Global Banking & Finance Review Issue 28 - Business & Finance Magazine

Issue 28

Mr. Edwin R. Bautista President and CEO Union Bank of the Philippines

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EDITORS LETTER

FROM THE Chairman and CEO Varun Sash

editor

Editor Wanda Rich email: wrich@gbafmag.com Web Development and Maintenance Anand Giri Head of Distribution & Production Robert Mathew

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Dear Readers’ Issue 28 is filled with exclusive inter views from financial leaders across the globe.

Featured on the front cover is Mr. Edwin R. Bautista, President and CEO of Union Bank of the Philippines. In my exclusive interview Mr. Edwin R. Bautista reveals how the bank managed operational risk during COVID-19 while supporting continuous services for its customers and disclosed some of the huge steps they are taking in fintech development to make financial services more instinctive and accessible. Read the full interview on page 26.

Absa Bank Uganda delivers a flexible, speedy and accessible banking experience to their customers. I recently spoke with Managing director Mumba Kalifungwa to discuss, among other topics, the corporate social responsibility initiatives Absa Bank has been implementing, and the steps it is taking in order to keep the customer experience at the front and centre of its strategy. Read the full interview on page 20. Turn to page 24 where Mr. Abdullah Jaragh, CIO at Ahli United Bank K.S.C.P. discusses of the role of IT in the banking sector, the future of banking and why he favours attitude over expertise when it comes to new hires. BDSwiss is a leading financial services group which, since its inception in 2012, has been offering bespoke CFD trading and investment products to more than 1.5 million registered clients, in over 180 different countries. I sat down for an interview with Drosoula Hadjisavva, Chief Marketing Officer at BDSwiss for the past 2 years, with extensive experience in branding and marketing, and a successful career of more than a decade in similar roles in the FX and fintech industry, to discuss how today’s investor needs have evolved and why personalisation in products, services and communications is key to client loyalty. Read the full interview on page 36. You won’t want to miss these and other exciting exclusive interviews.

We strive to deliver the latest news about the world's economy, financial events, and banking game changers from prominent leaders in the industry and public viewpoints with an intention to serve a holistic outlook. We have gone that extra mile to ensure we give you the best from the world of finance.

Send me your thoughts on how I can continue to improve and what you’d like to see in the future.

Enjoy!

Wanda Rich Editor

®

Stay caught up on the latest news and trends taking place by signing up for our free email newsletter, reading us online at http://www.globalbankingandfinance.com/ and download our App for the latest digital magazine for free on Google Play and the Apple App Store

Issue 28 | 03

CONTENTS

INVESTMENT

32

BANKING

Paul Elflain, Head of Asset Management, Linedata

48 Banking: making it accessible to the public

TECHNOLOGY

Ryan Graham, CTO, Texthelp

18

BUSINESS

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40 How financial institutions can protect themselves against cyberattacks

Paul Herring, Global Chief Innovation Officer, RSM

Chris Pogue, Head of Strategic Alliances, Nuix

Boosting and rebooting your business in a post Covid-19 world

46 How COVID-19 Spurs Financial

James Done, CEO, Tail

12 VNEURON: ANTI-MONEY LAUNDERING COMPLIANCE MADE SIMPLE, FAST AND COST-EFFECTIVE

Mahmoud MHIRI Executive Partner Vneuron Risk & Compliance

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The key fintech innovations helping businesses today

Noel Smith, Business Development Director, Transact Payments

Chief Innovation Officers play a crucial role in helping businesses reinvent themselves during challenging times

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The ESG Data Challenge for Asset Managers

Fraud and What to Do About It Andrey Koptelov, Innovation Analyst, Itransition

CONTENTS

CONCORD ASSET MANAGEMENT – INNOVATIVE SOLUTIONS FOR BULGARIA’S INVESTORS

Natalia Petrova Executive Director Concord Asset Management (CAM)

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42 THANKS TO CONTOUR, TRADE FINANCE IS MAKING STRIDES IN THE DIGITAL SPACE Carl Wegner CEO Contour

34 AUBK’S CIO ABDULLAH JARAGH ON THE ROLE OF IT IN THE BANKING SECTOR

Mr. Abdullah Jaragh CIO Ahli United Bank K.S.C.P.

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CONTENTS

36 CREATING VALUE THROUGH TRANSFORMING THE CLIENT JOURNEY Drosoula Hadjisavva Chief Marketing Officer BDSwiss

20 ABSA BANK UGANDA – A “FLEXIBLE, SPEEDY AND ACCESSIBLE BANKING EXPERIENCE”

Mumba Kalifungwa Managing Director Absa Bank Uganda Limited

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CONTENTS

HOW UNIONBANK IS POWERING THE FUTURE OF BANKING THROUGH INNOVATION

Cover Story 26

Mr. Edwin R. Bautista President and CEO Union Bank of the Philippines

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BUSINESS

Chief Innovation Officers play a crucial role in helping businesses reinvent themselves during challenging times As 2020 dawned, businesses around the world were launching into what they hoped would be the ‘Roaring 20s’, a period of continued profitable growth on the heels of the longest bull market in history. However, the blow dealt by the Covid-19 pandemic put many of these plans on hold, forcing businesses to pivot fast and hard in order to survive. A world of new opportunities beckons for those businesses resilient enough to survive this challenging transition.

just as important as technology. In business and personal spheres, people have embraced technology in order to streamline their busy lives in a world where face-to-face interactions are now the exception rather than the rule.

Innovation has been the driving force behind increasing business optimisation and efficiency. One of the key roles of a Chief Innovation Officer (CIO) is to ask the human question and remind organisations that it is their people, not technology, that drive change.

Over the past 18 months, digital transformation, including the accelerated adoption of automation and analytics, has been an important ingredient of success for agile businesses redefining their operating models. The catch is that applying technology innovations is not the only ingredient for success. As we look ahead to a period of recovery it is important to remember that when it comes to innovation, people are

The evolution of the CIO

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This has been at the heart of the CIO role over the last year and a half. CIOs are pivotal to balancing the human element of business with the necessary acceleration of digital transformation. CIOs have had to adapt and change their tactics to reflect their new environments but, in some ways, the pandemic has made the task of the CIO easier. Innovation

goes hand in hand with change.

Driving change in any organisation is inherently challenging as it is only human nature is to resist change.

Before the pandemic, naysayers would argue that while technology was disrupting other industries, they were different, and that there was no prospect of technology disrupting their business in the foreseeable future. The pandemic changed this, lowering the water for all boats.

According to Forrester, U.S. tech budgets are set to expand by 6% in 2021, highlighting how Covid-19 has created an environment where transformational change is not only considered an option, for many it is seen as a necessity. In fact, when asked what IT initiatives they were prioritising over the next 12 months, 32% of the IT organisations surveyed wanted to increase innovation and 31% wanted to invest in tech that helps employees perform better.

BUSINESS

On the other hand, the pandemic has made a CIOs job harder. Business disruption has led business owners and managers to focus more acutely on preserving liquidity. Innovations rarely generate new net cashflows immediately, so CIOs are faced with making the business case for investments that now compete with other, more immediate priorities.

There has always been a trade-off between short-term performance and investment for the long term. The volatility ushered in with the pandemic has made this trade-off more acute.

The prioritisation of transformation There is no doubt that the events of the past year have changed what it means to transform. Initially, between March and September 2020, many of the solutions businesses put in place were temporary and only intended to last until teams had adjusted to their ‘new normal’. They were implemented as swift resolutions to minimise disruption. Loans were taken out, investments deferred, and strategies put on hold. However, as it became clear the changes would be permanent fixtures, businesses have switched tack and accelerated their plans, innovating to survive the pressures of the ongoing pandemic.

As leaders looked to mitigate risk in order to survive the financial impacts of the pandemic, many turned to technologies that would help them to tackle the challenge of moving all operations to a remote environment, virtually overnight. Be it converting a shop into an online marketplace or moving client meetings to online video platforms, change previously

considered impossible has quickly become the norm. The pandemic has brought about a permanent change in mindsets – the impossible now seems possible. For example, during the first lockdown, the entire Italian government moved to online servicing within the space of a few weeks. No one would have dared suggest this before the pandemic, even in the most extreme of scenarios.

Progressive business leaders now recognise that curiosity and a culture of change through innovation is vital to future-proofing their ventures, in any and every form – a message that lies at the heart of every CIO’s ethos.

The CIO’s challenge of balancing people and tech to build an inclusive workplace Businesses of all sizes are now adjusting to a shift in employee expectations regarding their workplace and remote working. Some businesses, notably investment banks, have announced a full return to the office, while others, including tech firms, have announced that remote working or a hybrid, is here to stay. Many businesses have come to appreciate that the old daily commute is not ideal.

Technology has already shown that it can enable remote working for many businesses, quite effectively.

Businesses are accelerating their investments in automation solutions to reduce their exposure to future lockdowns, to reduce their operating costs and improve process quality.

As a result, businesses have been provided with more reasons to invest in autonomous solutions as the

demands of employees and clients alike have been transformed by the pandemic. However, its important businesses do not discount the value of human interactions and relationships in their search to meet current demands.

While a change in mindsets has moved the bar in favour of digital transformation, CIOs continue to face numerous challenges as businesses emerge from a ‘survival’ state and into recovery. One risk is that the burning platform for change evaporates as the impact of the pandemic recedes.

Multi-year innovation projects that were funded in late 2020 may find support evaporating if management’s perception of the value-add also evaporates.

Another challenge for CIOs is the shift in timescale for innovation. In 2020, the focus was on short term solutions. Restaurants, unable to serve customers indoors, quickly erected temporary seating in parking lots and beefed up their online ordering options. Doctors quickly adopted video consultations. Car rental firms sold off their fleets and airlines furloughed tens of thousands of employees. Now that demand for these services is increasing rapidly, businesses are having to scramble to re-assess how to scale back up.

Do we do this with investments in long term resources like plant and equipment, vehicle fleets and airline employees, or do we explore alternative models including hiring resources from the gig-economy, and lease models vs. purchase? Innovating business models this way demands casting a vision further out.

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BUSINESS

As we move into the second half of 2021, we have two trends emerging.

Firstly, there has been a huge spike in economic activity as businesses emerge from the pandemic and government stimulus funding is renewed. Recent U.S. economic data shows the fastest growth since the 1940s. The other trend is the growing number of COVID cases from delta and other variants, especially among those who have not been vaccinated.

These two trends are on collision course, leaving significant uncertainty about the outlook for economic activity over the next few years.

This backdrop means that smart businesses are now innovating for a new normal where uncertainty rules. Analysis from Forrester sheds further light on this, highlighting that accelerating their shift to digital business is amongst the top priorities for organisations looking ahead to the next 12 months. The volatility in economics conditions is likely to continue for years to come. For car

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rental companies, the dilemma is how to rethink their business models to provide a response to a surge in demand given the depleted fleets, while recognising that a return to the fleet levels of 18 months ago may not be prudent. Similarly, for airlines, the speed at which staff should be rehired and aircraft brought back online requires careful planning.

CIOs are a vital bridge between workforces and innovation As we emerge into a new era of transformation, not only in business but also in society at large. CIOs have an important role to play, continuing to provide a bridge between people and technology, inspire creativity and push leaders to go that extra step further. Businesses and their leaders will need to look beyond the immediate future and instead start making changes for three, five or even ten years down the line in order to truly innovate and improve.

Paul Herring Global Chief Innovation Officer RSM

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14 years of international cooperation MEGABANK is a unique bank in Ukraine, as it is a bank with three major international financial institutions being shareholders of the bank: KfW Development Bank International Finance Corporation (IFC) ̶ member of the World Bank Group European Bank for Reconstruction and Development (EBRD)

“MEGABANK adheres to high European and world standards, introduces best practices and new approaches” Oleksii Iatsenko, Chairman of the Management board of the MEGABANK JSC, Ukraine

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Vneuron:

Anti-Money Laundering Compliance Made Simple, Fast and Cost-Effective Vneuron Risk & Compliance is a cloud-based, award-winning compliance solution provider, bringing an immediate response to financial institutions’ AML compliance needs. Its platform Reis™ RCS is a one-stop-shop for all AML compliance. It is selected by top-tier banks and insurers across EMEA, screens data for more than 27 million end customers and is filtering more than $10bn worth of transactions annually.

Wanda Rich, editor of Global Banking & Finance Review, spoke with Mahmoud Mhiri, the executive partner of Vneuron Risk & Compliance. He has more than 15 years of experience in technology development and the digital transformation of financial institution processes.

Being very passionate about compliance, he participated in the launch of more than 50 projects of top-tier banks and insurers in Europe, Africa and the Middle East to respond to major AML compliance challenges.

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Please tell us more about Vneuron Risk & Compliance and what led to its creation.

What do you see as the main challenges to internationalisation that companies face?

Vneuron Risk & Compliance is a spinoff of the bigger company that was founded in 2007. Vneuron, being a technology provider for more than 14 years, is helping companies from all industries transform and digitalise their processes. With the necessary capabilities and field experience, Vneuron Risk & Compliance was created when the need for an AML compliance solution was raised. With more than 5 years of operations, Vneuron Risk & Compliance successfully assisted more than 50 clients in their AML compliance programs. Its solution Reis™ RCS is a complete platform, providing an immediate response to all AML compliance regulations.

The main challenges to internationalisation are mainly the particularity in local regulations and how to adjust compliance systems to the changing regulations.

Specific regulatory requirements of every sub-industry, which can limit the expansion of systems that can’t adjust to custom regulatory requirements.

It is also important to mention that each sub-industry has its specific regulatory requirements. Compliance specificities vary from one financial institution to another and from parent institutions to subsidiaries depending on regional jurisdiction.

With that being said, if technologies are not flexible enough to adjust to the particularity of each institution, it will be very challenging for it to expand and internationalize.

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How has the change in business operations as a result of the current pandemic affected the needs of businesses?

The pandemic changed business operations; thus, business needs are no longer the same. With the need for full digitalisation of all processes worldwide, we are witnessing an increase of online payments, online account opening and other services concerning the financial sector in particular. With that being said, financial institutions had an imminent need for contemporary compliance solutions to combat all sorts of new financial crime patterns arising through digital channels.

When it comes to selecting the right anti-money laundering system, what are some of the key points businesses should consider?

There are several key factors for an effective Anti-Money Laundering system (AML). First, the vocation of the solution – meaning to choose a pure player, not a generalist one, to ensure the robustness of its features and inclusiveness of its modules.

Also, the effectiveness of its filtering algorithm – opt for a solution that has an effective filtering algorithm capable of taking into account all typographical, phonetic and differences due to transliteration from original languages, thereby improving the quality of results, reducing false positives, minimising the processing burden on analysts and reducing compliance costs.

Then, the multidimensionality of the risk matrix – check that the solution allows the integration, parameterisation and calibration of a multidimensional risk matrix so that all the client’s KYC data can be analysed in detail, and the client’s risk profile – ideally supported by a rating – can be established and appropriate due diligence measures can be taken.

For more information about the key points to consider when choosing your AML system, read their white paper.

Why should companies select Vneuron Reis™ RCS? What are the different components that Vneuron Reis™ RCS covers?

We are proud to say that our solution is comprehensive and covers all AML regulation compliance. We facilitated the mission of the compliance officer by providing them with all the tools they need: • Full KYC lifecycle and on-boarding automation, including

• PEP/Sanctions screening with online and batch features with builtin integration to major compliance content providers (Refinitiv and Dow Jones) • Risk-Based Approach with automatic customer risk scoring and classification capabilities based on a configurable risk matrix • Domestic transactions and crossborder payments screening • Transaction monitoring and AIpowered customer profiling In addition to these capabilities, Reis™ RCS is provided with an integration workbench which allows it to connect with a wide span of systems. It features a developer-ready full API to connect with systems of all generations.

Furthermore, Reis™ RCS enables total customisation of its dashboards, KYC forms, reports, workflows and analytics interfaces with no code needed.

What are your future plans for development?

Mahmoud MHIRI Executive Partner Vneuron Risk & Compliance

We are planning to expand to the LATAM and APAC markets in the course of the next 12-24 months. We are also planning to support cryptocurrency AML regulation requirements.

For more information consult Vneuron’s risk and compliance website. vneuron.com/compliance

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BUSINESS

Boosting and rebooting your business in a post Covid-19 world There’s no doubt that Covid-19 has hit businesses large and small the world over, and hit them hard.

Many have had to close down altogether while others have faced a constant battle for survival, missing rent payments, having to furlough staff and all the while trying to come up with new, pandemic-friendly ways of serving their customers – if they were even able to serve them at all.

But I don’t need to tell you how hard it has been – that much is obvious. What I do want to do, however, is lay out a strategy for recovery, along with a few tips on how businesses can better prepare for the unexpected.

Building customer loyalty Loyalty is key to any successful business and will also be the deciding factor when it comes to recovery. While the quality of your product

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and standards of service are big factors when it comes to driving loyalty, the fact of the matter is that there is a great deal of competition out there. Therefore, it is important to think about areas of differentiation – things that your business can do to really stand out.

For example, it’s become pretty common to see merchants offering discounts and rewards to attract new customers and retain existing ones.

In fact, it’s become so common that having a loyalty programme doesn’t really set a business apart from its competitors. There are a few tweaks such as personalisation that can create distinction, but in my view the real critical area to get right is the user experience when it comes to the ease of redeeming rewards.

While loyalty schemes in the past were a nightmare to implement and keep track of, smartphones have changed all of that. Rather than customers having to pack out their wallet with several different plastic store cards, everything can be done through an app.

BUSINESS

But even merchants who don’t have the resources to develop a loyalty app can get in on the act too. Several banks offer customers the chance to earn cashback rewards by spending on their cards with participating retailers, so the barrier for businesses that want to create a scheme for rewarding loyal customers is now even lower. Making it easy for punters to redeem rewards is absolutely vital to an effective loyalty programme.

Putting money in your customer’s pocket Loyalty schemes are often seen in supermarkets, fast food outlets and high street retailers, but there’s no reason why players in other vertical markets shouldn’t be thinking about them as well. For example, a travel agency that offers rewards for people booking holidays would have a useful point of differentiation from its competitors, as well as a better chance of retaining that customer when they book their holiday next year.

It’s about adding value – while travel agencies often try to bundle extras such as car hire, insurance or airport transfers into the deal, it’s very rare to see them offering cashback. But this is exactly the kind of reward customers want – they will value some extra spending money in their pocket over the convenience of booking everything in one place every time. Of course, the kind of rewards that work best in terms of attracting and retaining customers will vary by industry, but cashback will always have universal appeal.

Preparing for the unexpected The very thought of having to endure something like the Covid-19 pandemic again is almost too much to bear. But we must face up to it and do what we can to be better prepared for the unexpected. A business that is serious about retaining its customers needs to show that it really cares. They need to develop a relationship that goes beyond the purely transactional. This involves providing services that add value beyond simple discounts. For instance, B2B propositions could look at adding educational and training schemes for their products. Gyms and leisure centres could offer health checks and sessions with a personal trainer. There’s also a great deal that can be achieved by producing relevant and useful content for customers.

James Done CEO Tail

Many businesses that were forced to close their premises were supported by successful crowdfunding campaigns, driven by customers who didn’t just buy from those businesses regularly, but actually had a deeper connection than that. This just goes to show that there’s so much more to loyalty than simply offering one-size-fits all discounts, and businesses that take their loyalty programmes to the next level will be able to depend on the goodwill of customers when times are tough. Make it relevant, get the rewards right and make them easy to redeem.

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INTERVIEW

Concord Asset Management – Innovative Solutions for Bulgaria’s Investors

Natalia Petrova is the Executive Director at Concord Asset Management (CAM), a registered investment advisor providing clients with innovative asset management solutions. She has over 15 years of experience working in asset management, capital markets, equity and fixed income trading and securities sales. Wanda Rich, editor of Global Banking & Finance Review, recently spoke with Natalia to find out what sets CAM apart from its competitors, what opportunities are available in an increasingly volatile market, and her predictions for the coming year.

Last year, Concord Asset Management celebrated 15 years of operation.

How has Concord Asset Management developed over the years?

Concord Asset Management has proven to be a leader in the nonbank asset management industry in Bulgaria, focusing on mutual funds management and innovative products. Since I joined Concord Asset Management three years ago, the company has doubled in AuM in UCITS funds; the first interactive education for investors in the country was released; an online-

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based platform (Concord Online) for remote investing in mutual funds was introduced, and for the first time, the digital onboarding of clients using eID application was introduced in an asset management company in Bulgaria. We have also launched a regular investment product called ‘EXCELLENT Financial Plan’ which allows saving and investing at the same time. However, the challenges are still ahead of us. We are working on products that could bring even more diversity for our clients.

We have applied to the Bulgarian Financial Supervision Commission for obtaining a full license for the asset management company to manage alternative investment funds.

How did Concord Asset Management adapt operations as a result of the COVID-19 pandemic?

Why should investors choose Concord Asset Management over other asset management companies?

What are the current opportunities you see for investors right now? What advice do you have for them for riding out the increasingly volatile market?

As our company’s slogan says, ‘We are different.’ We are flexible and we aim to be close to the investors, to create trustworthy and innovative decisions for their portfolios. We strive to be pioneers in developing new products in Bulgaria. Our goal is to become a preferred partner for South East European asset management solutions.

The COVID-19 pandemic resulted not only in changes to people’s habits and their way of living - the companies have also changed. We started to become more digital, to develop solutions and platforms that would be just one click away from the customers. We are proud that we haven’t lost our market share during the pandemic. Our business is dependent on the development of the capital markets, so we have worked to achieve good performance and wide diversification by optimising the risk of the portfolios.

In the current environment, everyone is looking for an opportunity to invest quickly, easily and remotely. We have created a product for regular investment, and have automated the entire investment process without the necessity for the client to come to our office every month. We use an online platform and once the investor becomes our client and

INTERVIEW

receives access, he/she can place orders through Concord Online. By choosing the EXCELLENT Financial Plan, the selected monthly instalment is automatically transferred to the selected fund or funds. This product is suitable for individuals, corporate and institutional customers. It has the following advantages: firstly, it is not associated with large sums, so each investor sets aside as much as he can afford; secondly, investing in the capital market through mutual funds makes it possible to achieve exposure to a very diversified portfolio with small amounts which, given an optimised level of risk, allows for long-term growth; third, capital markets are the first to react when there is an inflation, and last but not least, with a regular contribution, it is not necessary to choose the right time for investing or to react in volatile markets. The investment is regular for example, every month - and not dependent on market timing, so it is not significantly affected by periods of market decline.

first place in MoitePari’s 2020 rankings. ‘Concord Fund 3 – Real Estate’ was named by MoitePari as the best equity fund (2018-2020), and ‘Concord Fund 5 – Central and Eastern Europe’ was awarded third place in the Equity Fund – Emerging Markets category by Investor Finance Forum for 2020. For us it is important that several funds from our product mix have been distinguished by independent observers over the years.

What does the year ahead look like?

The year started positively for the fund management industry with more than a 7% increase in the AuM worldwide, according to EFAMA. The Bulgarian market surpassed EUR 1 billion for the first time, per the data of the Bulgarian Association of Asset Management Companies. The world is looking into the new trend for ESG and green investing. Concord aims to develop more distribution channels this year and we are working on innovative products, searching to attract more liquidity and investor interest in Bulgaria. It will be another positive year to enjoy.

How do your advisors help clients achieve the best returns?

We are convinced that clients must be well informed about the character of their investments. The financial products they choose should fit to their goals, experience and risk aversion.

The diversified portfolio always helps when aiming to achieve long-term stability and good performance. Our mission is to provide all the relevant and necessary information to the investors so they can make wellinformed decisions for the product that best suits their intentions.

What was your best performing fund in 2020?

We always rely on independent opinions of our products and different local or international rankings. Last year, our balanced fund ‘Concord Fund 1 – Shares and Bonds’ was awarded first place in Bulgaria in the Mixed Balanced Fund category by the Investor Finance Forum, and

Natalia Petrova Executive Director Concord Asset Management (CAM)

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TECHNOLOGY

The key fintech innovations helping businesses today

Clearly, the fintech industry is currently in an exciting (and booming) age. Fast-scaling startups are offering a plethora of innovative services and products to meet the ever-growing demand from consumers, who now have the ability to instantly (and seamlessly) move money.

The pace of change is simply staggering. In less than ten years, venture capital (VC) investments in fintech companies worldwide increased from $1.89 billion (2010) to $53 billion (2019). Even more profound, 69% of adults, roughly 3.8 billion people, now have an account at a bank or mobile money provider, an important step in making banking as inclusive as possible. More recently, the impact of the Covid-19 pandemic has even pushed the most hardened devotees of notes and coins to rely on digital payments at last. Within this innovation revolution, more and more hypertargeted and personalised products and services are launching each day.

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When it comes to such businessto-business (B2B) products and services, the same, currently, cannot be said. In fact, the market has been quite overlooked in this fintech frenzy. For instance, digital B2B payments, across all industries, have lagged significantly behind consumer payments globally. Digital payments aren’t the only laggards though.

Critical business financial processes, like reconciliation, invoicing, lending and reward have also struggling to see innovation breakthroughs.

The fintechs most likely to succeed in this evolving B2B market are those that understand and build products and services which directly solve the inter-dependent needs of businesses. Currently, the financial operations of businesses are complex and siloed, leading to lost revenue and time. Fintechs which address this combination of needs, while also operating within the latest regulatory frameworks, are likely to be champions of this market transformation.

Yet consumer fintechs are finding it increasingly difficult to truly differentiate themselves, due to such rapid innovation. Thus, the B2B market offers a real opportunity to innovate given businesses’ need to use digital solutions. This is especially driven by desires to optimise operational processes, obtain a competitive advantage, and also meet fairly significant regulatory requirements.

With this in mind, it is safe to predict that the B2B market is likely to see a similar boom experienced within consumer fintech.

However, I believe four key innovations will help to change the B2B financial landscape in the coming years.

Digital payments become the new standard for businesses There is already wide availability of technology that enables B2B digital payments. Yet, the majority of finance and accounting departments, within companies, have held steadfastly onto tried and tested payment methods like cheques, cash and traditional credit

TECHNOLOGY

cards. Change can’t be put off forever though, as such methods have become unmanageable due to the swift rise in contactless, digital payments. We are already seeing a swift shift by many businesses to products, offered particularly by non-bank disruptors, that address their virtual needs.

Virtual expense cards become part of the (digital) wallet In essence, virtual expense cards are prepaid cards for employees.

This innovation enables a more sophisticated level of control for finance departments at companies, because these cards, in effect, approve a transaction before it takes place.

This is because a unique card number can be generated for use on specific purchases. Thus, card details are protected from fraud as they are not shared with employees or merchants.

The vast applications are obvious and virtual expenses look set to become a mainstream product that businesses of all shapes and sizes will rely on.

Barriers to borderless business lift Today’s economy is truly global, creating a deep need for fast and secure cross border payments to suppliers and employees overseas.

Currently though, just a minute fraction of the nearly $10 trillion cross border B2B payments every year are digital. Businesses are left with frustrating delays in making and receiving such cross-border payments, which in turn impacts heavily on dayto-day cash flow.

role in driving much needed change.

Integration of payments will need to be part of a full workflow solution, encompassing other elements including Smart contracts, financial management and accounting systems.

This fully integrated approach will have many benefits, such as automating operational flows, improving internal processes and reducing the allocation of unnecessary resources.

Lending to businesses Small to midsized businesses are often at the mercy of laborious and complex application processes when it comes to accessing funding, especially in the wake of the 2008 financial crisis. Fintechs are increasingly jumping into this space thanks to a streamlined application process, matched with swift underwriting decisions.

Running through all these exciting developments within the B2B space is the capability to offer a suite of tangible (and harmonious) business benefits. While many fintechs may be eager to offer such solutions, the payments ecosystem is underpinned by a requirement to understand the regulatory landscape before even launching these products or services.

Noel Smith Business Development Director Transact Payments

Thus, experienced, well-connected payments solutions providers are the crucial first port of call for fintechs.

Working with such a partner allows fintechs to transform an idea into a viable product or service that businesses both want and need.

Beyond digitisation of cross border payments, innovations that can simultaneously solve multiple business problems will play a crucial

Issue 28 | 19

INTERVIEW

Absa Bank Uganda – a “Flexible, Speedy and Accessible Banking Experience” Mumba Kalifungwa is the managing director of Absa Bank Uganda Limited, a commercial bank licensed by the Bank of Uganda, the central bank and national banking regulator. Absa Bank Uganda is a subsidiary of Absa Group Limited, a financial services conglomerate based in South Africa with banking subsidiaries in 12 African countries. Mumba has occupied the MD/CEO role since April 2020.

Wanda Rich, editor of Global Banking & Finance Review, recently spoke with Mumba to discuss, among other topics, the corporate social responsibility initiatives Absa Bank has been implementing, and the steps it is taking in order to keep the customer experience at the front and centre of its strategy. However, first on the agenda was the scope of its pandemic response.

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“We understand the effect that the pandemic has had on Uganda’s socioeconomic environment,” Mumba began. “As a result, we have supported our clients operating in sectors directly or indirectly affected by the disruption to ease their financial burden and ensure the sustainability of their livelihoods. We implemented relief measures issued by the Bank of Uganda in addition to our own interventions which included repayment breaks, moratoriums on capital repayments and the waiver of fees on interbank transfers through internet banking and bank-to-wallet transactions, among others. As of December 2020, over 1,400 of our customers have benefitted from the relief measures and about Shs260bn in terms of loans has been restructured.

“The safety of our customers and staff remains a top priority for us,” he added.

“This has necessitated strict adherence to Standard Operating Procedures

(SOPs) at our premises, changing operational times during this period, enabling our staff to work from home and providing mental health support to staff, among other initiatives.”

In supporting the social economic development in Uganda during this uncertain period, Absa acknowledges the significant role small and medium enterprises currently play in the Ugandan economy. “SMEs contribute 20 percent to the GDP and employ over 2.5 million people,” Mumba told Wanda. “Due to the negative impact of the pandemic, financial institutions have emerged to provide assistance through credit relief, lower interest rates and other forms of support.

Absa has gone the extra mile through our SME Academy by providing capacity building, professional support and training. During its launch, 70 SMEs received scholarships to a three-month training programme for proprietors and directors.

INTERVIEW

A customer being guided on the use of one of the automated Automated Teller Machines (ATMs) at Absa Bank Uganda's digital branch.

“Additionally, Absa has provided business advisory support, bringing on board industry experts and public organisations towards discovering and creating favourable conditions for SMEs to thrive, despite the pandemic.”

Most importantly, he asserts, is the support financial institutions should provide in the economy’s key growth sectors. “The pandemic and response measures have had far-reaching socio-economic consequences, which include a slowdown in economic growth, increased government expenditure, major shortfalls in domestic revenues and increasing public debt, to mention but a few,” he said. “In light of all this, as financial institutions, it’s prudent for us to take a sector-led approach in supporting social economic development. Key sectors include trade, manufacturing, oil and gas, infrastructure and agriculture, among others.”

Access to financial services becomes a particularly hot-button issue when there is a disruption to the business environment such as that caused by the pandemic, and Absa Bank Uganda has remained proactive in keeping accessibility at its highest possible level. “The disruption created opportunities for unique digital solutions to assist recovery, growth and improve livelihoods,” Mumba explained. “Absa navigated these challenges through providing digital banking solutions, including increasing its agency banking outlets countrywide, rolling out accounts with low management fees, intelligent ATMs and unveiling the Chat Banking application. Additionally, we enhanced our online and mobile banking platforms to include selfservice capabilities for debit card management, statements, proof of payments, travel advisories and passwords. All these advancements have ensured that customers have a flexible, speedy and accessible banking experience.”

The more typical challenges the bank’s clients tend to face include the high transaction and business costs when having to visit bank branches or money transfer branches, find favourable rates and make transactions across borders – a process Mumba describes as “tedious, frustrating and costly” for traders. Fortunately, Absa offers a solution in the form of an app. “In order to alleviate this challenge, Absa created the NovoFX application. With the popularity of mobile phones, customers can have a one-stop shop for all their transactional needs. The NovoFX application, available on the IOS App Store and Google Play Store, makes it possible to transact across different borders using multiple currencies at competitive forex rates.

Furthermore, it allows transactions of up to Ugx 100 million a day.

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INTERVIEW

Mumba Kalifungwa Managing Director Absa Bank Uganda Limited

“Additionally, Absa Bancassurance offers bespoke insurance solutions for both life and non-life insurance services. These include education plans, family protection insurance, travel insurance and executive motor comprehensive insurance. Testament to the success of our Bancassurance service is that Absa was one of the best performing banks in 2020, earning the highest commission within the life insurance business of about Shs671m.”

Of course, the struggles of recent times are not fully behind us yet and the individual needs of customers continue to be taken into consideration.

“Customers have been offered payment holidays of up to 6 months, with needs

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determined on a case-by-case basis, and solutions tailored to individual circumstances through proactive engagement with all concerned. With the help of our relationship managers, Absa has supported corporate and business banking clients through creating bespoke solutions tailored to their needs.

“Through our Enterprise and Supply Chain Development proposition, we have enabled the strengthening of value chains in the power infrastructure, petroleum distribution and telecommunications sectors. We partnered with anchor corporates in these sectors to provide financing to SMEs in their value chains for execution of large contracts and to drive sustainable business growth.”

The bank is enthusiastic about the role it has to play in corporate social responsibility in Uganda, a passion that is heavily supported by a number of CSR initiatives on its roster. “Absa Bank Uganda undertakes annual programmes such as the Ready to Work soft skills development programme, country scholarships and the Mandela Centennial fellowship programmes,” Mumba said. “This is in addition to the SME Academy which this year partnered with IFC, a member of the World Bank Group, to train over 300 Ugandan SMEs and help them navigate the difficult operating environment caused by the COVID-19 pandemic. This year, we have helped to improve employment youth outcomes through the provision of 265 internship and graduate placements to date.

INTERVIEW “Education is at the heart of furthering the development of Uganda, and Absa Uganda participates through the Absa Scholarship Programme,” he went on.

“Since its inception, the programme has supported 69 students, 26 of whom have so far graduated from university with another 14 set to graduate in 2021. We have also supported 139 teachers and school owners looking to recover from the effects of the pandemic by offering post-COVID resilience training support.”

In line with the bank’s commitment to be an active force for good in the community, it also supported the government in remedying the effects and fighting the spread of COVID-19.

“We donated EpiTents and Personal Protective Equipment (PPE) to the Ministry of Health to support frontline workers, enabling us to play a positive role in strengthening the country’s healthcare services.

“Absa colleagues reached out to the vulnerable in their communities through the ‘Absa We Care’ initiative, where they procured PPE for Masaka Hospital and relief items for five organisations, including Katalemwa Cheshire and SOS Children’s Villages Uganda, among other upcountry organisations looking after vulnerable children and youth across the country.

“Absa is also committed to the development of sports in Uganda,” he added. “For example, in 2021, Absa Uganda sponsored the annual Captain’s Bell Golf Tournament, and is backing Team Uganda at the Tokyo Olympics.”

With regard to new products and services on the agenda, Mumba explained that Absa always stays abreast of new customer trends and needs in order to create solutions that meet them. “Prioritising customer needs has led the bank’s innovation towards being a digital bank that meets customer needs conveniently and cost-effectively,” he confirmed.

Exceptional service and long-term value have always been priorities for Absa Bank, and Mumba emphasised

that “utilising big data to make informed decisions and doing more for customers” are among the key priorities as they focus on maximising the customer experience going forward. “Absa has and will continue to invest heavily in its big data capabilities. These investments will allow Absa to hyper-personalise experiences for each customer, using data, so that each individual customer becomes unique and a segment of one for us as a bank.

“Investment over the last two to three years has largely been allocated to technology upgrades, front-end solutions and organisation-wide automation. Our investments, amongst others, include state-ofthe-art contactless debit cards (Absa Vertical Cards) and payments platforms, a front-end teller system and a new look mobile banking app with world class UI/UX, built on the Xamarin framework.

not disappear entirely. The future is not physical or digital; rather, the future is bionic or ‘phygital,’ as is the new catch word these days. An ecosystem will emerge that will see digital experiences completely mimic what a customer would do in a branch, with the ultimate aim being a singlecustomer experience that is uniform and channel agnostic.

“Absa is taking advantage of this by driving towards becoming a customer focused and digitally led financial services provider through launching digital branches, revamping its application and adding the NovoFX application,” he concluded, “all to make the banking experience more convenient, affordable and flexible to customers’ needs.”

“Absa boasts a heritage of global best practice risk management protocols and standards,” he added. “It is now focusing on aligning this with building stronger remote and video banking capabilities.”

Finally, Wanda asked Mumba how he sees the upcoming year panning out for Absa Bank Uganda. “A recent Mastercard survey in the Middle East and Africa shows that more than 70% of respondents were, by March 2020, using some form of contactless payment,” he said.

“Moving to a leaner model means less back office and more focus on sales and advisory, and branches will transform, but will David Wandera, Absa Head of Global Markets (L) and Michael Segwaya, Absa Chief Finance Officer and Executive Director (R) display the NovoFX app.

Issue 28 | 23

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INTERVIEW

How UnionBank is Powering the Future

of Banking Through Innovation

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INTERVIEW

Union Bank of the Philippines, also known as UnionBank, began operations in 1982 and was granted to operate as a universal bank a decade later. Its digital transformation strategy and commitment to the customer experience has earned the bank multiple prestigious ‘Best Digital Bank’ accolades.

Union Bank of the Philippines President and CEO, Mr. Edwin R. Bautista, was interviewed by Global Banking & Finance Review editor Wanda Rich, when he revealed how the bank managed operational risk during COVID-19 while supporting continuous services for its customers and disclosed some of the huge steps they are taking in fintech development to make financial services more instinctive and accessible.

First to be discussed was the bank’s performance over the past year, which has held firm despite the many challenges presented by the pandemic and its effects. “The bank has surpassed the globally challenging year with strong 2020 results,” Mr. Bautista confirmed. “We set aside credit reserves due to COVID and still recorded a net income of Php11.6 billion in 2020. This translated to a return on equity of 11.5%, significantly higher than the industry’s 6.6% average.

“The bank started 2021 strong, posting a net income of Php4.7 billion in the first quarter, which is 79% higher than the same period in 2020 and 53% higher quarter-on-quarter. This was despite additional provisions as credit buffer.

“As of the end of March 2021, total assets were at Php747.3 billion, nearly flat versus a year ago. Total loans and receivables were down by 12% to Php344.9 billion, driven by weak demand for corporate loans. Total high-cost deposits were 22% lower to Php222.8 billion, as funding requirements were supported by low-cost CASA deposits.”

The driver behind such solid results given these circumstances was the level of preparation afforded to the bank, thanks to its robust digital strategy. “Our people were equipped with digital tools which allowed for a smooth transition and undisrupted operations during the pandemic,” he explained. “We managed to keep the majority of our branches open with full banking services, while ensuring that our people were safe and had the resources to continue operating the branches. Our app and digital platforms were also in place, which allowed our customers to continue transacting with us from the safety of their homes.

“Our agile mindset allowed us to launch innovations to help address customer pain points during the pandemic - 5g bank on wheels, sending money to remittance centres, mobile cheque depositing, and other services that helped to make banking from home easy,” he added. “This digital shift motivates us to continue enhancing features across our digital platforms. We recently launched InstaPay 2.0, which enables fund transfers by inputting your mobile number or email address. Also, small businesses can now open their business accounts and perform banking transactions digitally with the launch of our SME Business Banking App.”

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INTERVIEW

As well as allowing the organisation to weather the conditions brought on by COVID-19, digitisation brings with it more overall benefits, particularly to its bottom line and how the customer experiences the banking process. “Our digital channels were key to our performance this year, particularly in onboarding new customers and sustaining the customer transaction despite the pandemic,” Mr. Bautista said. “As the pandemic accelerated the shift towards digital, the bank experienced great traction. As of March 2021, we saw a 3.3x year-on-year increase to 2.4 million; a 10x increase on digital account opening via the UnionBank Online App to 623,000, and a 3.8x increase in monthly transactions to 6.6 million. Moreover, several partners ‘teched up’ with the bank’s help, including the Department of Social Welfare and Development (DSWD) and the Bureau of the Treasury. Recently, the Supreme Court of the Philippines entrusted us to ‘tech up’ their Judiciary Payment System so that its stakeholders could make digital payments to courts nationwide.”

An additional shift UnionBank plans to make by 2022 is the migration of its IT infrastructure, from an on-premises environment to Amazon Web Services (AWS), the world’s leading cloud platform. “The migration is intended to accelerate the bank’s digital transformation, improve customers’ digital banking experience, and strengthen financial inclusion in the Philippines by bringing financial services to remote parts of the country,” he explained. “The bank will also realise a cloud-only IT transformation strategy, becoming the first major bank in the Philippines to be fully hosted in the cloud.

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“When the migration is complete, the bank will run almost 400 mission-critical applications on AWS to further modernise its IT infrastructure, drive operational efficiencies, and innovate new services. We are also migrating over 900 virtual machines to VMware Cloud on AWS. In addition, we expect to benefit from increased staff productivity, reduced unplanned downtime, and increased business agility through faster deployment of new, externally-facing applications.”

UnionBank is no stranger to innovative solutions, collaborating with XLOG to launch the country’s first blockchain-enabled supply chain financing, embedded in a logistics platform. This provides buyers and sellers with an efficient way to do business through digital document presentment, settlement, collections, and an instant community-based financing programme.

“This partnership enables those with a logistics business to have access to end-to-end logistics technology for operational efficiency, realtime monitoring, online documentation, and flexible payment arrangements on blockchain,” Mr. Bautista said. “We are firm believers in how blockchain technology can bridge gaps in different industries, which we have already seen disrupt the financial industry. With this partnership, we hope to innovate the logistics business by integrating the financial supply chain platform with the already advanced logistics platform of XLOG.

INTERVIEW

“The integration of both technologies means that shippers, freight forwarders and their service providers - e.g. shipping lines and truckers - can facilitate, monitor and complete their transactions in one platform,” he went on. “They can now cover possible gaps in collection and payables with service providers through financing. Shippers can also enjoy extended credit terms while allowing service providers to receive advanced payments through discounting.

“Moreover, service providers can easily grow their businesses and close bigger deals by extending longer payment terms to potential customers.

The partnership will also improve the cash flow of the parties by enabling the early collection of receivables via financing.”

UBX, UnionBank’s fintech and corporate venture capital arm, has experienced tremendous growth since it was spun off in 2018, two years after the bank embarked on digital transformation. This bold step aligns neatly with the organisation’s overarching vision, as Mr. Bautista explained. “UBX is predicated on a future where financial services are invisible, seamlessly embedded into the experiences and activities that truly matter to businesses and people.

It leverages compelling ecosystems and data to explore new possibilities, making financial services more instinctive and accessible.

“The company continues to build and invest in open platforms, as well as in technologies that allow others to innovate, adding value whether they collaborate or compete. The impact of financial inclusion can unlock the potential of businesses and people.”

He went on to describe how the digital platforms created by UBX provided access during the height of COVID-19 that may not have otherwise been possible. “All UBX platforms are digital, which allowed us to service customers despite the pandemic,” he said. “i2i is recognised as one of the Philippines’ largest and fastest-growing financial networks and facilitates easy transfers across the network of financial institutions. It promoted agency banking amid the pandemic through its mobile ATM service. UBX stepped up to the plate through i2i by digitally transforming community-based financial institutions via i2i, enabling nationwide digital cash transfers for its customers to send funds and payments to over 11,000 locations around the country. In addition there is Bux, an all-in-one payment platform, which enables easy payments to e-commerce businesses, and Sentro, a free online shopping platform with pre-integrated payment and logistics capabilities, which makes online shop building possible and made MSME products and services accessible during the pandemic. Finally, we have the internationally acclaimed SeekCap, the Philippines’ first same-day-approval loan

Issue 28 | 29

INTERVIEW

marketplace for MSMEs. It gave MSMEs easy online access to funding sources for their business and operational requirements.”

More digital advances are yet to come, as is made clear by the creation of the Innovation Campus, a real property development that will support the bank’s innovation initiatives. “It’s a first-in-industry facility, which is being built on a one-hectare property in San Pedro, Laguna, and will act as a hub for research and development that will further boost the bank’s digital capabilities,” Mr. Bautista told Wanda.

“In addition, the campus will house various centres of innovation within UnionBank, including our institutes on data science, artificial intelligence and blockchain, as well as the recentlylaunched Asian Institute of Digital Transformation (AIDT), which is in partnership with Global Learning Solutions Singapore. It is a dream come true and a testament to the commitment to innovation, on behalf of management and the Board, as a major strategic thrust of the bank and of our parent conglomerate, the Aboitiz Group.”

Aside from their commitment to technological innovation, Mr. Bautista believes that financial institutions have a key role to play in supporting social economic development in the Philippines, and he highlighted a number of significant ways in which they can contribute. “There should be continuous provision of credit/liquidity to key industries in order to fuel economic growth,” he acknowledged. “An aggressive push for financial inclusion/inclusive prosperity is also needed. The key to

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this goal is providing easy, affordable and sustainable access to credit to the unbanked/underbanked sector of society, especially those in far-flung areas. This can only be made possible, far-reaching and scalable if financial services are offered via digital means.

Digital transformation is therefore important, i.e. helping to ‘tech up’ more individuals and businesses for greater financial inclusion. It’s also important to help promote financial awareness to more Filipinos in support of the BSP’s efforts.”

The discussion drew to a close with UnionBank’s plans for the near future, in pursuit of realising its long-held vision to become the superior digital bank. “Recently, we have been voted the Most Recommended Bank in Asia Pacific and among the most helpful banks in Asia Pacific,” he reported.

“This was because of our efforts to assist our customers, the economy and our country during the pandemic which would not have been entirely possible without the digital capabilities borne out of our five-year transformation. We know that the pandemic accelerated digital banking. While we have several years’ head start in digital transformation, we are cognisant that other banks and fintechs will do the same as a natural tendency.

“However, despite the crisis, we do not intend to slow down or even just maintain our pace. Rather, we will accelerate our medium-term plans and bring it forward to today, given the rapid rise of digital. In fact, in our recent strategic planning, our Board has supported and even mandated us to do this acceleration to maintain our lead in the industry.

“UnionBank is going full-throttle in our digital transformation,” he continued. “The bank shall compress its five-year plans into two years by accelerating the digital onboarding of new customers. Our success today was a product of looking ahead into the future and preparing for the evolution of banking. With the recent regulations, the bank is gearing up for the entry of more digital banks and the anticipated shift towards an open finance environment. We shall continue to launch pioneering solutions and test new technologies.

“UnionBank continues to sustain its digital leadership, and was recently named Digital Bank of the Year 2021

by The Asset Triple A. We hold the distinction of being the first and only Philippine bank to receive the award four years in a row.

“We will continue to help “Tech Up Pilipinas,” focusing on promoting wide-scale digital transformation to our customers, partners and institutions,” he added. “We believe that this will allow all of us to weather this crisis and emerge more resilient than before. Together, we can power the future of banking and help ensure the renaissance of our nation.”

INTERVIEW

Mr. Edwin R. Bautista President and CEO Union Bank of the Philippines

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INVESTMENT

The ESG Data Challenge for Asset Managers

The pressure is on for asset managers to seriously consider their role in the sustainable finance revolution, and as a result, conversations surrounding sustainability have continued to pick up the pace over the past year. This has been exacerbated in 2021 not only by new EU regulations, but also by US President Joe Biden’s commitment to climate change policy. In turn, ESG criteria is increasingly a must-have for incoming generations of investors who are committing to sustainable finance. Younger investors value transparency and expect ESG factors to be meaningfully and legitimately implemented into their portfolios, rather than just buzzwords and empty promises that might constitute ‘greenwashing’.

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Asset managers must accept that sustainability is not just a trend in the industry – it’s a trajectory. From January through November 2020, investors in mutual funds and ETFs invested $288 billion globally in sustainable assets – a 96% increase from 2019. With new sustainable funds on the rise, introducing standardisation of frameworks is critical and is the driver behind the EU’s new Sustainable Finance Disclosure Regulation (SDFR). This was implemented on March 10th this year, but the real deadline for change is now July 1, 2022, when the associated reporting requirements come into effect. This has been pushed back by six months from

January 1st 2022 – a welcome development due to the complexity of the task at hand.

But with less than a year to go, time is still running out for asset managers to ensure compliance. Gathering ESG data to appropriately score financial products is challenging in itself, as SFDR requires data from multiple sources and multiple vendors – and the required data is often costly or unavailable. This is a complex and resource-heavy undertaking, but there is a second challenge at hand. There is much to be done behind the scenes to integrate this valuable ESG intelligence into tools and workflows, so that it is placed at asset managers’ fingertips.

INVESTMENT

Sourcing ESG data: what are the options?

Asset managers now face an important decision: either they can build up new teams in-house whose role is to access, evaluate and score stocks by ESG criteria, or they can outsource this function to technology vendors and ESG data providers.

With a minimum of 32 sustainability metrics that individual products will be scored against, sourcing ESG data, calculating and reporting the resulting scores will be no small feat in time for July 2022. Ensuring efficiency and carefully planning resource distribution are the two most critical factors when making this decision.

Many smaller firms simply do not have the capacity to build brand new teams to carry out these new functions. Instead, working with an independent provider can help demonstrate that scoring is impartial while encouraging standardisation in frameworks across the industry.

Outsourcing is also an attractive option for larger firms looking to achieve compliance efficiently in order to spend more time strategizing and launching new funds. This means a partnership approach is likely to emerge as the most popular option to access and manage ESG data.

Integrating ESG data into workflows The direct integration of ESG data and scoring within their software gives managers a key competitive edge, but this can represent an enormous challenge as for many, workflows and software simply cannot be adapted so quickly and all too often, firms find themselves scrambling to respond to new regulations. But those that are successful will have a head start in creating and marketing new ESG funds, ensuring compliance and

positioning their firms as sustainable and ESG friendly. This then opens up resources to consider new investment strategies, providing the foundation to create new ESG products and boost competitiveness by differentiating the firm’s offerings.

For those who still use on-premise servers and legacy technology, the process of integrating new rules into software can be a slow, burdensome and costly task. Those already embracing cloud technology have a significant advantage because cloudbased data lakes can break down data silos and scale up and down quickly, and it is easy to layer new analytics on top, simplifying the task of collecting and then scoring ESG data.

How can asset managers stay competitive?

portfolio strategies and bringing new products to market. Fast access to ESG data will also empower asset managers to make informed decisions ahead of their competitors, regarding which well-performing companies they should include in sustainable and ethical funds.

Firms should consider as a priority whether prospective partner’s solutions are cloud-based as this will affect not only speed of implementation, but also scalability.

Speed and scale will be fundamental to taking reliable ESG products to market quickly and expanding internationally. The opportunities are clear, and the race to July 1st is on – but with the right partner, the race is already half won.

Despite the challenges and pressure on resources that SFDR compliance is likely to create, the new regulation should be welcomed by asset managers as it represents a gateway to new opportunities and a levelling of the playing field. There are opportunities to be taken in the creation of truly sustainable financial products that will attract the next generation of investors, and firms will no longer be able to get by through empty rhetoric or opaque data points that can be labelled as ‘greenwashing’: everyone will need to walk the talk.

A partnership with a service provider may represent a quick and easy way to ensure compliance without pulling on resources, for firms of any size.

The right partnership could free up resources by reducing the time spent ensuring regulatory and investor reporting requirements are met and cutting down the number of data vendors needed. These resources can then be channelled into enhancing

Paul Elflain Head of Asset Management Linedata

Issue 28 | 33

INTERVIEW

AUBK’s CIO Abdullah Jaragh on the Role of IT in the Banking Sector

Ahli United Bank K.S.C.P. was the first bank to be established in Kuwait on the 18th December 1941, and since converting to Islamic banking in 2010 has led the field in offering innovative Sharia-compliant financial solutions and services.

Its CIO, Mr. Abdullah Jaragh, was recently named as the Banking CIO of the Year - Kuwait in the 2021 Global Banking & Finance Review Awards. Editor Wanda Rich interviewed him to discuss the key role he played in AUBK becoming Sharia-compliant, what technology he believes will define the future of banking, and why he favours attitude over expertise when it comes to new hires.

Briefly share with us your journey to becoming CIO of Ahli United Bank K.S.C.P. After graduating from the University Of Wisconsin in the USA, I joined AUB Kuwait’s IT division. At the beginning, I thought working in the bank would be about a purely financial environment that used limited technology services.

With the advancement in technology and growing adoption of technology within the banking sector as it moved away from manual ledgers to systems, it later became apparent to me that the bank was a big technology conglomeration.

Since 1986, I have led many successful project implementations for IT systems as a technical services head, before being elevated to the Head of IT position in 2012. Since then, there has been a magnanimous shift in the accountability, planning and visualisation of technology in order to keep abreast of the new roles and responsibilities that come with it, along with the technology advancements happening in and around the world.

You have been with Ahli United Bank K.S.C.P. since 1986 - what achievements are you most proud of?

There are a few which are closer to my heart as I considered them as the pinnacle of those times that set us apart from others. First, I successfully

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led a team to migrate from the conventional bank into an Islamic bank when the Bank was converted to an Islamic bank. This process began in 2008 and the conversion was completed in 2010. This was not only about a technology shift programme, but also the way I had been exposed and tuned in to the previous version of banking, i.e. conventional. This needed careful selection of the technology, along with the learning process of the new Islamic version of banking. The end result is what I am pleased with, having AUB as one of the major leaders in Islamic banking in Kuwait.

Second was an IT setup using advanced technology for an active-active DR site, which was a stepping stone for a robust business continuity plan that is tested twice a year in real-time mode. It is a matter of personal pride for me that AUB was not only the first in the country, but is still amongst the few to have such a DR setup.

This gives muscle strength to our system availability, capability and continuity.

The past year has been full of challenges.

As CIO, what were the biggest obstacles you have had to overcome?

Last year was very challenging for everyone around the world but at the same time, I believe it brought the best

out of all of us. The multifold digital transformation that happened in the last year is commendable. However, it brought many obstacles that we had to hurdle through to reach where we are.

One was the push for a shift in the mindset to adapt to the new normal of ‘work from home’ without impacting the aprojects which were underway, and adopting newer projects to deliver remote-capable services for our customers in order to keep the business impact as low as possible. We also had to provide remote working capabilities to staff without compromising the security of the bank, which was a challenging but excellently handled by the IT and security team of the bank, with a lot of collaboration from all divisions.

We also took the bold step of keeping the IT operations staff housed in the AUB premises - with logistical support of necessities - to keep the bank operational for customers during full lockdown and curfew times, in order to ensure that our online cash capabilities were available without interruption.

Last but not least was keeping the morale of the IT team high, even during a pandemic, with all sorts of eventualities happening around all of us and the staff members’ inability to travel back to their

INTERVIEW

countries and meet their families in such testing times. This had to be dealt with using a lot of human touch and emotions to ensure that there were no breakdowns in the human side of the bank, impacting the technology aspect or AUB as a bank.

What are the biggest trends impacting your field in the decade ahead?

If the cloud is the digital foundation, then data are the building blocks of the new world technology, and artificial intelligence is going to make it effective and efficient. Cloud technologies have underpinned value creation through major innovations over the last decade, particularly the internet of things (IoT), where companies are using a combination of sensors and cloud technology to collect insights from almost anything you can think of – from oil rigs in the middle of the ocean, to refrigerators in your home. There are case studies where banks in other regions have started adopting the IoT to customise their product offerings to suit the lifestyles of their customers, and it is only a matter of time until it will be the new normal, considering the advancements in AI capabilities to process such data efficiently and at speed. Therefore, I strongly believe that data analytics clubbed with artificial intelligence and cloud utilisation is going to dominate the building blocks of any technology solutions in the banking sector, while the fintechs will just help to fast-track this journey of transformation.

Therefore, an early adoption of cloud usage, data gathering and processing, artificial intelligence and partnering with fintechs is what will define the success and future of any bank.

What is your management philosophy?

My management philosophy is to provide an environment that leads to productive employees who work smartly and efficiently, which is always centralised in three components: motivating staff, guiding the banks to common goals, and decision-making. I have learned a great

deal and found that leading by example is a strong way to influence directs to work diligently, using a human touch and personal connections to keep the team together and motivated.

What do you look for when you’re building a team?

A thorough selection process for picking team members has great long-term benefits, even if this means you spend more time recruiting than you'd like to.

Value each role, communicate, set goals and know each other. I look for attitude in people more than their expertise or technical knowledge. I believe that technical knowledge, to some extent, is easy to grasp if you have the right attitude, but it’s not so easy the other way around. Therefore, I look for professional people with the right level of technical knowledge and a positive attitude who are willing to go the extra mile to give their best to the team and the bank.

Do you have any advice for young people interested in a career in IT management?

I was a consultant of IBS (Institute of Banking Studies - Kuwait) for more than 10 years, designing and recommending the IT courses needed by new technology aspirants as per the international technology trends of the banking sector in Kuwait and the region.

That’s where there has been a wide range of interaction with young people aspiring to be part of banking IT. My advice to them would be the following: keep up to date with technology, as it is changing faster than they think.

Feedback is a gift, either positive or negative; therefore, one should embrace it with open arms and use it to their advantage. Always be willing to learn something new, from anyone in the organisation - from the lowest position to the highest. There are thousands of people who can handle technical jobs, but there are few who can communicate with their business partners effectively.

Finally, take technical writing classes, as management lives on communication.

What is the bank’s technology strategy?

The bank’s technology strategy is based on our objective to lead in digitalisation by digitalising processes and services, as well as touchpoints where clients interact with the bank and implement modern technology, to facilitate access to the segment for new generations and attract this segment that seeks technological solutions. Our focal points for the next few years will be around transforming the bank to digitisation, robotic process automation and artificial intelligence, big data and data analytics with the help of artificial intelligence, and the adoption of cloud technology and cloud-ready platforms, as and when the regulations are formalised.

While it is already evident in many parts of the world, digital transformation in banking is not yet done. In the future we can count on more technological advancements, all in a bid to provide a better experience for customers, improve security and increase profits for banks. Having said that, the trends around the world are changing at a pace never seen before and if adopted earlier, they can give any banking institution a competitive edge as we step into the almost unknown. As such, AUB is continuously assessing the adoption of such trends, keeping in mind the best fit for our bank rather than relying on best-ofbreed technology solutions.

Mr. Abdullah Jaragh CIO Ahli United Bank K.S.C.P.

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INTERVIEW

Drosoula Hadjisavva Chief Marketing Officer BDSwiss

Creating value through transforming the client journey BDSwiss is a leading financial services group which, since its inception in 2012, has been offering bespoke CFD trading and investment products to more than 1.5 million registered clients, in over 180 different countries. Global Banking & Finance Review editor, Wanda Rich sat down for an interview with Drosoula Hadjisavva, Chief Marketing Officer at BDSwiss for the past 2 years, with extensive experience in branding and marketing, and a successful career of more than a decade in similar roles in the FX and fintech industry, to discuss how today’s investor needs have evolved and why personalisation in products, services and communications is key to client loyalty.

There are many brokers in the market. How does BDSwiss differentiate itself from its competition?

BDSwiss is a multi-regulated global broker that has built a solid reputation as a transparent and forwardthinking brand that aims to exceed client expectations by investing in product differentiation and delivering a strong value proposition. We recognise that in today’s fast growing fintech industry, competition is stiff and that the stakes are always high when it comes to maintaining a loyal client base.

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Our ongoing efforts are concentrated on becoming a one-stop shop providing easy access to a number of financial and investment services.

We focus on analysing our audiences’ needs and enhancing client experience by investing in continuous research, improving our existing services and products, introducing innovative trading and investing solutions, and providing ongoing financial education and support.

INTERVIEW We follow both a client and partner-centric approach, accommodating them throughout their client journey and ensuring a world-class experience. In short, clients and partners that choose BDSwiss can expect a transparent service under a regulated environment, as well as reliability in execution, competitive pricing, and awardwinning trading conditions on over 1,000 underlying assets covering all major markets and beyond.

How have your trading platforms been critical to your success?

Undeniably, the trading platform is one of the most crucial components of a trader’s experience. As a global leader in CFD trading, BDSwiss is always looking to provide the most advanced, convenient, and feature-rich trading platforms on the market. Our platform offering includes the MetaTrader4 which is used by millions of traders around the world, while a few years back, we also introduced the MetaTrader5, which aims to address more sophisticated trader needs.

In the last few years, our Product team has also been working hard to develop the BDSwiss WebTrader and the BDSwiss Trading app, two proprietary forex trading platforms, specifically designed to accommodate our clients’ needs by combining a user-friendly interface with a wide range of analytical tools. Both BDSwiss WebTrader and Trading App are fully integrated with our clients’ MT4 accounts and dashboards, for a seamless experience across all platforms and devices.

Providing a wide range of trading platforms, which have proven time and time again to be extremely reliable during adverse market conditions and sudden spikes in trading volumes, has played a significant role to our success, indeed. We are not complacent though, we know there’s always room for improvement, which is why we continue to add value for our clients with additional features and partnerships, while also galvanising our teams to develop bespoke charting and analysis tools that enable traders to identify major trading opportunities and make better informed decisions.

The BDSwiss Trading app was developed completely in-house. What advantages does this bring?

Developing our Trading app exclusively in-house enabled us to create a fully customised, all-in-one platform that can accommodate our clients’ needs. We also maintain the ability to further develop the app over time, adding new features and improving UX for both iOS and Android systems. Maintaining a natively developed app also gives us room to conduct our own research and use the feedback we receive from clients to make further improvements to our app. It’s important to note that while having complete control over our mobile platform gives us a true edge when it comes to trading innovation, it also requires an ongoing commitment to constant innovation on our part.

"The “post-pandemic trader” is more financially savvy and investmentoriented than their predecessor this trend is here to stay."

- Drosoula Hadjisavva

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INTERVIEW

In a nutshell, BDSwiss’ Trading App offers a complete trading environment to mobile users as well as a smooth onboarding and access to client dashboard where they can monitor their account, deposit, trade, and withdraw on the go.

How important is it to deliver personalised service in the financial sector?

Delivering personalised service is particularly important in the fintech sector, as in a highly commoditized world of FX & CFDs investment products, it’s the client experience, driven by personalisation, that sets financial institutions apart. Study after study highlights personalisation is what consumers have come to increasingly expect from the brands they engage with, but unfortunately, many forex brokers are still stuck in the mindset of delivering generic one-size-fits-all communications on their new products or services. In an era of hyper-personalization this is definitely a losing approach when it comes to attracting younger generations of traders.

As retail traders’ individual needs and requirements diversify, and target audiences become more niche, financial institutions need to adapt accordingly. In order to win the race for “digital differentiation” fintech brands must now deliver personalisation at scale, designing services based on individuals’ unique needs and perspectives to provide a meaningful experience!

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At BDSwiss, we have truly invested in analysing our database and segmenting our clients based on their trading activity, behaviour, but also investment needs - which could differ based on different demographics such as geo location, financial status, age, etcetera.

From marketing communication to customer support, we ensured that our messaging was consistent, yet targeted, timely, and relevant. This enabled us to ensure that we don’t bombard our clients with tone-deaf messaging, but that we anticipate and address their concerns, we accommodate them with the appropriate education and support at the right time, and we provide actionable research and information that pertains to their individual needs and investment profiles.

How have you had to adapt how you interact with clients due to the current pandemic?

In times of crisis, a client’s experience of a company can dramatically impact their sense of trust and future loyalty towards it. Rightly, when it comes to online forex and CFD trading services, clients expect the same platform responsiveness, quality conditions, pricing, execution speed, and support. Addressing clients’ concerns, BDSwiss was able to reassure them by continuing to provide an exceptional level of service, as well as fully operational platforms and customer support during the pandemic.

INTERVIEW

On the opposite end of the spectrum, popular interest in the financial markets grew during the pandemic, with flocks of new clients opening trading accounts and looking for tools to keep up with all the latest developments in different markets.

Remaining loyal to our client-centric approach, we delivered clear and helpful cross-channel client communications via emails, social posts, company newsletters, and in-platform updates and multiplied its online educational webinars. We also leveraged our Research Team led by seasoned fundamelist Marshall Gittler to offer actionable insights on the markets through a series of live analysis webinars, daily market commentaries and trading alerts.

What innovations should your customers expect in the near future: promotions, services or products? Or what is your business strategy this year?

As part of our ongoing commitment to our clientcentric approach and in an effort to accommodate our Group’s aptitude for growth, we wish to focus more on localisation this year. Localisation and personalisation are the new drivers of business value and we plan to utilise both to create compelling, meaningful, and differentiated client experiences.

We are looking to expand through a “think global, act local” approach and streamline our internal processes in a way that allows us to continuously adapt our products and services to serve the needs of different markets, with a sensitivity to cultural, regional and national preferences.

Reflecting on our past, present and future, our vision remains the same: to become a one-stop shop and offer access to the markets with ease.

We will therefore continue investing in research and development, introducing innovative solutions, wallets, and services to cover the needs of our increasingly diverse clientele.

In your observation, did the behaviours of traders change as a result of the pandemic?

One of the most striking phenomena of 2020 and early 2021 when it comes to the financial industry has been the rise of retail investors. The constant flow of world-changing events resulted in myriads of investing opportunities, completely transforming the retail trading landscape. As such, retail investors felt encouraged to take control of their finances and get back a sense of ownership for their investment decisions. The "post-pandemic trader" is more financially savvy and investment-oriented than their predecessor - and I believe this trend is here to stay.

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TECHNOLOGY

How financial institutions can protect themselves against cyberattacks When we think of bank robbers, our mind probably gravitates towards a certain kind of criminal. We perhaps think of the masked robbers, wearing a black and white striped shirt, black beanie, black trousers. Indeed, if you search Google for images of a bank robber, you will see this masked villain carrying a bag of cash over their shoulder tiptoeing out the door.

This form of robbery in many ways made a lot of sense, as banks were predominately where the money was, but in our digital age, the modern criminal can steal vast quantities of money armed with little more than a laptop and an internet connection.

The cybertheft market is now believed to be worth in excess of a trillion dollars globally, and the prevalence has encouraged not only organised crime groups to enter the fray but also rogue nation-states. Who can forget, for instance, the cyberattack widely linked to the North Korean state on Bangladesh's central bank in 2016 that saw the criminals make off with over $100 million?

It’s the type of crime that was popularised in the Netflix series Money Heist, in which a criminal gang targeted the Spanish Royal Mint to illegally print a few billion Euros worth of untraceable notes. It sounds like the stuff of Hollywood imagination,

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but a few years before the show aired the Carbanak hacking group compromised the IT systems of a hundred banks across 40 countries, making off with around a billion dollars in the process.

“Why bother with guns, hostages, and getaway headaches when you could steal as much or more from the comfort (and safety) of your sofa?” writes Gottfried Leibbrandt and Natasha de Teran in their recent book The Pay Off. These types of crimes are safer, more lucrative, and thanks to the challenges with attribution, apprehension and prosecution of computer-based crimes, a criminal’s odds of getting caught and spending time in jail are orders of magnitude less.

A new wave of attacks This evolution in financial crime was underlined by a recent report from BAE Systems and Swift, which highlighted “ATM cash-outs”, which are a form of ATM hacking that allows huge quantities of banknotes to be released. It’s an approach that has been mastered by the BeagleBoyz crime group, who are themselves widely linked to North Korea. In the past few years, they have been responsible for a huge number of attacks that collectively have tried to steal around $2 billion.

These attacks are highly coordinated to overcome the inherent limitations on the amount of cash each individual machine can dispense, with some of the more ambitious attacks targeting cash machines in dozens of countries simultaneously.

Indeed, the report highlights a recent attack that was conducted in 28 countries across just two hours, with a total of 12,000 withdrawals made in that timeframe.

As more and more of our payments are made digitally, these payment systems are also a highly lucrative target for attack. For instance, way back in 2013, we saw the retailer Target hacked, with criminals making off with the credit and debit card details of 40 million customers.

Phishing attacks have also been on the rise in recent years, and while we often associate these attacks with attempts to elicit vital information from individual customers, there has also been a surge in so-called “executive whaling” in recent years. This involves criminals sending fraudulent communications that appear as though they have come from the CEO or other senior individual to deceive employees into making large payments.

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The COVID-19 crisis has also seen an increasing willingness to target insiders to gain access to critical value information. Indeed, an investigation by The Economist recently found that cybercriminals were offering up to eightfigure sums to tempt employees at Wells Fargo, Bank of America, and JPMorgan Chase to authorize illegal and fraudulent wire transfers.

Staying secure

Cybersecurity matters

So, what can you do to ensure that your own organisations don’t fall foul of cyberattacks?

The first thing is to ensure that it’s an issue that is taken seriously. This means not only that cybersecurity is baked into everything that you do as an organisation, but that training, risk assessment, and incident responses are devised for you and for your whole supply chain.

All of which should be of considerable concern for financial services companies, especially given the significant growth in digital-only banking in recent years. Indeed, a recent study from Nanyang Technological University, Singapore highlights how poor cybersecurity may be significantly undermining the faith of consumers in digital banking.

You can rest assured that cyber criminals, who are becoming more specialised and professional, are devoting considerable resources to breaking into your organisation, so it’s vital that similar rigour is applied to keeping them out, detecting them as quickly as possible when your prevention strategies fail and recovering from successful attacks.

Cyber threats have become one of the most pressing concerns across the financial services sector globally. There is a need not only for cyber resilience at the firm level but also at the sector level. A sector-level approach is essential as while large firms tend to have relatively robust cyber resilience, there are clear vulnerabilities in the supply chain with out-of-date infrastructure (broken window theory on full display) - a particularly attractive vulnerability to cybercriminals.

Digital finance is here to stay, so it’s beholden on the financial services companies to get their house in order with regards to providing the kind of security that customers are demanding.

Positively, the need to act is clearly recognised across the industry, so now the key is to ensure that concern translates into meaningful actions.

Despite this, there remains a consensus that spending on cybersecurity is insufficient, with the majority of what is spent being invested in protection rather than in areas such as detection, response, and recovery.

Chris Pogue Head of Strategic Alliances Nuix

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Thanks to Contour, Trade Finance is Making Strides in the Digital Space

Carl Wegner is the CEO of Contour, a growing global network of banks and corporates working to digitise trade finance. Carl’s role aims to enable banks, corporates and technology partners to streamline their communication and to improve transparency in their trade finance activities.

Prior to working with Contour, he served as the Managing Director for Asia at R3, where he was instrumental to the business growth and market penetration of Corda solutions with central banks, financial institutions and corporates.

Carl’s prior roles include Managing Director and Head of Global Transaction Banking for Greater China with Deutsche Bank, and Managing Director of Transaction Banking for Standard Chartered Bank in Taiwan. He was also Head of Asia for TradeCard (now GTNexus), building its network in 14 countries.

Carl has held posts as Treasurer of the American Chamber of Commerce in Taipei and is a Board Member of the Taipei American School. Fluent in Mandarin, he holds a B.S. in both Chinese Language and Chinese History from Georgetown University.

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When Global Banking & Finance Review editor, Wanda Rich sat down with Carl, he explained the disparity in the trade finance industry that first inspired Contour’s inception.

“Contour is a global network of banks, corporates and ecosystem partners working together to transform trade finance through the use of innovative new technologies.

Digitisation of this industry has lagged behind other areas of finance and is needed to improve security and remove access barriers, which will create a better and brighter future for businesses and communities around the world,” he said. “Contour began life when some of the world’s leading trade banks of various sizes and geographical focuses decided that digitisation could only come through industry-wide collaboration, a common focus, and through the use of decentralised technologies. They joined together as a consortium to test and validate the then emerging blockchain technology and its potential application to trade finance.”

Several successful live transactions later, and aided by a wave of positive corporate momentum, Contour launched as an independent

organisation at the beginning of 2020.

“We retained several key consortium banks as investors and welcomed new financial institutions as investors as well,” Carl continued. “Since then, we have welcomed more financial institutions around the world – both global and regional – as well as their corporate trade customers. We’re industry-agnostic, meaning that our corporate customers can range from steel to textiles and anything between, from all over the world.”

“Our network is scalable, global and has a growing set of products to offer.

We can support a transaction within a country, or across continents. Global trade requires a common network to drive digitisation, and we want to ensure that our offering is capable of supporting all methods of conducting trade. By digitising global trade, we can lower barriers to accessing finance and global markets, reducing poverty and inequality. For us, this journey starts by building an inclusive, collaborative and common network.”

There is a lingering perception in the trade finance industry that original documents are more secure and tamper-proof, with wet ink from a stamp or signature often seen as the

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gold standard. This leads to a certain inertia and a reluctance to change the status quo, which Carl notes as one of the biggest challenges Contour has had to overcome. “Our solution is to first transform Letters of Credit (LCs), one of the most complex traditional trade finance products, but also one of the most standardised, which allows for it to be useful across geographies and industries,” he said.

“We have digitised and simplified this product using collaborative workflows amongst transaction participants, all connected on a common decentralised network. We have successfully launched our production network and with each successful transaction, Contour challenges this misconception and reluctance to change by proving our digital network to be far more secure than paperbased processes, while also allowing all trade participants to achieve a significant reduction in processing time by up to 90%.

built on a permissioned blockchain network that is secure and private, where banks and corporates retain ownership and control of their own data in any transaction.”

“Another challenge we have faced is the perception that blockchain technology is open and public, and not suited to private commercial transactions and financial arrangements. However, not all blockchains are the same. Contour is

He conceded that across the broader spectrum of trade finance, the impact of COVID-19 has exacerbated the inherent limitations in international trade networks dependent on human couriers and employees working from offices. “The need for an effective,

The extraordinary events of the past year and a half have affected businesses in every field and every corner of the globe, but Contour’s circumstances were somewhat atypical. “Like all businesses, our operations have been impacted by the pandemic,” Carl said. “However, what makes our experience unique is that we formed the Contour team at the start of the pandemic with only a handful of staff. Since then, the company has grown to employ over 30 people. We have continued to operate virtually across different time zones since operations began. It is only now that restrictions have started to ease that some of us have been able to meet in person, after over a year of working remotely.”

digital and common solution for banks and corporates is now seen as crucial to business continuity by many.

Keeping trade flowing during turbulent times requires more than just keeping goods moving,” he explained. “It also requires a level of network accessibility and connectivity that traditional physical documents are unable to sustain. As such, Contour’s open and inclusive network provides a much-needed solution to the industry, eliminating data trapped within silos and seamlessly connecting businesses to financial institutions and the physical supply chain through our partners.”

Beyond the effects of the pandemic that impact on almost every industry, the challenges facing trade finance are mostly centred around what he describes as the “archaic” nature of traditional methods. “They create significant barriers for global trade growth, adding complexity, cost, and delays to both banks and corporates.

Trade finance does not have digital infrastructure to drive improvements or to remove the heavy requirement for paper documents that need to be couriered globally. This is a key challenge for the industry, and has been for decades,” Carl said.

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“With no standard connectivity between banks and corporates for communication, several challenges occur making inefficiencies rife, as well as a lack of clarity and poor interoperability of solutions between all participants,” he went on. “The use of paper also leads to business continuity risks during crises such as the pandemic, and risks loss or damage to paper documents that are in transit or in storage. The risk of fraud is also increased with paper usage as double-financing can occur.

“Even where there are some digital offerings, they operate in silos without integrating into the main elements of trade such as contracting, post-trade fulfilment, customs and other areas.

This causes friction and unnecessary administration, which in turn leads to increasing costs and delays.”

With every challenge, of course, comes an opportunity. “Unless the processes for global trade digitise

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and work with each other, commercial activity will always struggle and rely on paper. Herein lies the opportunity for forward-thinking players to modernise the industry using the latest tools and technology.

“There is much to gain. Contour’s global network will create trade growth for businesses and communities around the world through our accessible, secure digital network. By doing so, global trade can become accessible to all and do what it is supposed to do – create new opportunities that can reduce poverty and inequality.”

With regard to what comes next, Carl reported that Contour has big plans for further digitisation, innovation and accessibility. “As we scale our digital network of banks and corporates, we’ll be able to transform more elements of trade finance,” he said. “This means expanding beyond LCs to other pain points in trade finance such as open

account, collections, bank guarantees and standby LCs. We have already developed a bank guarantee solution that is currently in client testing and will be moving into open account trade next. We have created an Innovation Lab and have started to hire an inhouse development team that focuses on researching and experimenting with how we expand our products.

“We believe the future of trade finance should benefit all; that’s why our network is accessible to the full spectrum of banks, corporates and integrator fintechs for trade finance,” he added. “Our goal is not small – and a new global standard for the trade ecosystem will take time – but we are up for the challenge and have the support of the industry.”

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TECHNOLOGY

How COVID-19 Spurs Financial Fraud and What to Do About It In general, the COVID-19 pandemic has shown that our society has exceptional human beings and companies that are willing to sacrifice many of their resources for the public good. However, on the flip side, some individuals and organizations are using the new conditions imposed by the pandemic to their advantage.

Historically, global disasters, which can take many shapes and forms, have always caused economic destabilization and distress. This, in turn, inevitably causes an increase in the number of fraudulent activities.

Unsurprisingly, people have become much more reliant on media streaming services, digital commerce, and electronic payments. As the pandemic has effectively forced digitization on many companies, some of them have also failed to provide adequate cybersecurity protection.

And fraudsters are never hesitant to

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capitalize on the new opportunities.

Let’s see how financial software development and other methods can help combat them.

Most Common Pandemic-Induced Fraud Types

Identity fraud Identity fraud is one of the most known fraud schemes, yet people still get caught off guard.

Most commonly, the wrongdoers directly communicate with the victims via email or phone to obtain financial data, or simply ask them to send funds. For example, fraudsters can disguise themselves as the World Health Organization (WHO) or the American CDC representatives, and ask for donations. They also create websites that sell fake virusprotecting aids and ask people to

click on links that contain malware.

With the right mix of kindheartedness and inattentiveness, victims often fail to double-check where exactly they are sending money. With the stress instilled by the pandemic, people become much more vulnerable to such scams.

Financial statement fraud With the economic recession caused by the pandemic, companies often struggle to meet their earning targets. To make up for the dramatic decrease in consumer spending, some organizations may resort to intentionally falsifying their financial statements to appear capable in the eye of investors. Similarly, some businesses may misrepresent the number of assets or income they have to qualify for government lending programs like the Paycheck Protection Program.

TECHNOLOGY

Internal fraud With increasing personal financial pressure, employees can rationalize stealing from the company and commit fraud. According to the Association of Certified Fraud Examiners (ACFE), 42% of occupational fraudsters are living beyond their means. In times of the pandemic, the number of employees who are forced to spend more than they earn has been increasing.

Unfortunately, companies further facilitate internal fraud by intentionally weakening their anti-fraud programs.

Paradoxically, the management often decides to cut costs on compliance and anti-fraud teams because of the pandemic, which makes it easier for distressed employees to steal from the company.

Account takeover According to Kaspersky, the share of account takeover (ATO) incidents increased from 34% in 2019 to 54% in 2020. Kaspersky links this surge in fraud attempts to the pandemic. The logic here is pretty straightforward: as companies transitioned from pointof-sale shopping to digital channels, they have become more exposed to fraudulent attacks.

Interestingly enough, the underground bazaars of compromised data have also been affected by the pandemic.

As crooks are afraid to get caught red-handed in nearly empty brickand-mortar stores, prices for stolen on-card data have been steadily going down, while online card data is now selling for more. This means that

criminals who are specialized in pointof-sale fraud are now transitioning to the closest fraud type, which is ATO.

What to do about it?

– In general, companies should educate their customers on how to identify fraud by repeatedly sending them relevant information. This can have a dramatic effect as many fraud attempts can be prevented by simply recognizing the common red flags in time. Some banks achieve that by gamifying the customers’ learning experience.

– In times of recession, companies are expectedly looking to decrease their spending. However, anti-fraud teams should never be the target for it. It’s quite the opposite — to address increasing risks of internal fraud, organizations should put more effort into ensuring that their security, audit, and compliance teams can perform at their best.

– Financial institutions should review their approaches to detecting fraud, as pandemic drives criminals to come up with novel fraudulent schemes.

This should mostly come down to reexamination of data analytics strategies and the development of new approaches to proactively alert clients to potential fraud.

By the very nature of their occupation, criminals are opportunistic. As it becomes increasingly complex to navigate the cybercrime issues in the times of the pandemic, financial institutions, corporations, regulators, and policymakers need to work together to combat them. The recent International Fraud Prevention Conference that took place on April 21st, 2021, is definitely a step in the right direction.

– Financial institutions should implement dedicated systems that can detect suspicious account openings linked to loan applications such as through Paycheck Protection Programs.

– With ATO scams becoming more prevalent, e-commerce businesses need to deploy way more stringent authentication procedures. This especially concerns merchants, who were forced to shift their sales from physical stores to online channels.

Being in a rush, and new to the online business, security often comes as an afterthought. Advanced verification processes involving user behavior analysis and biometrics along with multi-factor authentication should become standard precautions.

Andrey Koptelov Innovation Analyst Itransition

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BANKING

Banking: making it accessible to the public The financial services industry has a notorious history when it comes to trust and transparent communication. The language used by financial institutions is often complex and unclear. This industrystandard has even received criticism in Hollywood blockbusters, as Ryan Gosling mentions in The Big Short “It’s pretty confusing, right?” Does it make you feel bored? Or stupid?”

While this has gradually changed over the years, there are still problems being faced.

This opacity of communication is felt by those using online services as well. According to research by TimeTrade SilverCloud, 70% of banking customers start with online

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self-service support but 87% say that it’s not working for them. That’s a significant portion of people that struggle to understand, and therefore access, online banking services.

However, in recent years, many have begun to recognise the importance of using more understandable language when speaking with people. As a result, incumbents need to take this opportunity to review how they talk to customers and make sure their bank is as accessible as possible.

The source of banking jargon The complexity of language in financial services – even in retail banking – has often stemmed from a lot of jargon. The financial

services community has historically failed to speak in simple language, with the complex terminology and abbreviations often only understood by the people in the sector itself. This has a very serious knock-on effect in retail banking, with customers who may buy financial products without properly understanding the risks that may be involved.

Retail banking is dealing with a broader pool of people with varying levels of comprehension so there is no doubt that many will be confused. As a result, it’s important that communication should be written with the lowest levels of understanding in mind.

BANKING

In the past this complexity has been less of a problem – the presence of physical banks and the popularity of brokers meant that any uncertainty could be clarified on a call or meeting. The popularity of advisers gave a ‘translator’ for the complex work of personal finance. But banking has changed.

Branches have closed on the high street and physical presence has reduced dramatically. Brokerages have changed to digital platforms, isolating those not comfortable with technology and removing the human interaction that can lend clarity. Unsurprisingly, COVID-19 and the subsequent lockdown has exacerbated this even further.

The digital switch The COVID-19 pandemic has sped up the shift from high-street to online banking. Many consumers have faced problems during this period.

While digital platforms have worked to improve accessibility for users, specific demographics have struggled.

Older users especially have faced difficulties when banking online.

With finances involved, there is an understandable fear associated with managing money on a digital platform.

This, combined with web design and UX that can often be confusing prevents users from fully going digital.

Fortunately, fintechs have set new standards on how to engage with customers online.

Challengers on the horizon The rise in challenger banks has arguably offered, a simpler and stress-free user experience.

These institutions have been able to build in an accessible UX, and straightforward technology right from the start, meaning that improving access is much easier compared with incumbents. Many of these brands also offer a clear way of explaining certain banking activities – with some even outlining their tone of voice on their website for improved transparency.

This trend has put increased pressure on traditional banking institutions to improve the way they connect and communicate with their retail customers. Banks are putting more emphasis on improving the user design on desktop and mobile sites. Alongside design and UX, readability has become crucial to delivering a simple and stress-free user experience.

Banking has been democratised as technology becomes more advanced and services increasingly move online. For established institutions to stay competitive, showcasing the same innovation and customercentric approach as challenger brands, they need to make sure content is not just well-written, but free from jargon, and understandable to everyone. Accessible content will help retain existing customers and appeal to a broader range of potential clients as well; ensuring that everyone who does business with an institution is fully informed and aware of what they are doing.

What incumbents can do As well as making the design visually appealing, in line with the look and feel of challenger brands, traditional banks need to make sure the content itself is written in plain English. This can hard to achieve. Bankers will naturally understand their own jargon, making it easy for institutions to think their own content is understandable.

However, the reality is that the average user will likely face problems in understanding the content written on the site. Financial institutions need to take a step back from their day-to-day operations and look at the content objectively. Where possible, having an impartial party – whether a consultant or piece of software – to review the site, will make sure the material is readable for everyone and not just those ‘in the know’.

Ryan Graham CTO Texthelp

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