Finance Derivative Magazine Issue 5 by financederivative

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FROM THE CEO

CEO and Publisher Mehtab Chisti Editor Mara KI

Greetings from Finance Derivative and A very warm Welcome to all our readers. We thank you all the Outstanding and young supporters who keep us inspired to bring this edition to you each time. Our team strives for the best of Content to present to you and keep you engaged. Amidst 2022, With this issue we bring a lot of exciting topics covering the Smart businesses, Constant evolution of technology, automation and consumer banking. I am sure you will have great time reading it. Go ahead to have an insight.

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Finance Derivative Awards is established

As we see that Small companies have access to world-leading technology like never before. This creates a doubly-positive effect totally. Not only can they enjoy the benefits of data-centred algorithms immediately, but further machine-to-machine communication will also multiply the gains. This will surely become the new norm for SMEs. Speaking about Aviation, as an industry has suffered more than most because of the pandemic. Any potential recovery has been hit further by low passenger numbers, which were fifty percent down last year. The aviation industry has taken a significant hit amid the Covid pandemic and ongoing global economic turmoil. However, the sector has also proven its resilience and now it is imperative that we start planning ahead for the future and invest in new market developments and technological advancements that will enable the industry to once again resume its position as a pillar of economic growth. Today, Experience defines business, and insurance is no different. Customers will reward those providers that deliver exceptional experiences. Having said that, By combining intelligent automation for the quick, repetitive work with human resources for connecting and building relationships, insurance providers can deliver tailored experiences at scale and safeguard their market positions. Speaking about the Cybersecurity, Today’s cybersecurity landscape is increasingly complex and multidimensional, but this should not scare you or deter your cybersecurity efforts. Rather, it should serve as a wake-up call to prioritize cybersecurity efforts at your firm.

HARVEST: PROSPERITY THAT INVITES We are today in the situation where business grow irrespective of the things happening around, keeping it up let us move ahead with positive thoughts and impacts EVERYONE TO THE TABLE. on our businesses and day to day work.

with the aim of honoring excellence in

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Our award honors companies and their key

players who have performed extraordinarily well and who strive for fineness & provide a

I Hope you will enjoy reading this issue of Finance Derivative.

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Enjoy the Read !

Banking I Lending I Payments I Insurance I Asset Management

Mehtab Chisti CEO

CONTENTS

14 BANKING:

WEALTH M

16. Authentication vs. Authorisation in the SCA era

34. Safe haven bo

24. Why information is now the most valuable currency in banking

38. The future of

36. Voice is the new frontier for growth and innovation in consumer banking

experiences

54. 4 Trends Drivi

40. Corporate Banking In 2022 – An outlook on the industry

TECHNOL BUSINESS:

6. Tech collaborati

8. New avenues for investing in the aviation sector

22. Constant Evol

12. Why the future belongs to smart businesses?

28. Yet to embrace

46. Highlighting Cyber Threats Before They Darken Your Business

52. Scaling secur

23 34 06 48

MANAGEMENT:

FINANCE:

onds in an inflationary environment

14. How to optimise your KYC processes

insurance – intelligent, automation-driven

20. A lending revolution: bringing retail SMEs a new funding model

ing Acceleration in the Insurance Industry

LOGY:

that truly meets their needs

48. FS C-suite are “flying blind”: Three steps to make better decisions with data

50. Control over compliance: Navigating regulations in the finance industry

ion: What does it mean for mortgages?

lution: Cyber Threats, Regulation and Technology

SPECIAL FEATURES:

e the cloud? The competitive gap is widening

30. Finance Derivative || Global Award Winners 2022

rely in the automation-first era

Technology

Tech collaboration: What does it mean for mortgages?

echnology has changed the face of nearly every industry. For example, fintech firms like Monzo and Tide have changed the consumer-facing banking industry by digitising customer interactions in an efficient and easy way. Yet even as technology is revolutionising the way we do everything, the housing and mortgage sector stands apart in that it has only so far seen significant innovations for each stage of the conveyancing process in silo. Now, the industry is ready to ensure that this innovation is taken advantage of across the whole journey as all stakeholders stand to gain so much in terms of efficiency, customer service and costs. For that to happen, we need conveyancers and lenders alike to see the benefit of technology. As it stands, they understand and champion its importance, but with the various solutions only changing one part of the process, there is more opportunity to maximise the benefits for the industry as a whole. The evolution of technology combined with collaboration will provide huge advancements when it comes to implementing one streamlined, end to end solution.

Optimistic attitude

Collaboration is key

Consumers in the property market are increasingly expecting a speedy, efficient service when it comes to property purchases. However, as the conveyancing process can still feel inefficient, requiring faxing, rekeying the same data multiple times and manual verification, it’s not surprising that it can be frustrating. The opportunity is there to change this, both so that the industry can improve the end customer’s experience and so that both law firms and lenders can manage the ever-increasing volume of purchase and remortgage activity efficiently.

However, while tech is key, ensuring cross industry collaboration is vital to ensure that it is not implemented in silo. With sufficient tech progress and the demand for it, all that remains is for companies and tech providers to harness collaboration to actualise these ideas.

LMS saw mortgage lending increase by nearly a third (33%) last year and, with many existing mortgages set to expire at the end of June, the market is geared to spike again. Over the second half of this year, we will see the highest volume of loans expiring in any six-month period over the last decade. Conveyancing stakeholders should aim and look forward to digitising manual processes in order to ensure they can process this high volume of activity smoothly and efficiently, and with minimal errors.

Creating these efficiencies is so simple but so powerful. Tech can be seamlessly incorporated to existing systems to give conveyancers and lenders one single source of truth. This allows them to assess how much time a case will need from the outset, helping them with capacity while also giving the consumer a more accurate estimation of their completion date to eliminate uncertainty.

Sharing documents digitally will significantly cut out errors and time spent on administration, and technology can also tackle fraud such as attempts to intercept documentation, which has clear benefits for both the end consumer and law firms.

Streamlining the solution While there is ample tech out there, too many providers are offering to automate only a single component of the journey so

Technology

it is no wonder that firms can’t see the point of automating the conveyancing process. This in turn stunts collaboration across the industry as each party struggles to navigate the challenges of multiple providers and find the right solution. Third party tech providers such as LMS are simplifying tech implementation by offering one end to end solution that links every step of the journey. Installation does not require conveyancer or lender input but is a case of simply plugging it into case management systems (CMS) via API. The tech then functions as a channel for data to easily and automatically pass through. This improves customer service and satisfaction while bolstering resource efficiency and reducing costs for industry stakeholders. The current conveyancing process is not delivering in the fast-paced, digital world that consumers live in. Law firms and lenders alike want to give the customer the best possible end result but the solutions they currently have are no longer able to meet this demand. While each party works as quickly as possible throughout the process, we need to help incorporate the tools that are at our disposal which can ease this burden. By collaborating with third party tech providers, all parties will help deliver a speedier, smoother and less costly service for their valued clientele. While this is no novel idea, doing so will fortify relationships and engender new business for many more years.

Travis Scholes, Commercial Director LMS

Business

viation as an industry has suffered more than most because of the pandemic. Airlines around the world have lost more than $200 billion, with the effects of travel bans and border closures eradicating nine years’ worth of profits. Any potential recovery has been hit further by low passenger numbers, which were fifty percent down last year.

Air cargo

Wider market conditions are further threatening the liquidity of airline companies. The effects of a cost-of-living crisis, fuel price increases, rising inflation and rising geopolitical tensions are beginning to be felt. Air transport is an integral part of the economy, and investment to support its global recovery must be a priority.

Air transport is a crucial facilitator of broader economic activity, facilitating international trade, economic growth and creating jobs in the process. Passenger traffic may still be low, but air cargo remains essential, and is an increasingly appealing avenue for aviation operators.

Within uncertainty, there lies opportunity, and there is no reason the aviation sector cannot bounce back stronger than ever.

Air cargo is emerging as a stable investment, with rising demand and good potential returns for stakeholders. Owning largely to the e-commerce boom, the IATA recorded a 9.4 percent increase in air cargo demand in October last year, and this momentum is set to continue throughout 2022.

Several operators, Airbus and Boeing included, are considering launching bespoke freighter carriers, owing to the market opportunities, and this is a trend that we can expect to continue.

AVIATIO SECTOR

New avenues for investing in the

New horizons Despite last year’s low passenger numbers, normality is slowly being restored as we navigate our way out of the pandemic, and as travel restrictions ease. Asia Pacific is one region to watch, with domestic market activity on an upward surge. Investment into short-haul air travel is expected to rise considerably over the next twelve months, and India and China have both announced the launch of new airlines. The Asian middle class is expected to reach 3.5 billion people by 2030, so the opportunities across Asia Pacific will be plentiful. The move by the aviation industry to cut net carbon dioxide emissions to zero by 2050 is something else to watch. Uptake of sustainable aviation fuels has been slow to date, but widespread adoption will happen. The industry used 100 million litres of SAF last year, but the IATA plans for SAF to

account for 449 billion litres of all fuel usage. Investment into engine technology will be at the heart of this change. The pandemic caused global disruption, but that in turn has created opportunity for new market players, particularly those whose competitors may have fallen by the wayside. The airlines and companies who invest in tomorrow’s market opportunities today can look forward to the brightest futures. Financial flexibility The past two years have been incredibly turbulent for airline stocks. With crude prices now hitting unprecedented levels, we are seeing another mass selloff. This is triggering short-term uncertainty in the market, but for those who are patient and ready to wait out the current disruption, there is cause for longer-term optimism.

Business

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Business

Bhanu Choudhrie, Founder and Executive Director,Alpha Aviation We have seen throughout the pandemic that airlines are able to withstand crisis, and that demand for air travel will bounce back. With stocks falling, there may never be a better time to invest before the next market boom. For savvy investors, there is an even bigger opportunity, with traditional banks retreating from the aviation sector. This has catalysed the adoption of new sources of funding, including green bonds and private equity, diversifying the financing streams in the sector. This new influx of capital has created a more varied aviation landscape, which is particularly exciting for new startups and leading platforms. Practice makes perfect Now that aviation is back up and running, and with new airlines launching across the globe, estimates suggest that as many as 500,000 pilots will be required in the next ten years. Pilot shortages are

nothing new, this has been a prevalent issue in recent decades. The renewed demand for pilots is welcomed for the sector, but does create pressure to find ways to train new cadets in bulk and to the requisite level of quality to meet rising demand. At Alpha Aviation Group, we are seeing interesting trends develop across the aviation training sphere. There is growing demand for localised training facilities and educational institutions, with airlines wanting to save on cost by training cadets nearer their facilities, rather than outsourcing internationally. There is also growing appetite for simulator facilities and e-learning solutions. If investment into these solutions continues and they are implemented effectively, they could hold the key to solving the industry’s training dilemma in the years to come.

Looking ahead The aviation industry has taken a significant hit amid the Covid pandemic and ongoing global economic turmoil. However, the sector has also proven its resilience and now it is imperative that we start planning ahead for the future and invest in new market developments and technological advancements that will enable the industry to once again resume its position as a pillar of economic growth. From freighter carriers and emerging domestic markets to stock fluctuations providing entry points and shifting sentiments prompting new sources of financing, there are plenty of new avenues coming to market for those that are able to turn optimism into opportunities. Source: 1 https://www.bloomberg.com/news/articles/2021-10-04/

airline-losses-from-covid-to-exceed-200-billion-industry-says

2 https://www.iata.org/en/pressroom/2021releases/2021-12-02-01/

Business

Why the future belongs to smart businesses?

owadays, businesses are not only facing a growing number of challenging working environments and tough economics, but also increasingly demanding customers. Organisations are required to make quick, intelligent choices and move with a greater sense of urgency and agility. In addition, it is essential for companies to engage in continuous innovation, both to constantly improve their business, as well as to deliver outstanding customer experiences which are superior to their competitors’ offerings. Simply put, businesses need to be smarter. In response to the Covid pandemic many organisations have undertaken digital transformation initiatives with renewed vigour. Nevertheless, simply striving for digital change is no longer enough. It is also pivotal for companies to embrace smart change if they wish to stand out from the crowd and thrive. 12

Key attributes of smart businesses For a business to become smart, it’s not just about having a greater amount of information and data readily available – but how it is actually used to think and move with greater speed and confidence. Those businesses which are smart are able to leverage their digital investments to empower and inform people in every business function and department. They also see challenges and assign accountability for customer, operational and financial success at a whole-organisation level, in addition to intelligently using their digital tools and data across the entire customer value chain. However, this doesn’t stop there, a smart business has a number of important attributes. Firstly, a smart business must embrace continuous change, constantly transitioning from one unstable environment to another, producing new service propositions

and developing smart ideas that enable it to stand out from the crowd. Ensuring that all of its departments and functions are innovative, allows the business to transform its operations and improve customer delivery in a continuous, repetitive dynamic. What’s more, these companies will also look to foster a company culture which is inquisitive and analytical – an environment in which fresh ways to elevate customer experience and improve outcomes are formed. All of this requires a workplace where creativity and experimentation is encouraged and members of staff have the freedom to operate with a can-do, growth mindset without fear of failure. But it also requires them to have the tools and the skills to ensure that these new ideas can be effectively implemented. This requires collaborative hubs where teams can openly communicate and innovate, so that suggestions can be encouraged, shared, explored, developed, tested and implemented.

Business Secondly, smart businesses have a clear vision of what they are aiming to achieve, so that they know exactly where to focus their energy and time in order to secure improvements. To do this, they use information and intelligence to identify areas in which the business can be improved. When it comes to supporting customer success and providing customers with an excellent experience of the brand, this shouldn’t only be for their benefit. Smart businesses embrace solutions which are capable of analysing and serving up insight on cost-to-serve and customer margin trends to cultivate the best and most profitable relationships. They also adopt advanced analytics, allowing them to deliver predictive insights such as improvements in pricing or the identification of profitable opportunities for change. But finally, this does not come about by chance. Smart businesses rely upon efficient business processes delivering high quality, actionable data to make employees smarter. These companies are not just using data to inform decisions on specific management or functional challenges. They are also democratising the data, providing every business function and member of staff with ready access to essential corporate information, a single source of the truth. For example, having a 360-degree view of the whole customer relationship means that traditional back-office

teams, such as the finance department, are equally as informed about customer relationships as those involved in service delivery. They also provide support when it comes to interacting with and serving customers regarding financial affairs. And as a side benefit, delivering a high quality of service to customers and having a vibrant and engaging working environment will work wonders in ensuring that the top talent at the company remains engaged. Become smarter As businesses continue along their current digital journeys many wish to simplify, streamline and improve business functions by adopting cloud-based solutions. Many are also capitalising on the opportunities and benefits that come from utilising a common ecosystem of complementary technology vendors that all share a common platform. One key characteristic of cloud based software is the provision of regular software updates, typically 2 or 3 times a year. These updates do not take place for the sake of it. They deliver new and improved business functionalities that exploit the latest technological advances combined with the experiences of many customers who actively played a role in

the development of these products. A huge amount of energy, from an innovation perspective, is invested in enterprise solutions by those developing the tools. As a result, this provides customers with an ongoing pipeline of new improvements and the potential to regularly offer new capabilities to the company. For any organisation wanting to fully embrace the project economy and realise the benefits of continual business change, the seeds of success are readily available. Those business leaders who put customer experience at the forefront of their business goals, in addition to developing their organisational agility and innovation, will be in the best position to build the successful enterprises of the future. They will be capable of achieving and sustaining better business outcomes. They will not simply be a digital business – they’ll be a smart digital business.

Andy Campbell, Global Solution Evangelist, FinancialForce

Finance

How to optimise your KYC processes

FINANCE

lthough methods of tackling financial crime are continually being improved, the ever-changing nature of the technology industry means criminals are seemingly gaining the edge. Fraud reporting has increased year on year. Businesses being fined for non-compliance with anti-money laundering (AML) regulations have expanded, and more than $937 million in fines were issued in the first half of 2021 alone. Currently, vast amounts

of time, resources and capital are being dedicated every day to combating and limiting the damage of fraud and money laundering. However, it is clear the effort is not having nearly the effect on criminals that the financial industry would desire. Across the world, a war is being fought across multiple fronts, the battle to prevent fraud, money laundering, and the exploitation of financial services. A 2020 study claimed that AML policy

intervention has less than 0.1% impact on criminal finances. To claim victory, financial institutions must be able to optimise their KYC and prohibit bad actors from gaining access to financial products. The growth in the digital economy and the increase in crime The nature of criminality is to continuously innovate new ways to exploit and take advantage of law-abiding

Finance

individuals and institutions. With the rapid expansion of the digital economy, crime has risen, especially financial crime. The momentum of growth seen in the development of the digital economy has been at a breakneck speed, so prevention has come as a real challenge. Since the introduction of fintech and Neobanks and their boom over a short period of time, there have been even more methods of laundering money and committing fraud. The digital economy is running in tandem with a borderless financial economy, making it even more challenging to prevent crime. Organised criminal enterprises ruthlessly engage in cross border illegal activity and exploit the helplessness of authorities. These factors mean financial services and regulators are one or several steps behind the criminals. For the criminals engaging in this activity, often the most challenging task they face is legitimising their money by

getting it into the legal financial system. Money laundering is big business, and frequently it’s a criminal’s most significant vulnerability. The onus for preventing money laundering lies with banks and financial institutions, which means enforcing stringent KYC procedures. Regulatory inspection has led to an improvement in this area. More and more information is being shared between law enforcement agencies, regulators, and institutions, which are now working together to solve problems and find solutions. If these processes are as effectively implemented as they should be, the industry can prevent criminals from gaining access to financial institutions before they begin laundering money. Leaning on KYC There are many advantages to automating KYC processes, such as making those processes much more efficient. For example, AML checks against politically exposed persons (PEPs) and those on sanctions lists are most optimally performed by automated risk engines. The engines can undertake the heavy amount of work needed to continually monitor and carry out daily checks more efficiently than a human can. KYC is critical for recognising patterns of repeat behaviour that criminals often engage in. Automation is excellent at seeing repeat activity, so machines are ideal for spotting these similar types of fraud. The rise of perpetual KYC is yet another string to the bow of automation, identifying changing risk factors in real-time and freeing up more time for analysts to carry out other risk management and compliance operations. However, new types of fraud and criminal activity are constantly evolving and identifying these can involve more nuance - less suited to automation.

Professionals, using cognitive functions, are still crucial in understanding the difference between customers and criminals. AI models cannot yet predict behaviour. Therefore, some human involvement is essential to ensuring the best risk-based decisions are made, and new modes of criminal activity are seen. Perpetual KYC automation - monitoring the customer landscape for risk automatically - allows human analysts to spend less time on remedial tasks and divert attention elsewhere, which is optimal when striking a balance. The human touch in conjunction with effective technology is a powerful combination in the fight against fraud. Hitting the right balance Automated technology is brilliant at creating efficient KYC processes, but it is not nuanced enough to be ideal when operating independently. It is still imperative for financial institutions to truly understand their customers; otherwise, automation can introduce more risk. The best way to optimise KYC processes is to strike a balance between technology deployment and cognitive thinking. Ensure human beings are available to identify new types of crime and the nuance in behaviour to make the best risk-based decisions as part of a holistic approach to KYC and fraud prevention.

Alex Richter, Head of PassFort Source: 1 https://www.occrp.org/en/daily/15047-fines-for-anti-moneylaundering-breaches-drop-globally

2 https://www.tandfonline.com/doi/full/10.1080/25741292.2 020.1725366

Banking

Authentication

Authorisation

in the SCA era

Banking

Since its enforcement in the UK in March, Strong Customer Authentication (SCA), designed to protect consumers and reduce the number of fraudulent orders for merchants, comes with added complications when determining the most efficient and cost-effective way for retailers to process online orders.

These challenges are a real concern for merchants, especially in the midst of a recession when every sale matters. However, it’s not all bad for merchants, as they still have the opportunity to eliminate the friction that SCA brings, making way for a brighter future for ecommerce. The not so good news is that making those choices is a complicated matter. Payment optimisation

hagun Varshney, Signifyd Senior Product Manager, Payment Optimisation, takes us through two different approaches to SCA, and what retailers can do to avoid the downsides of the new regulations.

In the pre-SCA era, merchants didn’t worry about whether they should be seeking exemptions in the payment process and just how they’d best go about that. They were working in a world without exemptions. Optimisation was not a thing.

Many of the questions and concerns surrounding the new SCA regulations have been about the additional layers of security to transactions. This is causing more friction along the buyer journey and leading to high basket abandonment rates and resulting in lower conversions.

With SCA in place, the world has changed. 3D Secure, a protocol that facilitates authentication, has become the critical path to a successful transaction. But in the early going, 3D Secure has proven unsteady. Not all merchants, banks and payment processors are prepared and using the newest version of 3DS, a version that accommodates the exemption requests that are 17

Banking

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Banking

vital to a successful SCA strategy. Now, merchants need to understand whether the banks and processors they depend on are fully SCA-prepared or not. And if they are not, merchants need to be able to request SCA exemptions by processing orders along the authorization path. In short: Today merchants need to be in the business of payment optimisation or live with the damage friction and cart abandonment cause their business. SCA Exemptions SCA calls on consumers to demonstrate that they are who they say they are. They can confirm their identity in two of three ways: ● Something they own (such as the device they used to buy). ● Something they know (such as a onetime passcode). ● Something they are (via biometrics, such as a fingerprint or retina scan). The regulation also comes with a batch of exemptions. These exemptions and related exceptions, called exclusions, are generally available when an order meets certain criteria: ● The order is low-risk and low value. ● Both the merchant and its banks have kept fraud rates low and the transaction meets certain limits — order values below €100 or between €100 and €250 or €250 and €500 depending on how low the merchant and bank’s fraud rates are. ● The transaction is “out of scope.” These include phone or mail orders, prepaid card transactions and orders when the acquiring or issuing bank is outside of the European Economic Area.

Trusted beneficiary — if a consumer’s bank agrees to allow it. The trusted beneficiary exemption can be applied when a consumer expressly tells the bank that issued their credit card that they don’t want extra scrutiny applied when they are buying from specific merchants. Again, the issuing bank can refuse to allow the exemption. The big decision - authorisation or authentication? Making this decision means knowing whether the banks that support an online purchase for the merchant and the customer’s card issuer are fully prepared for frictionless SCA. It also requires an understanding of SCA’s exemptions and the requirements for requesting an exemption to SCA. And it requires those insights for every individual order. By understanding which payment flow — authentication or authorisation — best accommodates the transaction process for a given order, merchants can optimise the customer experience they provide, which increases conversions and the likelihood a consumer will return for a subsequent shopping trip. Again, the backbone of authentication is 3D Secure. But, all 3D Secure is not the same. Older versions that have been in the market for years don’t allow merchants or banks to request exemptions. They always require a step-up, often requiring a shopper to click away from a merchant’s site to satisfy the authentication requirement. A newer version allows merchants and card-issuing banks to request exemptions. The newest version allows merchants, the merchant’s bank and card-issuing banks to request exemptions. Unfortunately, a significant number of European banks have not yet upgraded to the newest form of 3D Secure, meaning consumers will face an authentication challenge when trying to buy, unless the

merchant has requested an SCA exemption via the authorisation route. The optimum strategy for merchants in the SCA era is to understand —through data — the history of transactions when it comes to individual banks and payment service providers. That way they know whether the authentication route will result in a friction-free approval — meaning 3D Secure along the payment processing path is fully optimised for requesting and accommodating exemptions. Or would the better route be to request exemptions through the authorization route? All this means that merchants need to pay more attention to transaction data. They should get into the business of what is happening: Why was an order declined? What banks and payment processors were involved? They should be more demanding in asking for data from their banks and their payment service providers. They should ask for data and reports that show what orders are being declined and why. And they should consider working with partners who can readily marshal that kind of data and provide instant insights into the question: authentication or authorisation. After all, optimising transaction flow is more important than ever in the SCA era. And you can only make an intelligent choice if you have the proper data to guide you.

Shagun Varshney, Senior Product Manager Signifyd Source: 1 https://www.visa.co.uk/dam/VCOM/regional/ve/

unitedkingdom/PDF/visa-preparing-for-psd2-scapublication-version-1-1-05-12-18-002-final.pdf

Finance

A LENDING REVOLUTION:

bringing retail SMEs a new funding model that truly meets their needs

SMEs

often feel neglected by their money makers. As the international economy’s mainstay, they employ as much as 60% of the world’s workforce and account for 99% of all EU companies. Despite their undoubted financial and social significance, they are routinely left behind in national programmes, access to technology and, above all, funding. This is particularly so in retail SMEs. Cashflow shortages are holding them back and with little to no liquidity, their ability to compete with tech titans such as Amazon, Alibaba and others, who will never find it hard to access money at scale, is mightily impaired. E-commerce retail and wholesale operations are finding the financing ecosystem especially tough. Goods sellers worldwide must have fast and easy access to cash to keep their inventories full, especially when dealing with disruption. It is the best way to deal with recent global supply problems – Brexit aftershocks, the pandemic, the war in Ukraine, shipping container and worker shortages.

And if they go to the wall, the major retail barons take their place and retain their dominance forever. That’s bad for the market, bad for the economy and bad for the consumer.

to examine the wealth of numbers and details baffling - thwarting and impeding SMEs’ growth and denying the banks themselves the opportunities to forge sound business partnerships.

If any market is ripe for scrutiny and maximised efficiencies, it is funding for SMEs. And the traditional financing model simply does not fit their needs. They face silent discrimination by virtue of the inflexible rules and procedures of the traditional banking system.

The global pandemic saw huge growth in retail and e-commerce. It was common to see small one-man bands’ accelerated growth into middle-size companies. However, such staggering expansion is too fast for many businesses to scale up properly. This process includes attracting and retaining top talent; installing and upgrading appropriate tech systems; learning from competitors who have successfully grown; and identifying barriers to expansion.

Despite their massive investments in IT over the last decade, major banks remain one-trick ponies. “Show us your historical profits and our computer will tell you if you are eligible for financing or not”, they say. But that’s not how enterprising companies work in today’s fast-moving world. Retailers and wholesalers produce massive amounts of data each day that can be analysed in real-time, giving a financing institution much more insight into their actual health and needs, especially as organisations develop. This makes banks’ almost universal failure

None of these are especially easy – and they usually demand a lot of time and money. Time and again, business owners tell us the same story: “We live day to day, basically holding the company together with sticky tape and praying it will survive”. What these operations need are sophisticated inventory forecasting lenders. These providers can predict clients’ future

Finance

sales based on their historical data with high accuracy, then deliver the appropriate funding when needed via disruptive financing partners. Such pioneering partnerships understand the need for cash in retail SMEs’ day-today operations. They live their clients’ struggles from an informed, very close perspective and give them easy access to funding. The workings of such an arrangement are simple. The inventory forecaster’s AI predicts clients’ future sales and values the perfect amount of inventory that needs to be ordered from suppliers to match consumer demand. This places a very exact, very business-associated price tag on their financing needs. With the client’s consent, it shares this data with the funder. They plug the numbers into their learning algorithms and, within minutes, create a one-click bespoke offer, which is delivered instantly to the client. If they agree, they receive cash within 24 hours, which is how financing really should work for anyone. Disruptive data-driven startups are fast-emerging and are powering a funding revolution for small-to-medium-sized companies. For example, Irish revenue-based

financing and growth platform for online merchants, Wyflyer, is already an established data-driven financing startup, with more than half a billion USD in e-commerce business funding. Unsurprisingly, it saw an opportunity in inventory planning and the associated financing and started its own inventory management services earlier this year. Data-driven fast and easy access to cash will become the norm. It is tailored, unbiased and low risk for the financing institution if the data source is rich. Access to data-driven funding is inextricably linked to access to super-IT, which brings us to a concluding point. Most SMEs, whether retail or otherwise, are still Excel managed. This creates an unsustainable technological divide between the small and the super-powerful conglomerates. All the major data silos, the best AIs, the top-rated developers at Amazon, say, create a hostile environment that simply gives little or no chance for smaller companies to compete. But the so-called “democratisation of technology” process is quickly changing that landscape. AI and other cutting-edge technologies need no longer be a luxury for any enterprise. Accessible, easy-to-set-up

SaaS tools create a bristling armoury of powerful opportunities for our ‘local heroes’ - at an affordable price. Small companies have access to world-leading technology like never before. This creates a doubly-positive effect. Not only can they enjoy the benefits of data-centred algorithms immediately, but further machine-to-machine communication will also multiply the gains as SaaS startups become interconnected with APIs. Such closely linked environments create cases for information-driven financing and these will surely become the new norm for SMEs. In fact, the process has already begun, with companies in leading economies now securing sizeable equity and credit awards to enable and expand their offerings.

Tomas Formanek, CEO and Founder, Inventoro. Source: 1 https://globalnaps.org/issue/small-medium-enterprisessmes

2 F:\Magazine Issue 4\Artices\12 David\Wayflyer.com

Technology

he cyber landscape is changing fast. Year over year, organizations face new threats and tactics from threat actors who want to capitalize on the security shortfalls of financial institutions. While these risks change, one thing remains the same; the need for robust cybersecurity to defend against evolving threats and threat actors. Financial institutions are a prime target for cybercriminals as they process monetary transactions and house highly sensitive customer and financial data. Cybercriminals also know financial institutions have easier access to funds to pay off ransoms than many other businesses, such as small online retailers. And these 22

criminals know reputation is everything and may threaten to leak company data or expose the hack publicly. Assessing the risk landscape is a critical first step to ensuring financial institutions are protected from evolving cyber risks. Before investing in technology to bolster your firm’s cybersecurity efforts, you must fully understand what risks you are up against and create a well-thought-out plan to mitigate these risks. Mindlessly throwing software solutions at issues is not an adequate fix. While technology suppliers and vendors can offer valuable solutions to protect against cyber-attacks, it can be money wasted if your business does not invest in the right solutions.

Mitigate third party risk Cybercriminals continue to attack critical supply chains that are vital for all businesses including financial institutions. Gartner predicts that by 2025, 45% of organizations worldwide will have experienced attacks on their software supply chains. Securing the supply chain and ensuring proper third party and vendor risk management is now as crucial as your in-house risk management process. Today, businesses across verticals rely on third party vendors to perform daily business operations. The financial services industry is a large consumer of outsourced technology, elevating exposure to potential third party risk. As financial

Technology

institutions continue to adopt permanent hybrid work policies and ramp up technological transformation efforts, the need for proper third-party risk management is evident. Firms must continuously ask questions and gather data to ensure vendors are following the proper procedures to secure their data and privacy, from the vendor search to long-term vendor relationships. Performing adequate due diligence and allocating resources to third party risk management is necessary for financial institutions to minimize supply chain based cyberattacks. Emerging technologies As the threat landscape continues to evolve, so too do technologies aimed to protect firms. For example, Extended Detection and Response (XDR) combines endpoint detection and network protections to provide a holistic overview of abnormal activity from multiple data points. With XDR, technologies can work in conjunction from technical controls (such as anti-malware protection) to cloud security and network security. XDR is just one example of new emerging technologies that have entered the cybersecurity marketplace. As technology evolves, new technologies can be configured to meet your firm’s specific cybersecurity needs and work in tandem with the systems and processes your firm already uses.

global businesses were impacted through their supply chain. In response, the CISA released Guidance for Affected MSPs and their Customers.

(MAS) has acted to prevent cyberattacks on financial institutions. It’s clear that regulators across the globe are prioritizing cybersecurity for financial institutions.

This government focus has resulted in threat intelligence that is more coordinated and available to private businesses and security firms than ever before. For example, in the US, the CISA publishes Top Routinely Exploited Vulnerabilities highlighting critical vulnerabilities threat actors continue to exploit. In the EU, ENISA releases annual Threat Landscape Reports, identifying threats and attack techniques and offering relevant mitigation measures. These freely available government resources provide insight into the evolving threat landscape and current trends and can be used to inform your firm’s cyber preparedness and plans.

Navigating the evolving cybersecurity landscape

Regulation is king As regulators become more focused on cybersecurity, we can expect multiple governments to introduce new regulatory efforts to aimed at pushing financial institutions to prioritize cybersecurity and ensure compliance. Different localities are taking different approaches. In the US, the SEC listed cybersecurity as one of its examination priories in 2022. In the UK, FCA/PRA released rules to ensure cyber resilience. In Asia, the Monetary Authority of Singapore

Today’s cybersecurity landscape is increasingly complex and multidimensional, but this should not scare you or deter your cybersecurity efforts. Rather, it should serve as a wake-up call to prioritize cybersecurity efforts at your firm. Robust cybersecurity is possible for any firm of any size. The goal of cybersecurity efforts should be to become a resilient and trusted financial institution. The first step is to understand the risk and regulatory landscape, constantly analyze and reassess your defenses and incident response plans, and invest in the solutions, talent and technologies that will ensure your firm remains protected and compliant.

Simon Eyre, CISO, Drawbridge. Source: 1 https://www.gartner.com/en/newsroom/press-

releases/2022-03-07-gartner-identifies-top-security-and-riskmanagement-trends-for-2022

2 https://www.cisa.gov/uscert/kaseya-ransomware-attack 3 https://www.cisa.gov/uscert/ncas/alerts/aa22-117a 4 https://www.enisa.europa.eu/topics/threat-riskmanagement/threats-and-trends

Use available government resources Governments across the globe recognize how critical it is to protect critical infrastructure, including financial institutions, from cyberattacks, and regulators are taking different approaches, from legislation to working groups. The Kaseya attack last year displayed the critical nature of protecting software supply chains, and government action in response to disruption. While less than 60 direct customers were affected over 800 23

Banking

Why information is now the most valuable currency in banking

he effects of COVID-19 had a significant impact on many areas of our lives, and the retail banking sector is no exception. During lockdown, banks throughout the UK were forced to close their branches, requiring their customers to access and manage their accounts online. At the height of the pandemic in early 2020, 73 percent of UK consumers were using digital banking channels at least weekly, while the number using mobile banking reached 57 percent – a rise of five percentage points on the previous six months. The shift to digital banking has, of course, meant a change in the ways banks interact with their customers. Gone are the traditional relationships and faceto-face ways of doing business. But, while it may have been challenging at first for financial service institutions and their customers, the wealth of customer data generated through this new way of banking represented a new opportunity for banks to deliver a better – albeit different – customer experience. Understanding and insight Delivering an excellent digital customer experience is vital for banks today. As with any online service provider, their experience of buying products and service online mean that if a customer isn’t happy with the experience they receive, they’ll simply look elsewhere. It’s largely why banks with a customer-centric culture have been found to be 60 percent more

profitable than those without. Despite this, though, many are still not delivering the experience their customers expect. Only by truly understanding its customers can a bank hope to meet their expectations. Doing so requires achieving a 360-degree view of those customers, across the entire organization, and at each stage of their journey. Taking such an holistic, end-to-end approach will provide banks with visibility into their customers’ behaviour, needs, and preferences, which will allow them to offer personalised products and services. Fortunately, the move to digital banking means banks are now able to access all the data they need to gain this understanding. At the same time, though, there’s so much data available that deriving any value from it can often appear challenging. It can be hard to know, for example, exactly what data a bank has, where that data’s stored, whether it’s up to date and accurate, and at all times, ensuring it’s secure and compliant. But managing this wealth of data needn’t be overwhelming. Implementing a company-wide solution for managing customer lifecycle information can ensure banks deliver the experience their customers have come to expect and at the same time, deliver optimal employee engagements.

Banking

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Banking

Benefits of information management A customer lifecycle information management solution will break down the various information silos that exist within a banking organisation, connecting its disparate system to eliminate any inefficiencies and enable improved information sharing across the institution. By digitising, streamlining, and automating time-intensive, traditionally paper-based manual processes, it will not only increase productivity and agility, but also enable a bank’s employees to work from anywhere, at any time – particularly important given the current trend toward post-pandemic hybrid working practices. Automated business processes diminish risk and improve efficiency, too, ensuring a bank’s information management remains secure and compliant. In addition to dramatically reducing the potential for human error, for instance, such a solution will help support end-to-end KYC (Know Your Customer) and anti-fraud processes as well as, maintaining and adhering to evolving compliance regulations concerning the use of customer data. Perhaps most importantly, this approach will enable banks to deliver optimal and consistent customer service interactions, and engage with their customers on their preferred channels. Furthermore, the insight it grants into each customer will allow banks to create, personalise, and deliver products that match their individual needs – this includes enabling them to create engaging and effective self-service capabilities.

But this has given banks an opportunity to understand their customers better and create consistent and engaging customer experiences throughout their lifecycle that will drive loyalty and nurture long-lasting relationships. Never before have they had access to so much customer data, and the insights it can provide can prove invaluable. Optimising this treasure trove of customer information can allow them to adapt to shifting expectations, and provide dynamic and relevant services that meet their customers’ needs. Key to this is managing that data effectively which, for many, can be a daunting task. However, with a customer lifecycle information management solution in place, banks can efficiently analyse the data they hold, using it to deliver the best possible customer experience and, in turn, maintain their competitive edge in the new normal.

Monica Hovsepian, Head of Financial Services Industry at OpenText Source: 1 https://www.rfigroup.com/rfi-group/news/rfi-latest-

research-rfi-group-global-digital-banking-report-2020

2 https://thefinancialbrand.com/125771/top-five-customerexperience-trends-in-banking-for-2022/

Long-lasting relationships Banking has undergone a considerable transformation in recent years, not least due to the impact of the pandemic. A widespread shift to online and mobile platforms means both banks and their customers have been forced to adapt to new ways of engaging.

Technology

Damien Brophy, ThoughtSpot’s Vice President, EMEA

riven by the acceleration of modern data architectures, such as those offered by Snowflake and AWS Redshift, the world of enterprise data has been massively transformed in the last decade. So much so it could be said that the economy is now entering the defining decade of data. All the promises made by the business intelligence and analytics analysts are now coming true - with the scale and power of the cloud, modern data architectures, and AI behind it.

The UK’s vibrant financial and financial technology market, dominated by digital natives born in the cloud, exemplifies the newly established expectations demanded by the modern frontline analytics user. Not the modern data scientist or data analyst, but the frontline user, interacting with data, even though they are not data specialists and hold no PhD in analytics. It’s this ability to take determined action based on realistic insight that has propelled successful modern financial brands to disrupt the market. Witness the growth of NeoBanks Monzo, Revolut, or Starling, and Metro Bank - using new technology to take on the high street with the best of both worlds. They leverage insights and push to evolve and disrupt industry models and markets, taking advantage of innovation from across the modern data stack to outcompete their peers at home and internationally. For institutions offering financial services, perhaps even enterprise banks who

are yet to embrace the cloud, here are some pointers to unlocking greater value from existing data. Understand the environment Real change starts with an informed position. Legacy technology drag is a bugbear of large institutions. Smaller firms may not be quite as aware when their tech-stack has begun to be an anchor until they begin their journey. Many banks in particular maintain complex, almost Frankenstein’s monster architectures that simply must be kept running. Those environments mean technology leaders must be sure that moving to cloud services will not impact service provision. By 2025, Gartner estimates that over 95% of new digital workloads will be deployed on cloud-native platforms, up from 30% in 2021. Back in 2016 it estimated that under 10% of data was stored in cloud platforms, and by 2025, it predicts that context-driven analytics

Technology

and AI models will replace 60% of existing models built on traditional data. The speed and scale of operations has transformed consumer and business experiences alike. Cloud platforms including Snowflake, DataBricks, Google Big Query, and Azure Synapse provide elastic compute, data sharing, and agility benefits, plus automation. The tedious data ingestion processes have moved ETL (Extract, Transform, Load) to ELT (Extract, Load, Transform). Moving huge data sets to be able to work and transform it in the cloud is no longer a months-long process. Change stands on tech, but isn’t focussed on it As financial organisations move to the cloud to build more flexibility and agility, they have two new requirements. They need to extract the intelligence now more accessible from within their data. And, they must push it to the decision makers that need those insights. The new cloud-native, data stack is AI-driven and its front ends have been ‘consumerised’. Arguably, the real opportunity doesn’t come from technology cost reductions or increased speed, it comes from the ability to augment all employees, from the dedicated business analyst to the

frontline customer service agent. With search, backed by AI support, users can query and understand insights from data, guided by organisational guardrails to help them troubleshoot, forecast, uncover trends, and get ahead of problems - able to be agents of incremental value creation. Without the adoption of modern data tool sets based on modern, open data platforms, the gap between the tech-savvy and tech-lagging firms may become unbridgeable. Every problem solved, every smarter and quicker interaction builds brand equity. Therefore a move to the cloud, to fully take advantage and be successful, requires a cultural willingness to open up benefits and responsibility alongside the solutions that empower the workforce. Financial firms are already investing in AI on top of their data platforms. A survey of 200 business executives and C-suite leaders showed a belief in transformational value. Nearly 40% of financial institutions are measuring AI’s success by its ability to detect and reduce fraud. In the next five years, 34% expected to use AI to significantly reduce operational costs, 27% will leverage it to develop new

products and services, 25% will utilise the technology to enter new markets, geographies, and industries. Again, this comes back to the overall customer experience. Based on agile data, in the cloud, firms that reduce costs, better serve customers, and find new market opportunities, will dominate. This is how cloud-based data-leaders across sectors are winning. Netflix. Amazon. JustEat… They are data leaders, and all leverage the cloud to drive their insight machine. The potential for other financial services firms to follow the brandname growth stars like Monzo, Revolut, or Starling, is there. But lessons must be learnt from how data leaders gain and keep their edge in the modern data-led world. Technology, data, culture and intelligence are the pillars of the modern, successful business. Each reinforces the other. All build on the cloud, but a financial institution must be open to a culture that prioritises a data-led approach, finding solutions based on fact, and taking measured risks based on those findings. Source: 1 https://www.gartner.com/en/newsroom/press-

releases/2021-11-10-gartner-says-cloud-will-be-thecenterpiece-of-new-digital-experiences 2 https://www.gartner.co.uk/en/articles/12-data-and-analyticstrends-to-keep-on-your-radar 3 https://go.thoughtspot.com/e-book-financial-services.html

Global Award Winners 2022

2022

AWARDS WINNERS LIST

Winners

Award Title

Aafiya TPA Services

Best Health Insurance TPA UAE 2022

Abu Dhabi Islamic Bank

Best Islamic Digital Bank UAE 2022

Access Bank Plc

Best Sustainable Bank Africa 2022

Access Bank Plc

Sustainability Leader of the Year Nigeria 2022

Access Bank Plc

Most Innovative & Sustainable CSR Activities Banking Nigeria 2022

Access Bank-Ghana

Best Retail Bank Ghana 2022

Advans La Fayette Microfinance Bank (Advans Nigeria)

Best Microfinance Bank Nigeria 2022

Agthia Group

Most Sustainable Food And Beverages Company UAE 2022

Al Hilal Life

Best Life Insurance Company Bahrain 2022

Al Mal Capital

Most Leading Asset Management Company UAE 2022

Alizz Islamic Bank

Best New Card Product Oman 2022-Shari’s Compliant Corporate Credit Cards

Aljazira Takaful

Most Outstanding Islamic Sharia Compliant Insurance Company Saudi Arabia 2022

Alta Software

Best Banking Software Solution Providing Company Georgia 2022

Asia Pay

Best Digital E-Payment Solution Provider Hong Kong 2022

AsiaPay

Most Leading Financial Solution Providing Company Singapore 2022

AvaTrade

Best Online Broker UAE 2022

Banca Generali

Best Private Bank Italy 2022

Banco Industrial, S.A.

Most Outstanding Retail Bank Guatemala 2022

Banco Industrial, S.A.

Most Admired Digital Bank Guatemala 2022

Bank Dhofar

Best Corporate Bank Oman 2022

Bank Nizwa

Most Leading Islamic Retail Bank Oman 2022

Bank of Ayudhya Plc-Krungsri Bak

Best Bank For SMEs Thailand 2022

Bank Of Mauritius

Best Central Bank Governor Africa 2022 – Mr Harvesh Kumar Seegolam

Bank Of Mauritius

Best Central Bank- Sub-Saharan Africa 2022

Banka Kombetare Tregtare-BKT

Best Commercial Bank Kosovo 2022

Beltone Asset Management

Best Performing Asset ManagementCompany Egypt 2022

BPI Capital Corporation

Best Investment Bank Philippines 2022

Casebook PBC

Most Admired Human And Social Service Platform US 2022

China Asset Management Co., Ltd.

Best Asset Management Company China 2022

CLIMBS Life and General Insurance Cooperative

Most Leading Micro Insurance Company Philippines 2022

Global Award Winners 2022

Winners

Award Title

CM Trading

Best Performing Broker South Africa 2022

Commercial Bank of Ceylon PLC

Best CSR Bank Sri Lanka 2022

Commercial Bank of Ceylon PLC

Best Digital Banking Initiative Sri Lanka 2022-Flash

COSCO SHIPPING Ports Ltd

Most Sustainable Company (Port Sector) Hong Kong 2022

COSCO SHIPPING Ports Ltd

Best Port Operating Company Hong Kong 2022

Credit Bank Plc

Most Innovative Financial Services Kenya 2022, Best New Banking Product Kenya 2022-Elev8Her

Credit Bank Plc

Best New Banking Product Kenya 2022-Elev8Her

Delta Capital Partners

Best Private Equity Deal House Jamaica 2022

Devexperts

Best New Trading Application Germany 2022- DXTrade Mobile

Dividend Gate Capital

Most Leading Private Equity Firm Bahrain 2022

EasyPay

Most Leading Digital Payment Platform Albania 2022

Ecobank-Liberia

Best CSR bank Liberia 2022

Faraday Venture Partners

Most Outstanding Venture Capital Fund Management Company Spain 2022

Fast Cover Travel Insurance

Best Customer Service In Travel Insurance Australia 2022

Fidelity Bank PLC

Most Innovative Digital Bank Nigeria 2022

First Capital Bank Botswana

Best Commercial Bank Botswana 2022

First National Bank Zambia

Most Innovative Commercial Bank Zambia 2022

First National Bank Zambia

Best Banking Application Zambia 2022-FNB App

Forex Masters

Best Online Forex Training Company South Africa 2022

FundCalibre

Best Performing Investment Fund Research Firm UK 2022

Genero Capital LLC

Best SME Private Equity Investments Firm UAE 2022

I&M Bank Ltd-Rwanda

Best Commercial Bank Rwanda 2022

IC Markets

Most Innovative CFD Broker Australia 2022

JFD Group Ltd

Best Portfolio Management Company Cyprus 2022

Joyalukkas Exchange

Most Outstanding Mobile Application(Remittance Services) UAE 2022-Joyalukkas Exchange Mobile App

Kanbawza Bank (KBZ Bank)

Best Bank for CSR Myanmar 2022 and Best Digital Wallet Myanmar 2022 (KBZPay )

KCB Group

Best Retail Bank Kenya 2022

KCB Group

Most Valuable Banking Brand Kenya 2022

KdedeC Consultancy and Training Companey

Most Outstanding Consultancy And Training Company Turkey 2022

LegacyFX

Most Trusted Trading Education Provider UAE 2022

MAGIC FINSERV

Fastest Growing Digital Platform For Financial Services USA 2022

Mashreq Bank-UAE

Best Digital Bank UAE 2022

Maybank Asset Management Company Ltd-Malaysia

Best Asset Management Company Malaysia 2022

Maybank Securities (Thailand) Public Company Limited(Maybank Kim Eng-Thailand)

Best Capital Markets Brokerage Services Thailand 2022

MetLife Emeklilik ve Hayat

Best Life Insurance Company Turkey 2022

MetLife Emeklilik ve Hayat

Most Trusted Loyalty Program Insurance Sector Turkey 2022

National Bank of Kenya

Best Customer Service Microfinance Bank Kenya 2022

National Bank of Kenya

Best Commercial Microfinance Bank (For Product Innovation)Kenya 2022

National Bank of Kenya

Most Sustainable Financial Services Kenya 2022

Nedbank

Best Banking Technology Implementation South Africa 2022 31

Finance Derivative Awards Inviting Banks, Companies and Business Leaders to participate in our Annual Awards Program 2022

Submit Your nomination now to awards @financederivative.com

www.financederivative.com

Global Award Winners 2022

Winners

Award Title

Old Mutual Life Assurance Company

Most Outstanding Life Insurance Company Malawi 2022

Oman Insurance Company

Best General Insurance Company UAE 2022

Ooredoo Maldives

Best Telecom Company Maldives 2022

Ooredoo Maldives

Best CSR Telecom Company Maldives 2022

Pacifico Seguros

Best Insurance And Reinsurance Company Peru 2022

Pangaea Securities Limited

Best Stock Brokerage Firm Zambia 2022

People’s Bank

Best Domestic Bank Sri Lanka 2022

Profile Software

Best Digital Banking Software Company UK 2022

Profile Software

Best Treasury Management Company UK 2022

QInvest

Best Islamic Investment Bank Qatar 2022

SeABank

Best Digital Bank Vietnam 2022

Sehaaonline (Neoshine Healthcare Alliance FZ LLC)

Most Leading Online Healthcare Marketplace UAE 2022(Medical Equipment market place / Trading)

Shorooq Investments PLLC

Best Technological Investment Company UAE 2022

Steward Bank

Most Outstanding Bank For Card Services Zimbabwe 2022

Takeleap

Best Futuristic Technology Company UAE 2022

The Jubilee Insurance Company Of Tanzania LTD

Best General Insurance Company Tanzania 2022

The Jubilee Insurance Company Of Tanzania LTD

Best CEO(Insurance Company) Tanzania 2022-Dipankar Acharya

Tianjin Port Development Limited

Most Leading Port Operating Services Hong Kong 2022

Tianjin Port Development Limited

Most Outstanding Cargo Handling Services Hong Kong 2022

uab bank Limited

Best Bank Myanmar 2022

UNIFIN Financiera SAB de CV

Most Excellent Leasing Company Mexico 2022

Vattanac Bank

Best Mobile Banking Application Cambodia 2022

Vattanac Bank

Best Customer Service Bank Cambodia 2022

Vietcombank Fund Management

Best New Equity Funds Vietnam 2022 – VCBF Midcap Growth Fund

Wema Bank

Most Outstanding Digital Banking Platform Nigeria 2022-ALAT

Yapı Kredi Asset Management

Most Outstanding Investment Advisory Company Turkey 2022

Zeepay

Best Fintech Company Ghana 2022

CALL FOR ENTRIES 2022 INVITING Financial Organizations

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

Wealth Management

Iain Ramsey, Chief Investment Officer, AHR Private Wealth

Safe haven bonds in an inflationary environment In the current climate, the merits of holding traditional ‘safe haven’ bonds seem few and far between. Increasing but albeit still relatively low yields, alongside recent volatility similar to equity markets make the trade a very difficult one and has investors questioning their traditional investment approach and asset allocation.

hen also factoring in the spread between bond yields and equity earnings yields, the trade looks even less compelling. However, what is important for investors to consider is what are the main drivers of including these safe haven assets in the first place? Often their inclusion is done so to add protection against equity market volatility and to ensure that at times of market stress the whole portfolio is not correlated to equity markets. Of course, on top of this, there is the steady flow of income these assets can provide (although despite recent moves this still looks relatively unappealing).

and higher inflation are worth less to an investor today due to the uncertainty of the market and growth equities have been sold off the most as a result of their price being based on their predicted future cash flows. Additionally, the income provided by government bonds is also worth less to investors today.

of war in Ukraine, it took longer for safe haven bonds to show the effects of inflation. With this in mind, investors should be considerate when holding safe haven bonds and not act in the same way as they might have done before but consider allocating them as a more reliable bond in market shocks.

Understanding this dynamic gives investors insight as to why their traditional asset approach may currently be struggling and the prompt to consider what action they should take. Certainly, it would be neglectful to ignore this dynamic and maintain the traditional approach on the premise it has worked previously.

However, one of the biggest hurdles to this flexibility across asset allocation has been and is, the use of passive investment vehicles and their advocation of traditional asset splits between traditional equity and traditional fixed income.

High inflation and rising interest rates have created an ideal scenario for traditional asset class holders enabling both their equity and fixed-income holdings to sell. As both equity and fixed income holdings are being sold off at the same time, the reasoning as to why points to the duration of these assets.

Relying on safe haven assets in market uncertainty

Equities with a higher risk-free interest rate 34

Safe haven bonds remain an attractive asset during market shocks caused by conflict, the pandemic or recession as they tend to stay relatively consistent and are affected by event with a delay. In recent times of world distress, such as the initial outbreak of Covid 19 and the onset

Many investors will find themselves with a split of low-cost equity ETFs and low-cost Fixed Income ETFs. This approach has worked well and may continue to do so over the longer term, however it is important for investors to understand what they own, in particular within the fixed income space. In a traditional global equity ETF, the vehicle will buy shares weighted to the market capitalisation of the companies within its index. Over the long term this should lead to the vehicle buying more

Wealth Management

of those companies that have performed best and grown accordingly. This is not always the case in the short term, but longer term this should stand true. But most Fixed Income ETFs simply buy the largest issues of debt within its respective index with no consideration of quality or duration of the issues, just simply which company or Government has issued the most debt. It soon becomes apparent that this is a very different dynamic to that of an equity equivalent and presents risks to investors of these ‘cheap’ vehicles that they may not be aware of. This process works well when these assets are lowly correlated to equities and provide a favourable level of income, but when they sell off in a similar vein to equities, Bloomberg Barclays Agg -4.66% YTD (at the time of writing), this ‘cheap’ approach may need to be revisited or, at the very least, truly understood by the investors led to believe that this is a surefire, safety-first approach. So what is the correct approach to asset allocation in this environment?

Finding the right approach While an allocation to safe haven bonds is still warranted, this will be on a lower one than the historic norm and the challenge then lies with investors to maintain the desired risk profile. But in order to escape an inflationary environment unscathed, utilising alternative asset classes and areas of equity that are typically able to perform well in this environment can prove useful. The risk of property and commodities such as gold and silver being as volatile as equity is often much lower for example because these assets are not typically the ones hit the hardest in an inflationary environment. Which makes them a good equity alternative. There are also only a few absolute return strategies available to mirror the return profiles of safe haven bonds. This are for example consistent low single digit returns with low single digit volatility through both long and short equities or accessed by using derivatives to take advantage of

currency changes or interest rate rises. However, even those are perhaps riskier as there remain many absolute return strategies that are closet equity trackers, and where precision in selection remains a key factor. Creating a barbell portfolio In this instance, bond yields and equity are scattered at some of the highest level in decades. And whilst higher risk is usually entailed, equities currently have a much prospect in terms of risk adjusted trade than bonds. As such, it is based on this metric that investors should adopt a barbell approach to investing whereby they can take a higher equity allocation while continuing to invest their fixed income into the lowest risk investments that act purely to preserve the real value of their holdings. This can enable them to retain the benefits produced by favourable equity trade relative to bonds and keep the same risk allocation. As mentioned above, selection remains key in any case and precision in to choose equity and fixed income is crucial. 35

Banking

Voice is the new frontier for growth and innovation in consumer banking Agility is not something typically associated with traditional, largescale financial services organisations in the consumer banking sector. The reason for this is relatively clear: these organisations, operating in highly regulated markets, are often lumbered with complex legacy infrastructures and are therefore slower to implement technologies and processes that might make them more nimble in the face of uncertainty.

ortunately for the consumer banking sector, things are starting to change. The pandemic acted as the required nudge for many consumer banks to begin investing in technologies that would make them more responsive to the ever-changing needs of the customer. Nowhere was this clearer than in the area of conversational data, unlocked by voice capture programmes and AI-driven analytics. This technology became something of a necessity for many consumer facing banks with lockdowns implemented, working arrangements switching to hybrid, and

customer communications thrown into a state of flux. Voice capture became a lifeline for many banks forced to maintain in-office compliance standards in a world of remote working. However, as value from investment in voice capture and the power of conversational data was realised, many innovative consumer banks have started to recognise its potential elsewhere. Whilst this innovation may have been prompted by something beyond their control, many banks have come to see the newfound flexibility and improvement in customer experience.

Banking

banks that are not resolved first time round are a significant pain point as they can escalate into an around 11-13 additional interactions to reach a conclusion. This is frustrating, not least because the customer often must explain their reason for calling multiple times. The most innovative consumer banks have used their investment in voice capture technology to garner actionable insights and learnings from these conversations, reducing the number of customer interactions and improving the first-time resolution rates. In fact, companies that use voice data combined with AI to identify the top reasons for repeat calls and provide better firstcall resolution training. This decrease in repeat calls results in significant savings for large organisations making it a worthwhile investment. How voice technology is tackling bad actors

Voice capture as an opportunity for CX To understand the potential of voice capture in improving the customer experience processes in consumer banks, one must consider the extent of communication that occurs via voice. Whether it’s phone calls to contact centres, in-branch conversations or internal discussions regarding issues, a significant amount of insightful data (that can lead to more efficient customer resolution processes) is held here. What’s more, this all-important voice data is not found in an average CRM but instead in call recordings that can tell banks about much more than just the effectiveness of their customer relations – right down to the customer’s emotional responses and their likes and dislikes. For the customer, calls to their

However, it is not just the much-discussed area of customer experience for which investment in voice capture is yielding new benefits. Banking and financial services industries are finding voice an invaluable tool in tackling bad actors inside and outside their organisations. HSBC, for instance, has said that it reduced telephone banking fraud by 50% by authenticating customers through their unique voice identifiers, showing how voice data can be used to protect consumers. From a regulatory standpoint, according to recent research finance workers are ten times as likely to share inside information and make inappropriate comments during phone calls and video chats than over email and other text-based platforms. With call recording, AI and analytics technology, organisations can stay ahead of this

problem, analysing voice conversations, spotting patterns and flagging potential issues. There is also the increasingly tricky issue of keeping customer records up to date in an era where communication with one’s bank is far from homogeneous. Consumers are increasingly instigating communications across multiple channels, including voice-based smart devices, and this has significant ramifications for businesses - both from an operational and regulatory standpoint. Consumer banks that prioritise ownership of conversational data will set themselves apart from competitors and stay ahead of these developments. Beyond the initial benefits to compliance, voice capture technology offers a wide-ranging roster of possible innovations to improve operating processes. It is also clear that the importance of voice is only set to increase – 50% of consumers in the US and UK now own a smart speaker, an estimated 128 million Americans use voice assistants, and voice assistant usage is growing globally in cars and other settings where interacting with a screen is less accessible. These developments show that voice is expanding as the key medium consumers expect when communicating with organisations. Banking and financial services institutions must stay one step ahead of this trend and offer the level of service their customers expect.

Richard Stevenson, CEO, Red Box Source: 1 https://www.ft.com/content/6e0b0150-9af0-4a63-b2b709448defc98d

The Future of Insurance–

Intelligent, Automation-Driven Experiences

Wealth Management

xperience defines business today, and insurance is no different. Customers will reward those providers that deliver exceptional experiences (for example, paying up to seven per cent more for car insurance), but they will also punish those companies that don’t by not buying from them again. In fact, 32% of all customers would stop doing business with a brand they loved after one bad experience. But what does an improved experience look like? It’s fast, it’s easy, and it delivers what customers want, through a channel they’re comfortable with. Or, to put it another way, good experiences are whatever the customer, not the provider, decides. In insurance, consumers increasingly expect to be able buy common products (such as home, health, car and travel insurance) with a minimum amount of fuss and time. The demand and competition to simplify the end user experience is stronger than ever, with easy access to a broad range of relevant products (and the ability to buy them quickly) expected as standard. For more complex queries, if a human agent is required, then customers expect the representatives they’re speaking to have all the information they’ve already provided online to hand. Evolving expectations forcing ongoing change These expectations have been shaped by digital innovators in other industries and through entrants, such as price comparison sites and Big Tech companies, that do not have the legacy systems or regulatory concerns that established insurers must contend with. One report noted that policyholders’ willingness to buy insurance from non-traditional entities, in particular Big Tech, leapt from 17% in 2016 to 44% in 2020. With so many options readily available, people do not care about the challenges

insurers face – if a process is too hard or time consuming, customers will go elsewhere. Where does this leave insurers? Some are adapting, developing applications that allow customers to access all their insurance policies in one place, irrespective of the business unit providing the service. This allows customers to review policies, add and make changes, and receive relevant, targeted offers. The insurer receives live data on what matters to the customer and increases the likelihood of selling new products and growing share of wallet. It’s not front end or back end, but end to end How do others achieve this? Many will focus on the front end, investing in areas that customers directly interact with. While it’s certainly the most visible part of delivering great customer experiences, purely developing the interface overlooks the importance of being able to generate, connect and share relevant data in real-time, in a manner that meets regulatory requirements and corporate governance. This is critical. Without the back end and the ability to aggregate data effectively, all insurers are left with is a well-designed interface that provides no value to customers at all. Getting the right data in the right place at the right time is the fuel that drives great experiences. The challenge is enabling a system that can deliver full end to end services which simply can’t be achieved through a recruitment drive. Aside from the fact that sourcing, hiring and retaining the right talent is harder than it’s ever been, with all industries battling for the same skillsets, humans simply cannot scale and match with technological advancements. They get tired, they make mistakes, they lose focus when faced with crucial yet repetitive tasks, and their productivity becomes inconsistent.

Wealth Management

But technology never stands still. Processes that were automated a decade or more ago may not integrate with new solutions and innovations. New digital tools and ways of working means new types of data being gathered. That all needs to be fed into automated processes, which may have been initially set up for very different purposes. It is important to remember that automation is not a one-and-done task, but a system that needs to evolve as the business itself changes. Today, that change is being driven by heightened expectations of what makes great customer experiences, which means insurers need to deploy automation in new ways to better serve their audiences.

And it’s not just about reducing workloads. Automation can augment employee performance, by providing the data they need quickly and briefing them on crucial customer information in advance. That might be providing a summary of the case in question, sentiment analysis or even the opportunity to suggests alternative or additional services. This intelligent approach to automation isn’t exclusive to major providers, either. New models of delivery, based on cloud computing, means that insurers of all sizes can access intelligence-as-a-service, paying for what they need as they use it. No major upfront investment, no long lead times waiting to get going. Acquire, deploy, and start automating. Delivering experience at scale Automation is not new; many insurers have been using it to speed up certain back-office functions for years now. But applying it to customer experience, to deliver the exceptional levels of service that meet rising expectations, is relatively untested territory for many providers. By combining intelligent automation for the quick, repetitive work with human resources for connecting and building relationships, insurance providers can deliver tailored experiences at scale and safeguard their market positions.

Human and machine, not human vs machine That doesn’t mean replacing people. While customers may want quick access and easy-to-use systems to buy, when something goes wrong or doesn’t fit a preordained checklist, they want to speak to a real person. Automating the manual administration frees employees to focus on more complex issues, taking over from the machines when

Leon Stafford, UK country manager, Digital Workforce Source: 1 https://www.pwc.com/us/en/zz-test/assets/pwc-consumerintelligence-series-customer-experience.pdf

2 https://www.pwc.com/us/en/zz-test/assets/pwc-consumerintelligence-series-customer-experience.pdf

3 https://www.insurancebusinessmag.com/uk/news/

technology/report-highlights-impact-of-covid19-oninsurance-digitalisation-233562.aspx

The Future of Insurance–

What sort of processes? Insurance as a sector is full of automatable processes, in everything from risk and compliance to claims and financial administration. It might be updating invoicing contact details, transferring policies between systems, generating certificates, initial responses to enquiries, validating data, handling refunds, opening claims applications and processing assessments; the list is endless. With so much of an insurer’s business model based upon rules and meeting set criteria, much of it can, and in many cases already has, been automated to some extent.

a more tailored or empathetic approach is required.

Intelligent, Automation-Driven Experiences

The answer is to automate. To take manual processes, the ones employees struggle with, and let technology do it faster, more accurately, and at greater scale in conjunction with humans.

Banking

Corporate Banking In 2022 – An outlook on the industry

ollowing the accelerated pace of change brought about by the 2020 pandemic, what large corporate businesses are looking for from their banks is moving at speed. Troublingly, there’s a perception that those banks themselves aren’t fully keeping up.

Digital matters

It’s vital they do so. The tumultuous economic cycle we’re currently undergoing after all comes with opportunity. With drops come rises, and two-thirds of the value generated during a recovery cycle comes in the immediate two years afterwards.

Minimising friction and increasing efficiency are key demands from large corporates, lessening day-to-day direct interaction between them and their banks. Businesses want either self-service or machine to machine interaction with banking systems, and digital first is now very much expected. Our research confirmed it was more important to businesses than face-to-face interactions, a trend that’s not going to reverse with three times the number of corporate clients reporting they want to communicate through APIs.

Yet what complicates things is the changing demands put on corporate banks by business. NTT DATA recently surveyed nearly 900 senior decision makers across 12 countries to gain a clearer understanding of the current picture. Here are some of its key findings. 40

A big, irreversible change is that businesses clearly want a lot more interaction with their banks, but they want it on their terms. That means on a machine rather than human level.

Banks need to adjust both their culture and their technology stack to keep up: it’s

high priority, but also beneficial work too. Digital first allows them to offer customers a more flexible, bespoke service, that’s also more streamlined when it comes to scaling down - and ideally up! But the tech stack needs to cover ground to accommodate that, and at pace. To facilitate customers who might now want to start a transaction in one place and complete it in another, and to cater for the numerous daily interactions they’re now having with banking services. This is a by-product of online banking that’s long been building. The days of customers interacting with banks every week or so are gone. Our research concludes that the relationship now is a lot more frequent - but far less face to face. Quick evolving banks are adapting to this, particularly disruptors who originated from the tech sector. It goes beyond self-service banking: the drive now is

Banking

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Banking towards fuller integration. Companies want to build the tech into their own stack and harness the opportunities of automation and AI. It’s good news for the progressive, but a very real problem for traditional banks. Legacy technology and systems are a clear business impediment, and some traditional banks are losing momentum as they bring in the expertise and systems to adapt. In some cases, they are also hampered by legacy organisational structures that work department by department, rather than to a holistic strategy. It’s a local world now Appreciating technology stacks don’t instinctively recognise international borders, corporate banking still must take this into consideration when building out their digital infrastructure. Ignoring local knowledge and regional regulatory variations is done at their own peril. For example, banking may be globalised, but a major multi-national in the United States needs to be able to talk to each one of the 4,000 smaller regional banks that operate in the US as well. Local demand matters, and whilst ISO 20022 has emerged as a global standard for sending payment instructions between financial institutions of all sizes, it’s still developing. There’s a clear advantage for early adopters of it. Region by region, the priorities for banks also vary. We discovered that in Europe, blockchain use is of real interest, whereas in the US the priority is towards IoT data when it comes to trade finance. Head to Latam, and the onus is more towards investment into data that can be viewed and segmented. Sustainable Hand-in-hand with tech change in 2022 are environmental concerns. The to-do

list of policymakers and regulators is zeroed in on ESG and sustainability issues, they tell us. The world is shifting towards lower carbon ways of doing business, and there are pressure points from multiple directions for corporate banks to consider. On one side, governments are bringing in more stringent measures and ESG targets. But as telling, customers are demanding the same, as their customers are demanding it of them. Values and beliefs matter, an irreversible trend as more and more millennials assume C-suite positions. Banks are already conscious of this. In Europe in particular, regulations are not new. Many banks are already working to published standards such as TCFD, PRI and NGFS, pending confirmation of final regulations. The work is complex. Adapting fast is a clear business opportunity here, but also there’s a need to fully understand the sustainability impact covering all the processes of a bank. The difficulty some face with ESG initiatives is an opportunity of course for a fast-moving corporate bank. To be the place where customers come to in order to get the information they need – and potentially to unlock preferential financing as well. Regtech Much of the existing banking regulatory framework surrounds two familiar acronyms: KYC (know your customer) and AML (anti-money laundering). They’ve each brought about the rise of regulatory technology, or regtech. It’s a major growth area in fintech, and important to onboarding new clients. Still, our research exposed gaps: · 44% of banks report the need for more investment in onboarding

Banking

· 39% say their customer onboarding is too slow Onboarding is pivotal to a long-term working partnership, and making sure that process is as smooth as possible from day one. Positively, banks are prioritising this. · 57% of working on AI-enhanced KYC/ AML processing · 55% are accelerating the digitisation of KYC/AML There are regional variations. APAC is 10% ahead of development focus here compared to other regions in the world. In the US, there’s particular focus on the digitisation of KYC/AML processing. Europe, meanwhile, lags a little behind in reporting a ‘fast and seamless’ process when it comes to onboarding (stricter requirements and regulations are a factor there). Integration & rationalisation After years of low interest rates, banks have sought varied sources of income. However, return on investment will never not be important and it remains a major consideration for technology spend decisions. Internally, CFOs are also leaning more on data analytics and automation – pooling information from multiple channels – as part of their own decision-making process. Those channels require rationalising, and that’s a driver for modern banking too. Again, banks know it. 35% of those surveyed have already undertaken rationalisation work, with the aim of allowing a single customer view for senior leaders. The main reasons? Cost-saving is an obvious one, yet not the most popular. More respondents were keener to improve the experience they offer clients. The benefit of a single portal for a bank’s offerings was key to that. Also, the opening up of product features through APIs and web platform integration, in turn making those available to 44

clients. This isn’t new work, yet the current focus is more on the web platform side: complete API and host-to-host integrations are in short supply, yet also in demand. The banks who get to that first are in a clear position of strength. Where’s the investment going? Whilst opening up banking is the top investment priority amongst those we surveyed, what comes through is a clear drive towards robotic process automation. That’s to be expected: blockchain and IoT are of importance to corporate banking, as there’s some certainty that value can already be derived there. Yet the key drivers for change are also enhancing operations through the use of artificial intelligence, and that aforementioned robotic process automation and digitisation. Add in too that C-suite and senior decision makers are leaning heavily on data and insights, leading to 46% of banks putting their investment in this area. Decisions and expertise The future is moving fast, and technology is being pressed to keep up. There’s a tech stack demand that’s building for banks, and change is being demanded by their clients. The conundrum is whether banks build their own tech, or buy it in. At the moment, 61% are developing in-house solutions and 39% buying off the shelf (the latter number drops to 33% in Europe and the US). The cracks are where banks are placing their investment. We discovered disparities between expectations from businesses and the investment coming from banks. Take sustainability: banks aren’t matching the demand from clients yet. Corporates are looking for banks to join up their channels, and yet omnichannel investment isn’t fully meeting that either. Work is clearly required.

Client-first future Refreshingly, 2022 sees optimism in both the market again, and in a world where changes brought in to deal with the COVID-19 pandemic are longer lasting than anticipated. Still, it’s been proven that business can change fast, and that fresh thinking can come through at speed. Today, phoning someone up to deal with a demand is too slow. Businesses want fast, almost instant decisions. They prefer self-service from their bank, where services can be configured and adapted as required. Corporate banks need to adapt to that and need their tech stack to be able to service it. The broader move is towards a bank of the future that is client-led rather than product-led. One that innovates and that marries up cutting edge fintech to its traditional experience. To achieve this, banking CFOs are leaning too on more sophisticated data analytics for their decision making. AI use is therefore heavily expanding. Deep learning and natural language processing are vital, not least in facilitating a frictionless yet personalized end-to-end banking experience. At the heart of all this change? Data. The future bank, client-led, needs that data to not sit in siloes, but to flow securely between its services, enriched by AI. That’s the key to the experience corporate clients will demand – and also the key to their loyalty.

Miguel Mas, Director, Global Corporate Banking NTT DATA

Banking

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Technology

Highlighting Cyber Threats Before They Darken Your Business

dapting to polymorphic IT security threats requires not only a 360-degree view of cyber threats, but the adoption of innovative technologies such as AI, without disrupting existing systems, argues Adrian Jones at Gatewatcher. According to ‘The Cost of Cyber Crime’, a report in partnership with The Office of Cyber Security and Information Assurance in the Cabinet Office, the estimated cost of cyber-crime to the UK is £27 billion per annum. A significant proportion of this cost comes from the theft of intellectual property (IP) from UK businesses, which is estimated at £9.2 billion per annum. The real impact of cyber-crime is likely to be much greater. Financial institutions are particularly vulnerable. According to the Covid Crime Index 2021 Report, three-quarters (74 percent) of banks and insurers have experienced rise in cyber-crime since the Pandemic began. Indeed, 42 percent said that the remote working model due to COVID-19 makes them less secure and that IT security, cyber-crime, fraud, or risk department budgets had been cut by almost a third (26 percent) in the past 12 months. The UK’s financial regulator has recently told banks to strengthen and test their defences against the threat of Statesponsored cyber-attacks as the conflict in Ukraine deepens. Systemically important lenders in the UK have also been 46

contacted by British security services, such as the National Cyber Security Centre, with a similar warning. The imperative is to check their ability to identify an attack when it happens and to quickly restore any IT systems that are disrupted. Cyber-crime is a global phenomenon that affects every organisation, from smaller local companies to American Internet giants. Real-time multi-vector detection Private and public organisations have long recognised the need for protection systems such as antivirus software, firewalls, and infection prevention to respond to the ‘classic’ cyber-attacks well-known to the security community. Yet too many are exposed to the threat of advanced targeted attacks that we call advanced persistent threats (APT). A broad term, APT is used to describe an attack campaign in which an intruder, or team of intruders, establishes an illicit, long-term presence on a network in order to mine highly sensitive data. With these attacks increasing in both frequency and aggression, the threat to corporate systems and networks is not as simple as a lack of protection. The greater issue is complacency and the ‘wrong’ kind of protection. The increased sophistication of cyber-attacks, which often focus on ‘endpoints’ as easier targets for infiltrating a network, have contributed to the rising adoption of

endpoint detection and response (EDR) technology that detects and investigates suspicious activities on hosts and endpoint devices such as laptops and tablets. They employ a high degree of automation to enable security teams to quickly identify and respond to threats. Increasing sophistication However, for the global banks and financial institutions that we work with, EDR coverage is not enough by itself. Enter network detection and response (NDR) which is a natural complement to the extended detection and response (XDR) platform. While EDR is based on a software requirement on each of the monitored systems, NDR analyses a copy of the monitored network traffic. Chief Information Security Officers would never choose between two senses - sight or hearing. We use all five senses and our brains to constantly construct a ‘situation’ thanks to information from the various sensors that are our senses to make thousands of decisions, often good ones, thanks to this information and its context. Whether it is with our brain or in the context of attack detection, the quality of decisions will depend directly on the information sent by the sensors. First, we must trust and understand this information, and build knowledge through contextual data to drive the step choices in the plan or process

Technology

Good protection models combine cutting-edge technologies with artificial intelligence (AI) to address all attack techniques by identifying the distinctive elements of each cyber threat. By analysing every single ‘packet’ of data, right across the network, organisations can benefit from a fully 360-degree view of the level of cyber risk by technology asset and user. These tools combine machine learning algorithms with various state-of-the art network traffic analysis methods to deliver insight rather than raw data and thousands of irrelevant ‘events’. What companies want: Cloud, Interoperability, and Data Sovereignty It is important to remember that not all EDR, NDR and XDR solutions are equal. There are dozens of companies claiming to offer these technologies, yet few have the full package. Organisations are rightly concerned about the risk of sending data to the Cloud, data sovereignty and legislation, as well as developing an IT stack that is ‘open source’ enough to work alongside other technologies, such as AI and machine learning. In today’s world, it is necessary to deploy secure products that are interoperable with other systems and network products, such as the EDR or the firewall, intrusion prevention system (IPS) and unified threat management (UTM). Financial institutions should seek a flexible (cloud, on-premises, or hybrid), scalable and innovative approach that is compatible with new technologies. Multiple types of AI should be used as the sixth sense, supporting and advising the human element within the security chain not forcing unknown ‘AI derived’ decisions. And it must do this without disrupting the existing architecture. A stand-alone platform will allow the local management of customer data which works both in connected and

disconnected mode for isolated and confidential networks. Agility is a daily requirement in the face of a protean and constantly evolving threat. Hackers are very nimble and innovative. We must counter and confront them through the creation of an evolving technology platform that promotes an adaptive solution in the face of future threats. It has never been more important to facilitate the operations of cyber security teams to enable them to be more efficient in prioritising their remediation actions.

Adrian Jones, Gatewatcher.

Source: 1 https://assets.publishing.service.gov.uk/government/

uploads/system/uploads/attachment_data/file/60943/thecost-of-cyber-crime-full-report.pdf 2 https://www.baesystems.com/en-uk/article/covidcyber-crime--74--of-financial-institutions-experiencesignificant-spike-in-threats-linked-to-covid-19

Finance

FS C-suite are “flying blind”: Three steps to make better decisions with data

he financial services (FS)

sector has experienced its fair share of disruption in the past two years,, with cyber attacks, the acceleration of digital banking and the allure of open banking startups being amongst the many trends to play out against the backdrop of a pandemic. The rapidly changing landscape means that financial leaders are facing more pressure and higher stakes than ever before, leaving no room for error when it comes to decision-making. Earlier this year, Treasure Data explored these challenges by surveying the views of the C-Suite in the FS sector, to understand how leaders are feeling about the art of decision-making in the current landscape. The results were stark. More than half (54%) of FS leaders now feel less confident making business-critical decisions compared to before the pandemic, and six in 10 (62%) revealed that they were afraid of making the wrong decisions. In addition, 58% admitted to feeling more pressure on the decisions being made.

It is clear that there is a clear crisis of confidence in decision-making, but what is more worrying is that the sector appears to be ‘flying blind’ without the resources and insights it needs to properly understand customers and clients. The digital revolution, accelerated by the pandemic, has made plain just how crucial data is for understanding customers and pivoting strategy at short notice. 72% of FS leaders say they base more of their decisions on data now than a couple of years ago, and 68% say that the pandemic has highlighted the importance of using data when it comes to decision-making. Yet concerningly, FS leaders lack the understanding to fully capitalise on the data available to them. Over half (52%) said that they don’t have the right tools in place to interpret and use data to make informed decisions, and one in two (49%) lack the confidence to interpret and use data to make informed decisions.

With high street banks such as HSBC and Lloyds Banking Group axing branches in favour of online, and the cost of living continuing to spiral for businesses and consumers alike; the C-suite is truly leading during an era of unpredictability. Successfully formulating and implementing actionable and precise data-driven strategies has never been more important, and all FS leaders must consider the following three steps to be data-ready. 1. Phase out data silos 77% of FS leaders recognise that effective, high quality data allows them and their businesses to open the door to a competitive advantage, yet many continue to rely on siloed data that constrains their ability to make the right decisions. As organisations grow and diversify or launch partnerships, , they risk letting critical intelligence on their customers and operations falling through the cracks.

Finance Accessing the highest quality cloudbased data, and having the tools and skills to use it, is increasingly important if FS leaders are to overcome the crisis of decision-making facing them. Only through truly connected insights , can financial services businesses develop the holistic view of their customers and clients that they need to provide the best quality services . 2. Upskill your team into the digital age In order for FS leaders and organisations to make effective use of the data available, they first and foremost must invest in boosting their skills - and those of their team. Our findings highlighted that data literacy is a concern for the FS C-suite, with 60% saying they felt that a better understanding of the available data would improve their job performance. Investing in upskilling your team will harness their ability to turn unconnected data points into a holistic picture of

actionable insights. Once leaders and their teams learn how to identify which data is genuinely useful and how to connect insights across channels and platforms, a picture will start to form, and the invaluable patterns of customer behaviour and consumer preferences will be unlocked. Equally, high quality training will grant you and your team the knowledge you need to conduct data management responsibly and ensure the right decisions are made when it comes to delivering tailored, personalised experiences without compromising privacy.

to inform the most effective communications with customers and clients. The C-suite must recognise that they have access to a goldmine of intelligence, but decrypting it requires the proper expertise and organisational setup. . Following these steps to properly equip teams will allow FS leaders to become more nimble and confident in navigating such an uncertain landscape. - The result? Decision-making e driven by smarter insights, and a clear cut competitive advantage.

3. Reorganise and gain deeper insight Whilst it is always important to take a holistic view, large data sets diminish in value without the intelligence and expertise needed to turn them into insights. The real problem facing FS leaders is a lack of intelligence around data, not that there is too much of it. In the age of precision marketing, data must be mined in order

Andrew Stephenson, Director of Marketing EMEA Treasure Data

Finance

Control over compliance: Navigating regulations in the finance industry

Finance

mong other sectors, the finance industry is typically subject to a range of new regulations on a regular basis, and the pace of introductions can leave organisations fighting to keep up, despite an obligation to ensure compliance. It’s a constant carousel that can leave IT teams and regulatory professionals feeling lost and rushing to implement quick fixes to ensure they don’t receive hefty fines, but rapid implementations can create issues of their own. In the finance space, many companies need to complete audits on a regular basis to prove that their data and services are sufficiently secured and remain private. While it’s also true that cost savings can be achieved from keeping pace with changes, a solution is simply mandatory to ensure business stability. This is even more urgent due to the fact that regulations are only becoming stricter and penalties are rising in severity.

Challenges in the finance industry The finance industry in particular is subject to a range of significant regulations. The SOX act for example was devised to protect both shareholders and the general public from any fraudulent practices or accounting errors. In both a financial and IT sense, all public companies in the US and non-US with a presence in the country must now comply with the regulation, or otherwise face fines of up to $5 million.

from the removal of time-consuming manual processes that would have previously been necessary with a wide range of disparate devices. This could for example have included server provisioning, a desktop or laptop system, network devices, storage and potentially even a different solution for each of their applications. By adopting a strategy where a heterogeneous monitoring tool is used, it’s all in one place and any non-compliant devices won’t slip through the net, reducing the chance of configuration drift.

Being in all places at the same time Tracking change

The first stage to achieving control over regulatory compliance is by being able to monitor configuration across the plethora of IT suite devices in the organisation. With the right technology in place from a specialist vendor, the current configuration can be ascertained before having visibility of how a device may have changed over time, which is vital data in understanding where a fix needs to be applied to ensure that regulatory standards are met. Depending on the public standards that the finance organisation needs to adhere to, the controls can be applied based on what they interpret to best suit their operations. This could for example be a particular setting that means only certain users have permission to access customer data, or a firewall that should only allow a certain type of information through. A monitoring tool can then be used to continually check and identify any change that deviates from those controls, ensuring that any potential future issue can be picked up before it becomes a problem. With devices able to be controlled from one location, IT professionals benefit

Before the proliferation and widespread expansion of IoT devices, it used to be the case that IT professionals could keep control of regulatory developments by simply monitoring one device in the organisation at a time. Now, the sheer number of complex devices makes this an almost impossible task, with this situation set to worsen as IoT expansion shows no signs of slowing. While IT professionals can’t physically be in several places at the same time in order to maintain control over their IT suite, the omnipresence of technology enables oversight that previously couldn’t be facilitated. With a monitoring tool in place, financial organisations are able to keep control over a diverse technology set and their current level of compliance, easing the working day of professionals in the business and enabling smoother processes.

Mat Clothier, CEO Cloudhouse Source: 1 https://digitalguardian.com/blog/what-sox-compliance 2 https://www.pcisecuritystandards.org/ 3 https://www.bis.org/publ/bcbsca.htm

FINANCE

With PCI DSS, any size merchant that accepts credit cards must be in compliance with the regulation. It’s critical that organisations ensure their systems are secure to enable trust with customers when it comes to securing their payment card information. In the banking landscape, regulations such as Basel II provide recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision.

It’s a tricky path to navigate, but one that financial businesses need to successfully tread, or otherwise potentially risk a ceasing in operations if a solution isn’t found. The key to enabling compliance is by carefully controlling change, which includes tracking any deviations through development, validation via engineering and then testing any new integration. The biggest issue with ensuring compliance however is the overhead required to both test systems and ensure that the results are recorded in a meaningful way, but the correct technology integration can remove this challenge.

Technology

Scaling securely in the a

obotic process automation (RPA) has been one of the key technologies underpinning digital transformation and, since it first appeared on the market a few years ago, the market has grown substantially. Now expected to reach $11 billion by 2027, RPA helps organisations achieve the efficiency, accuracy and speed necessary to thrive. By successfully supplementing rather than replacing human resources, RPA is empowering workers to use their experience and capabilities in a more engaging and beneficial way, rather than focusing on manual and time-consuming processes. For example, in the financial services industry, RPA bots are helping to do everything from streamlining manual underwriting processes and reducing fraudulent activity through to account monitoring and assisting with new customer onboarding. While this leads to numerous benefits for workers and employers, organisations need to be aware that RPA comes hand-in-hand with specific security considerations. As with other new and powerful technological initiatives, RPA projects need to be approached with cyber security as necessary component. Doing so will allow organisations to deliver enhanced digital experiences both quickly and safely.

RPA advancement Multiple industries have embraced RPA as a means of solving business problems. Yet, early implementations of RPA, namely semi-attended bots, necessitated human supervision, requiring a person to hit the ‘go’ button in order to accomplish a task and requiring the user’s digital identity to do so. As organisations look to digitally advance however, ‘citizen developers’ or those who use low-code or no-code platforms to design their own automated processes have 52

taken it upon themselves to push automation to the next level – entirely unattended robots. These unattended robots though, require access to the same networks, systems, and applications as their human counterparts, including access to systems which require the highest level of privileged access. This access makes robot credentials and identities just as vulnerable to threat actors as those of human workers, and not effectively securing them provides opportunity for havoc. The future of RPA then, has created a rift between security and automation teams. With security professionals demanding stricter measures and the latter struggling to implement them, many developers have been discouraged and ceased their creativity and innovation whichc is necessary to advanceing RPA technology. Those developers who have decided to continue in their pursuits and adopt non-approved RPA programmes however, have created gaps in their company’s cybersecurity.

Putting security first Fortunately, there is a way to address security problems while still using secure unattended robots, allowing citizen developer innovation and without demanding additional work from the teams which organisations are wanting to free up. The solution is the automated and centralised management of RPA credentials.

All hard-coded privileged credentials are removed from robot scripts and replaced with an API call pointing to automatically rotated credentials maintained in a secure, centralised repository – rather than manually assigning, managing, and upgrading the credentials a bot needs to do its work. This ensures security mechanisms, such as multifactor authentication, password uniqueness

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automation-FIRST ERA and complexity requirements, and the suspension of privileged credentials are all consistently implemented. It’s also good practice for security teams to ensure bots have their own unique identity credentials – similar to to limiting a human user’s access or rights to the bare minimum necessary for their work. This ensures non-repudiation and separation/segregation of duties, as well as limits access to the applications and databases bots need.

Liberating works and innovation To truly unlock the citizen developer’s innovation and liberate workforces through RPA, organisations must adopt DevSecOps and bring automation and security together from the start. By engaging with security teams and professionals at an early stage, organisations will be able to effectively - and safely - scale the number of RPA bots in their organisation.

Brandon Traffanstedt, Sr. Director, Field Technology Office CyberArk Source: 1 https://research.aimultiple.com/rpa-stats/#:~:text=The%20 RPA%20software%20market%20revenue,2027%20 (Grand%20View%20Research).

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Kevin Crawford, Global Head of Insurance Delivery Endava

Trends Driving Acceleration in the Insurance Industry

The past two-plus years have seen the digital economy accelerate at a breakneck pace. As people contended with a global pandemic and continued efforts to ‘return to normal’, one thing hasn’t changed: people’s preference for “digital-first” ways of living. The accessibility of logging onto one’s bank, car app, healthcare provider website, or favourite retailer with the click of a button has become easier than ever, and insurance companies are making moves to capitalise on this.

istorically, insurance has been considered a ‘grudge’ purchase: something consumers had to buy but wouldn’t choose to if it wasn’t required. Insurers are now thinking about how to change this perception and take the industry from a cost to be dealt with to something that adds value across key industries. Given the acceleration to digital-led and increasing touchpoints with consumers online, there are four main ways in which insurers are going about this: 1 – Thinking about more than CX Customer experience is the key driver in guiding decisions around product and service development. If customers aren’t happy, any other work is moot. But many are focusing too intensely on this element to the detriment of the rest of a tech stack, and while many insurers are using ‘digital transformation’ to address CX, this only tends to address user-facing systems, leaving the back-end as an afterthought.

But customer experience is more than just UX; it also must take into account critical back-end components that ladder up to what an end-user sees. Elements like faster throughput, less repetition, or fewer processing errors, are indispensable for meeting customer needs. That’s all to say that to properly address CX, we must go further than the front-end, overhauling systems to create a true end-to-end customer journey. 2 – Using data to build trust One element of providing the best customer experience is in the intelligent use and understanding of data to fit customer needs; insurance companies have recognised the opportunity here and as such, personalisation will set those providers apart in months to come. Implementing personalisation tools like engines or predictive analytics means that companies can better use customer data to provide a more relevant experience. Finding new methods to exploit this data and improve customer interactions will be a key market differentiation for insurers.

At the moment, customers seek to complete a transaction with insurance providers as quickly as possible and will generally avoid contacting the insurance until there is a problem, but better data utilisation and an increasing number of touchpoints is changing that. Thanks to smart home goods and insurtech like telematics, customers are engaging with their providers much more favourably and regularly and are rewarded for their involvement and compliance. Simultaneously, insurers experience improvements in claims, resulting in stronger, more sticky relationships. The use of telematics and sensor technology can be vetted and enriched by additional datasets, furthering this personalisation and building up to the one thing insurers need to continue growing and serving their customers: trust. By providing relevant, transparent and easy to understand options to customers only when needed, insurers will build credibility and rapport with prospective buyers, rather than trying to sell to those who aren’t interested.

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3 – Simplifying claims with parametric insurance Improving the claim payment process will become another critical strategy for insurers to boost consumer confidence and enhance the overall customer experience. Since claims processing is critical to insurance firms’ performance, this is an area where they can differentiate themselves from the competition. However, simple and frictionless payment has yet to become a distinct selling feature for most providers. The procedure is still quite manual and labour-intensive, which frustrates insurers and leaves consumers unhappy. To mitigate this, insurance companies must take a step back and assess the value of streamlining and simplifying the client payments journey. When purchasing a new insurance, a consumer wants the process to be as simple and straightforward as possible, with no time wasted entering payment information. Parametric insurance allows for the automatic payment of claims once a certain set of requirements has been met, take

rainfall for crop insurance, for example. Integrating electronic payment platforms into the customer claims journey, whether it’s Google Pay or Apple Pay, or another automated option, can only improve the customer experience as it reduces stress for customers. 4 – Integrating into the larger ecosystem Ultimately, where insurers win is by creating a more streamlined approach to access for customers across industries. This will require a review of existing systems, and integration across verticals, businesses, and networks. In some highly profitable areas – like automotive – insurers may seek to take a larger piece of ownership within the ecosystem. The automotive industry already has a host of ecosystems – fuel, breakdown, service, warranties, repairs – which provide touchpoints for insurers to use their customer data to embed services as is appropriate for end users. Alternatively, insurers may opt to partner with larger industry players who can operate credibly

on their own. Whichever approach insurers take, integration will be key to thriving in the digital economy, as consumers look for a onestop-shop marketplace for their needs. Conclusion As consumers continue to look for easily accessible options across their digital journeys, now is the time for insurers to shift focus from pricing to value-add. By placing greater emphasis on the client experience, the development of supporting data and technology, and the repositioning of insurance as something more than a basic risk exchange, insurers can reposition themselves as personalised, UX focused, integrated providers to ultimately better align with being seen as a benefit for purchase, rather than a ‘grudge’. As the digital economy continues to become a network of options for users, the need to operate in this space will only intensify so that consumers are able to buy what they need, when they need it.

Finance Derivative Magazine Issue 5

Articles inside

4 Trends Driving Acceleration in the Insurance Industry

Scaling securely in the automation-first era

Highlighting Cyber Threats Before They Darken Your Business

The future of insurance – intelligent, automation-driven

Voice is the new frontier for growth and innovation in consumer banking

FS C-suite are “flying blind”: Three steps to make better

Corporate Banking In 2022 – An outlook on the industry

Safe haven bonds in an inflationary environment

Control over compliance: Navigating regulations in the finance

Yet to embrace the cloud? The competitive gap is widening

A lending revolution: bringing retail SMEs a new funding model that truly meets their needs

Tech collaboration: What does it mean for mortgages?

Why the future belongs to smart businesses?

How to optimise your KYC processes

New avenues for investing in the aviation sector

Constant Evolution: Cyber Threats, Regulation and Technology

Authentication vs. Authorisation in the SCA era

Why information is now the most valuable currency in banking