Finance Digest_Issue 2

DIGEST

COVER STORY THE CHANGING RELATIONSHIP BETWEEN THE CFO AND CIO INTERVIEW RAWBANK “LET US CREATE NOW OUT OF OUR DREAMS FOR A BRIGHT TOMORROW” BANKING WHY SMARTPHONES ARE FALLING BEHIND BANKS IN THE MOBILE PAYMENTS RACE ?

INVESTMENT SUPPORTING THE INTERESTS OF UK INVESTORS THROUGH TAX -EFFICIENT INVESTMENT SCHEMES

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FROM THE EDITOR CEO and Publisher M. Murphy I feel pleased to present you the Second Edition of Finance Digest.In this issue, we acquaint you with the new and eclectic perspective coming from authors with enormous experience which would keep you riveted & captivated. It is not just a brisk mix of opinions & information from finance, but also data management, chatbots in banking, biometrics, cyber security and potential of IOT in fintech. As you know in the business world, the rear-view mirror is always clearer than the windshield, so find out here, if you are on top of your management strategy. Talking about the changing relationship between the CIO & CFO in large organisations, we see it as one which has undergone drastic changes in recent years. The CFO was seen traditionally as the head of several departments within a business, with responsibilities covering everything from IT to managing the company’s finances. With the onset of digitalisation, the CIO now has a far greater strategic role than ever before. With these two boardroom heavyweights fighting for prominence, it’s quite obvious why they find themselves at odds with one another. This issue also covers Rawbank’s discussion with Finance Digest, about their new strategic plan spanning over the period 2017-2019 with a tag line: “Let us create now out of our dreams for a bright tomorrow”. Today, Rawbank considers that Africa has found its own way, with the thrust of mobile solutions, where initially traditional banks wouldn’t have dared to navigate. Seeing the world of investments (at times cold and hard), a thorough research and a calm head held high, keeps you on course for reaping success in the long term. Find out our investment section to be in-line with your existing strengths.

Editor Anchal Gupta anchal@financedigest.com Client Service Manager Lynne Quamby Head of Distribution Mayha Das Project Manager Sean Dias Video Production and Coordinator Lynne Quamby Business Analyst Sofia Rego Graphic Designer S M Ramesh Advertising Sean Dias Email: sean@financedigest.com Phone: +44 2088580616 Admin Murali Ram Contact Address Three Six And Nine Limited 15 Bunhill Row London, EC1Y 8LP info@financedigest.com, news@financedigest.com

We hope that with this issue we keep you updated about the latest in the ever evolving finance industry and the various sprinting economies around the globe.

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BANKING 12

The Hidden Cost Strangling the Bottom Line at Retail Banks

Voice biometrics in the fight against fraud

Why Smartphones are Falling Behind Banks in the Mobile Payments Race

Bring back the listening bank

Three things to think about when bringing chatbots into your bank

How data holds the key to success by investing in employee wellbeing schemes

You get one chance to make a first impression â&#x20AC;&#x201C; why customer onboarding matters more than ever

INSURANCE 10

To get ahead in the evolving digital landscape, credit insurers need to be first out of the blocks

Addressing the insurance industryâ&#x20AC;&#x2122;s overreliance on paper by embracing electronic document management

Lessons insurers of cyber exposure can learn from WannaCry

BUSINESS 16

The changing relationship between the CFO and CIO in large organisations

Are you on top of your Digital Experience Management strategy?

Servitization - What Is It and Why Should You

Care

GDPR in the contact centre

HOW PAYMENT-OVER-TIME MODELS CAN EASE CYBER SECURITY STRAIN

The Achilles Heel of an M&A-led Transformation Programme – The Spreadsheet

Are you getting the right service from your payments provider?

Dealing with cyber security now that IT risk is a business risk

SMCR and GDPR - Why Senior Managers Have Good Reason to Worry

Preparing for MiFID II - choosing the right call recording solution

TECHNOLOGY 18

Protecting Sensitive Data When Migrating To The Cloud

Legacy technology: the dragon that won’t stay

slain

HOW TO NAVIGATE THE ERP PURCHASE DECISION -MAKING PROCESS

“How to capture and analyse your financial data more effectively

Leverage Flash Storage to Accelerate Digitalisation While Inverting IT Spend

FINANCE 8

Fintech Market: Threat or Opportunity?

Three ways financial services firms can use big data analytics to remain competitive

The finance customer services of the future

Digital transformation in the financial industry

The potential of the IoT in fintech

Five Steps to Keeping Your Sensitive Data

Secure

Why finance execs are embracing robots

Financial services firms and the need for board level transparency

How do we solve a problem like financial exclusion?

Nimble, focussed & savvy: Operating principles for financial services firms in high-pressure environments

How to improve the relationship between finance and operations

INVESTMENT 58

Supporting the interests of UK investors through tax-efficient investment schemes

How Can Secondary Markets Bolster Private Equity Investment ?

Fools rush in where business angels fear to

tread

INTERVIEW 84

Let us create now out of our dreams for a bright tomorrow

“

FINANCE

FINTECH MARKET Threat or Opportunity?

wo years ago, Jamie Dimon, chairman and CEO of JPMorgan Chase, wrote in a letter to shareholders, “Silicon Valley is coming.”

Since then, there has been a dramatic rise in interest and investment in the fintech market. In the first half of 2016 alone, investment in fintech companies exceeded $15 billion. A

Google search for “fintech” in February 2017 returned more than 19,300,000 results. However the ongoing noise around fintech creates confusion for CIOs and other bank executives. The noise comes from overuse use of the term “fintech”, used to describe firms big and small, new and old, pureplay startups and entrants from other industries. Venture capital funding, accelerator and lab announcements add to the noise and are not necessarily related to the adoption or success of the technology. The hype presents a significant obstacle to banking CIOs’ ability to make well-informed decisions about how to engage with fintechs. It also fuels demands from the business for CIOs to answer questions as to why their banks are not using, acquiring, partnering with or competing more aggressively with fintechs. To help CIOs determine the real value of fintechs to their organisations, Gartner provides this definition: Fintechs are startup technology providers that deliver emerging digital technologies that approach financial services in innovative ways or can fundamentally change the way bank products and services are created and distributed, and generate revenue. The term may also refer to the technologies these providers offer. Threats or Opportunities? Most financial services firms look at fintech companies as either friends or foes, but a premature use of that dichotomy can lead to bad strategic decisions. In reality, the transformational technologies that banks need are increasingly being developed by finte chs. This, of course, presents both threats and

opportunities for banks. Fintechs threaten the foundational services that banks offer customers. They often focus on simple, easy-to-use apps that charge consumers lower fees — or no fees at all — for transactions. However, fintechs also offer banking CIOs an opportunity to deliver the emerging digital technologies their institutions need and their customers demand, quickly and cost-effectively. Gartner predicts that by the end of 2019, 25% of retail banks will use startup providers to replace legacy online and mobile banking systems.

change the way the bank does business and to generate revenue. Banking CIOs should invest in or partner with these types of fintechs. For example, to gain access to blockchain solutions, Commonwealth Bank of Australia partnered with Ripple, while BBVA Compass partnered with Wave. CIOs evaluating fintechs need to do two things. Firstly, clarify the debate for colleagues by clearly articulating the threats and opportunities to the bank. Secondly, focus on the additional benefits that fintechs provide, including increased agility, improved customer experience, new services or brand differentiation

Cost optimization or digital transformation? Fintech startups generally offer opportunities to either help with transformational digital strategies or opportunities for IT cost optimization. Rarely will a fintech be able to address both. 1. Drive IT cost optimization Some fintechs offer CIOs the opportunity to improve customer experience or solve a specific financial services problem. These issues often result in customers turning to branches or contact centers to perform tasks, abandoning account opening applications or simply deleting mobile apps — all of which contribute to higher costs. To use fintechs that support IT cost optimsation, CIOs should purchase access and use APIs to deliver these fintech capabilities through the bank’s mobile app, website or even a third-party app or site. Alternatively, if the bank has sufficient internal IT skills, the CIO might consider building a similar capability inhouse.

Alistair Newton Research VP Gartner

References: “https://en.wikipedia.org/wiki/Jamie_Dimon http://files.shareholder.com/downloads/ ONE/15660259x0x820077/8af78e45-1d81-4363-931c439d04312ebc/JPMC-AR2014-LetterToShareholders.pdf https://www.cbinsights.com/research-fintech-Q2-2016 http://www.gartner.com/newsroom/id/3303517 http://www.gartner.com/technology/topics/costoptimization.jsp http://www.gartner.com/it-glossary/customer-experience http://www.gartner.com/smarterwithgartner/the-road-tothe-api-economy/ http://www.gartner.com/technology/research/digitalbusiness/ http://www.gartner.com/smarterwithgartner/the-ciosguide-to-blockchain/”

2. Support digital transformation Fintechs that facilitate digital business have the potential to fundamentally 9

To get ahead in the evolving digital landscape, credit insurers need to be first out of the blocks

n a world where it is increasingly difficult to make any transaction without some element of risk and without it being recorded digitally, the concept of blockchain should come as a breath of fresh air. Simply described, a blockchain is a distributed database that maintains a continuously growing list of ordered records called blocks. Each block contains a timestamp and a link to a previous block, all blocks are linked together and encoded using cryptography, which means there’s no central point of failure and its structure is better able to withstand malicious attacks. By design, blockchains are inherently resistant to modification of the data — once recorded, the data in a block cannot be altered retrospectively. Blockchains are ’an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way’. 10

INSURANCE

Originally conceived for financial transactions, where the third party would be a bank, blockchain technology is now disrupting other, broader markets where the ‘middleman’ is more likely to be a giant proprietary system or network. In the credit insurance market however, the disruption of blockchain has received a mixed response. There is concern that the very structure of the technology will provide all the security needed for credit transactions, therefore reducing the role of credit insurance, but is this concern rooted in reality, or does it more accurately reflect a general fear of change? Our industry does not move quickly and is already facing the challenge of how to re-evaluate its offer to customers, maximise emerging market opportunities and gain a better understanding of the quickly evolving ecosystem, much of which is influenced by digital technologies. Established conventions are hard to break, so it’s hardly a surprise that blockchain should be regarded with suspicion. But despite concerns, there are a wide range of emerging trends that will impact the credit insurance market, and while they may not all be around for the long-term, it is vital that we collectively understand how they can benefit our evolving environment and not just worry about the threat. No part of the insurance market operates in a silo and as 2017 is widely predicted to be the year in which blockchain technology makes its mark on individuals looking to take back control of their online transactions, it is likely that financial services will be expected not just to follow suit, but to lead the way. Credit insurance providers are already adopting a more client-centric approach, supported by technology, and it is only

a matter of time before blockchain applications are developed for trade finance. Several banks, including HSBC and America Merrill Lynch are creating automated letter of credit transactions and such like, so it is important for credit insurers to be looking at how new technology can shape their processes and product offers. In the recent Berne Union Yearbook, a report written by the International Union of Credit and Investment Insurers, blockchain technology was analysed and discussed many times, everybody agreeing that this technology is, in theory, an outstanding approach for changing foreign trade process sustainably in the future. One of the biggest concerns amongst credit insurers relates to databases that store details on buyers. These are no longer the sole domain of the big, traditional insurance companies. The costs of information have dropped, the Internet enables more reliable and wide ranging searches and new entrants have come into the market. The question is who in the trade credit insurance services industry will lead this revolution in a positive way? Throughout history, leaders of old paradigms have shown difficulty embracing the new. As with the major shifts that preceded it, blockchain will create winners and losers.

address individual needs in different geographical territories and industries. As part of this they need to communicate more effectively, delivering real-time information about the credit limits of buyers, highlighting any area of risk and details on the markets those buyers are working in. Technology is crucial to this. Not only does it enable the insurer to make informed decisions based on accurate information, it also speeds up the process, avoiding a frustrating wait for clients. The same applies to payments, which may continue for some time to be transferred in the traditional way, but which will inevitably start to use blockchain technology in the years to come. Progress is inevitable, and blockchain digitalisation technology could be of strategic interest for trade credit insurers. The biggest challenges to its industry-wide implementation are facilitating collaboration between market participants and technology leaders, so that digital and operational transformation can take place. There is an implicit threat, but there is also a great opportunity too, and it is up to the industry to ensure the balance is tipped in the right direction, in order to profit from this technology’s benefits in the shortest timeframe

What this means for credit insurers is that they have to compete on a new stage, and they have to develop strategies to engage clients that move beyond rating and scoring systems. Industry trends at present suggest that greater integration, greater transparency, greater dialogue and greater outreach will be the priorities of the coming years. Bespoke or specialised services must

Jerome Peze CEO and Founder Tinubu Square 11

BANKING

etail banks have done a commendable job of automating their customer-facing systems in recent years. Foremost examples are large ATM networks or a newly launched smart device app. However, there are hidden lingering problems that automation hasn’t fully addressed: a handful of manual, paper-based systems in the back office.

processes will be consistent across the enterprise. Double-checking data and resubmitting documents after errors are found adds costs and directly affects customer satisfaction.

These legacy manual processes undermine the pursuit of efficiency and productivity in a number of ways:

• They’re slow to adapt. Updating a manual process always requires, at a minimum, producing new or updated manuals and training existing personnel. Plus, there’s an inevitable increase in errors as new procedures are adopted.

• They’re costly. Using people to handle a routine task—think new account opening or loan application processing— will always be more expensive than an automated solution. • They’re error-prone and inconsistent. It’s nearly impossible to ensure manual 12

• They can’t scale. Software platforms can handle hundreds, thousands or millions of transactions with a modest, incremental increase in resources.

• They can’t be optimized quickly. Unlike manual processes, software-based ones can be analyzed in real time and iteratively improved. This makes them faster at responding to changing

business models or customer needs. Make no mistake: A scanner in the back office alone won’t solve these thorny issues. Unless integrated with other applications and business workflows, scanning and copying is an inefficient process. Plus, simple scanning doesn’t make the valuable information in business documents available to other applications. It just digitalises it. Finally, if scanned information ultimately has to be re-entered by hand, another manual process is born, which undercuts the goal of seamless automation. Manual Madness The downsides of manual labour include the fact that it is more expensive than automated processes, prone to error, not scalable, difficult to adapt and slow to optimize.

BANKING

“A handful of stray manual processes in the

back office can hamper automated financial document management efforts”

The Hidden Cost Strangling the Bottom Line at Retail Banks

David Whitton Regional Sales Director Kodak Alaris

One of the biggest blind spots for banks with regard to manual processes is how costly they can be to customer satisfaction. Manual processes that directly impact communication with customers take time. These delays allow customers to consider other options. The faster banks can on-board a new customer, the higher their new customer retention rate. In addition, leaving a customer alone to wait for a customer service agent to manage a document process on a device in the back office also presents a security concern. The nagging persistence of manual systems in retail banking has been exacerbated by waves of mergers and acquisitions in the banking sector, leaving many companies with a hodgepodge of conflicting systems.

Banks need to automate as many routine tasks as possible to reduce costs and human error, and to increase agility, responsiveness and importantly today, compliance. For this they need an information management solution that is a combination of hardware (scanners) and intelligent capture software that provides a way out of this manual madness. The software solution needs to be embedded within business applications and/or be presented on any desktop PC with a browser so that users can scan, index and send data to existing workflows. This way, document capture for e-docs, PDFs, Word, Excel, PowerPoint, email attachments and more becomes part of the existing workflow, rather than a new application users must master.

Web-based information capture technology using a graphical user interface, also known as GUI, can be made available to many more employees, enabling easy scanning and indexing for everyone—remotely or locally—while being centrally managed. And as a chain of custody for documents—documents should be deposited directly in a business repository, assuring accurate audit trail and data management compliance. Speed and accuracy result in higher customer satisfaction and lower support and staffing costs. With manual tasks in the back office a thing of the past, valuable staff hours can instead be spent pursuing additional revenue opportunities or developing new products. This shift can not only improve employee morale, but can also help boost the bottom line 13

BANKING

oice biometrics in the fight against fraud

any high street banks now offer voice recognition identification systems for their telephone banking services as a way of bringing more convenience to customers. It is billed as a way of offering customers easier and safer access to their accounts. However, in May 2017, BBC Click reporter Dan Simmons and his non-identical twin brother, Joe, succeeded in fooling the voice authentication system of a wellknown high-street bank by mimicking the phrase, “My voice is my password” – albeit after several attempts.

The struggle for contact centre agents is identifying fraudulent calls. Fraudsters are often skilled con artists. With just a small amount of personal information gained from places such as discarded bank statements and social media sites, they can manipulate a call centre agent into either feeding back additional personal information, or allowing them access to a customer’s account. Often, an agent’s key objective is to provide quality customer service and this can reduce the agent’s ability to ensure a caller is genuine.

But while the attempted ‘hack’ made for a great news story, voice biometrics has been shown to be far more effective at preventing fraud than more traditional security processes such as pin numbers, passwords and personal information. After all, very few people have a voicecoached ‘evil twin’ ready to impersonate them on the phone.

Luckily for contact centre agents and the companies they represent there are a range of ‘background’ technologies that can be applied to the call to help detect fraudulent calls. While training call centre agents to identify fraudsters can go some way towards minimising the risk, businesses are finding more success by empowering agents with new technology-based solutions.

Contact centre fraud – the arms race

Live call screening

The interactive and personal nature of customer calls to contact centres makes them a target for fraudsters. Voice biometrics is simply one of the more recent developments in the arms race between fraudsters and banks. Companies can implement a range of systems that operate behind the scenes to detect fraudulent callers and alert contact centre agents to potential criminal activity.

In addition to automated telephone identification systems, voice biometrics technology can also be used to detect fraud during a live call. The technology identifies a unique voice signature, like a fingerprint or a retina. Although someone can mimic the sound and accent of another, no two voices are the same.

Each person’s voice is unique because of the physical characteristics of the mouth, throat and nasal passages. While human ears are limited, these systems can detect even the smallest of changes in the speed, pitch, tone and rhythm of a caller’s speech. The system will build a mathematical model of a genuine caller’s voice, and then match every new call against it to ensure the caller is the same. Fraud detection There is also a way to protect against phone fraud that goes far beyond biometrics – fraud detection technology. Fraud detection on voice looks at more than the voice print of the user; it considers a whole host of other parameters. The technology scores calls based on audio, geolocation and phone number reputation characteristics, identifying in real-time more than 140 unique characteristics of a call to determine a unique risk level for every call. For example, is the phone number being used legitimate? Is the caller trying to hide something? Is the call actually being made from a voice-over IP (VoIP) system based overseas, when in fact it initially appears to be from a UK mobile? Voice Fraud technology has been proven to protect against overseas and as well as domestic threats.It analyses the complete audio of the call – going far beyond the sound of the voice alone.

A combined effort Most fraudulent call efforts are repeat attempts by the same group of organised criminals, and this has allowed authorities to compile a database of fraudsters from around the world. Calls can be matched to these unique voice and call signatures to quickly identify if it is a fraudster on the phone. The call centre agent is notified and they can quickly quarantine the perpetrator from any sensitive information. The entire process happens in the background of the call completely unbeknownst to the caller. Only when an issue is raised with caller authenticity is anyone alerted. Like any security measure, voice biometrics works best when combined with a range of other security processes, such as fraud detection. This approach has been shown to identify upwards of 85% of fraudulent calls. Combining several different technologybased fraud detection systems, instead of relying on outdated security questions for authentication, creates the widest possible protection for customers and their data

Tom Harwood CPO Aeriandi

BUSINESS

The changing relationship between the CFO and CIO in large organisations

he traditional boardroom has changed dramatically over the past few years, with senior roles and responsibilities shifting in line with the current economy and increasing reliance on digital technology. The nature of the relationship between the CFO and CIO, in particular, is one which has undergone much change in recent years. The CFO was seen traditionally as the head of several departments within a business, with responsibilities covering everything from IT to managing the company finances. The rise of digital, however, means that the CIO now has a far greater strategic role than ever before. With these two boardroom heavyweights fighting for prominence, it’s easy to see why they find themselves at odds with one another. 16

Internal clashes The relationship between the CFO and CIO can go one of two ways. Either it ends up being a constant struggle over the ownership of data and executive decisions, or it can take a more productive tack, where both sides work together to create maximum value for the wider business. The truth is that IT functions within businesses often cause frustration for finance departments, especially in the financial services sector. Insufficient resources, delays and restrictions can cause palpable tension between these two parts of the organisation. CFOs have historically played a critical role in managing IT project overruns and keeping costs down, and as a result,

many CIOs would actually report into the CFO. Today, technology plays such a crucial role within an organisation that the CIO is now often given budgetary freedom. This can become another source of tension, however. Senior IT directors are often guilty of pursuing so-called ‘vanity projects’, which demonstrate high technical capabilities, but use up internal resource and bring questionable value to the business. Driving collaboration If finance and IT work together, it can make a huge difference to a business, so CFOs must learn to recognise the important strategic role the CIO plays in their organisation. CFOs can forge a better understanding with their boardroom counterparts by

BUSINESS

looking at common features that exist between the two roles, according to Deloitte’s recent ‘CFO Insight’ report. For example, a ‘four faces’ framework can help CFOs to collaborate with their CIO more effectively by focussing on IT investment, how technology supports the organisation’s growth, timely and accurate data being delivered, and managing IT security risks. This methodology is already making a difference. According to EY’s recent ‘The CFO Agenda’, 61% of CFOs reported an increased collaboration in the last three years thanks to an increased involvement in the IT agenda, managing costs and profitability.

CFOs usually value logic and resultsbased thinking, whereas CIOs are often the opposite – big-picture thinkers. Being aware of potential differences when it comes to communicating is crucial to fostering a successful partnership. To start speaking the same strategic language as the CIO, CFOs should consider employing a ‘Business Partnering’ approach, where they provide more technical, commercial insights for the business to input into wider strategies. With this model, the CFO and CIO can work together to help plan, budget and forecast for what lies ahead, with technology at the heart of the company’s future strategy

Robert Gothan CEO & Founder Accountagility

References: “http://www.ey.com/gl/en/issues/managing-finance/eycfo-program-partnering-for-performance-the-cfo-and-cio-agrowing-collaboration https://www2.deloitte.com/content/dam/Deloitte/us/ Documents/finance/us-cfo-insights-seven-hidden-costscyberattacks-final.pdf”

As well as involving themselves in the IT agenda, CFOs also need to consider what their CIO is trying to communicate. 17

TECHNOLOGY

Protecting Sensitive Data When Migrating To The Cloud

iven the clear benefits of cloud computing it is interesting that there are not more organisations adopting this way of provisioning data-driven IT services for their employees. After all, there is less outlay on technology capital expenditure, less HR spend on IT personnel, and the opportunity to leverage the latest efficient IT solutions. Yet for many organisations, fears about the cloud linger. One of the biggest issues for banks and financial services companies is to guard against unauthorised access to data, and there are genuine concerns that moving to the cloud will bring about less, rather than more, stringent security controls. Questions are repeatedly raised around how to keep files encrypted as they move to and from the cloud or are sent to customers and business partners via cloud-based services. There is also a lack of understanding about whether a cloud environment will comply with 18

industry-specific and general data protection security regulations, not to mention data leakage, and accessing information from multiple devices. The most important decision for a bank or finance company is to select their cloud provider carefully, and ensure that all of their employees use only this approved platform. Enabling multiple platforms has the effect of fragmenting sources and sharing services, reducing the ability to monitor and control the spread of data, and compromising security protocols. Without access to a corporate-approved cloud platform, the temptation is for employees to use free, unsecure cloud environments just to ‘get the job done’, and the danger is that the IT department may not even be aware of it. Another consideration is the lack of physical control. If someone wants to steal data from an on-site data centre, they have to physically enter the building

to access the systems that house the sensitive documents. But with the cloud, if credentials are stolen, it is difficult for organisations to retrospectively restrict document access. On premises, sensitive data is the priority of the company. For cloud providers, however, the priority is giving access to their platforms 24/7, even if security is taken seriously. Case in point - Banks At all costs, banks and financial advisory firms must avoid the loss of capital and ensure there is no capacity for unauthorised users to access data that could lead to them taking the institution’s money somewhere else. The challenge lies in letting appropriate data be available to appropriate authorised users but also making sure all financial assets can be dealt with as if they were located within the walls of the institution’s datacentre and only accessed by trusted individuals.

TECHNOLOGY

Case in point - Insurance Because so many customer interactions take place in the field, insurance companies can benefit greatly from collaborating in the cloud. At the same time, firms must prevent fraudulent activity where unauthorised users attempt to modify claims for their own benefit. Of course, personally identifiable client information must also be protected from unauthorised access. The challenges Companies must make sure they keep every-day file exchanges — financial statements, accounts records and policy documents—as fully-protected as possible, whether at rest or in transit. This is made more difficult by the security issues that relate to rapidly-evolving technologies such as mobility and the Internet of Things (IoT), both of which are looking to access services and data running in the cloud.

The expansion of devices supported by the cloud also opens businesses up to more insider threats since superadmins can impersonate other end users to access their data. This can happen even without users (including senior management) realising the admin is viewing their files. Financial organisations also need to monitor whether employees might take advantage of the cloud— intentionally or accidently—to “over-share” their documents. Eager to get more business done, they may allow customers or business partners to see things they shouldn’t. The sharing of data may also grow or “creep” beyond the initial partnership agreement, letting more external users access more information than they should be allowed. Another challenge is “Man-in-theMiddle” attacks where hackers secretly relay and possibly alter communications

between two parties who believe they are directly communicating with each other. Many of these challenges stem from the development of ‘shadow IT’ practices that the availability of cloud services enables. This means that unless employees are restricted to a corporate cloud, they are likely to look for ways to collaborate and share files with each other as well as their trusted contractors, service providers and partners. Clearly stated and understood usage rules need to be applied. Mind the gap Device-based encryption, also referred to as hard disk and removable drive encryption allows data on the drive to be protected. This approach works well if the device (such as a laptop or USB drive) is lost or stolen. The challenge comes when a user is logged into the device and the data is unencrypted while they work on a document. Without additional protections, the data can then be used 19

(unencrypted) in other apps running on the device and sometimes even leave the device through the network. The data can then be uploaded, unprotected, to another device via a cloud platform or email. To overcome device and disk-based encryption gaps, data can be classified by a technique often called data loss prevention (DLP). This ensures data does not leave the device nor the network based on policies and rules. However, the data classification approach also presents several challenges in terms of which data files need to be encrypted; configuring the decryption policies and rules and applying them appropriately. Policies can become outdated before they even go into effect. For example, a policy might be set to block external sharing of information that contains personally-identifiable information. So it might block data if, for example, a file contains a driver’s license number and an address, which leads to some questions: • What happens if the information is needed to, for example, complete a loan agreement, or for an insurance claims adjuster to complete a claim? • What happens if the information is needed by a partner to complete the paperwork? • When, how and via what devices can the file be accessed (such as a smartphone)? • If a security policy change is made, is it an exception or does it become a rule? • If it becomes a rule, who does the rule apply to? • Does the rule last “forever” or does it expire after the business case disappears? When moving to the cloud, DLP solutions work similarly to disk-based encryption, meaning the data is encrypted

before it leaves the network and heads to the cloud. The challenge, similar to diskbased encryption, is that the data cannot be used in the cloud if it is encrypted. Device-based encryption and DLP certainly can play a role in protecting onpremises data at rest. But to completely protect files—as they leave the company and go into the cloud or onto devices and networks outside the organisation’s direct control—IT needs to apply a third security approach. The goal should be to encrypt data at rest—on devices, in file systems, on removable drives, on the network AND as it moves to the cloud. When encrypted data moves to the cloud, employees should still be able to access the information from the cloud using other devices and applications they’ve been granted rights to use. The answer to achieving this goal: Combine centralised security controls and rules with the option to give end users the ability to apply encryption to the files they handle. Employee Applied Encryption Enabling employees to apply encryption allows them to create their own trusted circle of collaborators in order to view the files. Wherever files go, they’re encrypted, and employees have the freedom to conduct business and improve their productivity while still protecting digital assets. Combining this approach with centralised controls and rules creates a powerful security defence system, putting the power in the hands of the users while keeping the ultimate control within IT. This method also reduces the amount of time spent by IT on securing documents. Users can select the data they need to get their jobs done—without having to wait for approval from IT or wait as IT updates the list of

approved collaborators and supporting policies. In addition to making sure data is not at risk, this approach keeps data more searchable and sortable for internal employees. In addition, secure file exchanges can occur among internal and external collaborators, including temporary employees and remote employees. From the perspective of IT and the business, data remains protected from unauthorised access and accidental disclosure. Data is also protected from access by vendors, super-admins and government surveillance. The technology is available for apps running on laptops, desktops, tablets and smartphones. Even though it’s applied by users, IT can still define, manage, enforce, track, audit and report on data protection policies for the company. Individual users can also be monitored to make sure they use the technology correctly, and IT can still see how far and wide data travels inside and outside the organisation. In essence, while end users gain frontline control, their data handling actions are completely transparent to, yet completely controlled by, the organisation. While the control is there, end-user content remains protected, even from super-admin eyes in IT

Jocelyn Krystlik Product Marketing Manager Stormshield

More than 190 Branches More than 1,5 million Clients

TECHNOLOGY

the dragon that won’t stay slain Reading the financial trade press these days, you could be forgiven for thinking that insurers and platforms are being transformed by autonomous technology and artificially intelligent advice algorithms. IT Directors must be obsessed, you speculate, by the excitement of the new and the race to be first to solve the “advice gap” problem for the mass market. This is happening, of course. Established firms are investing mil-

lions in digital centres of excellence and research teams. Some have bought promising start-ups to shortcut their way into robo-advice. But as a proportion of the change budget, this kind of R&D is still relatively smallfry. Ask the Chief Information Officer (CIO) what’s top of their in-tray, and most likely it will be the twin challenges of technology running costs and operational risk. Ageing technology is a major source of both of these

TECHNOLOGY

A hungry beast A typical large financial services company spends around 30% of its operating budget on IT – license fees, development and maintenance contracts, hardware and the people to look after it all. Costs escalate each time new technology is implemented to support a proposition launch without being adapted to support the products no longer for sale. The CIO’s successors later face cost headaches. • Much so-called “legacy” or “back book” business is run on expensive old kit and software, some of which is now unsupported by the makers. Providers must negotiate special support contracts with the manufacturer or another third party. • Fewer IT staff have the skills to maintain this technology. Those remaining command a premium on the contractor market. • Each new piece of product regulation potentially results in updates to legacy systems as well as current ones. • It is generally harder to integrate new services such as digital access into legacy software and hardware – often additional “middleware” is needed.

modern systems, for example to facilitate web-based services. • In some instances, the demand on a system outgrows the software or hardware’s capacity to handle it. This can particularly apply to batch processing systems, where there is only a finite amount of downtime overnight during which to run all the required batch programs. • Older software can become more vulnerable to security breaches. With manufacturer support withdrawn, security patches are not readily available. • The difficulty of recruiting and retaining good staff to maintain old systems can lead to key person dependencies. Nowhere to hide These increasing costs and risks come at the stage of the product lifecycle where there is steady and significant run-business off. Policies mature as customers retire or else gradually cash them in, but a small stubborn rump remains. In the context of a potentially 50-year product like a pension, the IT cost per policy in run-off can rise exponentially. With every retirement and maturity, revenue continues to move in the opposite direction to costs.

Mad, bad and dangerous to contain On top of the visible cost premium of keeping old technology running, there are significant operational risks attached. A great many financial products today are still being managed on software that is out of support or written in a dead language. With greater risks come higher solvency capital requirements, as well as unwelcome interest from the FCA. • As technology becomes obsolescent, it can become less stable and more prone to outages, even as consumers’ expectations for service availability are becoming ever more demanding. • Often, outages result from attempts to integrate old technology with more

Of course, this isn’t limited to the world of 200 year old life companies. Increasingly the young upstart wrap platforms that have grown up in the last 20 years are facing their own legacy challenges, in the face of downward pressure on platform fees. As recent news stories have shown, re-platforming is far from cheap or easy.

a competitive edge. Here are our five steps to better “dragon-slaying”. 1. Understand your total cost of ownership. Until you know which parts of your IT are causing most pain, it’s impossible to prioritise upgrades. 2. Perform a complete and realistic risk assessment of the IT estate, to inform your risk management and upgrade strategies. 3. Document the complexities of your closed book product set. This will be needed for any system replacement project, and will help to identify any unusual features that depend on manual processes or rare skills. 4. Assess the range of options. These could include migrating to a new platform, a technology outsource, a full business process outsource or even buying customers out of their existing contracts and “upgrading” them to new style accounts. 5. Implement. Design a target solution for the long term. Accept that change is continuous and use componentised architecture over tight integration wherever possible. While there’s no mighty sword in the fight to stay current, constant monitoring of the state of your IT landscape, an awareness of the options and a clear long term plan are the best weapons we can use to contain legacy issues

Where’s St. George? Several decades of technical progress predicted by Moore’s Law have rendered IT systems redundant at an ever increasing pace. The need for continual technology upgrade is unavoidable, and with so many examples of cost overrun, getting it right can give firms

Jon Dean Senior Consultant Altus Consulting 23

FINANCE

ways financial services firms can use big data analytics to remain competitive

inancial firms are under pressure to grow their business by adding new, consumerfriendly digital services, including more mobile access options, while minimising risk and maintaining compliance. The sector as a whole is embracing a big change as firms move to become more digital to meet the needs of their customers. But financial firms have additional challenges to overcome to reach this digital nirvana. Firms have to consolidate customer journeys without imposing on customer confidence. They have to deal with fragmented legacy systems as well as uphold the security, privacy and quality of the data they need to move. On top of all of this, the Financial Sector like any other sector needs to remain competitive and innovative 24

to attract and retain customers who require these institutions to offer more services over a variety of channels. This is where data becomes a strategic asset with many institutions starting to realise how to use and leverage it as well as monetise it in order to gain a competitive edge. Rather than anticipating what their business strategy should be, firms can shape a strategy that is based on fact and insight. In using data as a strategic asset, financial firms can discover how to best use and manage data to create new revenue streams; how to use data management and analysis to detect fraud and cyberattacks; and how to build data management infrastructures and processes that are compliant. Gain a 360-customer view Traditional approaches to data have

inhibited organisations ability to scale and support the data volumes that are continuing to grow. As the number of data sources per customer increases, so will the volume of structured and unstructured data. Firms also need to have the ability to handle different types of data and be able to ingest and analyse in near real time. Financial services organisations need to centralise fragmented customer data that resides in silos spread across hundreds of systems and platforms in order to gain a more holistic view of their customersâ&#x20AC;&#x2122; behaviours. By creating a secure, active and centralized repository, organisations can build a true 360-degree view of the customer journey that is consistent across all channels and devices. This data can be contextualised

FINANCE

to present location and circumstances to better tailor services by matching new products or services that complement customer spending habits. From here services can be personalised to reflect customersâ&#x20AC;&#x2122; preferences and aspirations to increase retention rates and customer loyalty. Users have become so accustomed to tailored services, whether they know it or not, that anything less than relevant and bespoke would be a disappointment. With the right tools to ingest, manage, analyse data and provide the right actions can help an organisation create in-the-moment experiences that provide firms with a competitive edge to attract and retain customers. Big data analytics now provides the capability to model an entire market place by simulating the interaction of all heterogeneous

customers in the real world to determine likely responses and revenue impacts to new product introductions, new pricing strategies, econom ic events, competitor offerings, and marketing programs. This approach is called agent-based modelling with origins from complexity science. Put a stop to fraud Every line of business in a financial services organization is being exposed to ever more sophisticated and persistent threats. Traditional technology platforms cannot keep up with the scale and sophistication of these advanced threats. Proper detection of these threats require firms to be able to detect and prevent fraud by enriching and analysing full data setsâ&#x20AC;&#x201D;both historical data and real-time streaming data to be able to identify and detect anomalies. To do this, financial

services organisations need to take advantage of new approaches to data and analytics that incorporate machine learning to be able to predict cybercrime, money laundering and fraud, and insider threats faster and with more accuracy. Traditional systems have been using a pre-defined signature recognition approach and as such legacy systems have been unable to identify zero-day attack methods or have been late in doing so, leaving firms vulnerable to attack. These systems are also likely to overload analysts with a high number of false positives â&#x20AC;&#x201C; a costly output for organisations. Essentially the proprietary architecture that legacy systems are based on, is expensive to implement, run and scale. Consequently, these systems are limited not only on the breadth of data 25

FINANCE coverage but lack the real time analytic capabilities to effectively battle modern day cyber criminals. The key to address these shortcomings is to be able to take advantage of systems that provide unlimited data storage that allow organisations to go back over many years, check for complex interactions between seemingly unconnected actors and transactions. With this depth of storage and real time machine learning based detection algorithms, firms are able to monitor their entire organisation for signals of criminal activity and more effectively identify organised crime networks that exist. Reduce the cost of compliance The last area where modern data strategies will benefit financial services organisations is within compliance. New regulatory compliance laws have been put into place to improve operational transparency. Financial services organisations are held much more accountable for their actions and are required to be able to access and summarize years of historical data in response to regulatorsâ&#x20AC;&#x2122; requests for information at any given time. Partly because of these pressures, leading financial services firms have realized that the key to optimising their

business operations is maintaining an efficient, agile and comprehensive big data infrastructure. However, the size, expense, and complexity of data management at this scale easily, as we know, overwhelms traditional systems.

for transforming existing processes through the use of machine learning, artificial intelligence, and sophisticated simulation capabilities to create new revenue streams and new operational savings.

As the requirements for compliance grow to exabyte scale, financial services firms and regulatory agencies are building data infrastructure with modern management, analysis and analytics at its core. Banks, payment processors, trading firms and insurance companies are now able to fulfil the demands of regulatory bodies at scale without the capital burden of specialised systems. Firms can also take on more advanced workloads and realise new strategic benefits from the same data that they need to keep onhand for compliance reporting. As such, organisations can reduce the cost of compliance and generate compliance reports faster for regulators.

Ultimately, by using modern data management strategies coupled with advanced analytic tools, the concept of big data analytics can significantly impact a firmâ&#x20AC;&#x2122;s bottom line by providing their customers with coveted services and products while modernizing internal business capabilities that provide business leaders with timely, reliable and accurate Information needed to support business decisions

Take a modern approach to data and analytics Financial services organisations are rapidly adopting these modern data management and analytics capabilities to ensure their confidential data is secure, easily accessible and compliant with the latest industry regulations. In each of these scenarios, organisations are able to start building a foundation

Richard L. Harmon Director, EMEA financial services Cloudera

H.Seyidbayli ave.,122 Gumush Plaza AZ1001 Baku, Azerbaijan

Phone: (+99412) 404 13 03 Fax : (+99412) 404 13 04 www.aiic.az

BUSINESS

Are you on top of your Digital Experience Management strategy?

oday’s business world is dominated by digital services that are made-to-order for users, where the quality of the experience – including intuitive ease, convenience, and richness of choice – is a key differentiator. Users demand to get the information, the product or the service they need – right now. They will judge an organisation based on the digital experience it provides, so the difference between a two-second and a five-second delay when using an application can mean the difference between satisfied end users, and frustrated users flooding IT with complaints. As a result, a lot goes into creating digital experiences that engage each user with a rich array of choices that can make their lives easier or better. That’s where digital experience monitoring (DEM) comes in. Gartner defines DEM as the experience of all digital agents — human and machine — as they interact with 28

enterprise applications and services. DEM has taken centre stage as businesses embracing digital transformation realise that to provide better user experiences, they need to monitor all aspects of the digital experience. This means it is no longer enough to just know how their network is performing. They also need to have full understanding of how the digital experience is from the point of consumption, to the end-user device. Aligning technology with business needs Most of the outcomes pursued by today’s organisations – including the increase in satisfied customers as well as in expansion and net/new business, continuous innovation, and reduced operating expenses, among others – depend on how well they proactively manage users’ digital experience. This requires the support of the right technologies.

However, aligning the needs and expectations of the business and IT’s ability to deliver isn’t always easy. According to a Riverbed survey, while 98 per cent of executives believe that enterprise application performance is critical to achieving optimal business performance, 89 per cent say poor performance of enterprise applications negatively impacts their productivity on a regular basis. As teams across the business become more digital, datadriven, and technology-dependent, traditional black-box IT must become transparent and accessible. Organisations cannot manage what they cannot see. In order to optimise the digital experience, they must know where users are, and how they are accessing and interacting with applications. This can become quite complicated when analysing a diverse range of servers, networks, web services, databases and the applications themselves.

BUSINESS

The importance of gaining insight When applications fail to meet performance expectations, they directly impact productivity and the company’s bottom line, creating problems such as dissatisfied customers (41 per cent), contract delays (40 per cent), missed critical deadlines (35 per cent), lost clients (33 per cent) and negative impact on brand (32 per cent). The solution is to establish end-to-end visibility into application performance across the entire network. In order to close the performance gap, IT needs to establish a clear line of sight into how apps are performing, and how they impact on the end-user experience. Using a DEM platform, IT can better understand what users see when they utilise an application to execute a critical business process. This could be a customer service agent looking up an account in a customer relationship management app, medical staff accessing a patient’s electronic health record, or a cashier scanning the bar code at the till. DEM empowers IT to monitor the actual end-user experience of any local, cloud, web, or mobile app running on any physical, virtual, or mobile device. IT

can then answer important end-to-end experience questions, such as: • Are applications slow to load? What’s the latency? • How does the user navigate the application? • What other applications are running on the device? • How did the transaction traverse the network and datacentre? • Did changes made to the application or infrastructure have an impact? DEM closes the visibility gap between what IT monitoring tools show and what the workforce or customers are actually experiencing. Organisations can detect issues before they start, fix bottlenecks, and make sure they do not happen again – before end users even have an opportunity to complain. When it comes to meeting or exceeding the expectations of your digital users in today’s digital business world, the key is to understand how the experience itself is evolving and what a successful service relationship looks like from the customers’ point of view. Failing to do so could mean lost revenue, lost productivity, or even damage to a company brand.

Having a full proof DEM strategy in place enables organisations to find valuable insights in application performance data and user behaviour to create a superior digital experience. This will undoubtedly give organisations a competitive advantage – and set them on the right path towards differentiating themselves from the competition

Elie Dib Senior Managing Director, METNA Riverbed

References: “https://www.gartner.com/doc/3363217/hype-cycle-itinfrastructure-availability https://www.riverbed.com/global-application-performancesurvey.html”

BUSINESS

SERVITIZATION: WHAT IS IT

f you’re competing on price alone, your days are probably numbered. (Globalization commoditization, shrinking product margins and diminishing returns from a product-centric approach took care of that argument). As we enter the era of the Internet of Things, a new and alternative services sector is evolving, called servitization – also known as outcome-based services.

again. It’s disrupting business as usual for product manufacturers globally. Intelligent field service management helps companies embrace this outcomebased model by shifting service from being a cost centre to a profit centre. As IoT moves service from being reactive to proactive to predictive, it is also impacting R&D design, with some products being built as ‘service ready’ from the outset.

It’s based on the premise that by integrating services with products, you can create bundles that are of greater value than products alone. As manufacturers move from being purely product providers to becoming service providers as well, it adds value to their products and generates additional revenue. In other words, service-based outcomes take you out of competing on price alone.

According to Aberdeen Group, over 90% of field service organisations that are considered “Best in Class” operations are managed as profit centres. Obviously, there is a link between having a revenue target and driving a “Best in Class” operation. Clients will not spend more with a company unless they are receiving excellent value for money.

From a consumer perspective, the arrival of IoT means life gets easier and more convenient. From a manufacturing perspective, life will never be the same 30

So what’s all the fuss about? Growth. “Best in Class” field service management systems are delivering a 22% increase in service revenue, a 24% increase in productivity, a 12% increase in contract renewals, and a 19% decrease in average

repair times for thousands of companies globally. Not bad when you also factor in that 70-90% of total lifetime cost of heavy equipment lies in maintenance and repair. Servitization and field service go handin-hand. That’s because by empowering and mobilising service technicians with cloud-based, real-time tools in the field, they can do work-orders, request parts, schedule and be scheduled, look up manuals, take payments, renew maintenance agreements, use social channels to communicate problems swiftly and effectively and upsell and cross sell products and solutions where appropriate. More importantly, you can measure and control the spend. I’ve outlined below, seven different ways that companies are using field service management to boost their productivity and performance: 1. Fuel The Top Line - Double digit increases in service revenue, productivity, and contract renewals. Service technicians identifying revenue opportunities on-site

BUSINESS

& WHY SHOULD YOU CARE and feeding back to sales. Servicing third party and competitive equipment to lock out competitors.

two to three times greater than product sales alone, and 30% cost reductions for customers).

2. Control The Bottom Line – Prevent warranty leakage, lower emergency parts shipments, and reduce waste and expenditure.

5. Accountability In The Field - Insight into parts ordered by individual technicians, verify if they were actually fitted, and track stock turn and number of jobs down to individual service engineers.

3. Rev Up Customer Satisfaction - Higher first time fix rates, empower service techs to execute work-orders, request parts, schedule and be scheduled, look up manuals, take payments, renew maintenance agreements, use social channels to communicate problems swiftly and effectively and upsell and cross sell products and solutions. 4. Adapt The Business Strategy – Shifting service departments from being a cost centre to a profit centre. Moving service from being reactive to proactive to predictive. Supporting corporate shift to an outcome-based business model and harness servitisation benefits (5-10% jump in annual services revenue, profits

6. Getting Stock Savvy - Insights into stock costs hidden in different budgets, visibility into central systems, databases of products and stock levels, measure and control top line parts profitability, track remanufactured parts per engineer, improve cash management, avoid over ordering of stock and reduce idle capital. 7. Post Purchase Product Insight Ability to track how customers are using products, how products are performing onsite via IoT connected field service and capture insights for future R&D design. Just about every other industry has ditched paper-based, manual processes

and clipboards in favour of automated, real time, business insight. If you’ve not yet updated your service processes, it’s time to move service out of the 1980s to take advantage of new systems and efficiencies

Spencer Earp Vice President, EMEA ServiceMax.

References: “https://www.google.co.uk/ search?sourceid=navclient&hl=en-GB&ie=UTF8&rlz=1T4ADRA_enGB482GB490&q=70-90%25+total+life time+cost+of+heavy+equipment+lies+in+maintenance+ and+repair https://www.servicemax.com/spz_home”

FINANCE

The finance customer service of the future

cquiring new customers in the world of banking is a big task. Not only is there more competition than ever before, but with the rise of the digital economy, financial services are finding it hard to stand out from the crowd to secure new customers and retain existing ones whilst also delivering new services. So how can financial services achieve the customer service of the future? The answer is a dedicated contact centre for customers. Traditional financial services Until recently, managing finances required a visit to a physical store on the high street. But with the proliferation of technology and the continual increase of disposable income, people are more willing than ever before to embrace innovative capabilities and engage with the financial services sector in new ways to get more from them. Consumers want to manage their finances on the go, speak to someone whenever they need to and also enjoy additional benefits where possible. Banks need to firstly understand that customers are calling because

something has gone wrong or they need something to continue with their lives. It is imperative that the service provided to the customer is quick, seamless, unobtrusive, timely and decision made in real time. While the sector has already shown progress in digital transformation, more needs to be done to meet growing customer expectations. The only way financial services can achieve this is to change the way they manage their customer services. Banking on the future According to PwC , 61% of bankers say a customer centric model is “very important” for business. Many financial institutions make the mistake of investing a lot into individual branches to improve customer footfall. But to have the competitive edge, organisations need to think differently and instead be innovative to deliver an outstanding customer experience.

As such, banks must look to build customer-centric contact centres to meet demand and at the same time optimise service channels, reduce costs, seamless identification, attract premium customers and increase customer loyalty. This will allow banks and financial services to: • Increase the types of services they offer • Improve the quality of service • Make Internet and telephone services more powerful • Improve the capacity and processing capabilities of the banking network

FINANCE Enhancing the customer experience There are many technologies that banks and other financial services can look at to build effective contact centres: • Video telephones Customers can make calls using terminals, and bank employees can initiate remote video conferences. By having a contact centre in place, banks can deploy remote community banks, telephone banks, and online banks are able to provide remote financial services. The remote banks can then integrate with ATMs, biometric identification technology, card read/write, invoice printing, and 3G video functions, which enable customers to enjoy quick, secure, and comprehensive financial services without making an errand to the bank. • Dynamic data analysis Contact centres enable banks to analyse user behaviour in real time, learn about VIP customers’ financial planning trends, obtain service data, and detect potential risks in the financial market. Using this data, banks should consider pre-authorising lending levels so decisions can be made automatically or with real-time agent empowerment.

• Unified customer service manager platform Having a unified customer service manager platform as part of a contact centres ensures service consistency. Based on a high reliable design, banks can supervise customer service managers’ service qualities, protect customer privacy, and improve VIP customer loyalty. • Precise, differentiated tiered services An efficient contact centre solution is able to identify customer information, including the customer segmentation, and then provide differentiated access, IVR processes, and service personnel according to customer segment. In this way, the solution reduces call costs by providing diversified services. Based on customer information, the solution quickly identifies and focuses on valuable customers, and performs precise marketing, increasing the marketing success rate and reducing operational costs. • Integrated and seamless identification Access to contact centres need to be integrated into the banking app. This is so the customer does not have to remember the telephone number. They should also not need to go through a whole identification process as the adoption of biometrics or preidentification via the banking app login process.

Looking ahead As people grow more comfortable with technology, they will continue to expect financial services to also adapt to meet their expectations. To meet the increasing needs of customers, financial services must look to anytime anywhere banking by investing heavily in customer service. This will allow banks and other financial institutions to modify the business, stay ahead of competition and also keep customers happy

Amin Lalani CIO Executive, Financial Services Huawei Western Europe

References: https://www.pwc.com/gx/en/industries/financial-services/ banking-capital-markets/banking-2020.html

Why Smartphones are Falling Behind Banks in the Mobile Payments Race

rriving with considerable fanfare, Apple Pay and Android Pay were predicted to make a significant impact on the UK payments market. Such was the ‘buzz’, banks themselves proactively included Apple Pay and Android Pay in their marketing messages, giving a boost to the technology giants. The reality, however, was somewhat different, and at best the rate of consumer take-up for Apple Pay and Android Pay has been little more than pedestrian. This should be taken 34

as a strong indicator that waving a mobile phone in front of a PoS device has failed to capture the imagination of the payment-making, smartphone-carrying public. The tap and go smartphone vision was one of the central driving forces behind the development of contactless payment technologies. In those early days, it was thought that once payment technologies were migrated to mobile devices, banks could eliminate the costs associated

with issuing payment cards. The contactless card was a stepping stone to that future, enabling the legitimate deployment of contactless terminals whilst the mobile replacement was being developed. Because of this, the contactless payment option wasn’t marketed heavily in those early days, and consumer take-up of the contactless option reflected this. When the introduction of the smartphone contactless payment option didn’t materialise, the issuing banks began to

BANKING rapidly. Whilst the volume of contactless payments initiated using a smartphone isn’t specifically reported, the numbers are clearly not a significant - the UK Cards Association found that 19 out of every 20 people who can use Apple Pay to check out (i.e. the store accepts it, they know how to use it, their card is provisioned) - do not use Apple Pay. Why have smartphones fallen behind? So, in a country where 71% of adults own a smartphone (Ofcom), why the sluggish take-up of the smartphone payment option? Maybe if the mobile phone option had been available prior to the rapid expansion of the contactless card population, there would have been more consumer interest, certainly all of the initial mobile pilots proved to be very popular with consumers. This pattern of adoption is not repeated in geographies where the mobile phone option precedes the rapid expansion of contactless card distribution. Even though Apple Pay and Android Pay take-up is higher in the US, it is still not high enough to rank as a ‘mainstream’ payment option, even after the banks funded the development of smartphone services that do contactless payments and paid for the marketing.

raise the profile of contactless cards and the contactless payment option. Consumers responded, but initial adoption was low. There was concern about the absence of PIN verification and unfounded media panics, but as consumers became more familiar with the facility, all that began to change. Smartphone competition in the contactless payment space is now very much the contactless card, which has recently seen its popularity soar - there are 104.4m contactless cards in issue in the UK as of January 2017, which is an increase of 25% over the previous year (UK Cards Association). Currently more than 1 in 4 card payments in the UK is contactless, and this number is rising

History will show that after an initially slow start, the UK public became accustomed to making payments with contactless cards. When coupled with the fact that for many common transactions, presenting a piece of plastic to a contactless reader makes considerably more sense than waving a mobile phone, it is not surprising that smartphone payment take-up is low. Smartphones are expensive, contactless cards are cheap; setting up contactless payments on a smartphone needs intellectual investment on the part of the consumer, contactless cards are delivered in the post, ready to go. Not only that, but the environments where contactless payments make most sense for the consumer are generally those environments where smartphones are best kept in pockets, and interestingly,

the use cases didn’t exist before contactless cards - think about the hostile payment environment of one of the London Underground gates during rush-hour, and the risks (to the phone) involved in paying for drinks at the bar in a busy pub. The stark truth, which won’t sit well with the inventors and the innovators, is that in the race for contactless payments, the contactless card beats the smartphone every time. All is not lost … Ultimately, the consumer will always take the path of least resistance, and what we see now is that the preferred path isn’t the smartphone. Would that have been different had the UK mobile operators and issuing banks managed to build a universal mobile payment delivery service before contactless cards became mainstream? One thing is for sure, the tokenisation technologies that were developed to facilitate mobile contactless payments are not going to be wasted. The future is about competitive collaboration and the development of consumer-focused value-added services delivered via mobile wallets. It look very much like the payment platform requirements for mobile wallets have already been addressed

David Griffith Director of Payment Services VirtusaPolaris

References: “https://www.ofcom.org.uk/about-ofcom/latest/media/ facts http://www.theukcardsassociation.org.uk/contactless_ contactless_statistics/”

BUSINESS

GDPR in the contact centre

ith less than one year until the implementation of GDPR, many businesses are not yet on track to be fully compliant by the deadline of 25th May 2018. A recent survey by Morar Consulting revealed that just 17% of respondents have taken all recommended steps towards GDPR compliance, while the same proportion have not done anything at all. Important changes will need to take place in the contact centre to achieve GDPR compliance. Its new, stricter rules surrounding how customer data is captured and stored will place much tighter requirements around call recording and archiving. These rules will apply to businesses operating their own contact centres, as well as those outsourcing to third parties. Businesses will need to consider the regulatory impact of GDPR on every contact centre touch point, from customer services and technical support to sales and marketing.

BUSINESS Going beyond secure payment platforms GDPR is a legal framework for handling personal data of individuals based in the EU, wherever in the world their data ends up being held or used. This means that wherever an organisation holds personal data, it will need to ensure that data is responsibly and securely managed in line with GDPR requirements. The key impact for contact centres is the GDPR definition of personal information. Whereas previously data protection requirements have been narrowly defined, GDPR covers any data that can be used to identify a person – either on its own or in combination with other data. Take payment information for example. To comply with current Payment Card Industry Data Security Standard (PCI DSS) and Financial Conduct Authority (FCA) rules, many businesses deploy secure telephone payment platforms in their contact centres. This helps them maintain accurate transaction records whilst ensuring no sensitive payment data is captured as part of those calls. At the point of a payment, customers are re-routed through the secure payment platform, keying in their payment information via the telephone keypad where it is processed directly with the bank. If the information never enters the call centre, PCI compliance is achieved. At the same time, the merchant has the complete call recording required to meet FCA requirements. Under GDPR, all personal data is protected. Keeping payment information out of the contact centre is possible, but keeping all personal data out of the contact centre is not. Businesses will now need to think about how they store all of their customer data, and crucially how they can recall it when required.

Power to the people Under GDPR individuals will have the right to make reasonable requests to access their personal data. They will not be charged for this, and businesses will be obliged to share any personal data held within the contact centre, without delay and within one month. Individuals will have the right to access, change and remove any personal data a business is holding. Businesses will need to ensure the information they house is not only properly stored, but also made available to legitimate customers, as and when requested. GDPR guidelines suggest a self-service approach – customers should be able to access their personal information directly and edit what is stored if they wish. Many businesses will need to question their current capabilities, and in many cases upgrade their systems. They will need a platform that archives data in a cohesive, organised manner and enables instant recall. More importantly still, individuals will have the right to have all of their personal data erased. Known as the ‘right to erasure’, organisations have to comply without undue delay if the customer makes a request. Businesses will need to think about how and where their call recordings are stored, ensuring they can identify, access and if necessary delete any recording or record that includes a customer’s personal information.

The maximum fine is now 4% of a group’s global sales or 20 million Euros – whichever is higher. Even if a subsidiary is found in breach of the GDPR, it is the whole group that is fined and the whole group’s worldwide sales that are used to calculate the 4% penalty. Businesses outsourcing contact centre operations will also remain responsible for their customer data. They will need to question the capability of third parties and consider the risk assessment of outsourcing operations when the new legislation comes into force. GDPR in practice GDPR will fundamentally change the way organisations and their customers engage. Its impact will undoubtedly improve standards around privacy and data protection. Technology will play a vital role in the governance and management of the new requirements, and much of what is currently used in contact centres will need to be upgraded to become GDPR compliant. How GDPR will actually work in practice is still unknown. Compliance should not, however, be seen as an inconvenience. Rather, it should be a way for companies to introduce a more robust data protection strategy while providing new ways to engage with customers

Why you should be compliant Under existing data protection rules, the Information Commissioners Office (ICO) can fine organisations up to £500,000 for the most serious data breaches. As such, it was possible to consider these as a cost of doing business. GDPR raises the stakes to a whole new level.

Matthew Bryars CEO Aeriand References: https://www.mailjet.com/wp-content/uploads/2017/05/ GDPR-The-Right-Side-of-Automation-A-Mailjet-ResearchStudy1.pdf

FINANCE

in the financial industry

he phrase ‘digital transformation’ has been a buzzword in boardrooms up and down the land in 2017, with much of the discussion centred on how disruptive technologies can provide organisations with a competitive advantage in today’s fierce business environment. In its 2016 Global CEO Outlook report, KPMG states that so great will be the impact, 41 per cent of CEOs expect to be running significantly transformed companies in three years’ time. The financial services industry is no different. A recent survey conducted by Deloitte Digital indicated the sector is on the cusp of digital transformation. Firms are particularly investing in new digital products and capabilities to enhance customer engagement, with 93 per cent of those questioned citing this as the key objective of their digital strategies. However, many CIOs now face challenges they have never dealt with before. Organisations of all sizes must cope with exponential amounts of data coming at them from many different sources and formats. An estimated 90 per cent of enterprise content is unstructured - such as email, video, digital documents, chat calls and SMS - this is in addition to the vast amounts of paper documents that businesses handle daily. Organisations must figure out how to not only capture, process, store and manage all of that data effectively, but also how they can turn the information into real business value through analytics and reporting. 38

Struggling to keep up Elsewhere, 77 per cent of CEOs are concerned about whether their organisation is keeping up with new technologies. This is feeding down to the IT department, which can find it difficult to stay in front of the rapid pace of change and their employers’ demands for new technologies. Indeed, one of the findings of ‘The state of IT procurement’ study conducted by The Economist Intelligence Unit (EIU) and sponsored by HPE Financial Services, was that many IT procurement professionals are struggling to keep up with their organisations’ digital transformation plans. It is essential that both employees and customers benefit from any kind of transformation project. The point of digitising paper-based processes for example, is to maximise productivity, ensuring that employees are no longer drowning in mountains of paperwork, wasting hours searching for missing documents, or on time-consuming tasks like mailing or overnighting important documents out for signature. Intelligent information capture is a key starting point for digital transformation. According to Quocirca’s Digital Transformation Study, 79 per cent of organisations report that digitisation of paper documents is very or extremely important to their overall information management strategy. The study says that most companies already operate paper-free processes and are planning more, with the top drivers for information capture cited as improved searchability (38 per cent),

reduced physical storage (26 per cent) and improved shareability (34 per cent). And those that are further along their digitisation journeys are outperforming their peers. The finance and banking sectors are at the forefront of this effort to convert paper into easily-accessible, secure electronic formats. InfoTrends research points to the key drivers for scanning in financial/banking being paper to electronic conversion, followed by cost savings and better search and retrieval. For example, banks are already finding that digitisation is leading to a smoother customer onboarding experience. The less paperwork they have to fill in and the faster the approval process - the happier the customer! Plus, automating paper-based processes also benefits the employees who would otherwise be left searching for physical paperwork or sometimes asking the customer multiple times for the same information. Compliance is naturally a top priority for banks and other financial services providers. They are subject to multiple and complex legal and regulatory compliance requirements involving the storage, security and integrity of customer data. This will be compounded when strict new data regulations come into force next year. Global Data Protection Regulation (GDPR) brings with it massive fines for data breaches - up to four per cent of a company’s annual global turnover or €20 million, whichever is greater. The consequences of data loss could be financially devastating for any company.

FINANCE

The scale and complexity of data today needs an integrated approach, therefore, organisations embarking on a digital transformation journey must take a holistic approach and have a plan in place to manage the data chaos. Information management ecosystem In today’s DX economy, a successful strategy demands an ecosystem of hardware, software solutions and services. The Alaris IN2 Ecosystem has been designed to take the complexity out of information capture. It offers the latest scanners and integrated software designed to work together, partners with the right experience to deliver solutions at scale, and services to keep an organisation’s information capture solutions running efficiently. While it’s the scanners that do the heavy lifting in document capture, it’s the intelligent software that organises, stores and transforms those documents into valuable business resources. According to Infotrends, sixty five per cent of finance or banking professionals say their organisations have already invested in scanning and data capture software, while another 23 per cent are considering investing in it, suggesting a significant percentage of companies recognise the value and are reaping the reward.

Another crucial aspect of the information management ecosystem is mobility. We live in a mobile world where employees expect to be able to work from anywhere. This is reflected in the increasing use of smartphones and tablets to scan documents and forms particularly in banking. As camera quality continues to increase, it is expected that this will continue to become more prevalent, which makes the use of wireless network scanners and mobile apps which enable knowledge workers to quickly and easily send documents from the scanner to any mobile device, and to capture (take a photo of) documents from mobile devices, an essential part of the information management ecosystem. Also, across every industry, IT teams are working hard to be innovative with the technology they have, and maximise any IT investment. Kodak Alaris IM can help IT professionals make better use of their legacy infrastucture through integration with existing back office systems, utilising common technologies such as smart devices and incorporation with capture hardware. Through its wide-ranging hardware portfolio and third-party device support through interoperable software, Kodak Alaris delivers an integrated and

simplified approach, which enables clients to leverage their existing investment, even within a multi-vendor fleet. Financial institutions that have started the digital transformation journey are already a step ahead of their competition. Information capture is a key part of the process, and as a sector that’s already on the cusp of that transformation, financial services will soon realise the wealth of benefits that intelligent information management can provide

Gregoire de Clercq Marketing Director Kodak Alaris

References: www.kodakalaris.co.uk/go/IMnews

INSURANCE

Addressing the insurance industryâ&#x20AC;&#x2122;s over-reliance on paper by embracing electronic document management

igital transformation and the concept of transitioning from manual and error-prone paper-based processes to electronic document management are well understood and are being increasingly applied throughout many organisations. But while certain sectors have been fast to migrate to a digital approach to managing information, other segments have been slower to make this transition and the insurance industry is one of them. For insurers today, an effective digital strategy is critical for long-term success, but often this is hampered by an unwillingness to embrace new systems or adapt to new technologies. The insurance industry is built on its ability to identify and avoid risk, but 40

many companies are blind to the risks of paper-based document management. Legacy approaches to managing information From creating new insurance applications to managing third-party data accumulated during the claims management stage, insurance workers frequently rely on printed documents for approval processes, perpetuating a culture wherein documents are created, stored and managed in paper format. This leads to significant inefficiencies in the way that insurance firms operate. Evidence of this was found in research from M-Files, which evaluated employee attitudes as it relates to managing information assets. The survey revealed

that 91 per cent of professional services respondents, including those from the insurance industry, experienced challenges when searching for information within their organisation. The frustrations and lost time that these challenges create are one thing, but the inability to find documents also poses data security and compliance risks. If you canâ&#x20AC;&#x2122;t find information, you canâ&#x20AC;&#x2122;t control or secure it. As a result, companies that rely too heavily on paper not only see their productivity slump due to the sheer impracticality associated with paper documents, but this approach can also make a company liable if physical files fall into the wrong hands.

INSURANCE A metadata-driven approach to information management So how can the insurance industry overcome its over-reliance on paper? An unwillingness to embrace technology suggests a pre-existing resistance to change. To address this, it is imperative that any new system or software is simple to use while also featuring the ability to securely collaborate on insurance files and documents. Adopting an intuitive metadata-driven enterprise content management (ECM) solution has proven to be an effective strategy for streamlining paper-based processes and increasing operational efficiency for many organisations. Although older ECM systems had their limitations, the latest generation of ECM solutions can be transformative. These solutions can dramatically improve the way a business manages its information electronically by organising, classifying and presenting documents to users based on their value and relevance, rather than relying on traditional folderbased structures. Leading ECM systems offer the ability to scan paper documents and transform them to digital files, while also categorising and classifying them so they are easily discoverable within the ECM system. Scanned insurance documents can be stored directly to a cloud or on-premises vault, and the addition of metadata attributes to files can then automate the task of establishing access permissions, notifications and workflows to further streamline processes.

Making the most of metadata By leveraging a metadata-based approach to managing information, the focus is placed on ‘what’ the piece of content is as opposed to ‘where’ it might be stored. This lets organisations break free of the folder/file hierarchy system, allowing them to identify and retrieve content in a much more intuitive manner. With a metadata-driven ECM solution, organisations have the ability to intuitively recognise what type of file it is and what it relates to, and then classify and store the information accordingly. This can lead to massive efficiency gains for an organisation, meaning employees can quickly and easily find the information they need, from wherever they are working. One of the big challenges associated with paper-based document management is the ability to ensure that employees are using the correct and latest version of documents. Often, multiple copies of paper files are created, printed and shared when updates are made, which then makes it difficult to know where the most current draft is – a problem often referred to as “version creep”. Critically, metadata eliminates the proliferation of different copies and versions of content. Collaborators can work from a single a document and versioning is automated and more effective, giving confidence that staff won’t be repeating their efforts. This problem of “version creep” still persists when using ECM systems that rely on folder-based approaches, but using a metadata-based ECM system

eliminates the proliferation of different copies and versions of content, meaning documents will only ever exist once – and any changes or updates will simply create an updated version of that document. In an industry as heavily regulated as the insurance sector, this is of paramount importance, providing employees with the reassurance that the documentation they are working on is correct. By moving beyond paper and to a metadata-driven ECM solution, insurance professionals can access, edit and share documents remotely as well as from inside the office. This adds a much greater degree of flexibility to the way employees do their jobs – they are no longer obliged to be in the office to access paper versions of documents, but can still manage information in a secure and convenient manner

Julian Cook Vice President of UK Business M-Files

TECHNOLOGY

HOW TO NAVIGATE THE ERP PURCHASE DECISION -MAKING PROCESS

hen purchasing a strategic software solution such as a new enterprise resource planning (ERP) solution, making the right decision is vital. Many organisations wrongly assume that when it comes to ERP, the old adage of ‘one-size-fits-all’ holds true. This couldn’t be further from the truth, particularly for enterprises operating in the manufacturing and services sectors, where an ERP system that is customised to meet the organisations’ specific business requirements, is vital to operational efficiency and ultimately growth.

that have solutions that match these requirements. If replacing legacy software, keep in mind future business goals, rather than simply writing a list of the shortcomings of your old software. Where do you want to be in 3-5 years? What does your ERP solution need to support in the future? These questions are vital. In the past few years, manufacturers have undergone a significant transformation to address market challenges. For many, this has

or hybrid options. Have an open dialogue with software vendors –The opening stages of making any software decision should involve an open and honest discussion with the software vendor about your organisation’s business ambitions. This is where vendors show their strengths as a true partner–suggesting the options that will best accommodate the company’s overall business strategy.

Below are six critical success factors to help ensure that you choose the ERP solution that is right for your business requirements. Assess functionality needs–Start by evaluating the business challenges and individual pain points that you need to address and determine the business value your organisation needs to extract from the software. What problems should it solve, or what opportunities should it create for your business? For a CEO, you might be focusing on growing revenue from existing customers, attracting new customers, or supporting your move to a new market. For a COO or factory floor manager, you might be challenged with improving throughput on the factory floor, reducing inventory levels, or coordinating supply and demand to prevent stock shortages. At a very early stage of your decision-making process, you will want to compile a list of cross-functional requirements to use to reach out to software vendors 42

meant moving from a very standard ‘make-to-order’, ‘make-to-stock’, or ‘engineer-to-order’ manufacturing model, to a “mixed mode” model which can put added pressure on ERP solutions. Another key question to ask is: how do you want to deploy the solution? Legacy systems are traditionally on-premises solutions. Today however, you have a choice in deployment including traditional on-premises, hosted, “true cloud”,

Understand the end game, not just cost of ownership–New software requires a considerable business investment, however, it’s important to measure ROI, not just cost. Consider the up-front purchase budget alongside other key considerations such as the benefits the organisation can expect to gain from that software, as well as the long term maintenance costs.

TECHNOLOGY

Today’s next-generation enterprise software solutions, for example, have the ability to save businesses valuable time by reducing the amount of administrative tasks that employees have to complete, automating processes and streamlining workflows. This results in a more agile business, that is more responsive and competitive. Assess ability to support the new software–Be sure to understand the capabilities of your company’s IT department. Will the team need help throughout the entire implementation process and beyond, or will they just need a training session before managing the deployment themselves. Many software vendors include support and upgrades in their sales package, but make sure the vendor is prepared to provide the level of service needed. Having this information and working with a vendor that understands the needs of the organisation will help when deciding what software/support bundle is best suited for your company. Research the software vendor–It is vital that companies check credentials and do the necessary research to make sure they work with a software vendor that cares about the business requirements, not just about where the next sale is coming from. Reputable software vendors will consult with the company on different options available and offer honest

opinions on how to use technology to improve the business. This is especially important when purchasing an ERP solution, which is a whole package, not just one small element of a business’s technology. Also, you can’t predict the direction your future growth will take, so having a partner that is agile and committed to innovation, is invaluable. ERP solution features–An ERP solution should solve problems, not create them, so it is critical to ensure that the solution you choose has the following features: • Industry-specific–An ERP solution that works well for a manufacturer of plastics might not necessarily be right for a retail outlet. Make sure that the solution you choose has been built to cater to the needs of your specific industry and has the track record to prove it • Scalability–An ERP system built on scalable architecture will help you manage growth—and the fewer customisations a system requires to meet your specific needs, the better • Functionality–An ERP system must have the capabilities to do everything that your business strategy demands of it. It should be fast, reliable and easy to integrate with your other systems • Deployment options–On-premises, private-cloud, public-cloud or hybrid deployment options—combined with mobile access for your employees— ensures that your organisation will

remain flexible and responsive • Ease of implementation–If you have problems at this stage, it can have a lasting impact on your ERP system’s performance—and your profit. Look for a solution that is easy to implement with all the customisations you need • Ease of use–Nobody wants to go through a difficult and unfriendly learning process. An ERP system with an intuitive user interface will increase employee satisfaction and productivity Choosing any new software, but particularly an ERP solution, is a complex task and can also be a confusing experience. That being said, selected carefully, an ERP system can serve as the backbone of your business—it can improve visibility and transparency across departments, streamline operations, speed up time to market, support change management initiatives and aid decision making—and give your enterprises the competitive advantage it needs to grow

Monzer Tohme Regional Vice President(Sales) Epicor Software

FINANCE

The potential of the IoT in fintech

he fintech industry is in a transformative phase of its development thanks to the increasing use of the Internet of Things (IoT) and Artificial Intelligence (AI), which enables the IoT. With the growing use of mobile payments, algorithms being used in trading, and neural networks being able to predict behaviours and financial indicators, we are entering into a whole new realm of money management. The synergy between the IoT and fintech should come as no surprise the IoT is based on the value of data and the financial services industry is heavily dependent on data gathering and analysis. PwCâ&#x20AC;&#x2122;s 6th annual digital IQ survey revealed that financial services is in fact one of the top ten industries investing in sensors for potential IoT innovations. Although the internal and operational benefits of IoT integration are vast, 44

the greatest appeal is more effective engagement with customers. Firms are able to use the data communicated by smart devices to build more accurate customer profiles and provide appropriate services based on these. This naturally has a positive impact on retention rates and also helps to drive business. The success of disruptive challenger banks, with no physical branches, comes to mind here. Unlike legacy banks that are only digitising certain services, challengers like Starling and Monzo are providing fully digital end-to-end financial management solutions â&#x20AC;&#x201C; and demand for these is soaring. A research report by Hitwise revealed that growth in visits to disruptor banking sites over the past year increased by over 50 per cent. Another report by PwC on how fintech is reshaping banking revealed that 80 per cent of survey respondents said they thought fintech was better at serving customers.

From the customer experience point of view, conversational virtual assistants and AI-based platforms can help with faster payments, statement analysis, portfolio management, and making smarter investment decisions. To demonstrate, N26, a Berlin-based challenger bank, has enlisted Siri so that customers can pay friends with a simple voice command, and UK-based Cleo is an AI money-managing assistant that links up to bank accounts to make financial calculations. According to BI Intelligence, robo-advisors are forecasted to manage $8 trillion by 2020. This focus on customer centricity is serious business. Eighty per cent of financial institutions globally view virtual assistants as the next golden opportunity. This is part of a wider allindustry trend - from 2013-2015, there was a 19 per cent increase in CxO interest in digital or virtual customer interaction and a 22 per cent increase in focusing on customers as individuals

FINANCE

instead of groups or segments. To align itself with the growing demand by consumers to have more sophisticated and personalised services, the fintech industry in the UK is seeing substantial growth thanks to innovative start-ups. These companies, with their fresh perspectives, are more open to experimenting, launching new prototypes, and are less likely to be hindered by legacy systems and processes. The expansion of IoT ecosystem however means a need for more stringent and watertight security measures, for consumers and businesses alike. Callsign, for example, has developed a one-of-a-kind Intelligence Driven Authentication platform capable of recognising users through deep learning based upon location, behaviour, device and biometrics. It can identify you from anyone else with a single swipe of the phone. With mobile now being a key channel for financial services

companies to engage with customers, secure authentication solutions are much sought after. These innovations in cyber security, which have far-reaching commercial potential, are unsurprisingly drawing attention from investors. Callsign, which already has significant banking partners was backed by Breed Reply, active operational investors in early stage IoT companies who not only provide financial backing but also the expertise and in-depth market understanding to scale these businesses. A PwC report says that more than 20 per cent of traditional financial services businesses are at risk of being replaced by fintech initiatives by 2020. But even fintech initiatives need to ensure that they are keeping IoT integration at the forefront of their strategy, especially given that financial institutions are planning to spend $153.5 million on IoT innovations by next year with a large

amount of this allocated to customer engagement solutions. Customers have (and demand) 24/7 access and the need to provide rapid intelligence through multiple channels, such as social media, is exactly what the IoT can accommodate. Connected products and data intelligence platforms are the drivers of this fintech revolution and ultimately, the future of money

Emanuele Angelidis CEO Breed Reply 45

FINANCE

Five Steps to Keeping Your Sensitive Data Secure

nfortunately, data breaches are on the rise – and the financial sector, with its wealth of lucrative, sensitive data, is a prime target for hackers. Last year, Tesco Bank suffered a large-scale cyber attack that resulted in £2.5 million being stolen from its customers’ current accounts. Getting cyber security right is integral to a bank’s longevity. These days, a large-scale cyber breach could cause irreparable damage – particularly if customer data is compromised. So, as hackers continue to get smarter and more persistent, what can financial institutions do to protect their most precious information? Here are five recommendations that will help your organisation keep its sensitive data out of the wrong hands: 1. Identify Where Sensitive Data is at Risk With the GDPR coming into play in less than twelve months, you need to perform a thorough review – if you haven’t already – of your environment. It’s important to identify gaps where confidential data, including information 46

contained on mobile devices, could be at risk. You don’t have to conduct this risk assessment yourself. There are a number of services available that can quickly help you understand where sensitive data lives and how it is being used.

layered approach to security is becoming increasingly important for companies, with device-focused technologies such as mobile device management (MDM) playing a big role. 3. Focus on Data Protection Solutions

2. Don’t Rely on the Traditional Network Security Focus Most financial organisations’ security starts and ends “on the network.” Why? Because it’s easier. Racking a security device on the network causes very little organisational friction. Yet IT teams then spend almost every day purposely punching holes in the network. VPNs are a common example; their widespread use makes them popular targets for attackers due to the high number of potential entry points and often lax attitude towards security from users. These inevitable holes mean the network will always be vulnerable to attackers. Added to this, is the fact that many employees operate in a mobile environment and demand access to business information on their phones and tablets – devices that traditional network security measures can’t protect. A

The proliferation of the cloud has made the traditional network perimeter obsolete. Focusing on technologies that aim to protect the perimeter simply isn’t enough anymore, because data regularly moves beyond it. Several proven data protection solutions on the market ensure security travels with the data. Called data loss prevention (DLP), these solutions help classify data, put a usage policy against it and strictly enforce it. DLP is a musthave for any company wanting to protect sensitive customer and business data. By making it fractionally harder to steal sensitive information, or render data useless once outside the network, attackers will move to another company that presents an easier target. As data remains the target and its attack

FINANCE

surface continues to grow, protecting that data must be at the core of every companyâ&#x20AC;&#x2122;s security approach. 4. Consider Outsourcing your Data Protection A way around the challenges associated with implementing advanced data protection strategies is to outsource to a managed security provider. Many of these companies have deep DLP expertise and proven infrastructure, meaning that you can concentrate on your business while they keep your data secure. If your IT team is already stretched, this approach gives you the comfort of knowing that customer data is being protected without taking valuable staff time. This will also help you meet the various standards demanded by customers, banks, and other security-sensitive organisations.

5. Go Beyond Traditional Security Training Employee security awareness is a critical step to protect customer data. The key to effective employee security training is to go beyond the annual refresher that no one takes notice of. Innovative companies are using technologies to help employees self-correct any risky data habits, such as using real-time, pop-up prompts that give employees a reminder of what corporate policy is, and how they can adhere to it. Regulators, customers and business partners will increasingly demand that companies show proof of security and monitoring to protect sensitive data. The security of the information supply chain is gaining traction within IT security circles and companies are realising that the weakest link in their

security posture may not be within their own walls, but rather inside the walls of those they choose to do business with. If you follow the above steps, not only will you be able to demonstrate that youâ&#x20AC;&#x2122;re protecting the data you possess, youâ&#x20AC;&#x2122;ll also be in a position to use your strong security posture as a differentiator

Thomas Fischer Threat Researcher & Global Security Advocate Digital Guardian References: http://www.bbc.com/news/business-37891742

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BUSINESS

‘

HOW PAYMENT-OVER-TIME MODELS CAN EASE CYBER SECURITY STRAIN

here is no hotter topic in the business world today than that of cyber security. Almost every day we hear about a fresh online attack, whether it be the one that affected UK Parliament just a few days ago or the major WannaCry incident in May that brought down thousands of computers in NHS trusts across the country, all of which could have been prevented if the right security measures were implemented in the first place. If anything, these attacks remind us that no business can consider themselves safe from the threat of cyber attacks, no matter the industry they belong to, and that cyber security should be at the top of their priority lists.

With this in mind, it is essential that all law firms put sufficient security measures in place, but there are several obstacles that make this process more complicated than many first anticipate. Firstly, the necessary tools for comprehensive protection often require a significant capital expenditure investment, and many firms struggle to pay this without any negative financial repercussions. What’s more, it is not uncommon that this money comes straight from the pockets of the partners, which results in additional strain for those looking to take a proactive stance against the cyber threat.

Even if the majority of firms could afford to pay the considerable one-off payment to protect themselves, they often fail to consider whether they have the sufficient resources to manage and maintain these various tools and systems. Security is not an automated service —it requires staff that are onhand to monitor and detect any potential vulnerabilities and then decide on the appropriate action to resolve the issue. However, flexible payment-over-time models represent a solution that makes the process of deploying these security measures much easier — a solution that

This advice is particularly pertinent for those working in the legal sector, who are more likely than most to come under attack. The information these businesses are handling on a daily basis is often of a confidential nature, and is therefore very desirable to cyber criminals. Once they manage to get their hands on this information, they can either sell it for money or simply use it to cause havoc and damage the business in question. 49

BUSINESS

reflects our 21st century â&#x20AC;&#x2DC;renter societyâ&#x20AC;&#x2122; sensibilities, and is being realised by security-conscious law firms. Just like many of us pay for our mobile phones or cars in monthly instalments, the legal sector is beginning to reap the many benefits of using such a model to pay for cyber security protection.

within the legal sector can continually refresh and future-proof their security measures to ensure they are constantly protected. Outdated systems can be swapped out for state-of-the-art replacements, without having to make another potentially crippling capital expenditure investment.

Firstly and perhaps most obviously the model means there is no need for a large, one-off payment if businesses want to guarantee protection: instead, the cost is divided into smaller, more manageable chunks that are paid over a pre-determined period of time. Suddenly, the financially-induced headaches that many partners and firms suffer from are alleviated, allowing them the freedom to breathe and implement these new measures without any disruption to regular operations.

Of course, any fast-growing businesses in the legal sector are going to be sceptical of investing a large amount of money on IT systems if they end up doubling their workforce in 12 months time, the systems they spent all that money on will no longer be fit for purpose. This is another problem that can be solved through payment-over-time models, which allow businesses to scale their estate up or down according to what the business requires. This approach allows businesses to match the investment costs with the businesses benefits over time.

Payment-over-time models are also extremely valuable thanks to their flexibility. As the cyber threat continues to evolve and hackers devise new ways of infiltrating IT systems, businesses

the impact of financial and reputational damage that could potentially cripple the business completely. While it used to be expensive and logistically tough to put these measures in place, working with a trusted partner to adopt a payment-overtime model takes away this strain and enables the security and flexibility that is necessary in todayâ&#x20AC;&#x2122;s environment

Chris Labrey MD, UK & Ireland Econocom

References:

The legal sector simply cannot afford to ignore the issue of cyber security. There is simply too much at stake, not least

https://www.theguardian.com/politics/2017/jun/24/cyberattack-parliament-email-access

FINANCE

Why finance execs are embracing

inance execs are increasingly being challenged to improve their departmental efficiencies. Desired outcomes typically include maintaining cash flow, reducing costs and providing ever more sophisticated performance reporting. Additionally, they need to retain the best finance talent and knowledge to meet new business demands – against a backdrop of increasing competition to recruit the best staff.

by humans. RPA is best applied to repetitive, high volume, rules-based transactions, so it can be assist many core finance processes - particularly those typically found in finance service centres. Accounts payable, accounts receivable and general ledger transactions readily lend themselves to RPA. Opportunities also exist in customer and vendor master data maintenance, order entry and bank reconciliation.

The robotic option New approaches are therefore being explored by forward-thinking finance execs and software robots are increasingly providing compelling remedies.

The business case for implementing RPA is convincing - especially where staff-cost benefits are considered. A typical robot can automate the work of 2-3 people - assuming the robots work 24x7. RPA delivers quality benefits too, by executing the business process to a consistent, repeatable standard - eliminating errors which can so often occur when staff members perform repetitive processing. Over time, further increases in process quality can be achieved, as the process rules are refined - so exception handling and supervisory intervention are also reduced. The net result of this is an improvement in the customer’s experience too.

Put simply, Robotic Process Automation software (RPA), automates finance tasks previously performed

RPA also provides increased control and process auditability. Unlike outsourcing or off-shoring to low-cost

The fact is it’s hard to get qualified staff, and hard to retain them – especially when they’re replaced with people who lack an immediate understanding of the business. With demands increasing wouldn’t it be great to re-purpose existing staff away from working on repetitive, but essential transactional tasks – onto more complex, stimulating activities.

centres, there is no need to provide 3rd party access to sensitive finance systems. And it avoids the risk and cost of system integration effort typically managed by the IT department to integrate disparate technical platforms. This places the control of finance processes squarely back in their department. Implementing RPA does require some upfront investment - usually to update or deploy the infrastructure that may be either physical or virtual machines for the robots to sit on and servers for databases. However, the implementation timeline is usually short because RPA can be applied to existing applications (i.e. without changing the current IT landscape) and emulates human execution of tasks - via existing user interfaces. Other costs can be associated with the time IT and finance staff incurs to discuss, agree and implement infrastructure, operating principles, working practices, governance mechanisms etc. Processes should be chosen where they demonstrate in-year benefits over-andabove the cost required to get operational. Get these factors right and the return on investment of a typical RPA licence can be within 1 year. 51

FINANCE

Top tips to make RPA a success There are numerous finance processes that are ripe for automation, these are proving the most popular: • Operational accounting (billing and collections, accounts receivable) • General accounting (allocations and adjustments, journal entry processing, reconciliations, inter-company transactions • Financial and external reporting • Planning, budgeting and forecasting • Treasury processes Re-evaluate finance processes Although RPA can automate a process as it is, there’s a good chance that all existing inefficiencies, inconsistencies and duplications in the process will be repeated by RPA limiting potential benefits of its application. To mitigate this risk, ensure that finance processes are reassessed. Reassure staff It’s vital that staff appreciate they’ll need to adapt but must also be aware they’ll play a key role in the journey - as humans will always be needed to work in parallel with RPA. Tasks such as training and operational management of a robot must be done by human specialists. A robot will also proactively involve humans for analysis and decision making at certain steps, where insights and subjective assessment should be used.

Finance personnel will face changes in skills and – especially as more capacity will be used. So in RPA implementations, it’s important to consider preparing for new tasks that will require more intelligence – such as; advanced analysis and interpretation – as well as review and approval decision-making. In addition, new technical skills will be needed to manage a robotized process. Final thoughts As well as the obvious cost savings and efficiency improvements, in the short and longer term, RPA has the potential to significantly enhance the way that processes are fulfilled in the finance department. RPA also automates many rules-based, recurring activities – so staff are liberated to focus on the value added, high end, actions - that can only be achieved by using the human brain

Paul Taplin Managing Director Voyager Solutions

FINANCE

Financial services firms and the need for board level transparency

inancial services (FS) organisations are facing more pressure now than at any time previously. With incumbent businesses under threat from more agile startups and market entrants, ever growing regulation meaning compliance and governance is a harder task than ever before, and political uncertainty meaning major decisions about location and strategy have to be made over the next 18 months, strong leadership is more important than ever.

But transparency is equally important – how were decisions reached, what was the criteria behind the decision? Showing how senior management arrived at certain decisions has a positive impact on governance, on internal comms and reassure external stakeholders that the board has the company’s best interests at heart. A lack of senior visibility and transparency? In April 2017, eShare conducted research with 1,000 UK employees

across a variety of different sectors to see how visible and transparent the boards were at the companies in which they worked. The results revealed just how ‘invisible’ many UK boards have become in the FS sector. 30% of respondents were unable to name a single member of the board at the FS company they work for, and more than one quarter said that their board was either barely visible (19%) or not visible at all (10%). More than half (56%) of respondents working in FS said their

FINANCE one of Frankfurt, Paris, Luxembourg or Dublin. But any organisation doing so will undoubtedly face a number of challenges. Not only do compliance requirements and jurisdictions vary from country to country, but such a complex process needs absolute transparency at board level. Employees, shareholders, customers and other stakeholders will all want to know why certain decisions have been made and what the rationale was behind any relocation. Addressing transparency Despite the occasional high profile case highlighted in the press, most FS businesses are better governed than they ever have been. But they do need to demonstrate this much more effectively, particularly when it comes to showing transparency in decision-making.

board is out of touch with day-to-day operations, while 72% of respondents said the board at their company could do more to be visible to employees. These findings would suggest that UK FS organisations need to work much harder at bridging the gap between leadership teams and employees. Around half of those surveyed were in the dark about board decisions, feeling those decisions were not clearly communicated to the rest of the company. Such an oversight could have potentially serious consequences in the future. A number of FS organsiations are giving consideration to a post-Brexit change of HQ, from London to most probably

Strong leadership is integral to this. A good leadership team is one that is cohesive and filled by individuals with industry expertise, ethics and integrity. The leadership team’s qualities can then permeate throughout the organisation as it grows and expands. eShare’s recent research did reveal a lack of diversity in FS boardrooms - 52% say there is noone under the age of 40 or any ethnic diversity on their employer’s board. 66% felt that employee representation in the boardrooms would be a good thing. Boardroom diversity is an interesting topic, and certainly a thorny issue to discuss. But employee representation – on the management team if not the board – is certainly one option when it comes to helping improve transparency of decision-making. However transparency is achieved though, it means that when the board makes a decision about the future of a company, both internal and external stakeholders are reassured that they know how that decision was reached and that the board has the organisation’s best interests at heart. Consistent

communication is the best approach here, so after every management meeting, the senior team should agree what needs to be shared and go share it. Time for boards to embrace digital But any move towards openness, transparency and visibility in FS, requires boards to move into the digital age with far more enthusiasm than they have done to this point. Many boards are still reliant on paper for use in board meetings - not only is this a major waste of time and resource – but it also is bad practice when it comes to governance and transparency. The use of online board portals to replace paper or PDF based board packs for board meetings will demonstrate clearly who said what in the meeting and provide insight into how certain decisions were reached. It also makes for a significantly more productive use of board members’ time, who now have any information they need - about say, the different jurisdictions in two countries - and can easily access it before, during and after a meeting via their personal device. People expect FS businesses to be open and transparent in their operations and in what goes on at board level. This is even more true in the turbulent post-referendum economic and politic climate. With organisations potentially looking at relocating and making major decisions about their future, board level transparency is more important than ever, and to improve this means it is time for boards to fully embrace digital

Alister Esam CEO eShare 55

BANKING

BRING BACK THE

f you grew up in the UK around the 80s, you might remember Midland Bank - a bank known for its characteristic slogan, “the listening bank”. Their catchy commercial ran throughout the 80s and soon, the slogan was the very phrase that came to be Midland Bank’s defining factor, the friendliest and most customer centric bank amongst the Big Four of UK banking at the time. In 1992, HSBC took over Midland Bank, and a mere seven years later, they dispensed the brand entirely. Nowadays, we are noticing exponential growth of innovation within the fintech industry. This growth has been matched by an equal, if not greater, growth in customers’ expectations. Since the time of Midland Bank, we’ve seen banking lose their friendliness, with bigger banks notorious for poor customer service, and, more shockingly, weakening customer and industry rules of trust. Unfortunately, this is not a local phenomenon, but rather happening at a global scale. What’s comforting to know is that the solution might be simpler than most banks imagined. Simply put, we can trace the root of the problem to the lack of communication between banks and their customers. Unsurprisingly, customers typically score their overall banking experience low. The world’s largest generation, millennials, are leading the change by influencing the future of banks, and if banks are unable to match their needs and demands - they will inevitably lose this sizable portion of the world. One of the areas in which we can see their influence is the importance they put on the the ability to bank from anywhere at anytime and from their mobile devices. Fintechs, compared to traditional banking institutions are a lot more agile, and this gives them a greater advantage over the latter in allowing them to deliver what matters most to their customers. The proof is in the numbers, with the World Retail Banking Report by Efma reporting 81.9% of consumers 56

experiencing higher customer satisfaction in digital banking through fintechs. The main driver of their satisfaction is a result of the ease of use, overall experience and service that new challengers provide in comparison to traditional banks. It would be absurd to think that this means traditional banking is on the decline and will soon be phased out - on the contrary, this is indicative that now is the time for brick and mortar banks to reprioritise and push forward with their digital transformation to be able to not only improve the overall banking experience or customer journey but most importantly to regain the trust of their customers. A step in this direction, will not only help a standalone bank but help to change existing mentalities towards the bigger banks. Here are a few simple steps on how you can get started: 1. Be accepting of direct feedback One of the key points for you to progress forward is by being open to direct feedback. This doesn’t only mean having an email or a contact form on your website or app, but also implementing procedures on how to handle these requests as and when they come in. How can you expect your customers to take time out of their day if their feedback is going to be left unseen? I recently spoke with someone who banks with Barclays, and he mentioned that when he called their customer service to provide his feedback on one of their new service features - shockingly, he was advised that they only had processes in place to deal with complaints and not to handle such comments. Yes, complaints are important to monitor, but feedback is also invaluable. Your customers are essentially your quality assurance testers, and you should be taking their input onboard very seriously.

BANKING

Such feedback is crucial to ensure your products and services are answering to your customers’ expectations. For example, by directing this information to the appropriate source within product & tech teams internally you can build upon your existing offers or quickly consider changing things that are not working.

Expenditures by banks could be optimised and improved if this was spent on putting in place offerings such as personal financial advice and help to guide their customers into making better financial decisions. By acting in the interest of your customers, it will allow them to place more trust in your financial institution.

2. Keep things clear It’s human nature to want to belong and be part of something and by offering your customers a platform where they are able to communicate openly and share their own opinions and ideas will ensure you are increasing your chances of receiving further feedback from users that can add value to your online community.

4. Allow feedback to flow freely Once you’ve received feedback from your customers, the feedback shouldn’t just flow to the root of the problem but should flow freely throughout the organisation. If several customers are complaining about the levels of customer service - this should be shared widely, and in doing so, your entire company will be made aware of particular issues.

One of the first things we built for our customers at Fidor was a community messaging system, similar to forums. This is completely open and a place where customers can submit a variety of requests or comments ranging from that of feedback on our mobile platform to ideas for new features. On this community messaging system, we often see our customers interacting with each other, and their interaction increases from others! It’s a great, but simple cycle of feedback!

One of the most productive ways to run a customer friendly bank is by ensuring that you live your product values externally, but also internally. The simple act of information sharing enables people to learn from mistakes but also to be aware of them in all future projects later down the line

3. Be user first Understandably banks seek to make a profit, but sometimes adopt the wrong approach and are often seen attempting to upsell their customers a variety of products or services they have no need for or simply do not want. You will notice that some banks’ existing online platforms continue to expose their customers to unnecessary advertisements for their offerings - such as loans or other unnecessary financial products.

Sophie Guibaud VP of European Expansion Fidor Bank

References: https://www.youtube.com/watch?v=clN9YK-hC-M

It’s concerning to think that some banks continue to measure staff performance on sales targets, rather than focus first on being customer-centric. 57

INVESTMENT

Supporting the interests of UK investors through tax-efficient investment schemes

K investors currently find themselves amidst a period of change and profound opportunity as the country redefines its position as an international hub for innovation, productivity and growth. Since the EU referendum in June 2016, the UK’s financial landscape has faced a series of monumental political and economic events, including the appointment of Theresa May as the new Prime Minister, the Bank of England’s decision to set to interest rates to an historic low of 0.25%, and the calling of a snap General Election which recently delivered an unexpected hung parliament. Following this surprising election result, political negotiations ensued – the Conservative Party sought alliances with minor political parties to secure a majority in the House of Commons, while the Labour Party called for Prime Minister Theresa May to resign. After two weeks of bartering and speculation, incumbent Prime Minister Theresa May successfully struck a deal with Northern Ireland’s Democratic Unionist Party, allowing the Conservative Party to lead a minority Government for the next five years. Should be there no leadership challenge over the coming months, this new-look Government will be responsible for negotiating the UK’s withdrawal from the EU, and forging the county’s postBrexit identity. During this period of economic and political transition, now is an ideal time for UK investors to review their current investment portfolio and develop a financial strategy that takes advantage

of the current opportunities on offer. When considering the full range of asset classes available to UK investors, taxefficient schemes for investment into scaling private UK businesses have proven to be a popular destination for investors. For example, in the 2016/17 tax year nearly £550 million was invested in Venture Capital Trusts to help small companies grow – the highest it has been in over a decade. What’s more, the globally renowned Enterprise Investment Scheme (EIS) has raised nearly £16 billion worth of private capital since its launch in 1993, encouraging taxpayers to invest in high-growth UK SMEs by offering attractive tax reliefs. These are impressive figures, and there are further reasons to be optimistic about the future of these initiatives. Recent research commissioned by IW Capital found that the equivalent of 1.47 million taxpayers are looking to invest through EIS over the coming 12 months. While these are promising statistics, Theresa May’s newly formed Government must not rest on its laurels – more work needs to be done so to ensure that investors are able to act on their intentions. Over the coming months ahead, there is immense opportunity for the UK Government to review the current legislative framework governing taxefficient investment schemes, and put into place a reformed system that caters to the interests of investors. To achieve this, the Government will need to review, and if necessary repeal, current EU State-

aid legislation that has progressively limited the number of investors and businesses able to access schemes such as EIS. IW Capital research also revealed that one in four investors hope that more will be done to support investor interest by way of tax-efficient schemes and income tax policy, with this number rising to 33% amongst those aged over 55. With the UK SMEs producing a combined annual turnover of £1.8 trillion, there’s no denying the monumental role the private sector will play in propelling the national economy forward as it prepares for Brexit. To ensure that investors are able to support UK scale-ups during the two-year Brexit negotiation period that is now underway, it is important for the new Government to actively encourage capital investment into the nation’s flourishing private sector, offering education and awareness in addition to tax incentivised opportunities that respond to the significant levels of positive investor sentiment. Doing so will ensure that taxefficient investment schemes continue to remain a popular option for investors seeking to support the UK’s burgeoning community of scaling SMEs

Luke Davis CEO IW Capita

INVESTMENT

How Can Secondary Markets Bolster

Private Equity Investment

decade into the alternative finance revolution, of which the UK has been at the forefront, many investors are now hoping to see a pathway to exit. Spurred on by negative experiences of excessive valuations, investors are now beginning to expect more from an industry that is reaching maturity. To this end, many leading crowdfunding platforms are – or at least are considering – launching secondary markets with the intention of enabling individuals to release equity from their private company investments. While this is a welcome step for the industry, adding much needed movement and liquidity into the market, it is questionable whether the crowdfunding platforms’ solutions will be able to effectively support investors seeking to release their equity. As a co-founder of Asset Match – the UK’s first secondary market for private businesses – I learnt a great deal about achieving the correct balance between the interests of company leaders, shareholders and investors. New investors require access to recent performance data and must be wellinformed of the company’s growth plans while existing shareholders need to be able to realise the value of their investments. Rather than being a zero sum game of favouring any of the parties,

a platform that can provide businesses with access to a confident, energised and fluid investor base is more likely to attract high-growth companies seeking growth capital investment. By contrast the listing model currently employed by the majority of crowdfunding platforms is perhaps too far weighted towards the interests of the companies, causing reticence among investors and shareholders. In order to attract yet more deal flow onto the platform and expand market share, there have been greater efforts from the platforms to attract new companies without proportionate efforts to expand the number of participating investors. Critically, not enough attention has so far been paid by the vast majority of platforms in providing means for shareholders to achieve a successful exit.

INVESTMENT

Essential to the attraction of new investors to the private equity market over the coming years will be resolving the imbalance between true market value and listed valuations. The secondary markets that we hope to see for businesses at this stage of growth must be able to provide investors with the due diligence and documentation necessary to validate the price of private company shares. So far it appears that the current secondary market model proposed by crowdfunding platforms remains short on one of the most vital components of any marketplace – openness. In the example of Seedrs’ secondary market, share trading remains limited to existing investors and is carried out within one-week-long trading windows, thereby shutting out further interested parties and limiting investment to those who may be hesitant or perhaps were limited in number to begin with. For a purportedly democratic mode of finance to close itself off in this way can only serve to hold back a more fluid and transparent share trading process.

To improve upon what is certainly a resoundingly positive step forward in recognising the imbalance of attention so far paid to the interests of not just scaling businesses but also investors and shareholders, platforms must become more open, transparent and informative. Such a revitalisation of the crowdfunding model could not be more critical for the private equity space as a whole; despite achieving exemplary market growth 2012-2015, last year the growth of UK equity crowdfunding stalled, remaining at £350 million in market value. Evidently, platforms must prove their long-term value to both new investors and early stage adopters who fuelled the industry’s widely lauded growth by developing secondary markets that are open to external investment

Stuart Lucas Co-CEO Asset Match

BUSINESS

The Achilles Heel of an M&A-led Transformation Programme – The Spreadsheet

2017

is expected to see healthy M&A activity, especially in the banking and financial sector, due to the European Central Bank encouraging cross-border diversification and consolidation, potential relaxation of regulation in the US, and disposal of noncore businesses by global banks. The operational challenge of disentangling businesses From a strategic perspective, the opportunity is for the taking for organisations looking to take advantage of an M&A conducive market and business environment. However, it’s imperative that from day one, the new entity is able to demonstrate to and convince the regulators and the market alike that it is an agile, effective and well-managed business. There are stringent regulatory deadlines, which if not complied with, have the potential to wreak havoc for the new entity in the market. M&A requires deadline-driven, operational transformation as businesses disentangle processes from the original environment to migrate them to the new entity. For instance, traders need to connect to the new entity’s systems and market data feeds on day one of the cross-over so that their trading activity is not compromised in any way. Nevertheless, there are operational challenges to divesting and merging entities, with the Microsoft Excel spreadsheet playing a major role in the success or failure of such transformational initiatives. 62

Typically, the financial controls that are in operation in organisations are spread across multiple enterprise systems and a myriad of critical spreadsheets spanning the entire business. Separating enterprise systems and connecting them to the new environment is relatively well understood by organisations involved in M&A activity; but there are also a number of complex, business-critical processes that reside in intricately connected spreadsheets, that organisations don’t always have visibility and indeed an understanding of. This makes securely disentangling and migrating key processes and financial controls to the new entity difficult and risky. Sometimes due to the nature of an acquisition – i.e. a smaller organisation being acquired by larger companies, it’s not unusual for the former to have been relying on immature processes and IT systems for financial controls. This further complicates the process of integrating the financial controls. Ensuring timely knowledge transfer of financial controls and business processes is yet another challenge that organisations undergoing an M&A situation face. As companies unify, organisations make huge cost savings through combining processes and merging personnel roles, often resulting in employees exiting the organisation. In order to suitably transfer the knowledge from the acquired or merging entity, organisations need to have a full understanding of the complex critical spreadsheets that are relied on for financial control, who controls and manages those

BUSINESS

processes, their integrity and where they exist in the business. Manual divestiture of processes error-ridden and wasted effort Many organisations, in the first instance, attempt a manual approach to understanding the spreadsheet landscape and the complex interlinkages across the environment in order to extricate businesses. It seldom works â&#x20AC;&#x201C; the process is complicated, time consuming, error-ridden and with the clock ticking to provide documentary evidence to

authorities, it is frequently wasted effort. Technology, on the other hand, enables the merging or acquired entity to understand its business processes, identify the individuals who are applying the controls and put automation around those procedures. This also reduces the key man dependency and ensures the necessary knowledge transfer to the new organisation. Separating Scottish Widows Investment Partnership (SWIP) from Lloyds Banking Group The disentangling of the Scottish Widows Investment Partnership (SWIP) from Lloyds Banking Group to Aberdeen Asset Management in 2014 is a prime example of the value of a technology-driven approach to M&A-led operational transformation. Following its acquisition, SWIP needed to separate its business from Lloyds so that the necessary and critical processes could be migrated to Aberdeen Asset Management. For example, where certain processes relied on market data feeds that were owned by Lloyds, or had linkages to systems owned by Lloyds. Due to the number of convolutedly connected spreadsheets across the vast spreadsheet landscape and the complexities of the business processes residing in this environment at SWIP, manually understanding the lay of the land was unfeasible. So, by utilising technology, SWIP was able to inventory the spreadsheet landscape, identify the business-critical processes, understand them and pinpoint the files that required remediation. Simultaneously, the technology helped expose the data lineage for all the individual files, clearly revealing their data sources and relationships with other spreadsheets. SWIP was able to securely migrate the relevant business processes to Aberdeen Asset Management and where necessary decommission the redundant processes.

Underestimating the role of the spreadsheet is reckless In any M&A initiative, there is always a substantial amount of work related to complex, business-critical processes that reside in spreadsheets and the dependencies of such processes on enterprise systems and vice versa. Many organisations under-estimate the challenge of separating financial controls and processes, the disturbance they can cause to the day to day operations of the new entity â&#x20AC;&#x201C; but more crucially, the long-term market, regulatory and financial impact of such interruptions. Technology offers a fail-safe, rules-based and automated mechanism â&#x20AC;&#x201C; including everything from identifying and understanding the processes, establishing the data linkages across the spreadsheet landscape through to remediation, migration and decommissioning. Teams that adopt a technology-led approach to drive M&A-led operational transformation programmes, find it extremely valuable. The spreadsheet is truly the Achilles Heel of such an initiative, a lot rides on it

Henry Umney CEO ClusterSeven References: https://www.ecb.europa.eu/pub/pdf/other/ecb. financialintegrationineurope201705.en.pdf

How do we solve a problem like Financial Exclusion? the government’s radar. Will a specially appointed minister be enough though? Financial exclusion is a problem resulting from deep rooted processes and assumptions within the UK banking sector. Real change will not be affected unless the key players within this space are finally challenged on their behaviour.

inancial exclusion is a problem that you likely cannot comprehend unless you have experienced it yourself. It is difficult to fathom just how many fundamental life activities actually hinge on having a basic bank account, from getting job to renting a flat. It seems impossible that when we live in such a financially advanced country, access to such basic financial services are restricted – restricted for 1.5 million people, to be precise. A recent House of Lords committee report recommended the appointment of a minister for financial inclusion, showing that the problem is in fact on 64

Don’t be afraid to tackle the big players As long as banks remain primarily self-interested, vulnerable people will face financial exclusion in the UK. The myth of ‘free banking’ in particular is a harmful idea that has managed to persist, despite it being completely false. Hidden fees and charges from these ‘free banks’ plague those who are most likely to succumb to debt, and can work to plunge such an individual further into financial turmoil. Bankers make money from customers through overdraft charges, overseas charges and much more. So called ‘free banking’ forces people to pay charges with money they simply don’t have, and this only leads to poor financial health.

A major issue is that banks have no incentive to help as they have no reason to change. Their goal is to make money - if they do this, then as far as they are concerned, they are succeeding in their role. To effectively tackle the problem of financial exclusion, this culture that permeates through the banking sector must be challenged. It is time to put people at the centre of their own banking needs. People are often turned down when opening an account because of their lack of credit history, or because they have bad credit history. Why does credit history factor into the decision when all the individuals wants is to store money? It matters to banks because such a service would not give them the opportunity to hit customers with their hidden fees and charges. This means that people are missing out because banks cannot find a way to take money out of them, and so reject them. Time for a new perspective? As outlined above, the greed of

FINANCE banks essentially fuels the problem of financial exclusion within the UK. So why are they considered the key players and negotiators when it comes to trying to solve such issues? Real debate on this topic is required, and this can only become a possibility when the opinions of challenger banks - institutions who actually seek to help – are taken into consideration. Such alternatives to traditional banking could be bring a breath of fresh air to such a longstanding issue within the UK. An incoming minister for financial inclusion should be aware that banks do not have any reason to challenge the status quo, so should look for allies that will help challenge the problems within banking. Allowing outsiders to the sector, like challenger banks, to have a say in issues such as these could lead to real change. Selfishness – a problem touching all organisations involved? It isn’t just the banks that exhibit selfinterest when it comes to handling the problem of financial exclusion. The key players involved, including the likes of national customer advice and support groups have also displayed behaviour in the past that would suggest that they have their own interests at heart. They need to tackle the problem properly, and accept that it must be without monetary reward.

This behaviour usually manifests itself through the implementation of a referral fee in order to give leads to alternative options from a traditional bank. Such a fee does nothing to progress the mission for financial inclusion. These institutions, which are supposedly in place to help the most financially vulnerable, will do nothing but restrict individuals to using services which are too expensive and do not fit their needs. Fair access to a bank account is important for anyone living within the UK today. It is therefore crucial that any minister for financial inclusion seeks to address the problem by tackling the assumptions that have lead to the problem. Ending the myth of ‘free banking’, opening up the conversation to alternatives and challenging support groups as well, all need to be top of this priority list – only then will we see real change

Mulenga Agley VP of Growth Monese References: “https://www.publications.parliament.uk/pa/ld201617/ ldselect/ldfinexcl/132/132.pdf http://www.financialinclusioncommission.org.uk/facts

BUSINESS

Are you getting the right service from your payments provider?

t should be a simple and hasslefree process for a business to get paid after a customer has made their purchase. But that isn’t always the case. Between businesses and customers there is a small army of service providers and systems that process, collect and transfer payments. While digital transformation has made taking online payments quick and secure, there are still friction points, such as aborted transactions, chargebacks or slow payment settlement. Payment providers should take a proactive approach to removing such issues and the below outlines the level of service that should be expected and delivered from payment providers. Ensuring there is a wide range of payment options The payments landscape is always expanding and diversifying. Long gone are the days of “cash, card or cheque,” as e-commerce innovations offer ever more ways for consumers to pay online. From mobile payments, to e-wallets, to pre-paid cards, consumers now have multiple options and are looking to pay in the method that is most comfortable and convenient for them. As customers embrace new ways to pay for goods and services and local trends emerge, businesses will need to keep up with consumer habits by adopting new technology. Indeed, the global nature of ecommerce makes it vital to understand local payment preferences to maximise transaction acceptance. Familiar payment methods speak volumes for how much a merchant knows the local market and this gives consumers confidence in the merchant. PSPs shouldn’t overload consumers 66

with choices, while it pays to give consumers options as they’re more to make a transaction if there is a convenient way to pay, these have to be relevant. To gain credibility PSPs need to focus on providing the right choices for each country, market and customer base., Continuous uptime Gone are the days when a business could simply shut up shop by 5pm. Online businesses have completely revolutionised the process of buying and selling, consequently, there is no ‘end of day’ anymore. What’s more, regardless of what time of the day it is, uptime should be consistent. With customers shopping at any time of the day or night, as well as more goods and services being bought across borders, PSPs should be able to confidently offer a round the clock service and be able to provide customer support at any time, should there ever be an emergency. The last thing a business needs at 3am is to be worrying that its payment gateway is going to crash when it’s peak online shopping time for customers in a different time zone. Quick settlement times Payment settlement timings can vary significantly from provider to provider. Some gateway providers hold onto funds, or a certain percent, for up to 30 days, others pay out funds on a set day, while there are some providers that can settle funds as quickly as the next day. Any business should be fully aware of when its PSP will release funds once a transaction has cleared, and this is one of the most common payment provider pitfalls. More often than not the issue is that of communication – the PSP has not been clear about the time it will take for

different types of payments to be settled. High levels of security Turning on the news will tell you how concerned consumers and businesses are about cyber security; it seems that not a month goes by without another high profile cyberattack making the headlines. With new rules from banks, regulators and card issuers placing more pressure on merchants; PSPs needs to be offering top quality security. This means having robust fraud protection, being Level 1 compliant with the Payment Card Industry Data Security Standard (PCI DSS), and using tool such as tokenisation. While the digital revolution has changed the way we trade, making it essential for PSPs to offer a range of safe and secure payment options with 24-hour uptime, it is important not to forget the importance of great customer service and offering value for money. While all these tactics will contribute to the level of service provided, it is also important to be on hand for customers and transparent about pricing. After all, it is certainly not unreasonable to expect a breakdown of costs and someone to answer your call in a time of need

Laurent Dhaeyer Managing Director Secure Trading

BUSINESS

BANKING

Three things to think about when bringing CHATBOTS into your bank

Mark Aldred Head of International sales Auriga

inancial services are rapidly recognising the benefits of chatbots, and it’s difficult to open a newspaper without reading about the rise of artificial intelligence. With Oracle reporting that 80% of businesses are already incorporating chatbots, or plan to add them by 2020, what does the financial industry need to keep in mind when implementing this technology? There are lots of areas for consideration, from technological compatibility, to getting your staff used to new technology, but above all else your customer experience must be your top priority. 1: Put your service brand values first Whether it’s through your staff, technology or artificial intelligence, your customers expect and deserve the same level of service and brand experience wherever they are, and whatever platform they use. Chatbots need to be integrated into your wider brand strategy, 68

and become part of a seamless customer experience. Does your customer know it was your bank they were dealing with when talking to a chatbot outside of a branded branch environment? Branding is a major investment for banks, so you need to make sure that customers recognise your brand across all platforms, whether that’s through the language your chatbots use to address them or the platforms they operate on. Consistency is key. Beyond this, you can also use chatbots to enhance the experience your customers receive throughout your banking system. They hate queuing in branch and they also hate waiting in call systems to get to the right department on the phone. Chatbots can enhance their experience by quickly taking them through the phone queue to speak to the correct person as soon as possible. But beware – not all chatbots are created equally. You’re entrusting your

customer’s impression of your brand with this technology. In the same way that you’d always train staff before putting them in front of customers, you need to make sure your chatbots are up to the task before entrusting them with your clients. Don’t see them as a cost saving measure, as this may lead to cutting corners. Chatbots should boost your customer experience, not threaten it. 2: Don’t settle – keep advancing your technology We know that artificial intelligence isn’t where it needs to be yet. Progress is coming, but there are still teething problems. This is understandable given how new the technology is, but for building customer confidence with your bank, you need to keep pushing advancements and making sure the solutions you adopt can maximise your customer experience.

BANKING

This does take time, but integrating AI into existing systems and aiming for omnichannel is crucial to providing a consistent experience for customers. This could range from data sharing, to keeping chatbots informed or making sure the chatbots are redirecting to the right humans who can help. A core advantage of AI is that machines can learn and adapt to customer behaviour. This means a bot can handle different situations and conversation types, drawing upon hours of prior interaction with your customers. Make sure this development is built into, and enabled, by your chatbot programme to keep improving the customer experience. Also, consider that chatbot interactions may provide staff with some interesting insights. 3: Don’t put all your eggs in one basket People love having staff in a branch. It’s part of building loyalty and trust, but

for many banks it can be challenging to adapt to new technology, while maintaining the personal touch. Balancing the two is important, but this isn’t a zero-sum game. The physical and the digital can work together to enhance the overall experience of the customer. Don’t replace your staff with artificial intelligence, instead use it to help them help your clients. Banking is an omnichannel game. You shouldn’t view artificial intelligence as a business proposition in itself – it should work with your other systems, and help you build a better business.

A win-win for banks and customers Banks have been convinced by the ease, cost effectiveness and 24/7 nature of chatbots. Now, they need to convince their customers.

The financial industry and its customers are not new to disruption. Machines have been part of our everyday banking experience for decades, so many of your customers will be used to the concept of technology helping them with their banking. ATMs in 1967 began the automation of our financial world, and customers couldn’t imagine life without them now! We’re on the brink of the biggest technological revolution for a generation, but just how artificial intelligence will change the banking industry in the next 50 years remains to be seen. Technology will never replace people, as they’re best placed to step in if things go wrong and provide reassurance and trust - but it can help us make the banking experience even better

References: https://www.oracle.com/uk/corporate/pressrelease/oraclereport-can-virtual-experiences-replace-reality-vr-chatbotsfor-cx-20161206.html

Dealing with cyber security now that IT risk is a business risk

yber security is a major industry - one of the biggest within technology - whose size is predicted to grow to $224.48 billion by 2022, according to recent Statistics MRC data. Keeping an organisation’s data and systems safe and protected is of course an issue for companies in any sector, but is perhaps arguably even more so for organisations in the finance industry. Due to the nature of the data and the information they hold, Financial Services (FS) firms are amongst the most regularly targeted businesses by cyber criminals. The last few years especially have seen a number of high profile cyberattacks, where the ability, professionalism and organisation of hackers has far outweighed a company’s ability to defend itself. As well as being unable to defend against such attacks, many organisations also struggle to quantify the impact of such risks, leaving them more vulnerable than ever before. Yet the consequences of a cyberattack go way beyond IT risk. There are a business risk, first and foremost, and must be addressed and managed as such if FS firms are to remain safe and protected 70

against this growing threat. IT risk = business risk Think about what happens when a FS organisation is subject to a cyberattack. Its IT systems may be frozen, or go down, private financial data relating to customers may be stolen or published online and the entire process is a major inconvenience for all concerned. It can sometimes mean the organisation that has been breached paying a substantial figure to hackers in order to get their data back. Ransomware is truly insidious and one of the most emerging forms of cyberattack. It can often encrypt most, or if not all of an organisation’s data, which then makes it completely unusable and puts a halt to virtually all internal business and IT processes. Such is the professionalism and expertise of modern hackers, it can be very difficult to fend off Ransomware once it has taken hold. To try and clean the virus, delete all of the encrypted files and then restore them, would not only cost a lot of money but would require a number of highly skilled engineers too. So it isn’t just an IT inconvenience,

there are consequences and repercussions for the entire business, whether it leads to customers leaving or even long-term damage to a brand. In short, cyberattacks are not an IT risk, they are a business risk and should be treated as such, and traditional approaches to managing IT risk are flawed. A new approach to cyber security It has become very clear over the past two years, that many firms simply do not have the tools, expertise or manpower to effectively defend themselves against cybercrime. In 2016 the UK Government published a guidance document - 10 Steps to Cyber Security – which sought to provide information on how to protect themselves in cyberspace. But a PwC report in the same year revealed that one-third of companies have no plans in place to fend off online fraud. This is highly concerning and shows that not enough businesses are taking the cyber threat seriously enough. In fact, cyber security needs a new approach entirely, one that integrates IT risks and threats with overall risk and compliance structures. This means that organisations can benefit from a real-

time and integrated view of all cyber security threats, guaranteeing a better level of security and performance, and providing powerful features to manage IT priorities in line with business expectations. The new OXIAL IT GRC solution is based on the idea that IT risk management begins with smart and effective governance. It provides a balanced and comprehensive view of every single one of an enterprise’s business risks, including the bringing together all elements of IT risk including availability, security, project management and disaster recovery, and integrating those with overall risk and compliance structures.

more targeted and more agile than ever before, it means that companies have to become equally professional in how they manage risk and meet this growing cyber threat. An internal IT team is simply not enough. Their time is spread too thinly across many other areas of IT and they often lack the most up-to-date expertise to be able to defend against cybercrime – a digital army of hackers requires a digital army to defend against it. This entails the involvement of highly trained and proficient third-parties, adept at warding off hackers and using digital tools to enable the realtime monitoring of threats, ensuring digital cyber security is a continuous and on-going process.

Continuous defence This approach lends itself to a much stronger defence of an organsaition, one that moves beyond a project-based strategy, to one that requires constant vigilance and a continuous defence. With the rise of professional hackers, who better resources, are much

Defending against cyberattack is just too complex and nuanced to leave to an often over-stretched IT department, that is busy with all manner of other tasks and day-to-day fire fighting. Cyberattack is emphatically not just a IT issue and will cut right to the core of any FS organisation that is not sufficiently protected. That’s why IT risk should be

managed along with other risks to the business, as the most effective way of keeping an organisation safe and secure against such threats

Eric Berdeaux CEO OXIAL

References: “http://www.strategymrc.com/report/cyber-securitymarket-2016 https://www.ncsc.gov.uk/guidance/10-steps-cybersecurity”

TECHNOLOGY

How to capture and analyse your financial data more effectively

ou only need to take a brief look at the news to see the uncertainty surrounding the UK political landscape. But, if you look closer, hidden amongst the noise is a reminder of the silent partner we’ve all encountered at some point during our professional careers – and it’s something likely to hit the financial sector harder than any ‘strong and stable’ soundbite: spreadsheet errors. In the June general election, more than 6,100 voters from Efford and Lipson were not included in the final declaration sheet for the Plymouth Sutton and Devonport constituency, due to an “error in a spreadsheet”. Thankfully the error had no material sway on the outcome for this constituency – the winning majority far exceeded the number of undeclared votes – but, what if this was not the case? What if there are other mistakes out there yet to be discovered? What if spreadsheet errors are widespread within your own organisation? The ubiquity of spreadsheet errors is alarming and such errors can cost companies millions – or even billions – of pounds, as this list containing 8 of the worst in spreadsheet blunders explains. Let’s face it, spreadsheets do have a seriously bad rep, and they are often the ‘go-to’ scapegoat for bad business decisions. But that only tells half the story… To really work out how to capture and 72

analyse financial data more accurately, we need to understand how and why errors end up in the spreadsheets in the first place. So, what’s been going wrong, and how do we put it right? Solve the right problems It’s all too common to find organisations spending huge amounts of time, resource and effort trying to emulate the advice of industry leading executives in analysing the latest, innovative performance metrics. What they don’t tell you is that the organisations who pioneer in this space operate at the height of efficiency already. In other words, and at the risk of sounding cliché, they already ‘have their house in order’ and are pursuing marginal gains on a well-oiled ship. That’s not to say these methods of analysis are beyond the reach of every organisation, but first ask yourself: are we covering the basics well enough? Ask the right questions to get the right answers Whether it’s cash flow, supply chain or even personnel, you cannot expect to solve your organisation’s most press concerns without asking the right questions. Often the tendency is to overcomplicate everything. Instead, try and answer questions in the simplest way possible and then work to refine the methodology – remember, it’s easier

to complicate a model retrospectively rather than trying to simplify an already complex model. Recognise human limitations A recent survey found that 27.5% of accountants attributed human error to mistakes in their spreadsheets. We’ve all been there; the slip of a clumsy finger, copying and pasting into wrong cells, or even a simple typo. It’s easy to do. Too easy… Whilst recognising the unique skills we humans possess in problem solving and analytical approaches, we mustn’t overlook the fact that there are some activities – particularly those involving repetitive and mundane tasks – which are better suited to those less inclined to momentary lapses in concentration, fat finger syndrome, or even spreadsheet related repetitive strain injuries (yes, they do exist). I am, of course, talking about our shiny silicon slaves: computers. Computers do what we tell them to, when we tell them to do it and at incredible speed. Use this to your advantage and invest in automation where available, freeing up your workforce to spend time on tasks where their brainpower is far more valuable. A new dimension So, you’ve got the data and you know the questions you need to answer, but how can you appropriately structure your model to be flexible and scalable, yet robust? We live in a multidimensional

TECHNOLOGY

James Kipling Product Manager Quantrix

world, with organisations operating across multiple regions, in multiple languages, and multiple time-zones, selling a variety of products. Your models need to reflect this – analysis needs to allow for any number of different scenarios, so you’re never left wondering ‘what if?’ Businesses aren’t static, they’re evolving entities, constantly changing the products they offer and the ways in which they sell these products. Ensure your model is flexible enough to adapt to these changes as they happen, with minimal effort (and ideally automate this)! Collaboration Synergy exists when humans collaborate. A well-tuned team is almost always greater than the sum of its parts. Spreadsheet models are often initially created as part of one-off exploratory projects. Frequently though, these models evolve into large team efforts involving a number of collaborators who maintain, develop and update your single spreadsheet. In an increasingly global world, collaborators, often from many different departments and locations, will need to contribute – and this process needs to be managed carefully. Frequently though, any collaboration process or project ends with a number of different document versions being distributed throughout your business simultaneously. This is called the ‘single source of truth’ problem.

The integrity of the spreadsheet is always in doubt, as multiple versions need to be compared, contrasted and edited to create a true ‘master file’. If the issue remains unnoticed, incorrect versions of the spreadsheet will be added to, circulated, and then returned. The process can continue indefinitely and errors are subsequently compounded. If an error is ever noticed, the lack of controls makes it hard to determine when and where in the process any critical changes, or errors, occurred. Traditional spreadsheets have attempted to address the collaboration problem, but the solution of ‘cell protection’ makes models inflexible, hard to edit, and removes the capacity for ‘self-service modeling’, decreasing employee efficiency and productivity. Aim for a true real-time ‘self-service’ modeling platform. User based roles and permissions will allow users the flexibility to experiment with their assumptions in a robust and safe environment. Sticks and stones Technology waits for no-one. You wouldn’t consider using an old-fashioned paper filing system to manage your customer records. The tool of choice for graphic designers is unlikely to be Paint – it’s more likely to be Photoshop or another similar, advanced product. Likewise, it’s improbable that professional software engineers use notepad for their day-to-day coding, they’re much more likely to use an

Integrated Development Environment (IDE). Professionals are frequently moving away from off-the-shelf tools as often they don’t excel in providing an experience suited to the needs of the user. It may sound simple, but whether it’s visualisation tools such as Tableau, or a full enterprise level business modeling platform such as Quantrix, using the right tools for the right job will ensure that efficiency killers such as formula writing, error checking and auditing are all alleviated through the use of professional features such as natural language formula writing, built-in audit trail and a visual dependency inspector. Collaborative multi-dimensional modeling tools are at the forefront of financial planning and forecasting – the inherent nature of today’s global businesses means the questions asked of analysts often exist in a multi-dimensional problem space. Remember: if you’re spending thousands of pounds on capturing and analysing financial data, don’t let your spreadsheet let you down

References: “http://www.cio.com/article/2438188/enterprise-software/ eight-of-the-worst-spreadsheet-blunders.html https://arxiv.org/ftp/arxiv/papers/0802/0802.3483.pdf https://quantrix.com/quantrix-whitepapers/cant-alwaysget-b/ https://www.tableau.com/ https://www.quantrix.com/ https://quantrix.com/quantrix-whitepapers/cant-alwaysget-b/ http://www.telegraph.co.uk/technology/2017/03/03/ amazon-blames-fat-finger-typo-taking-huge-chunkinternet/”

BUSINESS

SMCR and GDPR Why Senior Managers Have Good Reason to Worry

he combination of the regulatory requirements within the Senior Managers’ Compliance Regime (SMCR) and the General Data Protection Regulation (GDPR) will have significant personal as well as corporate repercussions. Big data and analytics occupy a place at the top of the corporate agenda because of their ability to transform companies. Public disquiet has led to new laws that make directors personally accountable, adding the prospect of personal financial ruin to huge corporate penalties. Recent high profile hacks into corporate bodies such as Sony, Talk Talk, LinkedIn and the NHS, simply increase consumer worries. The proliferation of phishing, malware and ransom-ware have made data protection a mainstream media topic and a threat capable of bringing a giant corporation to its knees.

Marketing Opportunity or Compliance Hell? The GDPR impact on Big Data and Digital Developments together with the requirements to be GDPR ready will disrupt the market place and accelerate competitive advantage for organisations. It’s worth noting that currently there is no such definition as being “GDPR Compliant”. Doing nothing is not an option. There will be challenges and opportunities to be addressed, including: New business model innovation •Organisations will have to change established business models in order to extend, defend, create and disintermediate using digital technologies. •Create effective and compliant capabilities that enable new digital business models to disrupt the marketplace or defend business from disruption. Digital customer experience

The new General Data Protection Regulation (GDPR) which becomes law on 25th May 2018 establishes a data protection framework across the EU which gives enhanced rights for individuals to better control their personal data. 74

•Create innovative and intuitive experiences along a customer journey map. •Organisations must provide services that are intelligent, context-aware, and personalized with actionable insights providing a vastly improved user experience.

Digital business process transformation •Organisations can take advantage of radical process transformations in meeting and exceeding pre-defined set of business value KPIs. •Execute regulatory requirements into operational processes and IT systems to optimize business performance and increase organisational effectiveness. Digital technology enablement •Deliver world-class digital transformation programs by designing and integrating the necessary technology components to achieve GDPR readiness. The role of differentiation

data

competitive

Data-driven strategies have become an increasingly important point of competitive differentiation. To exploit data and analytics companies must identify, combine, and manage multiple sources of data and be capable of building advanced-analytics models for predicting and optimising outcomes. Narayanan Vaidyanathan, head of technology insight at ACCA (Association of Chartered Certified Accountants) stresses the importance of an holistic

BUSINESS

approach to benefit from future developments: “It is a given that the volume of data is set to increase significantly and that factors like IoT will play a big part in this explosion. To benefit from this, organisations need to think not just in terms of immediate advantage, but also sustainable long term advantage.

increases in auto trading volumes, and in excess of 12-year liability penalty regimes. The definition of data will be broad and include voice, trades, emails, texts, org charts, board minutes, and corporate policies over an extended period and this is likely to include more than one employment.”

“The former is a function of superior analytics capability. Being able to analyse truly vast and heterogeneous datasets opens the door to new insights that can provide a real competitive edge. But to maintain it in a sustainable way, it is important to place this within a culture of regulatory compliance and more broadly, ethical behaviour. An inputsbased check-box approach to meeting requirements may fail to achieve the ‘outcomes’ that the regulator is testing against. Similarly, using data for a purpose beyond what it was collected for suggests questionable ethics, and may breach regulation in GDPR relevant jurisdictions once it takes effect. So it is valuable to do it fast and first, but it is necessary to do it right.”

Banking and ethics

Dr Steve Priddy, Dean of Grenoble Ecole De Management programmes in London, advises caution: “The use of robots and high volumes of data will require massive storage capacity and regulated secure automation to prevent an accidental or malicious automated trading economic meltdown. We can expect to see the use of massive cloud based real time personal data warehouses by senior managers seeking to defend themselves in the event of a regulatory investigation. This will be driven by exposure to joint and several liability claims compounded by exponential 76

Morale in UK banking is at a low ebb says Dr Priddy. “Anecdotal and occasional reports of b urn out and suicide mask a far more serious state of affairs. Banks have neglected investment in the age of high frequency trading (HFT) and exponential increases in the volume of data, resulting in low resilience in the event of cyber-attacks. Combined with this is the increasing pressure to close branches and to address the real cost of the banking system. In turn this is leading to wave after wave of redundancies while at the same time roles are radically transformed and skill shortages abound.” In all of this turbulence the role of ethics and of ethics training appears worryingly absent. Scandals continue to proliferate and, in Priddy’s opinion: “Even the main board directors of the largest banks appear to demonstrate only the lowest levels of ethical reasoning. This is a remarkable omission in a sector once held in high public regard and trust.” An optimistic perspective is that a new generation walks the City of London, far more intelligent and digitally literate than those who came before, and with a greater understanding of the

risks endemic to the UK financial services sector, and that these qualities will at least mitigate the damage of the next inevitable crisis. “The developmental paths of AI, financial trading and ethics are fascinating,” says Dr Priddy. “What is needed is their better integration. Many reforms are stimulated by developments in technology which will in turn change the underlying cost and the competitive structure of the banking sector. At the same time regulatory reform is an engine of further innovation.” Entrepreneurship Steve Bailey, director of regulatory consultancy MediusUK.com offers some thoughts on regulation in financial services. “Regulatory Technology (RegTech) is where future career opportunities emerge. The 2 million unbanked in the UK should not be forgotten, yet this is one of the unintended consequences of much of today’s regulatory response to the financial services sector. It’s noteworthy that there is a big increase in the scope and impact of the idea of joint and several liabilities, and extended liability periods. This will increase and capture individuals and institutions who had previously seen themselves out of scope of regulatory development.” Bailey notes, “We are experiencing a massive growth in interim workers and contractors working in the City of London which is leading to changes in networks as transience becomes more important at work and challenges loyalty”. He predicts the emergence and importance of personal data warehouses or repositories driven by SMCR

BUSINESS

and GDPR requirements Bailey warns that “the current combination of regulatory pressure and an innovative technology sector must lead to transformational consolidation, and that when it does the issue of identification and access to ‘my data’ including legacy data will become a matter of significant and concerned public and corporate interest. “Personal Data repository management and data custodianship will become a new competence in much demand in the workplace,” says Mr Bailey, “regulation will continue to increase incrementally, and become more technically informed and at the same time chronic under investment in management information systems means that financial institutions are still far too dependent on “first generation products “i.e. spread sheets, that have reached the limit of their functionality and scalability. Proprietary Development has generally proven to be a costly experiment for those who moved to the ‘second generation’. The “third generation” will be commonly owned apps and developed platforms. This will create commercial opportunity.” In summary, he asserts,” we are entering a brave new world that is both data and regulatory driven, in a way that has never been experienced. “No business can ignore the effects of regulatory compliance” adds Bailey, “and it’s not going away. Senior managers - that’s anybody recognised as such within the SMCR - will need to ensure that they and their businesses are GDPR-ready.”

Top Tips >Data processors will be held responsible for data protection, so under the new regulation any company or individual that processes data - including third parties such as cloud providers - will also be held responsible for its protection. >Some cloud service providers, especially those based outside the EU, may not believe that the regulation applies to them. It does! >So if you or anyone else touches or has access to your data, wherever they are based, you are all responsible in the case of a data breach! >If you fail… get ready for US-style class-action compensation claims.

>Analyse the type of data processing you do: Are your interests able to be over-ridden by the data subject? Can you prove consent? >Privacy notices: Verify that your communication is in clear and plain language, transparent and easily accessible. >Policies, procedures and agreements: Do your supplier obligations reflect the regulatory requirements?

Think about: >Accountability Policy Does it meet the new standards? >Create a culture that monitors, reviews and assesses data processing procedures, aiming to minimise data processing and retention of data, and building in safeguards. >Staff awareness and training: Are they trained to understand their new obligations? Conduct auditable privacy impact assessments review any risky processing activities and steps taken to address specific concerns. >Data security breaches: Prepare and practise for by putting clear policies and procedures in place to enable a speedy reaction. >Privacy: Embed this into any new processing or product at the design stage. This will demonstrate compliance as well as giving you competitive advantage

Narayanan Vaidyanathan Head Of Technology Insight ACCA

BANKING

HOW DATA HOLDS THE KEY TO SUCCESS BY INVESTING IN EMPLOYEE WELLBEING SCHEMES

ellbeing is a hot topic in employee healthcare but uptake hasnâ&#x20AC;&#x2122;t necessarily matched the surge in awareness. Despite the potential benefits such initiatives present, a lack of clarity around return on investment (ROI) and misunderstanding around outcomes often make them a tough sell, particularly for finance professionals. This is particularly true in the UK, where the business drivers tend to be less defined than in other world markets where the healthcare landscape is vastly different, particularly the US, Latin

America or the Asia-Pacific regions. It is a situation that necessitates a rethink around the application of measurable, bottom-line ROI as the principal motivator for investment in wellbeing programmes. Instead, it is more important to focus on the value investment when looking to gain buy-in from internal stakeholders and there are alternative methods for establishing a firm business case. A willingness to improve Willingness to embrace employee wellbeing does not appear to be an

issue. The most recent Staying at Work Survey from Willis Towers Watson, which surveyed 1,669 employers worldwide, found half of UK employers see health and productivity improvements as essential to organisational health strategy, with the rest believing they are moderately important. This is matched by expectation among employees. Fifty-six per cent of UK workers believe employers should take an active role in encouraging employees to live healthy lifestyles. Both the desire and the demand are established and there is also now

BANKING widespread recognition that wellbeing supports sustainable engagement and that a healthy employee is a productive employee. The Department for Business, Innovation and Skills report ‘Does workplace wellbeing affect workplace performance’ says there is “a prima facie case for employers to consider investing in the wellbeing of their employees on the basis of the likely performance benefits”. Aside from the impact on productivity, wellbeing schemes can also positively affect employee engagement and retention, while improvements to the overall health of staff can help to reduce sickness absence and the cost of healthcare benefits. Still, there are barriers to overcome and the Staying@Work Survey identified ‘fragmented delivery of programmes’, ‘lack of actionable data’ and ‘lack of evidence on returns’ as some of the most common. A data-driven approach So, although a traditional focus on ROI may no longer be appropriate, it remains important to demonstrate what difference initiatives are making and good data is key to this. When building the business case, proper analysis of the available health data can help to establish a solid foundation and combat any perception that results are not tangible or outcomes unclear. First of all, health risk indicators, such as levels of obesity within a workforce, or the prevalence of mental health conditions and musculoskeletal conditions should be taken into account and compared against national averages. A simple analysis of this nature helps to identify over-arching trends and begin pinpointing areas that merit greater focus. Further layers of data can be added through elements such as health screenings, online health risk

assessments and biometric testing results. Supported by insurance data and information on absence rates and the reasons for absence they allow amore detailed analysis of trends and root causes, opening the door for highly targeted action. It might also be appropriate to add information from employees themselves into the mix, taking their views on where help is needed most. This might help to identify particular health, lifestyle or financial concerns among the workforce, allowing action to be taken to improve staff morale and boost retention. Long-lasting change through better engagement Once the groundwork has been done, the next step is to identify what specific initiatives might best address the prevailing issues and resonate most with employees. They might include programmes to support increased physical activity, improved nutrition, or smoking cessation support along with programmes to better support psychological wellbeing. Sometimes, the focus may actually be on making better use of existing benefits through improved employee engagement, benefit delivery and effectiveness in supporting the required objectives to both parties. As ever, good communication cannot be underestimated, both in ensuring staff make use of the options at their disposal and in helping to effect longlasting change. A blend of different tactics might be used to achieve this goal. Regular email bulletins, briefings, seminars or newsletters might be used to raise awareness of a series of topics, covering everything from financial planning to diet. But consideration should be given to how effective these methods are in changing employee behaviours. Health apps for tablet or mobile

devices might then be used to further increase engagement by tapping into employees’ lifestyle habits. ‘Gamification’ is an interesting trend here too, capitalising on the popularity of mobile games by adding a degree of competition to the quest for better health standards. Once this is in place, employers should return to the data used to outline the business case in order to discover where improvements are being made. What these improvements look like could range from reduced insurance claims and sickness absence to an improvement in health risks or greater engagement with programmes. Proper management of this data can prove difficult so it might be useful to bring together all relevant business departments and stakeholders – including the HR and finance teams, health and safety representatives, external service providers and intermediaries, physiotherapists, in-house occupational health physicians and communications professionals – within a ‘centralised’ health and wellbeing committee to share information. Ultimately, it also depends on availability of the appropriate resource but an investment in this area could prove invaluable. By starting to get a handle on existing health risks and the value proposition associated with wellbeing schemes, businesses can really start to reap the rewards from a more proactive approach

Rebekah Haymes Health and Benefits Senior Consultant Willis Towers Watson 79

BUSINESS

Preparing for MiFID II – choosing

ith less than six months to go, the countdown is on until MiFID II compliance is required for the financial services industry, and one essential element of the legislation is mobile call recording. MiFID II can make for heavy reading, so it’s critical that you choose a call recording solution that will ensure you are 100% compliant with the directive – or face serious financial consequences. There are five key points to consider when evaluating potential solutions or providers to assist you in achieving compliance.

to the app before making calls. This makes it all too easy for them to accidentally make non-complaint calls. They also generally degrade the overall experience. Simplicity is key here, and the ideal solution requires no end-user training or changes to their everyday mobile phone experience. 3) Make it easy for IT The amount of IT involvement for both implementation and on-going management of a call recording solution must be carefully understood, so as not to introduce an unmanageable workload.

1) Make sure your solution is compliant This may sound obvious, but it isn’t something you can overlook. To achieve bulletproof compliance it is vital that you implement a solution that cannot be circumvented by the end user. Many companies believe that implementing call recording - whatever the specifics and technicalities of the solution - will tick the compliance box. The reality is far from this. If you implement a call recording solution that your users can easily bypass then, should a breach occur, the regulator could argue that your solution was not compliant in the first place. 2) Make it easy for your users The key to user adoption is a solution that has minimal impact on users’ dayto-day behaviour, and one that is easy to transition to. Convoluted dialler systems and apps exist which can be used to record calls; however, these require the user to change their habits and navigate 80

Where possible, you should look to deliver as much ease for your IT department as you do for your end users. Hosted solutions are ideal for this, as they remove the complexity of data storage and retention, which are key elements for MiFID II compliance. At the same time, reducing the maintenance aspects of recording and monitoring can provide a cost benefit of avoiding an on-premise system. Another aspect that’s often overlooked is the deployment of the solution to all mobile devices. The installation and configuration of an app-based solution can add a significant layer of cost onto the business. A network-level call recording solution means there are no apps to install and configure on mobile devices. Hence, you will never have to schedule installations, worry about compatibility with updates or even consider which devices are compatible with your call recording solution. This means

BUSINESS

the right call recording solution effectively you can almost remove IT from your call recording considerations. 4)Understand the technical components While it’s possible to avoid any IT concerns when choosing your call recording solution, it is still vitally important to understand how your solution works. Your provider should be transparent about the elements that make up their solution, including where and how the call recording data is stored and how they will roll that solution out to you. This will enable you to identify any potential points of failure in the proposed solution, such as application crashes or call forwards, which could hamper call quality. Additionally, a reputable vendor should allow you to trial the solution for yourself – which is invaluable for your compliance personnel who would need to periodically log in and audit call recordings when the solution is in place. 5) Consider how your solution will be supported Another key factor to consider is the support offered to you by your call recording vendor. This is often the area where vendors fall down, and the most common reason for this is that they don’t control every element of the call recording solution.

A typical call recording system comprises: -Call recording solution (or overarching licensing in the case of hosted solutions) -Some form of ‘per seat’ licensing -A data storage solution to retain recorded calls -A mobile network connection and associated tariffing -Compatible mobile devices (if your solution is not hosted) The ideal solution will be delivered by a vendor that fully manages all of these elements, meaning you won’t have to liaise with multiple suppliers to manage and coordinate different parts of your solution. Having different contractual arrangements, mechanisms and escalation paths for provisioning and service support, as well as multiple invoices reconcile, is less than ideal and it’s easy to see how this can become problematic. The more you can consolidate your call recording solution under one umbrella, the easier it will be for you. MiFID II compliant call recording can be simple if you familiarise yourself with the legislation, choose a trusted supplier and prepare for all eventualities

Alex Phillips Head of Mobile Adam Phones

FINANCE

Nimble, focussed & savvy: Operating principles for financial services firms in high-pressure environments

ressure on financial institutions is intensifying. The sector is experiencing fundamental shifts in what customers expect, what regulators demand and their competitive landscape. In the external environment, regulatory fees for banks and insurers increased 4% in 2015/6. This is exacerbated by the complexities of coping with compliance and the constant threats of cyber security, fraud and increasingly demanding consumers tired of data breaches. At the same time, technology-driven, agile Fintechs have seen an exponential rise in investment and are entering the mainstream market. The overwhelming majority (72%) of millennials would likely bank with non-FS companies, compared

to 27% of over 55s. It is therefore unsurprising that three quarters (75%) of banking executives fear their business is at risk from Fintech companies. Internally, too, banks are under pressure. Wholesale upgrades to out-dated technology and investment to meet sky-high customer demands are stretching margins. Cost to income ratios in Europe’s big banks are far behind targets (42% to 107%), leading many executives to consider aggressive cost cutting measures. In a challenging market, operational efficiency is key, but this does not just mean cutting cost. There are side steps and innovative strategies available to Financial Services firms so that they can thrive, not just survive, for years to come.

Operating principle #1: Collaborate strategically One of the defining features of the new global economy is sharing. Whether it’s accessing specific skills, technology or markets, there is sure to be a collaborative path available to Financial Services firms, which can reduce the cost burden of operations and innovation from the bottom line. • Strategic partnerships provide access to new markets and improve integration across services. • Forthcoming regulation such as PSD2 and Open Banking will also mandate some sharing of data between financial services firms – requiring a cultural shift. • Share costs – pursuing the utility model, which entrusts processing to

FINANCE

service companies, will reduce costs. • Use new technologies such as Blockchain – which will aid the required infrastructure and culture changes.

• An improved customer experience will require wholesale improvements to legacy infrastructure, where these have not yet been made.

Operating principle #2: Focus on the customer

Operating principle #3: Leverage data

Fintech companies do customer-led innovation better than any other hybrid industry. Where traditional financial institutions have predominantly focussed their resources on developing and integrating back office technology and systems, Fintechs have found faster, more visual and intuitive ways of serving customers. With supporting infrastructure optimised, it’s time to focus on the customer.

Organisations, customers and regulators are growing savvy about data – both its utility and its value. By 2020 there will be 44 trillion gigabytes of data in the world and the global pool of information is doubling every year. But only 0.5% of the data created and collected is ever analysed. There is significant potential for Financial Services companies to leverage data to streamline key operations, target efforts more effectively and better understand customers.

• After repetitive scandals, established firms need to rebuild damaged trust and loyalty amongst customers, and acknowledge that one size no longer fits all – personalised services are increasingly required. • Innovate across channels – finding an innovative blend of physical and digital channels is key to meeting customer needs.

• Abundant data can only drive better decision-making with adequate investment in people and processes. • Data is also multi-functional, and a combination of descriptive, predictive and proscriptive analytics should be used to harness its full capabilities. • Data analysis needs to be made visually compelling to ensure the right message lands.

• Drive consistent regulatory data to support quick understanding of the impact of new rules. • Agile delivery methods need to be used to accommodate rapid changes in direction

John Lunn Partner & Financial Services Sector Lead Consultancy Moorhouse

References: “https://www.mx.com/moneysummit/millennials-love-bigbanks-even-when-they-say-they-don’t http://www.bankofengland.co.uk/publications/Documents/ news/2015/cp1015.pdf”

INTERVIEW

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INTERVIEW

Let us create now out of our dreams for a bright tomorrow

“Brand Excellence in Retail Banking Democratic Republic of the Congo”

Thierry Taeymans, CEO of Rawbank discusses the Retail Banking sector in the Democratic Republic of the Congo and responds to our Questions about Rawbank’s success and their future plans What are the biggest opportunities and challenges you see facing the retail banking sector in the Democratic Republic of the Congo? We face an economic environment that uses two currencies, the Congolese franc (CDF) and the US dollar (USD), bringing constant exchange-rate risk because incomes are paid either in CDF or in USD and in some cases in both currencies depending on which part of the remuneration it is (basic salary or allowances). Second, we are experiencing an inflationary economic environment that makes it hard for those whose salaries are labeled in CDF. So to help

CDF-salaried clients wanting to get a loan, we advise them to make it as short as possible in CDF and then make a roll-over. Can you tell us about the four major assets that make up the banks commercial strategy? Our Branch and mini-Branch network is actually the largest in DRC (84), Proximity is a key success factor. Some of them are in remote areas in deep Congo where accessibility is difficult (no road for vehicles, rivers to cross, dodgy tracks and paths) Our mobile application ILLICO CASH is one of the pillars of our commercial strategy in an era of digitalization and in a country as large as Western Europe. Financial strength: Rawbank is the strongest bank in DRC, our tier 1 ratio is 19%, meaning 12% above the central bank threshold. We manage the bank

INTERVIEW

to preserve our clients’ assets and put ourselves in the right spin to reach our goals and support our expansion through innovation and the development of our branch network.

We, nevertheless, consider that Africa has found its own way with the thrust of mobile solutions where initially traditional banks wouldn’t have dared navigate.

Human resources: good knowledge of the environment and the clients are crucial for success. We invest a lot in training to make sure our staff has the skills and knowledge to manage clients at their best.

Mobile solutions is now part of our strategy to reach even more clients and especially those who were naturally excluded. ILLICO CASH is Rawbank’s mobile application available on Google play and Apple store that allows you to access your accounts, make transfers, top-up your phone, order a cheque book, or cash out from an ATM.

What unique products and services have been created in response to customer needs? Five years ago, the Government set for financial inclusion of Civil servants throughout the whole country especially those in remote and tough-to-access areas. Banks were solicited to make it happen. We took the challenge and committed to give unbanked civil servants access to banking products. Today we deal with a clientele base of civil servants of more than 100,000 clients scattered all over the country. Our mobile banking solution is today the perfect product for those clients because even though we settle a branch or a mini branch in remote areas, some of those clients still walk or paddle 50 km before they reach the nearest branch. How is technology impacting the way you do business? DRC is the second largest country in Africa, with a population of over 70 million inhabitants on a territory as big as Western Europe. The whole banking sector cannot settle a branch in every part of the country.

Customer relations are very important in banking, how do you ensure customers are receiving the best customer experience available? We are client centric in that our focus point is to make it easy, fast, and qualitative for the client whenever the client interferes with us. That’s the reason why we’ve invested so much in training our employees. Today our bank has a whole department dedicated to training employees with the intervention of specialist when it is deemed necessary in every domain that counts for the bank, be it legal, commercial, financial, audit, internal control, risk management, or credit. Downstream, we have created a department named Client Experience. This department takes care of clientele complaints and make sure there is a follow-up. They also monitor clients’ satisfaction vis-à-vis our products and new products launched through market surveys in collaboration with the marketing department.

Rawbank has an extensive branch network, do you have any further plans for expansion? Our strategy is to cover the whole country to offer banking services to as many Congolese as possible. Even if we have the widest network we plan to open a Rawbank branch in each and every of the 26 provinces (the new territorial subdivision draws 26 provinces out of the historical 11 provinces) Rawbank continuously strives to innovate and provide the best solutions for customers. What is your strategy for continued success and growth? The board approved a new strategic plan that spans over the period 20172019 with a tag line: “Let us create now out of our dreams for a bright tomorrow”. Our strategic plan can be depicted in 4 points: Keeping up with our pace and business model: We strongly believe in the potential of our market and our know-how to keep up with growth. Invigorate our brand to be referred to as the market’s major on compliance, innovation, liquidity, team quality, and closeness to our clients. Ever transform Rawbank in a modern bank to improve efficiently our productivity Improve our management and human resources by promoting fairness and our capacity to question ourselves

INTERVIEW

FINANCE

How to improve the relationship between

FINANCE AND OPERATIONS

rganisations often suffer from poor communication and collaboration between financial and nonfinancial managers. Operating managers don’t have sufficient input or buy-in to the financial planning process, and they aren’t educated about how their decisions can influence overall profitability. For its part, finance is unable to offer real performance insights that might truly help managers improve their results. Instead of working closely together to plan and forecast, finance and business resort to negotiations that can involve high levels of conflict. Why is this, and how can it be changed to strengthen collaboration between finance and the business, therefore transforming financial planning and analysis? 88

Metrics, measurement and spreadsheet chaos Companies sometimes flood managers with measurements and metrics, too few of which effectively help managers understand and improve their performance. Too much measuring can add cost and complexity to an organisation. In addition, spreadsheets continue to dominate planning processes in most companies. While spreadsheets work well for individual productivity, they cause problems when it comes to sharing and aggregating. Finance gets bogged down in low-value-added work— such as formatting and troubleshooting spreadsheets—and can’t provide useful service to business managers. Meanwhile, business managers waste time managing to budgets instead

of managing their business. They often don’t get the information they need, when they need it, from finance. Instead, they’re deluged with data, metrics, and reports, much of which provides little value. Furthermore, many planning systems are designed and implemented by finance and are seen as irrelevant by business managers. The result is lack of buy-in and enthusiasm. Making way for useful analysis and true collaboration Finance can make room for higher-value work for both themselves and managers by leading the way to less detail and complexity, simplifying internal systems, and reducing the amount of time managers spend

FINANCE

producing counterproductive reports and analysing too many measurements. In so doing, finance can provide effective decision support and performance insight that can truly help managers improve their results, making finance a real partner rather than an adversary. For companies to make these changes, the three best practices include: 1. Replacing annual budgets with rolling forecasts By replacing detailed annual planning cycles, which take too long and result in a budget that is already out of date as soon as it is complete, companies should embrace a more effective planning system that is a continuous process, focused on rolling views that look 12 to 18 months ahead. These continuous plans should enable managers to respond more rapidly to emerging events and trends and to changing business environment.

Replacing the annual budget with a rolling planning cycle can save huge amounts of work, freeing all managers to spend more time on value-added work. It will also improve the relationship between finance and business managers, as finance will have more time to provide better service. 2. Moving from monthly variance reporting to KPIs and dashboards Most companies manage through annual budgets and use monthly variance reporting as the primary feedback mechanism for managers. However, monthly variance reporting is too slow and fails to reveal underlying causes of problems. What is more effective is fast feedback of financial results, summarised and shown as trends and moving averages. KPIs should act as a management dashboard should provide managers with early warning signs when problems are brewing and action needs to be taken. These KPIs should be few in number and appropriate to the level of management. A small number of key metrics should be reported daily and weekly. KPIs should provide a fast, high-level view of what

is happening today and what is likely to happen in the short-term future. Moving to KPIs in this fashion will not only provide true value to managers but will also lighten the reporting load for the entire organisation. 3. Deploying cloud technology that provides fast, relevant information, enabling collaboration Finance can use technology to provide a performance management system that delivers what managers needâ&#x20AC;&#x201D;fast, relevant information. Avoid investing in complex IT systems that consume valuable time and money without providing reasonable value. Instead, implement a dedicated system that employs cloudbased technology to enable unlimited numbers of managers to work together on driver-based forecasts, which are automatically aggregated at every level. This system should also have tight integration with data from other enterprise systems, so that it serves as the primary performance management system. Why wait? Ultimately, by implementing these three best practices, finance teams will not only be transformed, but so will their company performance management practices. Indeed, finance teams can move beyond simply being effective at financial management and scorekeeping, and instead, become a trusted and integral member of the strategic management team. In addition, finance can offer real performance insights that can truly help your managers improve their results, thus strengthening the collaboration between the two

Rob Douglas Vice President, UK and Nordics Adaptive Insights 89

BANKING

You get one chance to make a first impression

why CUSTOMER ONBOARDING

matters more than ever

t is a moment of truth. An opportunity to start a relationship. It is where a bank sells the first of many products to a new customer. At least, that is the idea. No one would argue with the importance of an excellent onboarding experience. And yet, many banks struggle to meet customers’ expectations. So what is going on?

Even regulations have moved forward. U.S. FDIC Regulations section 1020.220 allows for non-documentary customer verification. Similar regulations exist in Europe. Banks have tried to react to these sea-changes by investing in onboarding. And yet, despite spending big on onboarding, many banks still struggle to keep up. Why is this?

The biggest challenge for banks is undoubtedly the speed with which the market is moving. Customer expectations have risen. Customers are increasingly used to a world where they can use their Facebook credentials to create a profile in seconds. They expect pre-filled – or even non-existent application forms. They want an immediate result – not to wait for some back-office process. Having to go to a branch with a driver’s license and utility bill just isn’t good enough. Today’s imperatives are now, now, now!

First and foremost, banks are encumbered by inflexible legacy systems. It is a widely documented issue, but the impacts on onboarding processes are particularly pronounced. In many banks, each different product has a separate system with its own unique origination processes and workflows. If a new customer opens two products at the same time, this can result in processes that do not run in parallel. It can mean that banks request the same third-party checks twice for the same customer, or send uncoordinated updates back to the customer.

At the same time, technology has evolved. In a digital-first world, anyone can create and quickly send an image. Video chat is a mainstream technology. Users can capture their own biometric factors. Organizations can access social data even before customers submit applications. Whilst banks have been slow to react to these changes, technology has lowered the barrier of entry. There are now many disrupters deploying processes that make the most of these technologies, and this also compounds the changes in customer expectations.

Some older core banking systems even require banks to run batch cycles before they can make updates to applications, making instantaneous product origination impossible. These systems issues are complex, and replacing old systems is risky and can be prohibitively expensive. This makes deploying a transformative programme across endto-end onboarding and origination an even more daunting task. Many banks do not have the capacity or expertise in delivering such programmes. As a result, management often focuses money on delivering enhanced mobile

apps in isolation. This means that back offices remain a tangle of expensive manual workarounds with multiple potential points of failure. Finally – and critically – many banks are culturally risk averse. The technologies are available, but banks are reluctant to progress. In part this is due

BANKING

to fear of fraud. Some will feel that removing documentary evidence from the onboarding process could provide an opportunity for fraudulent applications – despite the evidence to the contrary from those banks that have already done so. However, a lack of progress on origination is also due to a perception that the existing onboarding processes work just fine, and that customers are not looking for something new. This is a risky position to take. Challenger banks and fintech disrupters are launching in greater profusion, all around the globe. New entrants like Starling Bank and Monzo in the United Kingdom and Moven in the United States are creating seamless customer journeys based on good user experience design and technology. In

the past, it would take a visit to a branch and a host of documents to set up a new account. Customers would then have the inconvenience of transferring their regular payments. Regulatory provisions, such as the U.K’s Current Account Switch Service, already make transferring payments simple for customers. Such services will become far more potent; now customers can create new accounts from the comfort of their sofa without having to corral a ton of paperwork. Banks run the risk of losing significant market share in new account opening. The new banks are already gaining some traction. Starling Bank has had 40, 000 people register their interest since its opening in 2010, while Atom Bank has attracted more than £100 million in deposits. Cost pressures also remain a strong driver for change in banking. Taking application processes out of branches and automating back office processes, offers banks the potential for significant savings, whilst delivering a slicker customer journey. Banks need to seize the moment. So what do they need to do? They must redesign onboarding as an endtoend process. Having a whizzy mobile app on top of poor channel integration and discombobulated back office processing is the proverbial lipstick on a pig. The advances in technology – and the pervasive nature of these new technologies in customer pockets, is an opportunity for banks. They can now deliver a transformation that

improves customer experience and reduces cost. Banks can use embedded video chat or chatbots powered with neural intelligence to answer customer questions. Third-party data integration underpinned by sophisticated fraud analytics can enable document-free customer verification. Intelligent case management systems can span the gaps between siloed legacy product systems. Biometric facial recognition can match selfies to photo IDs. Robotic process automation in the back office can reduce error rates, cycle times, and unit costs. The list goes on – but the outcome is consistent. By taking a holistic view of onboarding transformation and delivering across the end to end process, banks can reduce costs and improve customer experience. They can make that first impression count

Alex Bray Vice President, Retail Banking Genpact 91

INVESTMENT

FOOLS RUSH IN WHERE BUSINESS ANGELS FEAR TO TREAD... Helping angel investors tread carefully One of the interesting features of successful entrepreneurs who have sold a business is the appetite they have for re-investing some of the proceeds into new ventures. We regularly support clients – who come back to us after a few months of ‘retirement’, seeking advice on proposals to invest in start-ups and other early stage businesses. Why? Entrepreneurs often get a buzz out of being in business – simply watching cash does not feed their appetite for risk. Combined with a track record of success, many entrepreneurs feel the need to apply their newly realised capital in other high growth business areas with a view to adding their ‘magic’ once again. Others look to invest in alternative 92

asset classes which deliver potentially greater returns (and more emotional engagement) than pure low risk financial investments. Surprisingly few entrepreneurs re-invest in the business areas they know well. On rare occasions, we have seen clients contact us on the day that restrictive covenants expire (typically three years from the sale of the business) to re-launch as a new competitor, but in most cases the new investment opportunities are in different business areas. This is a warning sign – by definition, the area in which an angel investor is most able to assess risk is the one in which their previous business was operating. To pursue angel investments in entirely new areas does demand greater rigour in terms of due diligence and business risk analysis.

Backing people It is worth reiterating that people are the most important aspect of an angel investment. Most angel investment opportunities are in small start-up businesses where the management teams are likely to be threadbare in certain key areas. Unless you are able and willing to fill one of those gaps (and demand a suitable value shift accordingly), the assessment of the management team into which you are investing is very important. Generally, a strong cohesive management team with an average business is a safer investment than a brilliant business opportunity with a dysfunctional leadership team.

Checks and balances It is very risky to lend or invest money

INVESTMENT

into an angel investment opportunity without going through a proper process of due diligence and agreeing investment terms. We would always recommend that an investor has the benefit of an investment agreement. This will mean that the target company and its founders have given warranties on the business information, and the angel investor has a set of investor protection rights, such as matters which cannot be carried out without his or her consent. Documents Some investors use template documents which can be obtained from Business Angel Networks, but in our experience, it is much better to invest in bespoke agreements directly focused on the investment opportunity and the particular issues that have been identified.

Investment Scheme (EIS) tax treatment. Most start-up investment opportunities do qualify unless they are subsidiaries of another company, mainly property companies, or are set up to receive royalties. There are also exclusions for financial services, but in our experience most companies in this sector can find a way through if they are process or software focussed. Advice on this element is essential to avoid the numerous bear traps in terms of qualification criteria â&#x20AC;&#x201C; for example, if you invest money by way of loan and then convert it into equity, EIS is not available. Similarly if you become a non-executive director and then put in money, you lose the ability to claim EIS relief. Given EIS can give you 30% of your cash investment back almost immediately, EIS is very foolish to ignore. Sourcing opportunities

Usual documents for equity investments you would need include: Investment Agreement; Articles of Association; Service Agreements for key executives; and Intellectual Property Licences or Assignments, to ensure the company has all it needs to exploit any developed technology or other IP.

EIS and other tax benefits

One thing that has really changed the angel investment model is the increasing prevalence of crowdfunding platforms giving a daily refreshed menu of investment opportunities. At the moment, most sophisticated angel investors are saying that while crowdfunding platforms have done a great job in democratising investment opportunities to new investors, the company valuations that are applied to them are too high to leave the possibility of a decent return in exchange for the high risk. This will no doubt change over time, but we have had experiences of client companies who have failed to achieve their target at the desired valuation on crowdfunding platforms, and then successfully raised funding at a lower valuation from angel investors who are in a position to offer their own terms. Relationship capital

Unless and until the tax regime changes, it is very attractive to angel investors to find investment opportunities that qualify for SEIS or Enterprise

In addition to any cash that an angel investor puts into the business, the value of the network they bring with them should not be overlooked. We have

Management information Unless you are willing to invest funds and sit back and wait until a future exit or dividend stream magically emerges, an angel investor would be well advised to have strict information obligations on the management to keep themselves fully informed on what is happening with their cash.

numerous examples of the connections that individuals have delivering significant value to new companies by way of additional investors or commercial opportunities. A recent client technology start-up was able to raise over ÂŁ5m using this relationship capital amongst similar-minded wealthy individuals and family office investment vehicles. This is another reason why investing in areas allied to where your relationship capital is strongest is sensible. Be careful what you wish for Whilst checking the daily value of your liquid assets might be dreary, be prepared for angel investments to be a farewell to some of that liquidity and a deeply frustrating experience. Whilst Michelmores LLP is not authorised from a financial services perspective to make formal introductions, from time to time we do help to make connections that can lead to our clients doing business together. At a recent meeting a successful retired entrepreneur client was pricking up his ears at the possibility of being introduced to a relevant angel business investment, when his wife cast a very stern look and advised that he had much better things to do with his time than start fiddling around with small businesses again!

Richard Cobb Senior Lawyer Michelmores 93

INSURANCE

Lessons insurers of cyber exposure can learn from WannaCry

annaCry prompted me to ask cyber security experts for perspective on the infection as it unfolded to really get what the implications for insurers of cyber exposure would be. Underwriters don’t normally get this kind of opportunity, so I thought I’d capitalise and interview the experts around me. The large scale infection left Tom Beale, ex-penetration tester and Corax CTO and, with a sense of ‘we’ve been here before’. So I asked Tom about his thoughts on the outbreak, and today’s threat landscape in general. “Initially, I just felt a sense of déja vu,” says Beale. “Back in my days as a penetration tester, my favourite vulnerability to test with was MS08-067. It’s an old vulnerability in Windows devices configured in a default state. In 2008 it was widespread and it was a favourite because it had a stable vulnerability and it could be reliably exploited. MS08-067 and WannaCry targeted MS17-010 are very similar types of vulnerability, so that’s why it feels like déja vu.” 94

“Are they similar, or are they the same?” I asked. “No, they’re not exactly the same, but if you drew up a list of recommendations on how to prevent them, it would be very similar.” So, 10 years after one vulnerability the list of recommendations to prevent another is almost the same. Has nothing changed in 10 years? According to Beale, the cyber security industry has had some great advances in information security products and practices since 2008, but the problem today is that we are still suffering from many of the same infrastructure and software security challenges. How can this be, and are there any takeaways for end user clients and their cyber insurers? • The WannaCry attack initially entered networks via a small number of phishing emails. Interestingly, the attack did not utilise as many emails as in other recent large hacks. • Phishing, and validating internal and external communications need more

attention. Without phishing attacks, many of the most recent ‘large hacks’ would not have been so successfully performed. • The attack became widespread using worm-like features. Network segregation and more secure device configuration would have prevented the scale of this type of attack. These are security 101 recommendations but many organisations and their suppliers are not consistently doing these things. • It’s clear that systems remain vulnerable to malicious attachments sent using email or other communication channels. The use of email sender validation tools, such as GPG can help by showing a user that an email is from a valid source. Advanced email filtering could also be more widely deployed, helping to detect malware and emails from illegitimate sources. • However, organisations remain vulnerable to human behaviour. Organisations could take away the desktop/laptop altogether and transition towards a centrally provided, virtualised desktop infrastructure. This runs in memory and does not

INSURANCE

have permanent storage for malware to embed itself. • Asset management and monitoring are also key. Third party software and infrastructure suppliers can provide their customers with guidelines and support. Ensuring that patch and update management can be performed regularly and with limited impact to the business. • Irrespective of how robust your security is, an incident response plan is essential. With the right policies, procedures and communications in place you can do a lot to minimise loss and damage. Creating an incident response procedure that is appropriate to your organisation’s size and maturity. Companies might consider drafting different response plans for different types of critical assets. Time to Response “Organisations had a month to patch critical systems” says Beale. “A month isn’t a long time and a key question

lies around the appropriate patching cadence for various levels of system criticality.”

around upgrading or not can divulge a lot about a client’s corporate culture in the cyber security space.

“Complexity is also an enemy. With the increase in internet connected devices, the number of assets that an organisation needs to configure, patch/update and maintain is growing exponentially.”

From an underwriting perspective, like many issues around cyber security, the model answer to a question regarding security hygiene needs to be considered in alongside company priorities and commercial constraints, and the answer to these questions is almost never a binary yes or no

Finally, Beale says IT security is a matter of prioritization and corporate culture. “Organisations are presented with an ever more complex set of security advice and product options. Leaders and senior executives need to understand their IT and people security risks and prioritize financial investment and time.” “Expensive security products are not required to prevent this type of attack. Why is the organisation forced to use legacy, end of life products such as Windows XP?” asks Beale. Legacy systems are often the most vulnerable and the risk/reward decision

Marcus Breese Head of Insurance Innovation & Strategy Corax 95

TECHNOLOGY

Leverage Flash Storage to Accelerate Digitalisation While Inverting IT Spend

minimal risk?” In other words, how can IT leaders invert IT spend and ‘have it all’?

t’s difficult to think of a force that’s having a more revolutionary impact on the service industry, particularly banking, healthcare, insurance and retail, than digitalisation. It’s materially changing everything in this sector: the way processes work; the way services are offered; the customer experience; and the speed at which business is executed and where it happens. Digitalisation is driving the innovation edge to exciting new horizons. For example, ‘robo-advisors’ can now aggregate data on markets and customer preferences to generate

automated investment advice on behalf of wealth management firms. Even in the ultra-conservative non-life insurance segment, digitalisation is impacting competition. Here customer demands are making traditional players vulnerable to data-rich, analytic-centric new entrants. For instance, who would have thought that customers would be the ones asking insurers to generate more data about their lifestyle habits? Yet a PwC study reveals some 50% of consumers surveyed would be prepared to provide their insurer with additional personal and lifestyle information in order to get more relevant services and better deals. 67% said they would be willing to have a sensor attached to their car or home if it could reduce their premiums Whatever innovation is happening at the customer frontline, it all boils down to one question for IT leaders in the service sector: “How can we help our organisations win in the digital economy—and do so with less IT complexity, less cost and absolutely

Experience tells us that the answer is data storage – how you architect and scale your storage, how you flex that storage to work at lightning speeds in both physical and virtual environments, and how you cost storage to deliver more business value, for less of your precious budget. This is because data is the currency of the digital economy. If it’s not serving the applications and systems that are driving your digital business, you’ll lose out in the race to customer intimacy and therefore profitability. Drive Storage Performance to Keep the Lid Down on Costs In no other business era has time been so critical an influence on success. In years past customers were happy to spend a few hours in the face-toface company of their bank manager or insurance broker. Today, telephone banking isn’t quick enough, and online comparison sites aren’t tailored enough to deliver the rapid, highly personalised answers customers are seeking. Speed is of the essence. The speed at which your front-end works is utterly reliant on your storage performance. But you can’t keep adding storage capacity to individual databases, or application workloads—that’s just adding cost. And even if that’s not a problem now, what about the time it will take to manage a 97

TECHNOLOGY sprawling storage estate? The answer is All-Flash Storage. Depending on the vendor you choose to partner with, all flash solutions are 10x faster on both IOPs and latency. They’re also 10x more efficient in terms of power, space and cooling. With the right all flash storage solution in place, you can improve customer experience, increase operational efficiency and transform existing business processes without breaking the bank (pun intended)! Build in Rock Solid Performance from the Ground Up In today’s always-on economy where business never stops and the speed of transactions and interactions are accelerating exponentially, the technology that stores your data must be absolutely rock-solid. The way your storage works in the background, the way software updates, the way upgrades are implemented—all of it must be executed rapidly, but more importantly, without impacting your production environments. At the same time, given the rising number of data theft and ransomware attacks, it is imperative that the storage solution you deploy includes inline, always-on encryption for data at rest. With this, in addition to delivering the ultra-robust, high availability that is the lifeblood of your organisation and powering customer demand for digital services, your data will also be incredibly secure, in line with local and industry regulations.

Focus on Value to Bring Down Costs By centralising your storage around one type of Flash technology, not only will you simplify data centre IT and add incredible flexibility to deal with both physical and virtual environments, you will also make some incredibly important savings. By partnering with vendors that offer perpetual upgrade programmes that are designed to guarantee your effective capacity with flash media that can consolidate and modernise as your organisation grows, you can avoid vendor dictated upgrade cycles, downtime and cumbersome data migrations. With these ‘Evergreen’ programs, there is continually refreshed software and an extended value lifecycle—with no requirement to re-purchase TBs you already own, and exceptional performance and value for more than 10 years. Things are just as straightforward when it comes to maintenance. You just pay one, simple flat renewal to update performance, scale and add features. Make Storage the Front Seat Driver of Innovation Like most organizations in the region, there is a good chance that you are working through your own personal journey to the cloud which is why it is imperative to partner with a vendor that offers you a two-product route to building your own All-Flash cloud platform.

Freeing you to develop such a scalable, simple, high performance storage environment can help you underpin your front-office innovations in customer experience, productivity tools and business processes, with a storage system capable of driving transformation. As we have already seen, with new profit-thirsty competitors entering all areas of the services sector, it’s absolutely crucial that IT leaders have sensible, practical and cost-effective answers to the question of how to ride the innovation curve by using data more effectively than anyone else. Quite simply, the time has now come to consider storage to be one of your most strategically powerful assets. With All-Flash you have the means to create a high performance, highly resilient, highly affordable foundation on which to succeed in the digital economy. With the right All Flash solution, you can drive more business value – achieving considerable ROI in just a few short weeks – while inverting IT spend

Christian Putz Director ,EEMEA Pure Storage