 ahead, we will continue to work with the upcoming and continued Industry leaders. The opportunities to learn are immense and all of our leaders are growing exponentially. The amount of transformation which is happening in the society is absolutely unprecedented. The extent of changes and the advancement is unbelievable. These are the times when obscene is high therefore, it is very important that we should keep you updated with the changes which are constant. Therefore, it is wiser to work with ambitiousness and be optimistic for fast country progression.

Enjoy the Read !

Mehtab Chisti Director Be sure to check out our online publication at

www.financederivative.com

INVESTMENT

MOVE OVER FINTECH, corporate travel is the new sector exciting investors

The world of investment has changed dramatically in recent years. Rewind to 2014 and the world of financial technology or ‘FinTech’ was sending investors into a frenzy, as they battled it out to back the next PayPal. Today, the sector is still attractive to investors, however its lost some of its sparkle as innovation isn’t as frequent and the exciting startups are quickly being snapped up by bigger fish.

So what will be the next industry to get investors excited?

Travel is one of the fastest-growing sectors in the world, and while there have been huge developments over the past 10 years – think AirBnb and SecretEscapes – the corporate side of travel has remained relatively untouched, until now.

The market is growing considerably, with some huge triple digit funding rounds for dedicated business travel companies over the last year alone, suggesting that perhaps corporate travel is ready to take FinTech’s crown as the hottest area in which to invest..

The appeal of corporate travel It’s no surprise that so many investors are turning their attention to the corporate travel sector. As a whole, it’s estimated the industry will be worth £1.3 trillion by

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2023. The growth so far has largely been driven by the overall development of the travel and tourism industry — including low-cost airlines, the rise in globalisation and the rapid increase in small and medium-sized enterprises.Given the sheer size of the industry, and the fact that up until very recently it has been largely underserved and left to antiquated tech from the last century, investors now have a huge opportunity on their hands.

Similarly to how the FinTech industry operates, to be successful in the world of corporate travel, investors know they need deep pockets — to help upstart organisations be able to offer the latest services and technology, as well as meet regulatory and compliance needs globally — businesses have to be well funded. On top of this, business travelers are highly demanding. As many employees know, travelling for work can be a stressful experience and their high standards, built out of great consumer experiences and the best B2B apps, cannot go left unsatisfied. With players emerging into the market constantly, competition grows and soon travelers will have pick of the bunch. One thing the new era of corporate travel organisations have in common however, is that their future lies in technology that reinforces the human element.

The consumerisation of the corporate travel space has been happening at a dizzying pace, as business travel companies have looked to the ease, convenience, and instant gratification of consumer apps for inspiration. Increasingly investing in technology to offer a customer experience to rival that of the leisure travel industry, now corporate travel is fuelled by data services and better access to integrated travel content that was once reserved for the leisure market. This technology allows for more personalised offerings, around the clock customer support. and real-time updates at every step of the customer journey. Corporate travel is about the overall experience, from the moment an employee books travel to the moment they return home from a successful work trip, every aspect needs to be taken care of to ensure a smooth and stress-free experience.

Growth through technology and sustainability Looking to the future of corporate travel, technology will continue to play a dominant role in how the sector develops. For investors, this will be exactly what they are looking for. Any time there is a big development in the space, it forces the incumbents to up their game, which benefits the organisation, the traveler, and

INVESTMENT those invested in it.

AI, specifically machine learning, will continue to leave its mark in the industry as it supports those at the heart of the industry, whose job it is to manage multiple travel bookings and ensure executive safety. From improving traveller safety and giving better visibility into an employee’s travels, to breaking down language barriers and providing location-based experiences and recommendations, it will continue to offer convenience for everyone involved. As investment into such technology continues, organisations will have improved inventories and be able to integrate fully with airlines, hotels, trains, rental cars, and global distribution systems. This will mean more streamlined booking processes, lower costs, and an overall better user experience. And that translates to a better experience for the corporate travel manager and finance leader who benefit from increased visibility and control over travel spend as more employees use a tool they love.

There is no denying the opportunity for investors when it comes to corporate travel. As an industry ripe for innovation, organisations in the space are crying out for investment to show the world what they can offer. And, as the sector and associated competition continues to grow, it won’t just be the savvy investor which reaps the rewards — but so too the business traveller and EAs booking trips on behalf of executives, as well as corporate travel managers and finance, operations, procurement and human resource leaders.

Jen Bowe Head of EMEA Finance TripActions

Source: 1 https://buyingbusinesstravel.com/news/1929589-businesstravel-market-set-reach-17-trillion-2023/

2 https://tripactions.com/press-release/tripactions-to-offercarbon-impact-data

In addition, across the sector organisations are becoming more conscious of the impact travel is having on the environment. Carbon emissions continues to be a hotly discussed topic, and we’re set to see more organisations doing what they can to reduce their carbon footprint and the environmental impact of travelling. In fact, recent TripActions research found that 6 in 10 travellers believe it’s important for their employer to offset the carbon of their business travel, demonstrating there is demand for businesses and employees to think more about the sustainability of their trips. There is undoubtedly an appetite to move beyond just talking about making a difference, and actually doing something that has a lasting impact.

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The DIGITAL BANKING

revolution is reshaping what it means to be a bank

Following the 2008 economic crisis the banking market was dramatically transformed and we saw an end to the long reign of traditional banking monopolies.

Established financial institutions such as Lloyds TSB and Barclays found themselves with far more competition as a result of a wave of new entrants into the market - what we know today as challenger banks.

This disruption has resulted in legacy banks widening their service offering, creating greater competition and a new 10

digital marketplace to complement the traditional high street branch. Legacy banks now offer online services as standard, demonstrating the evolution of base-line banking offerings over the last few decades. The necessity of this development stemmed from a desire among the established banks to maintain a competitive edge against digital banks like Monzo and Revolut. These banks were quick to realise and capitalise on the potential of smartphones to serve as a banking tool, with traditional players following suit, seeking new ways to keep pace in a rapidly evolving market.

Traditional banks are also now looking to launch entirely separate digital platforms.

Big players including HSBC, Santander, and Royal Bank of Scotland are amongst those pursuing such a strategy, hoping to leverage their long-standing reputations with customers and establishing new platforms that can offer at least as much as the services and benefits provided by their challenger bank rivals, if not more.

Having said that, change continues apace in the banking sector and no one can rest on their laurels. There now

BANKING exists a desire amongst challenger banks to reshape the landscape further still. These players are doing so by offering innovative, secure and tailored customer experiences that are changing the way consumers think about banking.

Furthermore, they are employing modern technologies to digitalise platforms and assert more control over banking services, driving society towards a cashless future where debit and credit cards are becoming the most common methods of payment.

As advancements in technology continue to create opportunities for innovation, banks are now offering new services that would have been unimaginable two decades ago. The demand for innovation is so extensive that it can even be found in one of the most traditional and heavily regulated banking sectors in the world, Switzerland, where Yapeal, the country’s first ever digital bank, is providing Swiss residents with the option of a local challenger.

solutions being employed to explore predictive and advisory functionality in this area.

Banking institutions of the future are no longer seeing their role as confined within traditional banking parameters. The adoption of sophisticated technology in the sector is allowing banks to develop a focus on real-time notifications and the technological interpretation of spending, which is resulting in hyper-personalised offerings. For example, soon enough your banking app may question your choice to buy that third coffee of the week when you have previously specified a desire to save for a holiday. Payments will also be more closely tracked and trends in spending monitored, allowing mobile-apps to play an increasingly important role in our lives.

The potential for it to become significantly more sophisticated is exciting and this will continue to evolve the banking landscape. The question now is whether the legacy banks and the first wave of challengers can do enough to innovate and keep up with the digital banking revolution that is underway.

Ian Johnson Head of European Growth Marqeta Source: 1 https://yapeal.ch/

This is for the near future, though, and it is important to recognise that the technology leveraged by challenger banks is still in its early stages.

The services boasted by such banks as Yapeal, or Morning Bank in France, are centred on creating closer ties between people and their finances through more personalised banking services and support for financial wellbeing. This offering is backed by new technologies, with open APIs, machine learning and artificial intelligence amongst the

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How to spot Insider Threats in

INVESTMENT MANAGEMENT Investment management firms entrust their employees, vendors and contractors with valuable data, including confidential client information, which ultimately increases the potential risk of an Insider Threat incident. By default, anyone with legitimate access to an organisation’s network and its data can be a security risk.

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Of course, companies in the financial services sector are no stranger to data breaches or cyberattacks. Indeed, the number of cybersecurity incidents in the UK’s financial sector rose by more than 1000% from 2017 to 2018 (Financial Conduct Authority data). However, as a direct route to money – and the data that provides access to it – the financial

sector is particularly vulnerable to the threat from within. Crucially, whether an incident is driven by accidental or intentional motives, no matter how data exfiltration happens, it can be a very costly problem for private equity firms, hedge funds, proprietary trading firms, and more.

INVESTMENT

may begin to exfiltrate critical IP, such as investment reports, client information, quantitative trading logic, pitch books, and term sheets, for use in their next job.

Money and personal gain are, of course, frequent motivations for these actors too. An employee who has access to critical infrastructure may be prompted to abuse that access for illicit high-value activities, such as trading crypto-assets, crypto mining, or breaching blockchain technologies – satisfying their greed or addressing secret money troubles.

And, although somewhat less common, state sponsored and ideologically based cyberattacks are another key motivation for maliciously-minded Insider Threats.

The primary drivers for these individuals include everything from national pride, to political beliefs and personal ideologies.

Turning to the second type: the ”unintentional insider.” A common misconception is that Insider Threats are primarily malicious, but in reality, nearly two out of three Insider Threat incidents are caused unintentionally (Ponemon).

In order to anticipate, mitigate and manage an Insider Threat, it’s essential to first understand that there are two main types of Insider Threat – malicious and unintentional – and, second, it’s key to know the common motivations associated with each.

Indeed, individuals who aren’t tech savvy, or are unfamiliar with the security implications of their actions, are at risk of becoming an unintentional Insider Threat. This is particularly an issue when cybersecurity policies are unclear or overly complicated. Due to lack of knowledge, these negligent insiders may share sensitive data and information on less secure channels (like cloud storage apps), access critical systems on insecure public Wi-Fi, or fall for phishing emails.

The best-known Insider Threat is the “malicious insider.” These insiders are typically motivated by emotional, financial or political reasons. Indeed, when a company insider is unhappy, frustrated, or angry about something – or someone – in the organisation, there’s an increased chance that they may act out maliciously. For instance, an employee who’s been passed over for promotion

Equally, in today’s busy work environment, convenience can sometimes trump security considerations and be a motivating factor in an accident taking place. If your cybersecurity policies and tools make it difficult for insiders to get their work done, they can be guilty of circumventing more secure systems and finding work-arounds like pushing files to cloud storage apps when removable

storage is banned, or forwarding work emails to personal accounts to work remotely.

Ultimately, knowing what to look for when it comes to the Insider Threat is key to taking positive action both to identify and manage insider breaches. The next step is getting visibility into all user and data activity on the network.

Monitoring all activity is a fundamental way that businesses handling high-value, sensitive financial data can detect risky behaviour or changes in regular patterns of activity from the moment it takes place. This type of technology can also trigger instant reminders to users that they’re acting in a way that contravenes set policies or processes, or it can also block high risk activity the moment an alarm is triggered. Bain Capital is just one of many investment management firms using monitoring to effectively gain critical insights on data exfiltration vulnerability points, such as cloud storage, web, email, USB, and copy/paste scripts.

With comprehensive visibility, financial firms can investigate promptly and thoroughly, speeding both response and remediation of Insider Threat incidents.

By being able to establish, as a matter of course, the who, what, and why behind an activity on an organisation’s network is vital, and means that organisations can be confident they are proactively defending against any type of Insider Threat, regardless of motivation.

Chris Bush Head of Security ObserveIT 13

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BUSINESS

HOW CAN BUSINESS LEADERS UTILISE EXISTING FINANCIAL DATA TO MAKE MORE INFORMED DECISIONS? There has never been a more important time for businesses to rely on big data. With the Bank of England warning that ongoing Brexit uncertainty will damage the economy and the IMF blaming unpredictable trading trends for ‘slugging global growth’, the global economy is crying out for economic actors who can make more intentional business decisions that encourage growth.

Data has been the name of the game as of late. Businesses of all shapes and sizes are making use of customer credit information, competitor reports and internal productivity metrics to drive efficiency and increase sales.

However, companies often struggle to find the same levels of data when expanding their operations overseas.

Here, David Walters, Group Data Director at Creditsafe, explains how CEOs can make the most of freely available information sets to ensure their decision making is as informed as possible; whether that’s trading nationally or overseas.

With Companies House being the goto source of free data in the UK, there is not necessarily the equivalent resource when trading internationally.

This creates a ‘financial black hole’ that can be complicated for businesses outside of the respective territory to navigate effectively.

African countries in particular present a glaring blank hole in so many of the world’s datasets. Inaccuracies in basic data are often due to corrupt government intervention linking statistical reports to ‘financial and reputation rewards’, as stated by the Centre for Global Development.

1. Utilise internal data to your advantage When deciding to trade goods and services with overseas partners, or perhaps expand into the territories themselves, businesses often neglect their own internal data to inform their decisions. In the business world, data is primarily used to answer three key questions: 15

BUSINESS - How much opportunity is there in the market?

- What are the challenges of working in that market?

- How much success, if any, have we had in that market?

If external data is hard to come by, companies should look inwards to answer these questions. For instance, have leads increased significantly in a certain market without new investment? Has there been an uplift in online traffic to the website from that region? Does it take less time from lead-to-sale? Do customers purchase more on average in that region?

The answers to these questions are not available through third-party sources, and can in fact be more useful for deciding whether a potential customer base will respond well to your brand.

2. Conduct competitor research Another key piece of data that businesses can use is data from within their own country to inform whether expansion into another territory is a worthwhile endeavour. For example, a business should assess the potential risk of a domestic competitor buying a competitor in the target market, or perhaps the likelihood that a business will move out or reduce its operations in the country.

Much of the financial data that could help analysis of this kind will be either

be available through Companies House or through a third party business intelligence provider. By looking at the revenue, debt and share price of a business, you will be able to assess the likelihood of a competitor moving in or out of a market, and consequently lowering or raising the profitability of trading there.

Moreover, keeping up to date with press coverage of your competitor’s mergers, acquisitions and patent applications will also provide insight into their actions moving forward. It is clearly impossible to fully predict the actions of competitors, but conducted regularly competitor reports with SWOT analyses is always a good way to make the most of limited external data.

3. Hire data analysts to maximise the value of available data Even the most complete set of data in the world is useless to a business without the resources to accurately dissect it and extract actionable insights. The NewVantage Partners’ 2019 Big Data and AI Executive Survey, whose participants include c-level technology and business executives from companies such as American Express and General Electric, found that 69% of respondents had not created a data-driven organisation and that 53% had not yet treating data as a business asset.

This study underlines the fact that data,

even in limited supply, is not being used to its fullest potential. Businesses should be making the most of business and industry data wherever possible to better inform their decision process,which requires hiring specialist data analysts to do so.

Hiring data analysts is by no means easy - many media outlets have highlighted the significant skills gap present especially across North America and Europe. Nevertheless, hiring experts to analyse data is a worthwhile investment that will pay dividends when the analysis helps drive a profitable overseas expansion or international trading partnership.

David Walters Group Data Director Creditsafe

Source: 1 https://news.sky.com/story/bank-of-england-warns-furtherbrexit-uncertainty-will-damage-economy-11813850

2 https://blogs.imf.org/2019/07/23/sluggish-global-growthcalls-for-supportive-policies/

3 https://www.cgdev.org/blog/why-african-stats-are-oftenwrong

4 https://www.itpro.co.uk/careers/28929/data-scientist-jobswhere-does-the-big-data-talent-gap-lie

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TECHNOLOGY

How to prevent and manage

IT FAILURES

in an always-on world

Technology is at the core of most of our day-to-day activities – and the management of money is no exception. The past few years have seen significant advancements in IT, which now power our digital lifestyles and enable us to do everything more quickly and easily than ever before – paying bills, accessing bank statements and transferring funds, all entirely from our smartphones.

However, even the most sophisticated

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IT systems sometimes fail. And the consequences for both business and customers can be dire – especially, but not exclusively, when it comes to people’s finances. Major banks such as Santander, NatWest and the Co-operative Bank suffered website glitches this year, likely linked to the traffic peak in the run-up to the PPI deadline on the 29th August.

Things get more complicated when outages affect independent mobile banking apps – think of the technical problems

briefly experienced by challenger bank Revolut. On these occasions, users don’t even have the option to liaise with a physical bank as their only point of access to their account is, in fact, their mobile phone.

MPs have recently condemned the level of IT crashes within banks, stating that their frequency and effect on customers are unacceptable. Imagine being barred from your bank account for an extended

Z TECHNOLOGY

period of time or missing out on receiving your salary!

Banks looking to minimise these accidents should look to update their ageing infrastructures. It recently transpired that it can take up to 17 minutes for UK GPs to switch on their computers, many of which still run Windows 7. While it’s not unusual to find older operating systems within long-established organisations such as the NHS, having critical systems continuously function via legacy technology increases the likelihood of IT failures.

In fact, back in 2018, IT chaos overtook NHS Wales, preventing staff from accessing patient details for several days.

Such accidents are no laughing matter as they can cost businesses $300,000 per hour of downtime. But funds are not the only thing unprepared organisations risk losing: severe IT failures that cause significant disruption to peoples’ lives can dramatically damage the company’s reputation and the value of a business’ reputation cannot be overstated.

Here’s what banks can do to help mitigate risk:

Launching a new system? Take a staggered approach

Identifying situations where IT failures are likely to occur is a great place to start. Many of these incidents take place when a new solution is being launched or during a system upgrade. Last year, for example, an outage at TSB caused up to 1.9 million people to lose access to online banking services, such as seeing their balances or making transactions. The episode was caused by the introduction of a new IT system.

Businesses should exercise extra care in these scenarios and take specific precautions: implementing the new system with a staggered, step-by-step approach can help prevent widespread damage.

Banks can also roll out new projects by running the new technology as a pilot – meaning, they can select a specific group of users and restrict the trial to a certain period of time. All of these practices can limit the exposure to any potential negative consequences of an IT failure to a small part of the customer base, thereby making the incident less severe.

Implement best-in-class tech

Naturally, avant-garde technology can be an invaluable ally when it comes to preventing IT outages. Banks should seek to modernise their processes and adopt solutions such as those utilised in industries like critical infrastructure or defence.

These can empower organisations to reduce downtime to only minutes or even seconds. The ultimate goal is virtually zero downtime, which with the help of innovative solutions, can be achieved in the next few years and will soon become the new standard.

Working to prevent outages is all well and good, but it doesn’t mean IT teams shouldn’t be prepared for when they do happen. Hopefully, the need to manage an IT crash will never arise. That being said, recent events suggest that every business must deal with such an event sooner or later.

Regular testing and a robust Disaster Recovery plan are simply non-negotiable.

Having an established and well tested failover process in place is just as important as implementing preventative measures. With the right DR capability in place if there is an IT failure, it can swiftly be resolved so that systems are up and running again and normal services are restored. …and calibrate your reaction

If the worst does happen, it’s important to keep calm and plan a logical reaction.

In the efforts of limiting public backlash,

organisations can be tempted to make rushed decisions with regards to the team. Rather than punishing a member of staff, such as an engineer who may have been responsible for the incident, it’s more constructive to liaise with them to gain insight into why and how the crash took place – so that measures can be implemented to prevent this from happening again.

Clear and transparent communication with customers is also of the essence.

Users must be warned that they will experience issues, be kept up to date on any developments, and customer care teams should be available to offer as much assistance as possible.

In an always-on world, outages which prevent people from accessing their digital day-to-day tools are simply not acceptable. It’s time for banks and financial providers to get smart and take all the necessary precautions to pre-empt, avoid and mitigate IT outages – so as to protect their revenues, hard earned reputations in the market and of course to continue to efficiently serve their customers.

Kevin J Smith SVP Ivanti Source:

1 https://www.theguardian.com/money/2019/aug/29/ppi-

claims-consumers-hit-by-online-and-phone-problems-asdeadline-looms

2 https://mobile.twitter.com/RevolutApp/ status/1187245201468690435

3 https://www.bbc.co.uk/news/business-50200213

4 https://www.dailymail.co.uk/health/article-7609931/BritainsGP-reveals-takes-17-MINUTES-switch-computer.html

5 https://www.bbc.com/news/uk-wales-42803118

6 https://blogs.gartner.com/andrew-lerner/2014/07/16/thecost-of-downtime/

7 https://www.bbc.com/news/business-44370802

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INVESTMENT

WHAT’S AHEAD IN 2020 FOR INVESTORS It’s been a whirlwind year for the investment industry with market shakeups such as Schwab’s proposed purchase of TD Ameritrade, the race to deliver nofees trading and a highly unpredictable IPO market.

As we look ahead into 2020, it’s easy to wonder what impact this volatility will have going forward and if heavy political influence will sway investors. After decades in institutional investment I still believe the long game holds the most value, but it’s still worth keeping a close eye on current trends. Below are my predictions for what investors can expect to see over the next 12 months.

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No fees trading will continue its ripple effect through the industry In the investment world, a bomb went off in October as some of the largest brokerages in the business announced new, no-fees trading privileges for investors.

Finally bowing to pressure from relative newcomer Robinhood, these companies who have been in business for decades recognized they were outmatched by the disruptor.

This sea change won’t settle down any time soon, however. Digital upstarts, emboldened by Robinhood’s success but able to learn from its missteps, will fur-

ther challenge the investment industry.

Investors, while enjoying a new no-fees trading model, will be intrigued by even more transparency, as fintechs prove that investors can and should have more insight into how their money is used and how much is being made on their money.

The payment-for-order-flow practice may face stricter regulations Investopedia helps explain payment-fororder-flow (PFOF), which is the compensation and benefit a brokerage firm receives for directing orders to different

INVESTMENT parties for trade execution.

Typically a brokerage firm receives a very small payment per share, for acting essentially as a middleman in the trading process.

crisis, as well as those who can provide digital experiences that delight customers, are the ones who are going to come out on top in 2020.

In 2020, we may very well see regulators requiring changes to the prevalent practice of PFOF. Currently, regulators are actively engaged in analyzing this area and have been soliciting opinions from industry participants as well as experts in financial market operations, market structure and consumer advocacy. This demonstrates a clear concern from regulators, as to whether the current model is in the best interest of investors. There are strong arguments both in favor of and against the current PFOF business practices, but I would not be surprised if 2020 brought with it buzz of regulatory changes.

Financial services will tap into the benefits of social

Developers will play a pivotal role Financial interfaces must change, and fast. As more upstarts enter the market poised to challenge incumbents, user experience and user interface will be a critical differentiator.

Consumers are looking for a balance of technical ease delivered with a human experience; they want things to work seamlessly but they also want to have an empowering relationship with their financial company, whether it’s a bank or a brokerage. The top requirements of consumers from financial institutions - namely trust and security - will be challenged in 2020 amid ongoing data breaches or hacked technology. Banks and financial services companies who deliver transparent, immediate responsiveness in the wake of

As general social media platforms face mounting pressures amidst constant misuse of data and the chaos that often comes during an election year, 2020 will prove an interesting opportunity for targeted “signal-focused” channels to lure users in with highly specific content and opportunities to engage with like-minded peers.

Fintech has yet to leverage the full benefits of social technology, owing to a long held assumption that finances and money are topics too sensitive to share. Yet younger generations expect much more of an interactive, empowering experience from the companies they engage with, and this is often built on compelling social experiences.

Technology that incorporates new alternative data sets and delivers scalability has made it easier to connect through anonymized data, and has given users more transparent control over how and what they share online. The effect has been to encourage new opportunities to connect and learn from peers as well as groups in social settings.

Social will be a powerful tool introduced to the investment market, particularly in 2020, as investors come together to share tips/tricks, enjoy league comparisons similar to fantasy football (but for real), and take advantage of a newly available, collective investment power.

portant investment target for VCs. In 2020 we’ll see regular investors start to get behind a majority of the IPO companies that have struggled in 2019, especially those with platform-based business models. These companies will start to demonstrate greater financial discipline now that they are public, and gradually they will win the confidence of investors while continuing to rapidly grow. The pendulum tends to swing back and forth, time to swing back. Despite all the hype in 2019, however, WeWork will most likely not IPO in 2020 after all.

Despite all the hype, the outcome of the election won’t matter to the market No question the US presidential election will take up a lot of mindshare in 2020, but the reality is that it won’t really matter to the market. 2021 may be a different story, but following the outcome of the elections the crystal ball will be too murky to read, and there will be enough time to figure it out before the market fully digests the implications and begins to trend up or down. I predict the reaction will not be quick or violent initially, but the medium-term trend will be defined by who wins, and what policies they actually commit to implementing.

Alan Grujic Founder and CEO All of Us Financial

Source: 1 https://www.aboutschwab.com/announcement

Artificial Intelligence still a hot trend for VC investment Companies focused on AI technologies and solutions will continue to be an im-

2 https://www.barrons.com/articles/free-trading-has-arrivedbe-sure-to-read-the-fine-print-51570208401

3 https://markets.businessinsider.com/news/stocks/ipomarket-outlook-trends-why-investors-rebelling-againstunicorns-implications-2019-9-1028570687

4 https://www.investopedia.com/terms/p/paymentoforderflow. asp

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FINANCE

Digital Disruption: The Future of Fintech Disruption in the financial services industry is increasing at an unprecedented level. Start-up fintech firms are changing the experience of banking through technology. The decentralisation of financial services has enabled hundreds of fintech start-ups to bring innovative products and alternatives to long-established banking services, resulting in a diverse ecosystem of traditional and non-traditional players.

While the benefits of emerging technology has never been greater, large be-

22

hemoth companies struggle with the mishmash of legacy systems and tools that prevent them from innovating at the speed and scale of challenger brands.

So how should the incumbents position themselves in the new landscape?

The future of banking is truly digital and banks need to become better equipped to thrive in this landscape or they risk falling behind. It is imperative that financial institutions manage their data better in order to anticipate the needs of customers, make banking easier, and pursue the right partnerships to increase capabilities and scale.

A Battle Royale in Banking Many banks have already entered into partnerships with fintech companies.

The relatively low cost and fast access to cloud environments have allowed hundreds of challenger banks and non-financial companies to quickly bring banking solutions to market. Take for example FreeAgent, the fintech startup that part-

FINANCE

nered with RBS to provide online cloud software to its customers or Uber’s full-service banking app for drivers.

For heavily-regulated incumbent banks, collaborating in the fintech ecosystems while complying with data privacy regulations can be a daunting task. The upcoming PSD2 compliance regulation brings significant change to the banking industry. It provides traditional banks the opportunity to modernise from the more open banking system and failure to adapt can leave these traditional banks to be seriously left behind.

Fintech start-ups focus on developing innovative, customer-oriented solutions that include a variety of services, including payments, peer-to-peer lending and trading, mobile banking, asset management systems, partner banks, integrators, aggregators, and more. They bring disruptive technology solutions to the ecosystem while established banks provide market expertise and a customer base. As a result, the collaboration can strengthen the competitive position of established banks by shortening the time it takes for new products and services to reach their customers, while the start-ups benefit from greater access to market expertise.

The Imperative: Banks Must Act Quickly In order for fintech and traditional banking to collaborate and build mutually beneficial partnerships, all members of the ecosystem need a way to share data for developing and testing innovative applications in a fast, secure manner.

Take, for instance, a commercial bank that wants to better compete with technology-centric companies, including Apple. In order to gain a competitive edge,

the bank needs to migrate application development and testing from a 15-yearold legacy system to a hybrid-cloud environment that included AWS. They need to adopt a dynamic data platform that allows its software development teams to virtualise data and mask sensitive information, working in tandem with DevOps tools, to achieve cloud agility and easily share data for development and testing with their partner ecosystem, including fintech software developers, credit providers, and payment processors.

But as enterprises strive to store and process greater volumes of data across multiple data platforms and multiple locations – both on-premises and in the cloud – the complexities of data management and data security increase.

Adopting A New Way of Managing Data Most banks will need to aggressively adopt new technology paradigms of digitally native companies, and this is certainly true when it comes to data.

DataOps, which is the rapid, automated, and secure management of data, can enable banks and financial services organisations to collect, virtualise, manage, and provision terabytes of data on-demand.

While DataOps was only introduced to Gartner Hype Cycle last year, the trend is moving fast as more global enterprises look to significantly increase investment in DataOps technologies.

This modern approach reduces the complexity of data provisioning and empowers developers with self-service access to data, accelerating the development of data-driven applications and data-driven decision-making to meet the rapidly changing requirements of the business.

Because not only is the use of legacy technology and processes slowing banks down, but outdated IT systems can pose a significant security challenge, especially if the software is no longer supported by the vendor. The onus is on the bank to fix security holes, and this is a huge burden on the business as cyber threats advance faster than security teams’ ability to detect and resolve issues. Meeting regulatory requirements, such as the GDPR and CCPA, also require that the technology be supported or face fees and penalties if you experience a data breach and your software out of compliance.

In other words, as your business grows, you’ll need to evolve your technology stack because your software must be able to keep up without inhibiting business scalability, growth, and regulatory compliance.

Keeping up with trends and customer needs is crucial for a business, and it has become obvious that offering traditional financial services is no longer feasible in a technologically advanced climate. The customer expects digital. An ecosystem that allows customer data to be shared with both external and internal parties in a fast, secure way will ultimately facilitate the best customer experience and engagement.

Benjamin Ross Director, International Marketing Delphix

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BANKING

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BANKING

Reasons to take out a

BUSINESS LOAN “

In the second quarter of 2019, it was calculated that 42% of all SMEs used some form of external finance including overdrafts, credit cards, bank loans, alternative lenders, and more. This range of financing options reflects the diversity of businesses, in terms of size, sector, and stage of development, and getting the right loan at the right time can be invaluable to the growth and success of a company.

�

Despite this, there can still be some reluctance from businesses, particularly smaller enterprises, to take out a loan.

This may be partly explained by the current economic uncertainty, as well as a lack of confidence that their application for a loan would be successful given the relatively strict lending criteria of some providers.

Nevertheless, there are many options for businesses looking for finance, depending on their individual circumstances.

Whether they are looking to start their business journey, take the next step in their business progression, or simply make up a temporary shortfall in their finances, there are many different loan types for businesses to consider.

Have specific aims When businesses first start to look at external finance options, they should have a clear reason for doing so. Not only will some lenders want to know exactly how

you intend to use the funding and subsequently make the repayments, but it will also help to focus your mind on the future goals of your business.

Creating a business plan will clarify the exact purpose of the loan, as well as identifying how much money the business needs, how quickly they need it, and their preferred loan term length. Crucially, businesses should make sure that the loan would generate a return and contribute to the long-term growth of the business, rather than being a quick fix to a more deep-seated problem.

Some of the times when a business may consider a loan include: Launching a start-up Individuals looking to take the plunge and set up their own business, or those who have just started out, may want to consider a loan to get their business off the ground.

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BANKING

Although start-ups present more of a risk to lenders than an established business with years of history to prove their credibility, there are funding options specifically designed to support the growth of new businesses such as government schemes and national and local grants.

Expansion An already established business may want a loan to fund their expansion, whether that’s moving into new premises, growing their product range, or developing a particular side of their operations e.g. marketing. Again, businesses would need to have a set plan for the funding and how it would benefit them, beyond a vague desire for ‘growth’.

Acquire new equipment When a business develops, they may look to acquire new and more efficient equipment or machinery. There are specific loans businesses can get to help with this, called asset finance, with several different options depending on which agreement would best suit them.

For example, they could own the equipment and spread the cost over time, using a hire purchase agreement, or rent equipment through a leasing agreement. After the end of the leasing term, businesses will then often have the choice of continuing with that particular asset, returning it, or getting an upgraded piece of equipment with a new lease to better suit their current business situation.

Invest in staff As the workload of a business increases, they will probably look into expanding their team. Businesses, particularly very small start-ups, may struggle to do this with their own funds as taking on new staff requires an immediate supply of cash and the benefits of having a larger workforce won’t be felt straightaway. Ex26

panding your workforce is a long-term investment that will hopefully bring in extra revenue in the future, but in the meantime their wages still need to be paid, which is something a business loan can help with.

Cover expenses Businesses may look at a working capital loan to help finance their operations, such as paying bills. Especially if the business is relatively new and growing, their cashflow can be under pressure when they

them to get back on track and continue their development.

Release cash from assets There may be instances where an asset-rich business wants to release some funds to invest elsewhere in the company. There are several ways they can do this, depending on the type of business they have. For example, asset refinancing allows a business to ‘release’ cash they hold in buildings, equipment, or other possessions by taking out a loan secured against their value.

Alternatively, if a business has money tied up in unpaid invoices, they could look at invoice financing. This is where a business ‘sells’ an invoice to a financier so they can access the cash immediately.

However, businesses should bear in mind that the finance provider will take a cut of the value of each invoice.

Build up credit Taking out a loan doesn’t just help businesses with their current needs, it can also help them in the future by building up a credit history. If a business takes out a loan and makes all the repayments on time, this puts them in a stronger position if they want to apply for a more substantial loan in the future.

are waiting for customer payments to go through, so they may find managing their finances quite tight. Eventually, businesses should have enough of their own money to rely on for day-to-day operations, but before this happens, taking out a loan can help ensure they have enough available cash to work with.

A business loan can also help a business with unexpected expenses like emergency repairs and replacements. However, businesses should make sure that the extra money won’t be used to patch up deeper-rooted, long-term problems. It is important that businesses will be able to repay the loan and that the loan will help

Jason Tassie Director Knowyourmoney Source: 1 https://www.financederivative.com/only-13-of-businessesreceive-their-agreed-loan-from-the-bank/

2 https://www.knowyourmoney.co.uk/business/the-ultimatebusiness-loan-guide

3 https://www.startuploans.co.uk/ 4 https://www.thebalancesmb.com/what-is-working-capitalhow-to-get-a-working-capital-loan-398519

5 https://www.telegraph.co.uk/connect/small-business/ finance-and-funding/invoice-financing/

CORPORATE LOANS PACKAGE Capital supporting with maximum loans limit Cash-flow managing with optimized benefits Trade financing with diversified solutions

1900 5555 92

PVcomBank.com.vn

FINANCE

Choosing the Right

FINTECH PARTNER –A Guide for Financial Institutions

“As banks and other financial services firms look to improve their services and challenge increased competition from new innovative rivals in banking and investment, many are looking to establish partnerships with new fintech companies.�

In an age where data volumes, regulatory scrutiny and, above all, consumer expectations are growing, the ability of innovative new businesses to provide a very high-quality customer service at much lower fixed cost represents a major threat to the established players.

Established firms find it difficult to deliver

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the innovation they need to compete purely using inhouse resources. They typically have a complex legacy IT landscape to support with a very crowded change agenda. They therefore increasingly look to fintech providers to help them fight back and deliver a better customer experience, improved insights

and optimised business operations.

Fintech is a broad space and, within financial data management, we are primarily talking about streamlining data sourcing, mastering and integration

FINANCE

into internal and customer workflows.

This is about improving the access to data to support every other business function including customer analytics, behavioural insights, risk exposures and operational streamlining.

But, with so many fintech partners to select from, it’s easy to make the wrong choice. Here we outline some key tips financial institutions can follow to help ensure that they opt for a partner that is right for them.

Prevent lock-in The fintech space is very crowded and competitive. Given that, it is likely that many fintechs will not survive over the long-term, no matter how good their ideas are. So, while financial institutions should never be discouraged from benefitting from smart innovative advice delivered by a fintech, they should be wary of putting all their trust in a startup organisation where they are not 100% sure of their viability and long-term sustainability as a business. In other words, they should not go into a fullyfledged partnership, if they are not sure their target partner has the necessary longevity to support them over the longterm.

world of data management that would generally include expertise in financial data products. data management and data exploration.

of Oracle, Google, Amazon or AWS. Of course, alongside this there also has to be a support criteria in the service and agreed escalation levels, for example.

Ensure the fintech firm understands your business and can deliver on that understanding

Other areas you can look at include: the customer product, is it properly documented? Do they have a larger installed base? Is there a user group that regularly meets? Is there a customer community? You can consult other people. What is the ecosystem in the marketplace? There may be some of your peers that use the system and you can consult them.

Its important to ensure that any fintech partner, especially one delivering a managed services option both understands your business and will be able to translate what you want to get out of that service into meaningful KPIs and SLAs

Make sure they don’t lock you into a proprietary approach It is important that any proposed partner uses open source technologies.

Providers using a proprietary database or proprietary languages likely require a highly specialised skillset, probably only supplied by the vendor themselves, which you may have to pay for indefinitely.

Using open source databases makes it easier to get your own staff to work on the approach or hire third-party help. In addition, open source components tend to be widely supported and may be more future-proof. And as a business, you are immediately part of a wider community.

Look for specialist, complementary skills

De-risking the chosen method

It is important when opting for a fintech partner not to go too broad-based in terms of the skill-sets they have to offer. Opt for a partner that has proven specialist skills in the required area of expertise. That would typically include specialist knowledge of industry requirements or industry models. In the

It makes sense to opt for a provider that combines expertise in a particular market with a robust and reliable infrastructure.

In terms of managed services, it has become easier for smaller to mediumsized businesses to offer a de-risked approach because they are able to rely on the vast infrastructure resources

Positive Prospects Today, fintech partnerships are becoming increasingly attractive to many financial services organisations for a variety of reasons discussed earlier in this article.

But for firms in the financial services space, with the choice of partners wide and getting wider all the time, it can be difficult to make the right selection.

Financial institutions that follow the top tips outlined above should, however, be better placed to get it right.�

Martijn Groot VP Strategy Asset Control

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FINANCE

IT’S TIME

to end the payments price war

“

Price wars are clearly bad for business. Cutting costs to entice new customers may seem like a winning idea at the start but can quickly turn into a nightmare. As soon as competitors get a hint of what you are doing they will naturally start cutting their own prices, and in no time at all you are both fighting over scraps. As business and finance people we know this. It’s not rocket science. Yet time and again we fall into the trap, a perfect example of this is how payment providers acquire small business customers.

”

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The problem with price wars for payment providers is that they may end up with a lot of customers, but they also end up with high levels of churn. Ultimately with only price separating one payment provider from another, you simply end up being seen as nothing more than a utility something that is needed but never really thought about or valued.

This can be a serious problem for the long term health of a payment provider. With the cost of acquiring a new small business customer often being very expensive, losing and then replacing them is a huge financial burden. Over time, this build-up of churn and ever lower returns whittles down revenues and stunts growth.

The way out of this then is for payment providers to make themselves ‘sticky’ and ingrained more deeply into how a small business operates. To do this, the small business finance industry needs to work together to be seen as a true partner to the huge number of customers.

Becoming sticky The reality is however that becoming ‘sticky’ is great in principle but hard to do in practice. Nonetheless, it can be made easier through partnerships. Working with a fintech partner who knows how to leverage the data that payment providers already have on existing and potential customers, could be of great value. A partnership combining two specialist skills can create something of great use to both the customer and the brands working together. Data can often be a largely untapped resource for payment providers, due to the difficulties in knowing what to find and then how to use it. However, technology platforms can now take the heavy lifting out of this by identifying how much a small business customer generates and when their busy times are. Finding these key data points can be the start of developing a real valueadded service.

The next area to look at is where the

FINANCE

small business pain points are and how a fintech solution can help. However, one quick look and it is clear that area needs attention; funding. Funding is the most valuable services that can be offered to a small business. With the pressure of increased business rates, rising wages and delayed payments the need for extra funding has never been greater for the nearly 6 million small businesses in the UK. Add to this the difficulties in getting funding from a traditional bank means that just staying afloat can be a major challenge for even the most successful of small business. Such is the problem with the access to cash that in 2018 less than a quarter of small businesses felt credit was readily available.

The real meaning of value By offering funding products that meet and fit small business needs, payment providers can help small businesses cover funding gaps and invest in expansion plans. If those in the payment

sector can pull together to answer these bigger issues that small businesses are facing, then price won’t be the only thing that comes into the equation when a small business evaluates their providers.

Taking things a step further, fintech and payment providers can even analyse and use data to offer small business customers pre-approved funding. By knowing exactly when to notify small business owners - such as ahead of busy periods like Christmas - while also understanding what sort of level of funding might be needed, payment providers and their fintech partners can get ahead of the curve. Then the key is to make access to this vital service easy and seamless. In reality, access to funding should be as simple as a twoclick process with the money in accounts within hours.

ending the small business payment price war has never been easier. Offering quick and easy access to funding, payment providers can become more than just a service provider and actually achieve a status as a trusted partner. Not only does this increase customer loyalty, but also helps reduce churn and increase revenue.

Rob Straathof CEO Liberis Group Source: 1 https://fortune.com/2010/05/29/what-makes-apple-sosticky/

By partnering with an innovative fintech that understands small business needs, data and has the technology to help, 31

AUTOMATION AND FINANCIAL Close – a Smart Equation for Mitigating Risk We’re all familiar with the feeling we get at the end of a difficult task. We wonder if perhaps things would have been easier and quicker had we been more organised and started working on them earlier. But even with the best of intentions, smaller jobs end up getting in the way. Sooner or later we find ourselves faced with long hours of mind-numbing tasks that seem too tedious even to begin with.

In today’s fast-paced and rapidly expanding business world, accounting teams are laden with manual tasks that involve months-old emails, spreadsheets, note pads and many other documents. These all need to be collated into something that paints a clear picture of where the company’s finances are. In short, it’s a lot of hassle and unfortunately prone to human-errors, all of which can impact the business 32

negatively.

Mitigating risks that arise from finance is on every CFO’s agenda, and in this digital age relying on manual efforts is no longer enough to combat them. Automation is the order of the day and here’s why.

Getting and Staying Ahead The reality is that when it comes to the financial close process, finance departments are stuck in a rut with the same spreadsheet - based processes that they have been using for over10 years. But when time literally means money in today’s digital economy, wasting it is irresponsible and, some may argue, a breach of fiduciary duty.

There are a number of concerns teams struggle with when it comes to process-

ing company finances. The most glaring of these is the sheer volume of the task at hand.

Accountants are faced with a gargantuan task, as frequently as every month, which is likely to occupy almost all of their time and resources. This is a situation, where one just looks ahead, hoping to soon see the light at the end of the tunnel.

When you’re restricted by manual methods, you inevitably tend to spend a lot of your energy just clearing a long to-do list.

That precious time, which could otherwise be used to improve processes or on deeper analysis, is literally wasted.

Another concern, and this is a particularly risky one, is human error. We know that 79% of accounting teams are under pres-

FINANCE sure to complete a faster close process.

At the same time, it is a well-known fact that people under pressure are more likely to deliver work that is of poorer quality.

The pressures of an overly-manual financial close often results in errors, which then can quickly spiral into late delivery.

According to Companies House, 25,049 companies failed to file their accounts on time in 2018, with 223,640 late filing penalties handed out as a result. It goes without saying that there are better ways for companies to spend their resources than paying for penalties that are needlessly incurred.

There are, of course, hefty fines too for misrepresenting company finances. Misrepresentation can manifest in many ways, be it due to human error or a more serious failure to comply with regulations.

This is closely linked to yet another issue around financial close – transparency and visibility.

To achieve maximum visibility, accountants must go through a series of processes, including variance analysis to identify issues, which is a known frustration for accountants. Because it is such a laborious task, teams sometimes do this less frequently than they should. However, this then often means that organisations aren’t able to proactively address risks as they arise, and instead find themselves with a backlog to deal with at the end of the month.

This is already becoming exhausting just to think about. If we also factor in other elements of the CFO role, such as delivering company growth and expansion, it is very clear – the way we have been approaching financial close is not sustainable. We must adapt if we want to remain competitive.

Automation – the Fuel of Fintech When we are faced with industry challenges today, often the approach to solving them involves technology. But even though companies are wary of any transition period or disruption associated with

“forklift” upgrades, standing still has never been the answer to problems. Now CFO’s are looking to automation to mitigate the risks their company faces, and it’s not difficult to see why.

Robotic Process Automation (RPA) workflow solutions, and digital transformation more generally, are evolving the most time-consuming financial processes.

With the help of dedicated financial close software suites, such as Adra by Trintech, finance teams are able to access all of the information they need to complete the close process in the same place, at the same time. Here they can reconcile and centralise in a single, integrated digital workflow, using pre-set policies to guide them through the process. By utilising intelligent rules, which can read data in its raw form, and integrating existing enterprise resource planning (ERP) systems onto one platform, businesses can ensure no information is lost during extraction - stopping finance professionals from ping-ponging between different programs and spreadsheets. Once these automated processes are set up, finance teams are able to complete their tasks at a greater speed, accuracy and with more control, making the financial close much less of an ordeal.

Unlike manual processes, automation also enables CFOs to have a real-time overview of finances, making it easier to prioritise high-value accounts and close smaller accounts faster. Businesses can have visibility and access to data at the click of a mouse, which in turn can be used to better detect fraudulent activity or to manage business growth. For the Small to Medium-sized Businesses (SMB) that form up to 99.9% of the UK’s private

sector, where margins may be tighter than larger enterprises, RPA can be invaluable – keeping costs down and avoiding unnecessary spending.

The time and funds freed up through automation can also be redirected and invested into further streamlining business processes. By allocating them to value-added tasks, rather than tick-box exercises, businesses can get out on the front foot and proactively manage their growth and development.

By adapting manual processes, tools and strategy to be increasingly automated, organisations can save time, money and unlock productivity from finance teams previously chained to excel spreadsheets.

As more and more companies embark on their digital transformation journeys, it really is a matter of time before virtually everything is done through automation – however, those who embrace innovation earlier are more likely to reap the biggest rewards.

Lars Owe Nyland Managing Director Europe Trintech Source: 1 https://www.accountancydaily.co/companies-handed-223kpenalties-late-filing-accounts

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BUSINESS

What’s the real cost of a data breach for your business?

In recent months, the Information Commissioner’s Office in the UK has declared its intention to fine both British Airways and Marriott for failing to comply with the General Data Protection Regulation (GDPR).

In both cases, key personal data that could be used to identify individuals was made public. Aside from the financial cost to both companies, what’s the human cost of a data breach?

Think about it. When you’re choosing to make a purchase, whether to book a holiday, buy something or visit a particular restaurant, you have to trust that establishment with your personal data. You have to trust that they will not sell it on to third parties or handle it in a way that gives hackers access to your information. You have to trust that they will do their utmost to protect the data.

This is exactly what consumers think.

Reputational damage: This relationship, built upon mutual trust, is one that can be shattered in the case of a data breach. Let’s look at the case of TalkTalk which suffered a huge cyber attack back in 2015. This led to the organisation to lose over 90,000 customers who felt they no longer could trust the company with their personal data. The reputational damage that comes with this is important to consider too. A clear message is sent when an organisation suffers a data breach- that the organisation has been unable to safeguard and protect customer data.

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Trust: Whilst fines are one consequence, trust is a whole other which has the potential to have a massive effect on businesses.

And one of the costs of a data breach is a decline in trust. One of the ways to maintain trust is to admit when things go wrong and create a channel of communication with customers prior to a breach. This includes privacy policies in a simple language which show exactly what businesses do with the data they handle and who handles it. Think about it, how many board members have struggled to get to grips with GDPR? Why is it then expected for the average consumer to understand technical jargon? It is impractical to expect this so any information around privacy must be accessible to all consumers. To do this, organisation’s must invest in a Data Protection Officer who is able to draft such privacy notices and information for them, in a language you understand.

Dealing with the breach: Another cost that is underestimated is the cost of actually dealing with the data breach. As well as needing to report the breach within 72 hours in Europe, the actual time cost of resuming to usual business is one that many organisations are unprepared for. Redirecting staff from their day to day jobs when dealing with a data breach comes with an operational cost as well as a time cost. This inevitably has a knock on effect in terms of causing disruption to the everyday operation.

Often times, when I’m working with

clients to mitigate risk and ensure they have robust data protection systems in place, the conversation centres around the fines that companies which are failing to comply with the GDPR are at risk of. But rarely is the cost of trust discussed. Yet, when we include this in the conversation, it is clear that data breaches have an effect that is much further reaching than just fines. Furthermore, reputational damage is something which is hard to overcome and just hiring a PR firm will not cut it! I always advise my clients to create that channel of communication from day one to ensure that trust is built into the user experience and so that in the case of data breach, that channel of communication can be best utilised.

Whilst both British Airways and Marriott now have fines to deal with, the real cost of trust will also be felt by both companies as savvy consumers are making active choices about which organisation’s they would like to share their personal data.

This is something that all companies should be facing up to and prioritising in their data protection activities.

Jamal Ahmed Founder Kazient Privacy Experts

TECHNOLOGY

INNOVATION must continue to be a key priority for FS firms

Banks must innovate for tomorrow as well as continuing to innovate for today.

How can they get the balance right – Wazoku’s Simon Hill looks at the challenges ahead.

The last decade has been one of great innovation in Financial Services (FS).

The emergence of new technologies has made it easier for newer and more agile providers to enter FS, coming up with faster, better and more efficient ways of doing things than traditional providers.

By applying a more innovative approach to familiar tasks such emerging companies have even created new products and services entirely. Other consumer-facing brands such as supermarkets and ISPs have also begun offering financial services, which has led to banks and other FS providers improving their own approach to innovation.

But in a rapidly changing market, it’s vital for FS firms to innovate for tomorrow as well as today. How should they best approach this?

Why innovation is important FS is not usually regarded as among the more innovative sectors. In many countries around the world, the banking market has for a long time been dominated by just a few firms. This lack of competition meant consumers and businesses alike lacked choice if they were unhappy with the service they were getting, and it often felt like changing banks was more hassle than it was worth.

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But as FinTech start-ups began to emerge, providing services that were cheaper, more flexible, quicker and more innovative, the entire market changed. Banks could no longer rely on customer inertia to retain business and meant they had to become more innovative themselves if they wanted to remain relevant.

By and large they achieved this. FS firms knew they had to offer better products and services and realised that turning to the crowd was a highly effective way of doing this. By canvassing the thoughts and insight of a range of stakeholders employees, customers, partners, local communities and more – and providing them with a platform to submit, discuss and develop ideas, banks gradually become more innovative.

But while innovating for today remains very important, the future is equally so.

The need for future innovation FS is a rapidly changing and evolving sector, with new market entrants all the time, so established firms must remain vigilant to the need for a more innovative approach.

Lehman Brothers is frequently cited as an example of a company that didn’t innovate for tomorrow and suffered the ultimate consequence. That’s true, but an overlooked element in its demise is that just a few years before it crashed, the firm had some of its best financial figures ever.

When the end comes for a tired and jaded

business, it can come quickly. Similarly, powerful new organisations can emerge into FS. When Metro Bank received its full UK banking license in 2010, it was the first one to do so in a century – since then there have been another eight at least.

Furthermore, there have been persistent rumours of Amazon and other BigTech firms entering the FS market. If one of these companies, with their focus on innovation and customer experience could bring those qualities to FS, then the potential impact on the market would be huge.

This all means that FS firms must develop day-to-day and incremental innovations but also make provision for bigger and more transformative ideas to take shape. This comes down to changing the business structure to ensure that innovation is front of mind in everything the organisation does.

Embracing innovation There are several measures that FS firms must consider in order to innovate for tomorrow. These include: the right method to manage ideas; a broader group of stakeholders from which to crowdsource ideas; encouragement for people to engage and collaborate; a genuine commitment at a senior level to cultivate and support innovation; and the overall establishment of a culture that truly embraces innovation.

It’s this final measure that is most important. A bank could have many of the

TECHNOLOGY

systems in place to facilitate a more innovative approach but if the company is not brave enough to implement some of the bigger and more ambitious ideas, then there is little point in putting a system in place that unearths them.

Innovating for tomorrow isn’t necessarily about finding the most game-changing idea ever, but in making sure that the business is ready to discover it. Big picture ideas are often presented as coming to someone in a spark of inspiration, but this is rarely the case. In fact, it’s usually the culmination of previous discussions, ideas and older innovation that combine to provide the bigger idea.

To reach that stage a bank needs to have had a long-term commitment to innovation. They must be agile and more experimental, and steer what the future organisation will look like. Innovation must be firmly aligned with the overall strategic direction of the business. Doing this will provide banks with more long-term sustainability and mean they are truly future-ready.

Simon Hill CEO and Founder Wazoku 37

TRADING

STOCK EXCHANGES? In the last year, questions have been raised over the future of traditional brokers and other intermediaries in stock exchanges. Many people have claimed that the once vital middle-man is slowly becoming less important in the securities value chain. This debate was ignited after ‘star fund manager’ Neil Woodford froze his fund when investors threatened to withdraw following a bout of poor performance.

Six Group, who operate the Swiss Stock Exchange, sought to explore how technology is impacting the rapidly changing stock exchange environment.

Their white paper analyses the different factors which alter the operation of exchanges and seeks to predict what the landscape will look like in the next five to ten years. These factors range from sustainability, the cloud and the sharing economy, to unbundling, protectionism and data protection.

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When looking to the future, the most likely outcome is that a stock ‘listing’ will still be a marker of its quality. However, as digitalised assets continue to grow the role of intermediaries will come increasingly under pressure. This is because labour-intensive jobs will be replaced by new and more economically viable automated technologies. Automation in the production of legal documents, accounting standards and due diligence is slowly reducing the need for human intervention.

This scenario will make for the improvement of diversity in digital assets as global tech companies set up issuing venues to generate more activity in their ecosystems. The greater range of digital platforms being offered, and their uptake, means securities will become more directly accessible, and the need for intermediaries to be involved in the buying and selling of stocks will decrease.

Crypto assets have great potential for diversification and so will maintain some popularity, yet it is unlikely that permissionless distributed ledger (DLT) and crypto assets will ever be dominant on the exchanges. This is because

TRADING

investors are now increasingly aware that the conditions needed for permissionless DLTs to be dominant are not reflected in the current market environment, thus making them far less popular. In contrast, the likelihood of cyber-attacks has grown as their operations have reached new levels of sophistication. Executing computation through quantum-mechanical phenomena including superposition and entanglement has possibly become a norm.

An alternative scenario is that “listing� would no longer be regarded by investors as an indication of quality, and financial investments which are not listed will be more common. Popular listing venues may be replaced by open-issuing markets as investors are over-served in protection but under-served in stock choice.

These marketplaces could operate as direct-access platforms, allowing financial products to be issued with third parties services offered through the same platform. These platforms would interrupt the traditional intermediary roles, further

supporting the move away from their use and necessity, leading platforms to adapt existing services instead.

of domestic venture capital will have adverse effects on FMI provider opportunities in smaller Western countries.

As open issuing markets grow in popularity, firms and individuals have transitioned away from traditional listings, listing venues and closed listing venues.

This transition will generate a move from primary and secondary markets to digital platforms which enable a direct line of access to investors and issuers. A seen in the first scenario, these could be backed by global tech firms to further boost their own activity.

The future of the securities value chain remains uncertain. As platforms become easier to access, the role of the middle man is a common point of contention. To guarantee their role in stock trading over the next 10 years, platforms may have to evolve the types of services they offer to account for new technologies which are coming to the market. This evolution, however, will be insignificant if intermediaries are not able to prove their necessity.

The white paper forecasts that it would be unlikely for issuers, investors and corporations to reduce their digital exposure after considering the costs and benefits of digitisation. By adding human elements to their value chains and isolating certain systems form the internet, FMI providers have only selective automation in their processes. This is a case of widespread protectionism and leads to a hostile domestic business environment. The lack

Daniel Dahinden Head of Innovation & Digital SIX 39

BUSINESS

THE KEY STRATEGIES THAT ENSURE LASTING BUSINESS GROWTH According to conventional wisdom 90% of start-ups fail, while only around 10% that scale-up survive long enough to make any kind of impression on the market. To prosper in such a competitive environment, start-ups and SMEs therefore need an understanding of what it means to scale their business from the get go; they need to have a well thought out growth strategy.

This is the process put in place aimed at enabling a company to scale in an effective and realistic manner. While in the past growth strategies tended to focus on gaining long-term market share rather than short-term profits, intensive growth strategies which aim to help companies scale more speedily are growing in popularity in today’s fast-changing market.

Working with SMEs of all sizes, at different stages of their growth journey, and as an SME which is going through a growth process ourselves, we like to think we have a good handle on the most effective growth strategies. As such, we’ve identified the key strategies we believe 40

are the most effective at building lasting business growth.

Market Penetration This strategy is low-risk but resource-heavy. The idea is pretty simple, if you’re a bricks and mortar business, just sell more items. If you’re digital based, sell more services. Market penetration tactics can include introducing an existing customer base which already has a familiar relationship with a product or service. For example, a customer who regularly buys an item packaged in a “pack of four” can relatively easily be persuaded to buy a “pack of six” of that item instead. A customer that signs up digitally to receive cover against malware attacks is likely to upgrade their plan to include phishing as well.

A product with multiple uses is also handy for market penetration tactics, as it gives greater justification for upselling, and for customers, a greater motivation

to buy. A good example of this would be a business that specialises in selling materials for making household appliances.

These could be re-moulded or re-shaped for other industries to widen distribution and increase sales. Alternatively, seeking new audiences by creating a variation of your existing product or service, which specifically meets their criteria can also work.

Diversification of products and services The basic premise of product and service diversification is that businesses create new and diversify their existing ones. Sticking within the ballpark of an original area of expertise is advisable at this stage, it certainly wouldn’t be wise for a digital streaming business to start selling groceries.

However, as long as you are demonstrably within your area of expertise, there is no reason why a business can’t develop and diversify existing services and

BUSINESS

products to grab a greater share of the market. For example, a data processor, managing large amounts of information, could see huge benefit from diversifying into selling data insight in the format of a report. As long as all regulations and legal obligations are followed.

Market Development If businesses prefer to concentrate more on the market than on developing their product and service offerings, market development may be the best way forward.

A market development strategy involves expanding services into new geographical markets, whether in the same country or globally.

Market Development is a popular strategy for urban businesses, as a plethora of markets are easily accessed within these areas. However, the success of any market development strategy is dependent upon how well a business can get products and services to that market and then engage with consumers once there.

For digital businesses, that are not restricted to the physical boundaries, a strong market development strategy requires an understanding of the cultural differences of each geographical region.

This may require the content, or layout of a website to be optimised in a different way, to better appeal to consumers. Products may also need to differ. It wouldn’t make sense to focus on selling

car insurance in an area that favours other modes of transport for example.

Businesses must think carefully about the logistics, risks and regulation before marketing to audiences hundreds of miles (physically and ideologically!) from where they are currently based. An example could include a digital business involved in handling data or managing risk. Laws and regulations are likely to differ greatly cross-border, this means that the business needs to have a strategy in place to be able to develop their presence while meeting all these differing criteria.

Channel Diversification Channel diversification is all about reach41

BUSINESS

ing potential customers in different ways. Swathes of new customers might be hanging out on channels a business hasn’t yet touched, so channel diversification is a great way of making sure that a company is really reaching its full potential audience.

If a business operates purely via bricks and mortar, they could channel-diversify by adding an online element and posting products out to internet customers.

Or, if they’re used to marketing products over social media, consider diversifying through search marketing for example.

No one size fits all approach Most good growth strategies will involve elements of several (if not all) of the aforementioned points. Some businesses will even have their own industry-specific ideas to maximise too. It’s vitally important that a growth strategy doesn’t

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follow a particular formula, more that it is tailored to suit the end goals of each individual business. The important thing is for a business to understand what it wants to achieve, and develop a deep understanding of their target audience to have a well-researched plan in place.

Risk Management To coincide with these growth strategies, businesses must also implement a risk management strategy that can scale as the company grows.

Creating a business risk management plan helps to clarify what is and is not an acceptable risk for the business on an ethical, legal, and financial basis. Not only that, but it also enables businesses to put plans in place to minimise the impact if the worst does happen.

It’s important that as many risks as pos-

sible are identified. These must range from cyber security through to manager and employee liability. It’s important that all bases should be covered – think of technical, legal, logistical, physical, emotional, criminal, natural, and any other kind of risk which may apply.

Once agreed, businesses must then partner with the right insurance provider that can provider cover against these. Giving peace of mind that operations are under control and freeing up valuable time and resources to focus on other areas of the business.

Mai Fenton, VP Marketing Digital Risk

FINANCE

How data is making the finan ce team key BUSINESS INNOVATORS

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FINANCE

How data is making the finance team key

BUSINESS INNOVATORS Data has irreversibly changed, and will continue to change, the business world.

Data is now a key component of almost every business strategy and its use is ensuring that job roles are continuing to evolve at a rapid pace – none more so than the finance team.

This focus on data has meant that the finance team has moved away from just being interested in the bottom line and is quickly becoming a force for innovation in the workplace. This shift is most pronounced in the role of the Chief Financial Officer, who has moved from the controller of the company’s finances, to the CEO’s right hand man. In the last decade, the role has become unrecognisable.

But why has this changed occured, and why are the CFO and the wider finance team becoming a critical component to a company’s success?

Finance – a testbed for innovation Heads of Finance hold a unique position within an organisation – being one of the rare few employees that have access to data across a whole company. More strict compliance laws have resulted in different business units, even within one company, blocking access to their own individual datasets behind walls. This limits the number of people that have true oversight across all data and processes – and is why the CFO is becoming a key player.

They are also having to deal with rapid

technological change, the rise of emerging markets, uncertain economic markets and tighter regulations. As the CFO’s influence has grown, increasingly they must not only manage disruption, but to also to identify new business models and lead the path to sustainable, profitable growth.

Forward-thinking CFOs have been using technology to ensure they can make the best use of business information and get strategic insights from their learnings.

For example, many successful finance teams are transitioning to a unified cloud infrastructure that combines the options and capabilities of on-premise, private and public cloud technology across the entire business. Doing so gives the CFO greater levels of flexibility and agility, and, crucially, it also helps to make the organisation’s data more accessible and manageable. The finance team are then able to make use of enterprise resource planning and management (ERPM) solutions with embedded artificial intelligence (AI) to streamline processes and gather greater insight.

This innovation within the finance department is key to success, enabling companies to quickly adapt to new business models and free up staff time while giving the C-suite a clear view of the valuable data it holds.

A strategic advisor to the board Creating a hotbed of innovation in the finance team and having an overarching

view of a company’s data ensures that the CFO is quickly becoming a strategic advisor to the board. This strategic importance also ensures they can help spur innovation across the company. They have the freedom to encourage greater integration and alignment between departments. Using the latest financial and analytics technologies to gain a view of each department’s performance, the CFO can become the orchestrator of organisational change. This will put them in an ideal position to ensure Line of Business strategies are in sync with the organisation’s larger ambitions – and to keep a close eye on the bottom line while doing so.

Now more than ever, organisations need to be as efficient as possible with their time to ensure that the C-Suite – and the CFO in particular – have the time to focus on value-driven work. Organisations should be employing forward-thinking leaders that can strategise and plan effectively to deliver business results. With innovation at the forefront of business in the new digital economy, turning the finance team and the CFO into a team of innovators is the perfect place to start.

Debbie Green VP of Applications Oracle 45

INSURANCE

DISRUPTION IN THE I

HOW ARTIFICIAL INTELLIGENCE IS MAKIN Artificial intelligence is making significant inroads into our everyday lives, moving from fiction to reality over the last few years. From smart cars and drones to automated personal assistants and business forecasting, AI is not only transforming how we live our lives, it is also having an increasing impact on the business world and the way in which it operates.

Consumers now have high expectations for quick technological processes to facilitate nearly all areas of their lives.

Whether it’s doing their weekly food shop or making an insurance claim, most consumers expect a digitally slick process somewhere along the line.

Crucially, the majority want a choice in how they communicate with service providers, as well as 24/7 availability to measure up to fast-paced living.

Businesses are increasingly turning to artificial intelligence (AI) to help meet this demand, and the insurance industry is following suit. With new deep learning techniques being uncovered and developed, AI has considerable potential to mimic humans in terms of perception, learning and reasoning. The insurance sector can hugely benefit from the services AI can offer, namely improved customer service and enhanced decision making based on customer insights.

Virtual Agents There are numerous ways AI can boost customer satisfaction within a business, and one of the most promising forms for the insurance industry is the AI enhanced chatbots that act as virtual agents.

In an ideal world, every customer would receive a tailored insurance policy.

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However, delivering this optimum level of customer service proves difficult in the face of huge numbers of enquiries, most with complicated and time-consuming demands. Using virtual agents can help to optimise this process as businesses can increase response time whilst helping employees manage their demands more efficiently.

The capabilities of virtual agents have seen incredible development in the last decade. For example, new levels of customisation allow companies to align their virtual agent precisely with their brand’s identity. In some cases, this can include conversations imitating the tone of voice used in the firm’s other communications.

Some doubt the ability of technology to recreate human emotion and sentiment.

However, virtual agents are always helpful and friendly, and cancel out the risk that customers will face problems from employee illness or unpredictable situations. They are a constant source of information, and are available 24 hours a day, 7 days a week, 365 days of the year.

In theory, the customer service that AI enhanced virtual agents can provide in some cases, is unbeatable.

Even better, AI can be intertwined into numerous processes. Not only can it benefit customer service operations, it can minimise the need for human interaction in the first place. Soon, the customer may be able to research and even purchase a complete policy without the need for human interaction at all.

And because AI can personalise every customer interaction, the personal and human-like touch remains.

‘Insurtech’ bonuses for businesses

INSURANCE

INSURANCE SECTOR:

NG WAVES IN THE WAYS WE MEASURE RISK There are strong incentives for businesses to adopt AI, especially those who are early to the table. A huge percentage of customer service agents’ time is spent dealing with repetitive inbound customer enquiries which results in hours of direct customer interaction being lost and not replaced. However, if AI can deal with run-of-the-mill enquiries, employees will have the time to deliver quality advice to consumers. Businesses can therefore focus their resources on the activities that matter the most and need both time and human expertise.

Customer service is of utmost importance in today’s competitive market. Customers are not only looking for the best prices amongst insurers, they also expect a good purchasing experience. Virtual agents have constant learning capabilities, so the service they provide to customers will be increasingly optimised with the more information that is fed to them. By monitoring every conversation, businesses are also able to follow and analyse the quality of customer service, and from this, they can also gauge how the customer is feeling at the end of the conversation.

Additionally, insurers will be able to analyse customer wants and needs at unprecedently high levels. Virtual agents are even capable of identifying opportunities to upsell and cross-sell which can lead to companies being able to identify new on new sales leads.

The fact that virtual agents are able to assess every customer’s unique set of demands and needs even before they have interacted with staff means that firms are able to create clear, tailored customer profiles. Wholesale changes can also be made through gaining insight

into the most popular policies, as well as the conditions and requirements that are most valued by the customer.

AI and upskilling The potential of AI is undoubtedly huge for the insurance industry. Currently, the most valuable function is its ability to take on routine, run-of-the-mill tasks, which take up employees’ time. The data that is stored through virtual agents can allow for the automation of certain process and provide invaluable insight. Employees will undoubtedly remain at the core of the insurance industry. We have not reached the point yet where virtual agents are able to use intuition to provide brilliant ideas and fully understand human sentiment.

However, having simple routine tasks such as providing quotes and answering basic customer queries passed onto virtual agents can be transformative for customer satisfaction.

In the long run, the insurance industry will fall behind if they fail to seriously consider AI adoption. Its potential could go as far as revolutionise the industry and the service that insurers provide to their customers. In our increasingly digitally focused age, those who dive deeply into exploring AI are very likely to reap the rewards.

Dr. Gege Gatt CEO AI firm EBO.ai 47

United Kingdom China

H Hong Kong

India Thailand

Japan (soon)

Taiwan Philippines

Vietnam

Malaysia Singapore

Indonesia

Australia

PCi

TRADING

HOW DIGITISED TRADE DOCUMENTS CAN DRIVE THE UK’S SME EXPORTS With Britain’s departure from the EU still stealing lots of headlines, export and trade are understandably high on the business agenda. Exporting accounts for a huge part of the UK’s economy, and while more and more SMEs are involved, barriers remain. Political uncertainty is partly to blame, but the real barrier is that aspiring small and medium sized businesses have faced for years - the amount of time it takes to process exports and get paid.

Figures published by the Office of National Statistics in 2018 showed the number of SMEs exporting goods abroad increased by 6.6 per cent to 232,000. That means almost 10 per cent of all SMEs in the UK are exporting of goods. While on the surface this may seem like encouraging news, the rate isn’t growing as fast as it could be, largely due to the arduous paperwork and its impact on the transferring of funds.

This paperwork is more than a few forms and checkboxes. It often requires businesses to courier documents around the world, storing them and amending them as required. Not only does this take precious time, it also leaves important documentation vulnerable to fraud and forgery - particularly when exploring new markets.

The transformative impact of electronic bills of lading The UK has been quite slow on the uptake when it comes to embracing electronic versions of crucial trade documents like bills of lading. A bill of lading is effectively a receipt from the carrier for the goods, the contract for carriage, and the document that entitles the rightful

holder to claim delivery of the cargo. But why in 2019 is the bill of lading still part of the ‘paperwork’ that so many growing businesses have to put up with? In a modern, export-oriented economy, the time it takes to sort out these transactional documents should be measured in minutes and hours, not days and weeks.

This is precisely what electronic bills of lading (or eBLs) can do, without any legal compromise. The eBL is as legally airtight as its paper counterpart, with the huge bonus of being authenticated and exchanged digitally and securely.

Banks will also stand to benefit from digitised documents Not only does digitisation allow exporters to be paid faster, it also generates much more confidence and interest among trade and banking networks. The ability to encrypt and exchange documents across platforms underpinned by a recognised body of jurisprudence makes everything flow much faster, and any amendments to paperwork can be automatically logged in an audit trail.

This allows banks to have round-theclock, real-time visibility of documents so they can better calculate the risks of providing working capital. They can glean information about ownership of certain cargo at any time - something which simply isn’t possible when the paperwork is hidden away in a courier’s pouch between destinations.

growth, businesses need to adapt to the use of digitised trade documents in order to align themselves with their foreign counterparts and reduce border friction. The Far East, for example, is racing ahead with digitisation and leaving countries like the UK behind.

While conservatism is certainly an issue here, the technology and platforms are readily available and waiting to be adopted. If more banks and exporters move to use the technology, we’ll begin to see change sweep through the SME sector and its banks. Lack of awareness is also a challenge, with many exporters not appreciating the full range of trade services available from banks, instead falling back on loans and overdrafts to conduct their business.

Years from now we may find ourselves in a completely digital trade environment, where letters of credit or open account trading are a thing of the past. This would make transactions slick and quick and completely transform risk protection. It’s something we should all be striving for, and businesses can take the first step today by asking that their banks offer them all the advantages today’s digital trade documents bring. The technology is there; we just have to embrace it.

Adam Kasraoui Bolero International

Alleviating friction at borders and ports The UK’s export market is healthy and growing, but in order to facilitate that

Source: 1 https://www.gov.uk/government/news/236000-ukbusinesses-making-the-most-of-overseas-opportunities

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FINANCE

HOW CONNECTED REPORTING IS REVOLUTIONISING FINANCIAL SERVICES BY ELIMINATING RISK Technological advancement has played a huge role in improving how we report across financial services. With traditional reporting, we were forced to rely on paper-based, manual processes that drained time, resource, and money, but with technology, companies are now more efficiently streamlining processes to handle large amounts of data with little to no manual effort.

Despite the promise of digitisation, many organisations continue to be limited by old, outdated processes and systems.

Often times, this is due to lack of capacity within IT teams to adopt and manage new software, but it can also be attributed to preference for familiarity. Many favour what they know over what may – or may not, depending on your outlook – improve business operations.

What has become clear is that with some organisations using legacy systems and others going digital, financial reporting has become an inconstant, fragmented hodgepodge ultimately leading to an increase in errors, fines, and potential reputational damage. With the risk so high and the margin for error so low, how

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companies report has now become a top concern across many large organisations.

Shred-It recently found that 53% of C-suite executives and 28% of small business owners found human error or accidental loss by an outside party to be the leading causes of data breaches.

Correcting a single error across spreadsheets, presentations, and reports is a complex and labour intensive process. To do this and ensure 100% accuracy, organisations now waste significant resources in terms of costs and employee support, and even then there is no guarantee that the report will be flawless. Rather, the inconsistencies and risks associated with manual processes are further driving the need for financial digital transformation, globally.

We’ve accepted interconnectivity into our everyday lives, whether it’s connected cars, homes, or devices, and yet despite this, many organisations still refuse to acknowledge the opportunities that streamlining reporting processes hold.

Through using automation to link values (quantitative or qualitative) across multiple reports, organisations will

minimise misreporting risks, save money, and improve consistency for future use.

In addition to streamlining reporting, an overhaul of a legacy system with an end-to-end solution can also streamline the process of document consolidation, production, review, and approval. This makes the process of financial reporting painless and efficient. More broadly, automation can improve upon: Contextualising Data - According to EY, roughly 75% of companies rely on six or more types of reporting systems (like ERP, CRM, and HCM systems). However, as soon as data within these systems is exported and moved to a non-compatible platform, it loses all context and opens itself up to inconsistencies. With connected reporting, people, processes, and data are unified to deliver accurate, contextualised reports for internal and external use.

Improving Collaboration – Because outdated processes come up short, companies end up relying on cumbersome manual processes, large teams, thirdparty consultants, and a variety of single-

FINANCE point solutions. And with so many points in the process, it’s often difficult to know which the most recent version of a given document is. This is particularly the case for companies working across time zones – here’s where automation can help.

Automation ensures accuracy across document versions regardless of time, location or language, and can improve collaboration for fast, reliable reporting.

Referencing Reports – An ongoing and commonplace challenge across financial reporting is the growth and complexity of companies. As companies grow, there an increasing number of employees and data points spread across the world. This data is then spread across hundreds of different sources and stored in incompatible formats, which makes managing processes exponentially harder. However, by creating a single

source of truth – a live working document from which employees can feed into in tandem – businesses can trust that all documents, presentations, and reports are up-to-date, accurate, and consistent, reducing the associated risks.

Relying on IT - Until recently, integrating a new financial reporting or risk management system into a business has meant the IT team has had to be there each step of the way – from installation and management to repairs and upgrades. Cloud-based technologies have since eliminated the need for IT teams to spend their time manually managing and upgrading software patches and updates, as cloud systems automatically update in the background, enabling IT to spend time focusing on other priorities, and teams to work without interruption.

As volumes of data and the accompanying regulations increase in the coming years, organisations will be forced to prioritise transparency, efficiency, and auditability when completing their filings, audits, and reports. If they want to survive, they’ll need to meet these challenges head on with future proof, cloud-based solutions to modernise processes, control and encourage collaboration, and secure access in an integrated environment.

Dermot Murray GM of EMEA Workiva Source: 1 https://www.prnewswire.com/news-releases/shred-it-studyfinds-us-business-information-security-plagued-by-humanerror-insider-threats-and-deliberate-sabotage-300867827. html

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TECHNOLOGY

Financial Services leading on ‘Voice First’ technology strategy, but there is work to be done

Richard Stevenson CEO Red Box

Today, voice is a critical data set for the digital transformation of the enterprise.

It holds much more value than any other means of communication because it conveys context, sentiment, intent, emotion and actions, providing real intelligence and driving valuable business outcomes.

Indeed, our research* shows that a majority (83%) of CIOs and IT functions in the financial services sector believe that a ‘Voice First’ strategy will be in place within five years, showing a clear shift towards recognising the value of the spoken word.

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The reality today in this industry is that, on average, just over half (58%) of organisation-wide conversations are being captured, suggesting limitations with current call recording solutions and set up. Furthermore, 86% of organisations in the financial sector stated that an open API approach is pivotal to their voice strategies enabling them to feed voice data into tools and applications of their choice (such as CRM, compliance, business intelligence, AI and analytics tools, or even custom-built applications) and crucially not tying them to one provider.

Yet only 10% of those surveyed say their voice data is easily accessible for fuelling AI engines and analytics, so data sovereignty also appears to be an issue.

The financial services industry is one of those leading the charge with regards to technological know-how and looking to AI to help drive transformation and differentiation. As AI platforms mature and consume more and more data, their capabilities will deliver on personalisation for users which will unlock new levels of value for their financial journey. However, this industry, often at the forefront of embracing technological change, still has a long way to go regarding its use of voice data. For example, despite customer experience being identified as the top AI use case to be enhanced by voice data, 35% admit they are not using AI for customer services at all. This figure is surprisingly high, given that organisations are trying to ensure they are doing what they can in

TECHNOLOGY

a competitive market still marred by bad PR in a hangover from the financial crisis of 2007.

In addition, as an industry, increasing legislation and demands for compliance have driven a necessity to be as technologically savvy as possible. Various legislation was introduced into the financial services sector in 2018, including MiFID II and GDPR, which sees financial firms having to record all interactions with customers. These regulations were introduced, in part, as a result of the financial crisis a decade ago. Initially, new measures were brought in to shore up and strengthen the foundations of the financial system. A light was then shone

on the conduct of the financial services sector as a whole, with new laws introduced to heighten personal accountability in relation to risk-taking and included a revision of remuneration packages and incentive arrangements that benefited a longer-term view of success.

Yet nearly half of financial service firms (47%) cite they are currently unprepared for future legislation, despite having a host of technological tools to help them.

Not only is a lack of knowledge an issue, but the cost of complying is vast. According to estimates by consultancy firm Opimas, MiFID II will cost the finance industry more than €2.5bn to implement,

with the largest banks expected to spend more than €40m each on compliance.

The idea of a ‘Voice First’ enterprise is clearly in the line of sight of the majority of CIOs in the near future, yet few of those that already capture voice data are exploiting its full potential. There is an opportunity to derive real competitive advantage by turning voice data into knowledge to serve customers in the most personalised way. *Survey conducted by Sapio Research for Red Box, asking 588 IT Directors or C-level executives responsible for IT across UK, US and Singapore 53

FINANCE

Delivering SCA in the

TRAVEL INDUSTRY When the European Banking Authority delayed the final implementation date of the Strong Customer Authentication requirements, executives across a variety of industries no doubt let out sighs, both of relief and frustration. Preparing for SCA has been no easy feat and industries such as travel were identified by the European Association of Payment Services Providers to Merchants as ones which, if SCA were to be implemented on the proposed date of September 14th, would suffer from increased decline rates. But why is it that SCA is so difficult to facilitate in the travel industry?

SCA mandates two-factor authentication (or 2FA), for confirming the identity of card holders in online transactions.

With 2FA, these payers must prove that they are who they claim to be by presenting, when prompted during the transaction, two of the following: - Something they know, such as a password or PIN - Something they are, such as biometric data - Something they have, such as a specific device Although the act of confirming identity before any money is moved increases security and starkly reduces the risk of fraud, it makes the payment process slightly more onerous. In industries like travel, where the payments process already comprises of layers of complexity, there are special circumstances that all players need to take into account.

Travel is often booked in advance Many prudent customers book their travel far in advance in order to benefit from lower prices. However, when it comes to Merchant Initiated Transactions (MIT), where a merchant ultimately takes payment from a card, we can run into difficulties with 2FA. MITs can be exempt from SCA but 2FA 54

must be undertaken for the initial payment that the merchant takes, usually when the holiday itself is booked. If the merchant needs to take subsequent payments, perhaps money spent on the hotel room’s mini-bar, the authorisation period will have lapsed (which is typically 90 days). The industry must find a way to conveniently enable SCA for these lower value MITs which have traditionally been taken for granted.

A lot of travel is sold indirectly In 2019, the preferred method for booking a holiday may have been through a general holiday booking website (44%), but a similar percentage is sold indirectly through online, traditional, and business travel agents (39%) . Therefore, quite often these days the traveller isn’t actually present when a payment is made.

So, when an SCA request is triggered and the end traveller that is required for authentication isn’t available to respond, clear processes are needed to ensure issuers know when the secure corporate payment exemption can be invoked.

Passing contextual information to issuers can be complex Many indirect bookings are considered Mail Order Telephone Order (MOTO) and therefore are exempt from SCA. This simplifies the issue for current merchants, but the industry will have to keep a watchful eye over this as in the future, regulators may decide to make classifications more specific. Additionally, for issuers to apply this exemption, rich data sets are needed by players at all stages of the payments process which would necessitate a set of new messaging standards to be implemented in travel distribution, something we are working hard on at Amadeus alongside the wider industry.

FINANCE

The location of participants is not always clear Although SCA only applies when both the acquirer and issuer are based in the EEA, it isn’t always possible to confirm this.

This is because the travel agent or travel technology provider authenticates the transaction but cannot ‘see’ the origin of the merchant’s acquirer. At Amadeus, we’ve taken steps to ensure that we can identify the merchant’s location for use by issuers when deciding whether SCA should apply but ideally, the entire industry needs to be ready before PSD2 can completely roll out.

2020 is the year SCA must be delivered.

We will need to see rapid adoption of new technology such as the 3D Secure 2.X protocol. Equally important though is collaboration amongst schemes, issuers, acquirers, travel retailers, distributors and their technology partners – we’re not going to deliver SCA from our respective silos. This is particularly relevant considering that the most complex travel scenarios (e.g. multi-merchant, distribution, hotels, use of corporates cards) still require a lot of thinking,

standardisation and development, all while the clock is ticking. Payments is definitely a team effort.

Jean-Christophe Lacour Head of Merchant Services, Payments Amadeus Source: 1 https://www.mobilepaymentstoday.com/news/europeanpayments-industry-group-seeks-additional-extension-onpsd2-sca/

2 https://www.abta.com/system/files/media/uploads/ ABTA%20Holiday%20Habits%20Report%202019.pdf

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TRADING

AS VOLATILITY STAGNATES, FOREX BROKERS NEED TO BECOME MORE CREATIVE TO FULFIL TRADERS’ NEEDS

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If the equities markets currently look calm, they don’t hold a candle to the foreign exchange markets, where volatility is at its lowest point in years. Traders are currently faced with less speculative activity, low interest rates and lower volatility in growth and inflation, making it incredibly difficult to achieve returns for their clients.

However, while the causes are understood, how long this period will last remains uncertain.

If we subscribe to the “low volatility begets low volatility” theory, then we could easily see a return to the 1990s environment.

For those in the forex space, this paints a worrying picture. If volatility doesn’t improve, opportunities for traders to take advantage of currency movements could become fewer and further between.

Adapt or die Faced with a potentially bleak future for forex, traders can’t rely on go-to methods to achieve returns. They’re having to get creative, and are expecting their brokers to keep pace.

One tactic has been to turn to the world of crypto, with the market tripling in size in the past year. We’ve already seen some big moves from institutions to provide offerings around crypto. Take Fidelity for example, which created its cryptocurrency platform Fidelity Digital Assets in October 2018 to offer crypto storage and trading solutions for institutional clients. Not only is the platform up and running, but it has also just applied for a New York trust licence, joining the likes of ICE’s pending crypto platform, Bakkt, which has also applied for the same license to be a qualified custodian to store the bitcoin underpinning its futures contract.

We’re also seeing moves towards more sophisticated crypto trading strategies.

Traders are looking at ways to profit from downwards price movements through short selling. The most popular instruments for doing so are futures and contracts for difference (CFDs). This is already appearing on several crypto exchanges as well as the likes of CME, which is currently seeing record-breaking demand for its Bitcoin futures.

With more institutions taking it seriously, and even major businesses such as Facebook announcing their own offerings, it seems that cryptocurrencies are finally becoming a more legitimate investment proposition. As a result, it seems the days of cryptocurrency being perceived as the ‘Wild West’ of the investment world may be numbered.

Presented with a more volatile asset which is increasingly gaining critical mass, as well as a more promising regulatory framework, it’s no wonder forex traders are jumping on the crypto bandwagon.

The end of the line for fiat?

Given the similarities between currencies and their digital counterparts, forex traders are uniquely placed to benefit.

Consequently, we may start to see forex traders demanding more from their brokers in order to take advantage of the opportunities that crypto volatility offers.

This doesn’t mean to say they will abandon ship entirely, or even that this would be a wise step to take. The traders who ride out the volatility storm (or lack thereof) will be those with a balanced and varied portfolio. This means they can take advantage of the peaks and troughs of crypto, while also maintaining an interest in the more stable, and arguably safer, traditional currencies.

Looking ahead, the volatility futures of both crypto and traditional currencies look uncertain. The traders who can get it right and the brokers who can cater to a new generation of forex trader will not only bolster themselves against prolonged volatility, but also benefit from the unique trading opportunities that cryptocurrencies offer.

Don Guo CEO Broctagon

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BUSINESS

Are your WEB AND MOBILE APIs putting your business at risk?

The world of finance is moving at a hundred miles an hour: open banking, apps and new entrants are pushing the entire industry to rethink its offering, how it communicates with consumers and how it manages the swathes of data that are transmitted every second. Financial organisations are all investing heavily in new technology to support these new trends and remain competitive. One technology in particular has emerged as a pivotal factor in success across the industry: APIs. Despite the fact APIs provide the financial services industry with the ability to launch new services faster without risking any disruption across the rest of the services, financial institutions need to watch out for a potential issue that arises from

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this more decentralised service approach: they may have unprotected web or mobile APIs, and may not be aware of it.

Let’s examine the five common risks encountered as a result of publishing unprotected APIs, and then identify how to mitigate them.

Beware of Accidental APIs The idea that private APIs are truly hidden is simply a myth. Developers often reverse-engineer APIs used by web and mobile applications to help break down the software and understand how they work.

Once they’ve been tackled, engineers can use them for their own purpose, often without the business knowing.

Since these reverse-engineered APIs, also known as ‘Accidental APIs’, can often op-

erate without authentication tokens, there is no specific way to shutdown access for applications. Instead, mobile apps will need to be updated to use a new encryption key, which allows data to be decrypted by the person using the app. Updates like this can often cause a considerable amount of downtime, potentially resulting in a loss of revenue. Additionally, a lack of proper authentication mechanisms allows developers to easily access any and all available data without restriction.

Without robust authentication, all sensitive data becomes exposed and attackers have unlimited access to it, without logging and auditing. To mitigate this threat, API security needs to be implemented to restrict access to the API, using standards such as OAuth 2.

BUSINESS

Inability to monitor, monetise, and scale Due to the lack of authentication, accidental APIs don’t have suitable monitoring capabilities. This means that there is no insight available into who uses an API, and how.

Unfortunately, this lack of insight into which partners or applications are using the API means that parties who heavily depend upon the API will miss out on valuable insights. This is particularly relevant for integration partners, whose contract renewals may allow for an increase in revenue for partners that depend upon APIs the most.

Accidental APIs also prevent partners from being aware of consumption patterns, meaning that the API may be used in unpredicted ways. . Similarly to mobile apps, APIs are often changing with every update; without the proper monitoring system in place, developers will have no idea which partners, internal departments, or integration partners use a particular part of the API that is being changed.

Often, APIs are co-deployed with other applications, which may limit the ability to easily deploy and scale quickly. Lack of proper management will prevent developers from monitoring and scaling APIs. This lack of rate limiting can end up overwhelming servers and reducing the performance of an application, or in the worst instance, render it unavailable. An API management layer will give engineers the ability to properly monitor and control APIs. In an industry where data flows consistently such as financial services, losing access to servers even momentarily can have disastrous results: international transactions using volatile currencies may be delayed, which can have a real impact on the business’ revenue.

Added maintenance costs Accidental APIs are often developed in a hurry, many times with little or no time spent to ensure that they have been designed to last. Rushed development often leads to poor design, resulting in slower development, a convoluted user experi-

ence, cryptic error messages, and longer development time when debugging integration with mobile or web applications. A lack of thoughtful design requires versioning an API, which means that mobile developers need to dedicate their resources to fix and push one, or sometimes several, updates to mobile applications. This development time can result in the company paying out much more than needed for a well-designed product API. Reverse-engineered APIs aren’t designed to deliver complete business value. For successful ROI, partner APIs will use oneoff partner or platform APIs for successful integration. By investing in proper API design and applying practical design principles, businesses can expect high business value APIs that reduce costs and encourage reuse.

Lack of API security The aforementioned risks will disrupt a business’ daily operations; however, the final two risks in this list lead to a more severe and lasting impact to an organisation. Accidental APIs open up a variety of security-related issues that can affect financial institutions, the most notable being insecure communications and industry compliance failures. Insecure communications can result from accidental APIs being deployed without SSLif the primary application doesn’t require it, or if the API is deployed haphazardly. This means that logins, passwords, and other sensitive data are sent in plain text and easily obtained by cyberattackers. Additionally, a lack of proper security precautions can often expose holes in a company’s PCI compliance, and other industry regulations.

To prevent such a severe situation, it’s recommended that security teams conduct an audit of the API before it is deployed.

This should involve appropriate measures being introduced to ensure credentials aren’t stored in plain text, and ensure TLS is used to encrypt API communication channels. An API management layer that implements authentication standards such as OAuth 2 wouldn’t hurt either!

Malicious API attacks and compromised data The final risk is related to API attack vectors with the intent of compromising the system and its data. Accidental APIs tend to expose systems to the following vulnerabilities: • Denial of Services (DoS) attacks: Attackers can try to reduce or completely eliminate the system’s ability to service incoming calls by overwhelming the system with API calls. This renders the system unusable by internal, partner, and potentially public consumers of the API. • SQL injection attacks: SQL injection is a technique used to try to access or modify data by attempting to alter SQL statements executed by the API endpoints.

This exposes data that was previously not available.

• XML attacks: An XML attack is designed to compromise servers by sending large invalid, or malformed, XML content. Servers are often made unavailable due to memory leaks or high CPU usage when trying to process large or malformed content.

Conducting an operations audit of the API environment, a code review to prevent various attack vectors, and a thorough review of all data sent and received by the API should help to mitigate these vulnerabilities, protecting sensitive data which is vital for organisations if they are to maintain their credibility. Businesses within the financial services sector need to maintain a degree of control over APIs to protect both the data they store, and the reputation of their business.

James Hirst Co-Founder Tyk

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TECHNOLOGY

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TECHNOLOGY

Why more FINANCIAL FIRMS are building their own software Financial organisations are increasingly building their own software solutions, rather than buying off-the-shelf or outsourcing to development shops. And for good reason: The cost, time. complexity and risk barriers to producing custom business software have fallen dramatically. The advent of no-code platforms means that to produce working applications, you don’t always need to recruit coders anymore. Besides being able to build exactly what you need, rather than buy-in functionality you won’t use, nocode platforms are proving to be very time- and cost efficient in practice.

Better software with more developers There is a growing need amongst businesses across all industries to attract more software developers to assist with their digital transformation efforts. It’s not so much because they are simply eager to digitise, but rather that they have to - or they’ll fall behind the competition. But although the demand from firms for software has risen exponentially over the last decade, a shortage of skilled software development personnel has presented a bottleneck to many firms’ digital transformation plans. This skills shortage has compelled businesses to search for people from outside of the traditional developer space and to seek alternative approaches to software development, including methods that require little or no coding skills from developers.

One of those alternative methods is

called ‘no-code’ application development. Various vendors offer no-code (and ‘low-code’) application development platforms, including Betty Blocks. Such platforms can help firms circumnavigate the developer skills shortage while shortening time to market and optimising return on investment. No-code approaches enable organisations to build software precisely tailored to their needs without developers having to know traditional programming languages. Instead of writing code, developers use a visual modelling approach. They select, drag and drop desired components into a workflow.

Both simple as well as complex business applications can be built this way. For the end-user, the result is the same. However, the trajectory to build these applications is far easier to grasp, paving the way for business users to build applications to meet their own software needs without requiring formal programming knowledge. This new type of business developer is known as the citizen developer.

According to leading research and advisory firm Gartner, “by 2024, low-code application platforms will be responsible for 65% of all application development activity.” Moreover, Gartner estimates that, “by 2020, at least 70% of the large enterprises will have established successful citizen development policies.”

By considerably reducing the threshold of what it takes to become a software developer, and by enabling existing programmers to also significantly speed up application development without the necessity of hand-coding, no-code is pick-

ing up steam. Organisations are choosing to have business teams develop software themselves rather than rely on third party providers and full-stack developers. They get to decide which features will be part of their application infrastructure, avoid paying for functionality they don’t want and can take their software far beyond the limits of closed third party systems. Furthermore, the architecture of the no-code platform allows for a high scalability and reusability of business-driven solutions across enterprise infrastructures.

Finance firms using no-code No-code approaches are proving especially effective within account management, data administration, and payment and subscription services. It is therefore no surprise that their implementation is becoming more widespread within the financial sector.

Over the last few years, no-code development platforms have been applied to solve wide-ranging issues within finance and fintech markets. At an entry level, nocode offers the ability to easily turn analogue spreadsheets into fully responsive dataflows. On a higher level, they allow for the optimisation of documentation and quality assurance processes.

For example, one major banking firm recently upgraded their static database to one in which they could view data in real-time. Doing so enabled the bank to automate a process for loans which 61

TECHNOLOGY

had previously required the manual processing of some 20 documents per loan application. Their no-code application saved the bank a lot of manual work in crunching numbers before making a loan decision (what took them 30 hours to do was brought down to 30 minutes). Having better visibility on reporting and analytics also allowed the firm to filter and sort data more effectively.

In another example, a Dutch factoring firm implemented a no-code platform to automate and streamline its back-end operations. The time saved was re-directed towards their innovation efforts.

But automating and optimising analogue processes is merely the tip of the iceberg. Financial organisations often have to deal with a lot of regulatory compliance. Assignments have to be overseen and approved by different departments through procedures that, if you work solely from spreadsheets, can be tedious and error prone. A no-code platform excels in setting up a proper quality assurance and control centre throughout the entire organisation.

An international accounting firm used no-code to do just that. They set up a quality assurance system in which all pending tasks were designated automatically. The application assisted employees make the right choice when handling pending issues. Organised dashboards helped them with sorting out the high

and low priorities and in this way, they diminished the risk of neglecting important tasks. After a successful testing phase, the company is now working on implementing these workflow tools within each department worldwide, connecting them all to a central database. For organisations that have to deal with complex paperwork on a daily basis, these applications not only save time (and actual paper), but can potentially prevent greater disasters from occurring.

Other organisations take the no-code approach even further and establish entire innovation centres around the method.

A Dutch insurance firm utilised no-code to reduce the need for separate licenses for customer relationship management systems and for payment management systems. The firm also created a department able to quickly develop, test and launch new services for its customers.

One outcome was a completely new line of risk prevention services for customers that immediately proved its value in practice by helping customers to reduce the likelihood of incidents occurring. This helped reduce claims.

Democratising application development Perhaps the most important aspect of this new approach to software development is that tech-savvy employees can

be given closer control of the programs they work with. They can add functionality to support corporate change, or even build in completely new components to support new requirements they might have of the application. As a safeguard, these citizen developers prototype and test their solutions from what are called sandbox environments. Applications must then be sanctioned by central IT, before being considered for production.

Besides no-code enabling firms to overcome the developer shortage and keep up with the growing demand for software, no-code also holds the power to democratise application development altogether. Although the majority of organisations still very much rely on third party software providers to assist with their daily workflows, more and more businesses are reviewing such choices and considering replacing them with applications built in house by their own citizen developers.

There are many reasons to get to grips with the no-code revolution. Certainly financial firms cannot allow their digital transformation efforts to be held up by skills shortages. Perhaps handing certain types of business development over to the business itself makes a great deal more sense than either burdening the busy IT department with it, or buying off the shelf software that never quite fulfills your requirements.

Chris Obdam CEO Betty Blocks

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Putting Banks Back on Track with Robot Help Business Systems UK’s Will Davenport explains why Robotic Process Automation (RPA) could be a real help for banks and financial services Robotic Process Automation is big and growing fast. Gartner maintains that global take-up of RPA solutions grew by a phenomenal 63% last year. And why wouldn’t you embrace RPA 64

platforms when they help speed up organisational digital transformation and can be applied to complex and time-consuming processes in the back office, plus have the power to streamline and enhance customer service.

Interestingly, banks are one of the biggest adopters, as it can

make significant cost and efficiency improvements – and it’s our experience that ‘sending in the robots’ offers a number of key advantages that can have huge benefits for the banking sector.

of “650-800%” within three years of deploying RPA for transactional processes.

The Contact Centre can now meet its SLAs 100% of the time There’s an unquestioned bottom line benefit in terms of replacing at least some staff time (or even FTE salary) with a team of robots. Commerce is voting with its feet here. According to Softomotive’s survey of medium-sized businesses adopting RPA, 44% identified reduced operating costs as a main benefit. And as well as being more time and cost-efficient than people, this new class of software workers can significantly improve workflows, as they have zero margin for error and can work through repetitive, monotonous tasks on a 24/7, no coffee or holiday-break basis.

Take for example an Italian bank that was having difficulty meeting client service level demands due to the large number of in-bound calls it was receiving into its contact centre (a team of 500 agents were handling a staggering 650,000 a month). With many calls requiring follow-up activities, primarily data entry, this customer was pushing resources to the limit, and its operatives were finding it almost impossible to meet the five-minute response time target for fraud alerts.

There is also the reduction in run-time error in your processes. Indeed, any RPA failures are almost always due to human error rather than technology. This fact allows banks to learn from past mistakes. An Arvato Bertelsmann report highlighted the fact that improved accuracy in a workflow supports compliance and quality control, with automated processes being fully auditable.

To help, an RPA platform was deployed which rapidly automated many of the post-call manual activities which were eroding agents’ time. In addition, desktop automation tools were utilised to guide agents through a complicated fraud alert process. The good news: this post-RPA contact centre is now meeting its SLAs 100% of the time, the average handling time of the closing phase has been reduced by 82% - and the bank also records 99% accuracy in the handling of over 8,000 fraud alerts a month.

RPA also helps staff morale because it frees people up from mundane tasks and allows them to focus on core business activities. This can add enormous value to business operations, and as we all know, the human touch goes a long way in attracting new customers and retaining customer loyalty. That same Arvato Bertelsmann report found that 96% of respondents looked to automation to free up staff time for more business-critical tasks.

What’s more, RPA can enhance service levels – the faster and more efficiently your teams can complete tasks, the better the overall quality of service. Increased accuracy also supports delivery of even the tightest SLA.

RPA’s ability to pull together diverse systems is one of its unique, and often overlooked, attributes. Arvato Bertelsmann spotlighted several key benefits in its report, including the ability to update and change processes centrally rather than having to address each one individually. Finally, RPA also offers an accelerated ROI. Many adopters of RPA report quick and substantial returns on investment, which will be music to the ears of any CFO. One study from the Everest Group states that the average company could expect to double its investment in initial returns, rising to a multiple of four for the top performers.

In one stand-out example, Telefonica 02 claimed an ROI

The beauty of RPA for the financial services sector is that it can be applied to customer service enquiries in the call centre directly, as well as to information flow in the bank itself. Working with RPA banks and other financial institutions can dramatically improve the customer experience and provide a faster, more seamless overall service.

So don’t get left behind and get that robotic help your processes can really benefit from today.

Will Davenport Director Business Systems (UK) Ltd Source: 1 https://www.gartner.com/en/newsroom/press-releases/2019-06-24-gartner-saysworldwide-robotic-process-automation-sof

2 https://www.softomotive.com/rpa-deployment-in-it-functions-of-growthcompanies/white-paper/

3 https://www.arvato.co.uk/white-papers/robotic-process-automation-rpa/ 4 https://www.forbes.com/sites/peterbendorsamuel/2018/05/30/two-key-enablersfor-roi-in-robotic-process-automation/#90156215b22d

5 https://www.businesssystemsuk.co.uk/about

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FINANCE

Source: 1 https://www.willistowerswatson.com/en-US/Insights/2018/10/how-employers-are-controlling-healthcare-costs

2 3 4 5 6 7

https://www.bankingstandardsboard.org.uk/annual-review-2017-2018/assessment-findings/theme3/ https://www.finance-monthly.com/2018/05/73-of-banking-workers-want-better-wellbeing-support/ https://workplaceinsight.net/uk-office-workers-may-sit-at-their-desk-for-up-to-nine-hours-a-day/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6069165/ https://warwick.ac.uk/newsandevents/pressreleases/new_study_shows/ https://www.globalbankingandfinance.com/73-of-employees-in-the-banking-and-financial-servicesindustries-are-looking-for-better-physical-and-mental-wellbeing-support-in-the-workplace/

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FINANCE

MONEY MATTERS, but so does working comfortably Workplace wellbeing is increasingly becoming a top priority for many businesses, with a growing number of organisations positioning workplace health as part of company ethos and strategy. According to research from Willis Towers Watson, 82% of employers are investing in wellbeing initiatives, or plan to within the next three years. Part of this trend is a growing awareness amongst businesses of the positive impact of well-designed workplaces and furniture on employee health and productivity.

81% of the UK’s working population spending a good portion of the day at a desk. Remaining static for large portions of the day causes physiological issues.

In the UK, 40% of all sickness absence is due to work-related musculoskeletal disorders (MSDs) such as short-term back pain. While rarely life threatening, MSDs can have a large impact on our quality of life. That aside they also have serious implications for the economy, since they are responsible for 24% of all working days lost due to work-related ill health.

Ensuring that they have their monitors and keyboards at the correct height will immediately reduce eye strain and increase comfort levels. Also, providing comfortable, adjustable chairs that fit with monitors and keyboards is vital to making sure employees are working as productively and comfortably as possible. However, even if a workstation is set up correctly, employees can still get tired from staying in the same position for too long. Flexibility is key: desks that can support sitting or standing, or even be folded away, enable this adaptation.

Overall, the outlook for better employee wellbeing and engagement is on the up. However, in the finance sector, statistics suggest that the emphasis on health and productivity may not be as high compared to other sectors yet.

In a survey of over 36,000 employees working in 25 banks and building societies in the UK, 26% of respondents agreed with the statement: ‘Working in my organisation has a negative impact on my health and wellbeing’.

Furthermore, 50% of working adults in the banking and financial services industries believe that businesses are not doing enough to support the physical and mental wellbeing of their employees.

It is a concern, but as has been shown in other sectors, there are certainly factors that can be addressed in terms of the physical working environment that can help employees in finance to work more comfortably, and therefore more productively.

Fortunately, small changes can have big benefits. The principles of ergonomics, the science of refining the design of products to optimise them for human use, have key roles to play in helping us to work more comfortably. They centre around the importance of working in neutral postures at the proper height, reducing excessive force and motions, minimising fatigue, static load, as well as minimising pressure points, and maintaining a comfortable environment.

Main focus areas of ergonomics include computers, the desk on which a computer sits, the chair on which a worker sits, the keyboard they use and how their hands work with it. These are typically the products most employees, including those in finance, use throughout the day to do their jobs. If they are badly designed, they lead to stress, fatigue, or even injury, which of course negatively affect the employees themselves, but also can reflect badly on their employers.

In having a choice of how they work, employees have the power to control their working environment themselves.

Not only does this add to comfort levels and health benefits, employees become more productive when they are content.

According to a study from Warwick University, happiness makes workers around 12% more productive.

The challenge faced by finance organisations has to do with minimising the sedentary nature of the work undertaken by employees in most banks and financial organisations, who are part of the

A good example in the finance sector is contact centres, where employees spend much of their working time sitting in front of a computer. According to this report, call agents spend more time (90%) at work sedentary and desk-based.

Assuring that financial workers have a safe, comfortable and productive environment in which to work should not be an afterthought. And with 59% of people stating that the government should be doing more to promote wellbeing, well-designed workplaces and furniture are becoming key differentiators between employers who promote employee health and productivity, and those who don’t.

Kleopatra Kivrakidou Channel Marketing Mananger EMEA , Ergotron 67

BUSINESS

EXCEL BEST PRACTICE how it affects your team, your professional network and your brand

As a fresh addition to an insolvency business, you’ll be keen to demonstrate your ability to learn fast, meet deadlines, and deliver work that is up to the same standards of your experienced team members.

Excel is a very powerful asset to the industry. However, if used poorly, there can be serious consequences, such as huge financial losses, unhappy banks, solicitors or accountants, a damaged personal or corporate image, and negative staff appraisals. Being the root cause of any of these can lead to a reputation you won’t want to be known for, and this notoriety can be hard to shake off.

So how can you work to avoid these situations, and instead use Excel to protect your team, professional network and company brand? Let’s explore the ways.

Excel and your team For starters, any ambitious junior insolvency professional needs to be confident entering data into Excel accurately; then, correctly applying some key formulas to manipulate and analyse the data is crucial to being able to quickly discover assets or present your trends. But what 68

happens if - during the course of using your Excel document - a colleague fails to notice an incorrect formula that you input, or there isn’t time to find the hidden assets because the initial data entry took days instead of minutes?

It may be your responsibility to close off potential errors in Excel, and perhaps you already know how to use Excel features like tracing cell dependencies, auto filtering conditions, and formula based conditional formatting to check your own spreadsheets before sending them; but your colleagues – no matter how long they’ve been with the company – may not have had this training.

And today’s hot topic, machine learning, is unlikely to eradicate the need for this training.

Generally speaking, effective decision making based on machine learning algorithms relies on vast data sets, as well as fast and accurate feedback when an event occurs. So you can see how identifying unexpected outcomes, or missed opportunities for further analysis in the context of a specific case, within an existing Excel model, will be difficult to create algorithms to detect.

So, with the technology we have available to us today, the best-case scenario is that if an Excel error slips through the net, someone politely passes the document back and you can correct the mistakes.

However, this requires you to enter an unrecoverable task on your timesheet, all the while creating extra frustration and a feeling that the time could be spent doing something more productive.

But if a senior team member catches sight of it, there is potential for this oversight to create a loss of faith in your team, resulting in a feeling amongst managers to pay closer attention to the team output and therefore, an additional burden at senior level – something your new team will have worked hard to eradicate.

To create a positive impact, you should make it a habit to remind your team about the importance of using these available Excel features to verify their own work – and anyone else’s they might be double checking - before sending it.

BUSINESS

Combined, these issues can lead to animosity, with the external professional potentially asking for a new team to be allocated to their case. If the situation reaches this level, the redistribution of team resource to meet their needs will require input from a senior level within your business – more time and money that won’t be recovered.

As such, insolvency professionals should be continually working to improve their Excel skills, taking advantage of training sessions which boost productivity and teamwork, and ultimately result in using Excel to strengthen your professional relationships.

Excel and your professional network If incorrect data ends up in the hands of a creditor, solicitor or accountant, the repercussions for the insolvency firm you work for could be significant – and if you’re a junior in the business, you may not appreciate how significant this can be.

Being presented with an error in Excel – big or small – can cause the trust clients have in you and your organisation to waver; to them questioning whether the right team has been assigned to the task at hand, and whether the overall business is proficient with the basics of analysing data.

Also, when the recipient of your Excel file has to contact your company in order for corrections to be made, they incur a misuse of their own time that could’ve been avoided, meaning they aren’t receiving true value from the time they’re buying, and the money they’re spending with your company.

Furthermore, practices should implement team-wide use of programs which automate data analysis – specifically those designed to highlight errors in continuity or mistakes in the original entry of the data. Doing so will make practices more sure that their teams are delivering consultancy based on complete transparency and accuracy of the financial data they have been presented with.

riences meaning your company’s reputation is damaged amongst a very important circle.

To avoid this reputational risk, you should consider using software or tools that accurately extract and convert data into Excel, which is then automatically analysed for keywords, key periods, round amounts and recurring amounts. This will give you the confidence that your conclusions are correct and will save the several hours or days it would usually take to do this task manually.

Excel proficiency is an essential for successful teams One mistake in a long period can be overlooked. But if you or an employee under your supervision is regularly delivering spreadsheets with erroneous content, it has the potential to hurt the company’s reputation, and definitely lowers team morale.

Excel and your company’s brand

No-one likes to feel that they need to check over every cell of someone’s Excel file; it simply feeds a culture of distrust both internally and externally.

At its most extreme, multiple blunders in Excel can drive professionals like banks, accountants and solicitors to stop referring work to your company, and instead rely on your competition for their recovery advice.

It is completely possible within a few hours, to achieve a level of Excel ability that simultaneously encourages creativity and enhances speed and accuracy, which instils widespread confidence, internally and externally.

This doesn’t just very quickly affect your firm’s bottom line, but will also prevent these external professionals from confidently promoting your company within their own networks that might previously have led to potential new clients for your business, therefore exponentially reducing the number of leads and referrals your firm receives.

StatementReader offers free introductory sessions to achieving Excel excellence. Click here to book a session.

If you’re lucky, they will act with discretion and simply recommend other companies to those in need. If you’re unlucky, they’ll communicate their negative expe-

David Elms Customer Experience Director StatementReader 69

2019

AWARDS WINNERS LIST Winners

Award Title

Aafiya TPA Services

Best Health Insurance Service Provider UAE 2019

Abu Dhabi Commercial Bank PJSC

Best SME Bank UAE 2019

ALJ Finansman A.Ş.

Best Auto Financing Company Turkey 2019

Aljazira Takaful

Best Takaful Oeprator KSA 2019

Arca Fondi

Best Asset Management CEO (Dr. Ugo Loser) Italy 2019

AsiaPay

Most Innovative Payment Solutions Provider Pan Asia 2019

AvaTrade

Best Online Broker Ireland 2019

Bank Of Mauritius

Best regulatory Authority

Cairo Amman Bank

Best Bank for Youth & Students Jordan 2019

Cellcard

Best Telecommunications Company Cambodia 2019

Cellcard

Best Mobile and Digital Lifestyle Provider Cambodia 2019

China Asset Management Company

Best Asset Management Company China 2019

CM Trading

Best Forex Broker Africa 2019​

Commercial Bank of Ceylon PLC

Best Internet Bank Sri Lanka 2019

COSCO Shipping Ports Ltd

Best Investor Relations Company Hong Kong 2019

COSCO Shipping Ports Ltd

Most Innovative Port Operator Hong Kong 2019

ČSOB Private Banking

Best Private Bank Czech Republic 2019

ESR Funds Management (S) Limited

Best Corporate Governance Company Singapore 2019

Firewood Global Ltd

Best STP Broker Asia 2019

Fleet Partners

Best Leasing and Fleet Management Company Nigeria 2019

HotForex

Best Client Fund Security 2019

IC Markets

Best Forex Broker Australia 2019

Islamic Bank of Afghanistan

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Learn to trade

Best Forex Education Provider South Africa 2019

Mashreq Bank

Best Bank for Factoring UAE 2019

Mashreq Bank

Best Mobile Banking Application UAE 2019

MultiBank

Best ECN Broker of the Year Asia 2019

Winners

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National Development Bank PLC

Best Bank for Credit Cards Sri Lanka 2019

Pacifico Seguros

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PortugalRur

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PVcom bank

Best New Credit Card (PVcomBank Mastercard) Vietnam 2019

PVcom bank

Best SME Bank Vietnam 2019

Pyramedia

Best Media Company CEO -Nashwa Al Ruwaini UAE 2019

Q8 Trade

Most Trusted Trading Platform MENA 2019

SeABank

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Shorooq Investments PLLC

Fastest Growing Venture Capital Company UAE 2019

Standard Chartered Bank

Fastest Growing Wholesale Bank Oman 2019

Taipei Fubon Bank

Best Investment Bank Taiwan 2019

Taipei Fubon Bank

Best Internet Bank Taiwan 2019

Takeleap

Best IT consulting and development Company UAE 2019

The Thai Credit Retail Bank

Best Retail Bank Thailand 2019

TigerWit

Best New Forex Broker UK 2019

Tradimo Interactive

Best Financial Education Company Denmark 2019

United Overseas Bank

Fastest Growing Wealth Management Bank China 2019

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Best Customer Service Bank Cambodia 2019

Wema Bank

Most Innovative Bank in Nigeria 2019

CALL FOR ENTRIES 2020 INVITING Financial Organizations

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Submit Your Nomination to Awards@financederivative.com OR Submit online at www.financederivative.com

FINANCE

Managing cash flow loopholes for SMEs Managing cash flow is an extremely critical aspect of financial planning for many businesses, especially SMEs. However, it’s an area which can often be difficult to control and could see benefit from tighter monitoring and planning. Many SMEs struggle to properly manage and maintain positive cash flow and research suggests that 63 per cent of SME decision-makers worry about their business’ cash flow. Irrespective of industry or size, one thing stands to reason, if the expenses generated by the businesses exceed the amount of cash coming in – then you have a cash flow problem.

Staying on top of outgoings and debtors requires a diligent and well organised approach. In the first instance it’s important for SMEs to look at areas of expenditure and try and identify where they can make long-term and short-term savings. One such area, which tends to be overlooked time and time again is corporate travel and expenses. The proper management of expenses can give businesses a huge advantage, but when handled inadequately the management of corporate expenses can be crippling. As a starting point, SMEs should evaluate their current expense procedures and pinpoint the aspects which are easy to exploit and put sufficient policies in place to ensure that they are not being taken advantage of.

Emptying the unofficial piggybank 74

There are areas of the expenses process which are easier to manipulate than others and we tend to see the same pattern of claiming behaviour over and over again, across countless businesses. Typically, businesses will get four distinctive spikes in expense claims throughout the year. The first is around Easter, the second just before the school summer holidays and the last two before Christmas – one at the end of November and the other halfway through December. During these peak period’s employees can often be claiming up to 80 per cent more than they would during a ‘normal’ week. For instance, if an employee who regularly submits claims of around £200 a week were to stockpile their receipts over four or five months, the business could be hit with a claim of nearly £4000. Stockpiling expenses is one of the biggest challenges that SMEs face, especially employees who use the expenses system as a piggybank. Of course, employees should be able to easily claim back funds but it shouldn’t be to the detriment of the businesses cash flow.

One of the ways to get around the issue of ‘piggybanking’ is to put expense policies in place which restrict the timeframe in which employees can submit claims.

Setting a time limit of around one to two months encourages employees to keep up to date with claims and stops them from building up large sums. This not only

limits the financial impact on the business but also goes some way towards regulating cash flow.

Fraudulent claims The second most common area of the expense process which is ripe for misuse is the submission of fraudulent claims. Now, of course not all employees will manipulate the expense system in this way but it does pay for SMEs to carry out proper due diligence and check the information which is being submitted to them. Whether it’s creating fake hotel invoices then staying with a friend/relative and pocketing the accommodation allowance. Or claiming multiple reimbursements from the same train journey by submitting the ticket and collection receipt separately.

SMEs should be making sure that the expense claims put forward by employees are in fact genuine, otherwise money is leaving the businesses needlessly and employees are tapping into tax free money which they aren’t entitled to.

Putting clear policies in place is key to helping employees correctly navigate the expense process but what if your business doesn’t have the time and resources to sift through and check countless receipts?

Tapping into technology Most SMEs have already bought into the benefits of cloud-based applications and

FINANCE use them across various functions of the business. Implementing a digital expense management solution could be an alternative to manually checking claims and offers the opportunity to enhance control of employee spending by automating policy enforcement. This would mean that out of policy expenses would be instantly flagged upon submission. Whether it’s claims which appear to be duplicated or those which go over the spending allowance, the system would raise these issues and return them to administrator for extra justification.

With the expense policy laid out clearly, employees are then able to make a fully informed decision before making a purchase they plan to claim for. It also affords business owners the ability to watch what employees are spending in real-time, instead of waiting till the end of the month to read an expense report.

With the digital expense system clearly spelling out policies and spending limits, employees are also required to take pho-

tos and upload images of their receipts.

This additionally layer of accountability can help SMEs tackle the misuse of the expenses process and hopefully stabilise cash flow in this aspect of the business.

Introducing automated solutions into the expense process can also help SMEs to recover the maximum amount of VAT possible and take active steps towards a positive cash flow. By prompting employees to correctly classify claims such as subsistence, travel, meals or accommodation, businesses can ensure they are paying the right level of VAT on expense items. It also offers up the opportunity to ensure employees are entering the correct VAT figures on purchases.

For SMEs it’s worthwhile identifying areas of weakness in the expenses process as they can have a large impact on cash flow. From the examples above it is easy to see how fraudulent claims can slip through the cracks and quickly add up.

The ability to properly manage and con-

trol employee expenses, not only saves SMEs time and money but also ensures that the right processes are in place to maintain the business. Only by staying on top of outgoings and having full financial visibility can business owners stay in control, make informed decisions and support future growth.

Adam Bamford Expedite Services Director Selenity Source: 1 https://www.home.barclaycard/media-centre/pressreleases/Cash-flow-concerns-keep-six-in-ten-SME-leadersawake-at-night.html\

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TECHNOLOGY

Easing the burden of

technology transformation According to a recent report on the state of IT spending, budgets are rising as businesses replace outdated technology. In fact, 44% of them plan to increase their technology spend in 2020 compared to 38% in 2019.

Chris Labrey Managing Director Econocom Some of this budget will be allocated to emerging technology. For example, 25% of companies in the financial sector state that they are already using blockchain, and AI technology is also a significant driver. But, regardless of industry, technology is a key component of improving customer outcomes as well as business processes.

uous tracking of cash flows and inventories. Therefore, any technology investment becomes immediately obvious on the balance sheet.

As technology gives businesses the ability to manage more of their routine operations with computers, finance departments will be spending less time analysing the numbers and more time driving the strategic direction of the business. A report by Deloitte predicts that by 2025, the same digital disruption which has affected the consumer experience, will also impact the financial landscape.

Asset or expense?

In the past, most large organisations would purchase any required technology ‘outright’ and then depreciate it over time on their balance sheet. Many businesses today don’t have the cash flow to fund large scale technology transformation projects upfront. Or they may not want to have such visibility on the balance sheet.

Therefore, many organisations opt for lease contracts to fund their technology requirements. This enables businesses to implement the technology while smoothing their payments over time and protecting their capex budget.

One of their main predictions is the demise of the cyclical reporting agenda. As stakeholder expectations for information and insights increase, so will the contin-

New rules?

However, all leases now need to be recorded on the balance sheet as liabilities at the present value of the future lease pay-

76

ments, as well as an asset over the lease term. This is because of the new IFRS 16 regulation which was introduced this year to remove the distinction between operating and financing leases. And costs associated with any maintenance and disposal of the technology also need to be accounted for, unlike previously.

These changes potentially have a big impact on the financial accounts for many businesses. For instance: • Organisations may find a large lease portfolio more difficult to manage when taking into account the total cost of ownership implications • Businesses with a large lease portfolio will see their debt burden increase • The ability to raise finance may be affected as accounting and financial ratios change • Banking covenants may change and will also need to be checked

TECHNOLOGY

Working with a subscription and as-aservice models These changes all add to the complexity of the procurement process and many companies may not have the time or expertise to put additional resource into this. However, organisations can ease the process if they work with a technology partner that fully appreciates IFRS 16 regulations, as well as understanding technology leasing requirements.

For instance, leases shorter than 12-months and where there isn’t the option to purchase the technology at the end of the lease term, are exempt from IFRS16. If businesses want to use this short-term lease approach, then their technology partner of choice must be an expert in managing the disposal of assets at the end of the term and incorporating this appropriately within lease payments.

In addition, managing the maintenance and warranty costs within the technology

lifecycle could lead to extra accounting.

But when this is incorporated into an asa-service model, the technology partner can make these costs part of the solution. They also ensure that the technology is retained for the most effective time period and is managed sustainably at the end of its life.

As leases with a value of $5000 or less are exempt from IFRS 16, the right subscription and as-a-service partner can manage the business’s lease portfolio to minimise liabilities as much as possible.

Maintaining business agility Technology can provide the competitive edge to all manner of industries and businesses when deployed effectively. But for large operations, getting sign off in terms of the budget can be a long and laborious process. With an as-a-service solution there’s no waiting time and even existing legacy technology can be added to the solution.

In addition, in uncertain times, organisations can feel insecure about funding their technology transformation projects without damaging cash flows. With an as-a-service model the technology rollout can be managed to suit the business; the partner can store and deploy assets as needed, therefore minimising disruption to employees. Furthermore, payments only start once the technology has been implemented.

IFRS affects all businesses as of January 2019 and public sector bodies need to be compliant from 2020. But financial regulation mustn’t be a barrier to technology deployment. Finding the right partner who understands these regulations, as-a-service models, and business requirements, can ensure that this doesn’t happen.

Source: 1 https://www.spiceworks.com/marketing/state-of-it/report/ 2 http://blog.innervision.co.uk/blog/applying-ifrs-16-adoptionchallenges-facing-uk-public-sector-bodies

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TECHNOLOGY

Unleashing the power of

AI IN THE BANKING INDUSTRY An insatiable demand for AI Barely a day goes by without the launch of a new report extolling the potential benefits of Artificial Intelligence in the banking industry, in cost reduction, operational efficiency, improved customer experience and, ultimately, bottom line growth. Indeed, analysts predict that AI will deliver a 22% reduction in operating costs (more than $1 trillion) across the global financial services industry by 2030, as banks look to transform both front and back office functions.

Demand for AI is coming from both ends of the market. Established banks are recognizing the need to respond to huge disruption in the market and to develop more agile operations to compete, whilst smaller players are looking to AI and automation as a way to scale quickly whilst keeping costs down, and to navigate their way around skills shortages.

For many banks, AI has become something of a holy grail and, in their desperation not to fall behind, the danger is that banks start to invest in AI for all the wrong reasons; to keep up with the Joneses rather than to deliver against specific business objectives. The result of this approach is that organisations are too often jumping in at the deep end, looking to implement AI technologies within their operations, but without the necessary strategies or groundwork in place to reap the full benefits of the technology.

Focus on the outcomes, not the tech The best way to approach and drive the maximum benefit from AI is, in fact, to try to put AI to one side and start by defining clear objectives and desired outcomes, 78

whether that’s widescale digital transformation across the organization or process optimization within a particular department or service. Once the objective has been defined, then you can work backwards from there, exploring the role that technology, AI included, can play in achieving the outcome.

Similarly, rather than thinking about AI as a new technology that is deployed wholesale across an organisation, banks are better served by thinking of AI as something that builds upon existing technologies and processes, and that they can work towards over time.

The journey to AI If we take automation as an example, Robotic Process Automation has been widely deployed by all banks for a number of years, to take out cost and streamline processes. But now, by integrating AI into their RPA platforms, banks can begin to move beyond the tactical automation of basic back-office tasks and processes, (in the contact centre, HR function or accounts department), to more complex and strategic initiatives.

Intelligent Automation (IA), which combines RPA with AI functionality, and additional capabilities such as Natural Language Processing, enables banks to automate a far wider range of workplace processes, in a fast, effective and secure way. This means being able to understand and interpret unstructured data across channels such as email and being able to make intelligent decisions based on historic data.

With AI, digital labor and automation

transfers from being primarily a cost reduction exercise to becoming a strategic asset to change and optimize the way that banks can run their entire operations. And with this shift, the benefits become greater – increased productivity, more robust regulatory compliance, enhanced capacity and more fulfilling work for staff, and more agility and scalability of resource across the entire organization.

We talk about three waves of adoption.

The first wave of RPA deployment is about cost reduction efficiency. But once you add in AI, organizations can progress onto the second wave, where automation and digital labor drives improved business performance, and the third wave, where the technology delivers genuine business transformation.

Indeed, as automation moves beyond high-volume processes, the relationship between human workers and digital labor becomes critical; the success of any AI or Intelligent Automation program depends on the knowledge and understanding of staff, and their appreciation of the role that a virtual workforce can play in supporting them.

This is why it’s essential for banks to adopt a measured approach to AI adoption, ensuring that they build the right skills and cultures within the workforce along the way, so that the introduction of AI becomes a natural progression on their digital transformation journey.

Beyond the hype – how AI is really making a difference With the right approach, where AI and

TECHNOLOGY TECHNOLOGY technology deployment is aligned to wider strategic objectives, AI has the potential to radically change how banks operate, both internally and externally.

Already, we’re seeing banks that are using AI (for example, chatbots) to deliver a highly optimized customer experience and providing a level of data-driven service and personalization to all customers that was previously only available to the select few. Elsewhere, banks are deploying AI as a way to manage an increasingly vast and complex compliance landscape, ensuring consistency and accuracy in the way that all transactions are actioned, monitored and reported, leading to a higher degree of certainty and reduced risk.

Another area where banks are now using AI to great effect is within fraud detection and prevention. The ability of AI to sift through massive amounts of data, 24 hours a day, and identify patterns is one of its greatest strengths, allowing banks to detect fraud and take appropriate action in real-time.

The catalyst for innovation and growth AI and automation will enable banks to redefine their resourcing models, allowing them to do what they already do in a more cost-effective and efficient way.

But, more importantly, as their use of the technology matures over time, AI will be the catalyst for innovation, growth and genuine differentiation in the market.

That’s where the real value of AI lies.

Therefore, it’s essential that banks adopt a long-term strategic approach, deploying AI and Intelligent Automation where it can deliver most value now, but ensuring that they have the skills, culture and governance to navigate this AI journey in the future.

Terry Walby CEO Thoughtonomy

Source: 1 https://next.autonomous.com/augmented-finance-machineintelligence

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Q8 TRADE launches a comprehensive webinar about the Aramco IPO

Brokerage service regulated by the JSC offering free webinars to increase trading competency Today, Q8 Trade, an online CFD trading platform, announced the launch of a new, completely free, webinar, covering Aramco’s IPO. The webinar is set to air on Monday, December 2nd, and will repeat weekly until the end of the year. Both Q8 Trade clients and the general public can participate in the webinar, completely free of charge.

The webinar will cover the following points: - A short history of Aramco and their previous IPO attempts - IPO effects, stages, and pricing - Tadawul Index - CFDs vs share trading - Recognizing market opportunities using charts Q8 Trade aims to empower their clients by giving them the tools and information required to make educated decisions about their investments. As such, this webinar is meant to help traders take advantage of the market opportunities created by the IPO with a greater competence.

About Q8 Trade: Q8 Trade is an online brokerage services, managed by Al Manara Capital, and regulated by the Jordan Securities Commission (JSC) under Company national number 200173579. Q8 Trade won the “Most Trusted Trading Platform” award in MENA for 2019.

INSURANCE

Standardization in Surety and Trade Credit Insurance – WHAT IS HOLDING US BACK?

Thomas Frossard Product Owner Surety Tinubu Square When it comes to the topic of data standards, organizations in the trade credit insurance and surety bonding industry are in agreement – standards are important, and their value cannot be underestimated. So why is it that they are woefully and widely ignored?

Weak adoption of standards so far Organizations undoubtedly realize improved efficiencies with the adoption of a set of protocols based on electronic reporting enhanced by a targeted, strategic data exchange capability. Many believe the aforementioned combination provides for a potentially powerful competitive edge. The problem is that insurer systems and the standards they are applying are typically not compatible with other important entities within the surety ecosystem. One result is that surety agents are put in a position to learn and manage multiple systems. Ultimately, 82

this is a time-consuming process with compromised benefits for all concerned.

require the commitment of all parties to make it work.

We seem to be in a conundrum. On the one hand, we want to redefine the surety bonding and trade credit insurance business process, establish standards and promote collaboration between all the partners involved in transactions. On the other hand, organizations are concerned that adhering to industry standards will compromise their unique competitive positions in the marketplace.

ACORD standards for successful exchanges

To address this concern, we need to take a hard look at the potential benefits and ‘future-forward’ importance of best practices. Strategic collaboration should lay the groundwork for healthy competition and mutually successful partnerships that provide meaningful choices for stakeholders within the surety ecosystem. By adopting and adhering to standards we can bring this about, but it does

A recent example of success and adaptability to market reality can be seen in the experience of the ‘Association for Cooperative Operations Research and Development’, aka. ‘ACORD’. Realizing that ‘e-standards’ were not gaining traction within the Surety marketplace, ACORD established a committee dedicated to successfully defining e-messaging standards. The working group was comprised of a cross section of industry experts that included surety agents, company representatives and software vendors. Following months of dedicated effort, a set of standards were published that promised significant benefits for a relatively low-cost implementation. A significant achievement indeed.

INSURANCE

Nicole DeChiaro, AVP, Business Development at Crum & Forster, former Chair of SFAA eBusiness Advisory Committee, stated that “the standards proposed have already been proven to reduce data processing time. Not only is manual data entry eliminated, but processing time for a single report was reduced from 30-60 minutes to about three seconds. The entire surety industry can recognize these same gains.”

AVP Business Development at Crum & Forster. As such, I strongly endorse the innovative work of the ACORD organization and the underlying work being done to enable and expedite, change management in such areas as evolving regulation, document exchange format standards, etc. Such capabilities are supported by the new technologies now being introduced and are a prerequisite for success in today’s dynamic market.

It should be noted that the above stated benefits have been verified by several vendors such as Tinubu Square.

The advent of newly developing ecosystems and of technologies such as smart APIs and blockchain should drive the acceptance of new standards and foster the development of interoperability while supporting significant industry initiatives. As an example, in a construction contract where the ecosystem includes, contractors, public buyers, insurers, re-insurers and banks, several existing standards could apply including FIDIC, BIM, Swift and ACORD. Without a joint

Success depending on efficient cooperation with all Surety stakeholders Personally, I have been impressed by the work of the ‘Automation Committee’ and the leaders therein such as Greg Davenport, Senior VP, Surety Global Risks at Liberty Mutual and Nicole DeChiaro,

approach, the end-to-end process is likely to be far from smooth and the value of standards might be questioned when really, they should be embraced to enable improved processes.

Most importantly, the above subject matter needs to be aired broadly, so all stakeholders can realize the opportunities for growth and prosperity.

“My hope is that we, as an industry, can build more adoption and implementations for other standards.” Greg Davenport, Senior VP – Surety Global Risks at Liberty Mutual.

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6

BUSINESS

Benefits of CSR for Small Businesses

Corporate Social Responsibility is becoming more and more important to businesses of all sizes. While CSR is traditionally associated with large corporations, small businesses have started to practice CSR more and more.

Not only does CSR benefit the community around small businesses, but small businesses can also experience many benefits from practicing social responsibility.

84

Satisfaction CSR can help to increase the satisfaction of the employees.

The way that a company treats the community around them is probably how they are going to treat their employees. If the employees feel like they are respected and have support in their jobs, then they are going to be a lot more productive. This means that they are going to be a lot more satisfied with their job. The best way to allow the employees to gain

some motivation and pride in their work is through the opportunities for them to have some type of personal development activities.

Public image Another obvious benefit is that the public image of the company can be improved.. There are a lot of companies that are demonstrating the corporate social responsibility by gaining exposure through their involvement in the community.

The reputation of the brand is

BUSINESS only going to benefit from the good deeds that are done in the community. This means that the consumers are going to feel good when they are buying products and services from the companies that are helping out their community.

The company should never miss an opportunity to publicize the community initiatives so that you can spread the word about the involvement that you have done inside of your community.

Loyalty Loyalty among customers is essential for the success of small businesses. The customers are a lot more likely to be loyal to a brand if the corporate values are going to align with their personal ones.

This is because the millennial are driving the market more these days compared to baby boomers.

The millennial like to do all of the business with the corporations and brands that have prosocial messages, ethical business standards, and sustainable manufacturing methods. These programs are going to help to showcase all of the values of the company. It can demonstrate the

companies willingness to work as a team, be involved in the community, and engage in the top of the core values of the company.

Creativity CSR also allows companies to increase their creativity. There are a lot of companies that are now wanting their employees to start thinking outside of the box so that they can increase the innovation of the company. The CSR initiatives is one of the best ways to encourage all of the employees to try new things and will help them to feel reenergized about their jobs. By getting employees involved in their community, they are going to feel empowered.

Therefore, they are going to help to contribute to the big picture. In fact, they might even be able to come up with some new ideas about products or services. Some of the employees will be able to come up with solutions for solving problems.

Costs An important benefit of CSR is the savings in costs of the products and services. This is because they are going to be reducing the amount of resources that they use along with the waste and emissions.

Therefore, the employees are going to

be helping the environment by being able to save money too. This means that just by doing a few steps, it can help to lower the utility bills of the company. This is the best way that you will be able to achieve the maximum savings for the company.

Reputation The final benefit is that it is going to help to build up the reputation of the business.

This is the best way to show that you are going to be responsible for all of the things that happen within your company. This will help to lead to having the competitive advantage over the employees. The company will need to choose suppliers who are known for their responsible policies. This is because this is how the customers are going to see the company.

There are some customers that are going to insist on dealing with companies that are known for being responsible instead of it just being a preference to some of the customers that you have.

Abby Drexler Media Specialist TSMC

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TECHNOLOGY

WHY FAILING TO IMPLEMENT AI AND ML IN CRED Why credit managers can’t ignore AI and ML any longer While the adoption of artificial intelligence (AI), robotic process automation (RPA) and machine learning (ML) is increasing across the finance sector, one area of the sector that is yet to implement these technologies is credit management. But why not when research has found that its use offers a variety of benefits, including the potential to boost productivity and gain more value from data? Firstly, investing in new technologies like AI and ML can be difficult to quantify in monetary terms. For instance, what is the ROI? In addition to this, finance teams may be holding back on investment due to the uncertainty surrounding Brexit or apathy towards change. Secondly, implementing technology can sometimes incorporate a number of required solutions within a business, and unfortunately, the credit department is often some way down the order of priorities. The final reason businesses may be reluctant to implement these new technologies is cost. Many 86

companies operating in difficult trading conditions either don’t have the budget or it is simply allocated elsewhere within the organisation, rather than assigned to the finance department. While the final reason may be more difficult to overcome, for those in the first two camps, failing to adopt new technologies means they are missing out on significant benefits, including:

Automation While AI is commonly associated with stock trading, predicting fraudulent transactions and determining risks within the financial domain, its use cases aren’t limited to these areas. In fact, AI can be used to streamline and enhance credit management processes. AI and RPA technologies allow finance teams to automate many repetitive, often tedious tasks, such as invoicing. This would see the hundreds of invoices usually dealt with manually by credit management

teams automatically inputted and processed within the system. This will save hours of time usually spent by individuals on the task. Similarly, there is potential to automate the compilation of reports.

With finance professionals no longer required to carry out these repetitive and time-consuming jobs, it’s likely to also improve morale and allow these individuals to focus on adding value to the organisation.

Credit management teams can also implement AI to automate the process of segmenting customers into groups based on established rules. By segmenting customers in this way, finance teams can determine what form of communication certain groups of customers are most likely to respond to, for instance.

This will result in more successful customer interactions with the aim of ensuring they make payments on time. This approach will also help to enhance customer relations and the customer experience as each individual’s preferences are taken into account.

TECHNOLOGY

DIT MANAGEMENT COULD BE A COSTLY MISTAKE Deriving value from data AI and ML technologies will also allow finance teams to make better use of the customer data that is being collected by the business and combine this with external data sources. Research has found that 61% of business professionals think machine learning and AI are their organisation’s most significant data initiative.

Using the technology in this way would allow them to perform reliable predictions based on the past. For example, AI is capable of analysing data in software solutions to determine if there are any patterns. This will allow the finance team to predict events, such as which customers will fall into payment arrears. They can then take the necessary actions immediately and decide whether to approve credit. This is likely to increase cash flow as finance teams have an increased awareness of which customers should or shouldn’t have their credit approved.

Predictions made by AI can also be applied to other processes, such as the invoicing method, as AI can predict which payment method will result in the invoice

being paid quickest, and transferring customers to collection agencies.

ers, rather than on the smaller necessary but time-consuming tasks.

Risk assessment

The combination of these capabilities and benefits demonstrates just how much credit management teams have to gain by implementing AI and ML. While their adoption requires an initial investment, their use will allow finance teams to reduce inefficiencies and spend more time on value-adding tasks, which will consequently boost employee morale and improve customer service.

Additionally, finance departments can use AI to improve the assessment of a customer’s credit worthiness. Previously, this assessment involved rules that were very black and white, with credit managers assessing any grey areas. However, AI can now be introduced to make new connections to assess these grey areas – making it easier for informed decisions to be made on credit risks. With AI and RPA proven to have greater accuracy than people, its use could lead to increased quality and lower costs. Thanks to this accuracy and ability to carry out automated tasks, finance professionals will have more free time to spend on bigger accounts or more impactful tasks. In fact, 72% of business decision-makers believe that AI enables humans to concentrate on meaningful work. For finance teams, this means they would be able to focus more closely on making a difference to their organisation and custom-

Marieke Saeij CEO Onguard Source: 1 https://www.globenewswire.com/news-release/2018/02/07 /1335563/0/en/Survey-Finds-Machine-Learning-andArtificial-Intelligence-are-Top-Business-Priorities.html

2 https://www.pwc.com/CISAI?WT.mc_id=CT1-PL52-DM2TR1-LS4-ND6-BPA1-CN_CIS-AI-AIsocial

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FINTECH APP DEVELOPMENT: 7 Insights That Will Delight Your Users Fintech apps are changing users’ relationships with money. Whether your users are freelancers, amateur investors, or just trying to more control over their finances, Fintech apps offer new and innovative ways to move, save, and invest funds.

If you’re a Fintech app developer, chances are your users are looking to you to help make their financial lives easier. Popular 88

apps like Twine help users automatically move money into a savings account to achieve financial goals or build emergency funds, and apps like Steady help string together payments from multiple sources to help paint a greater picture of a freelancer’s income. In the gig economy, these modern approaches to banking and finance help bring financial literacy into the 21st century, empowering users to

take greater control of their fiscal destiny.

Whether you’re in the development planning phase or have already started coding, here’s a look at seven insights that will delight the users of your next Fintech app: Be secure It may not be the most glamorous feature, but it’s certainly the most important.

TECHNOLOGY that users can use exclusively with your app. To encourage users to stay vigilant in protecting their password, you can even require a monthly password reset to turn back the clock every 30 days on any potential account breach. On the backend, it’s also your responsibility as a developer to securely store password data. Ensure passwords are hashed and encrypted to prevent possible decryption in the event of data theft.

Be more secure We can’t stress this enough: for Fintech apps, security is paramount. For an added level of security, consider implementing multi-factor authentication. Apps like Google Authenticator can supplement your security by allowing the second method of authentication to ensure the proper user is being granted access to your Fintech app. Physical security tokens can take security one step further, requiring a hardware device to access app data. Such financial organisations as American Express, ING Bank, OutBank DE, and Deutsche Bank have already integrated Apple’s biometric system, TouchID, in their mobile banking applications to verify user identity.

Keeping your Fintech app secure gives your users peace-of-mind knowing that their data (and, crucially, their money) is in good hands. But even if your app is built using industry-grade encryption and security protocols, users still control access to their accounts through passwords and authentication practices.

Make sure your app and any associated accounts employ strong password policies. Common best-practices for password policies include the 8+4 rule, requiring a password made up of at least eight letters, one uppercase character, one lowercase character, a number, and a special character. Even better, password generators can create random strings of text

Be data compliant Data security isn’t just something your users expect — it’s something government agencies require. Thanks to Europe’s General Data Protection Regulations (GDPR), any company doing business with citizens of the EU must follow strict rules on consumer data privacy. For Fintech apps,

this means any access to user data such as name, photograph, banking information, or identifying computer data like an IP address is legally required to be stored and processed securely. Companies not compliant with GDPR can face steep fines.

One of the key principles is GDPR is Privacy by Design and Default, meaning apps and systems that access user data should be built with privacy in mind from the ground up. This is great news for your users: by developing your Fintech app with GDPR in mind, your users will be at ease knowing their personal data is stored and accessed privately and securely by design.

Be payment compliant It’s not redundant to require multiple data security protocols: it’s the best way to keep your data safe. If your Fintech app handles credit card payments, make sure your credit card data is compliant with Payment Card Industry Data Security Standards (PCI DSS). Even if your Fintech app uses a third-party payment processor, PCI DSS still requires credit card information to be stored with a PCI compliant host.

Be safe If you’re developing custom APIs for your Fintech app, ensure they’re not designed to inadvertently expose identifying information or other private data. Programming your API to auto-increment record IDs may save time, but also may expose

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TECHNOLOGY your data to hackers familiar with how to exploit your record keeping. Your data is only as safe as your weakest entry point — make sure it’s not your programming!

Be aligned with customer goals Depending on the type of fintech app you’re developing, make sure you understand the needs of your customers and your app creates user experience that reflects trust. Customer empathy, build-

app for one specific financial task without having to sign up for an entire bank’s portfolio of services.

APIs have been beneficial for FinTechs taking their offering to customers through other firms as a distribution channel. Steve Ellis, Wells Fargo’s Head of the Innovation Group, said “Analytics is helping with the ability to use data to customize the experience for customers. Additionally, APIs and microservices are creating ease of integration, ease of connectivity, and ease of distribution”.

But the downside to microservices is that they are exactly what they sound like: microservices. In order for your Fintech app to grow, your services must offer an amount of scalability; at the same time, you don’t want to saddle your microservice with too much additional functionality. Make sure you’ve clearly defined the purpose of each of your microservices before scaling up.

Conclusion As a Fintech development company, make sure you’re putting the needs of your users first. You may be tempted to add bells, whistles, and other design chrome to help delight your users, but there’s nothing more attractive than a strong, secure programming foundation. By focusing on security, safety, and your user’s needs, you’ll empower users to do more with their money — and do more through your Fintech app.

ing trust, incorporating innovations is the trifecta that lays at the heart of the perfect app. While developing an app around changing customer expectations, make sure you have the agile team that can put themselves in the customer’s shoes and react to customer feedback.

Be scalable and specific Many Fintech apps offer a variety of microservices, the kind of transitions or services often provided by a large bank or lending company. Microservices enable Fintech companies to offer consumers highly specific services like lending and payment on a smaller scale, offering greater levels of focus for your app’s particular domain. Many users appreciate being able to have one specific Fintech 90

Hugh Simpson Leading Fitech Centre of Excellence, Ciklum Source: 1 https://twine.com/ 2 3 4 5

https://steadyapp.com/ https://smallbiztrends.com/2017/08/password-policy-best-practices.html https://www.lastpass.com/password-generator https://www.rsa.com/en-us/products/rsa-securid-suite/rsa-securidaccess/securid-hardware-tokens

6 https://support.google.com/accounts/answer/1066447?co=GENIE. Platform%3DAndroid&hl=en

7 https://gomedici.com/7-trends-in-biometric-technology-as-it-applies-tofintech/

8 https://adprofs.co/beginners-guide-to-gdpr/ 9 https://gdpr-info.eu/issues/privacy-by-design/ 10 https://www.pcicomplianceguide.org/faq/#1

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