Global Banking & Finance Review Issue 32 - Business & Finance Magazine

Issue 32

Climate Change Multiple solutions for the same goal: Leading the Fight against climate change Page 28

Putting Sustainability at the heart of investment strategy Page 32

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EDITORS LETTER

FROM THE

editor

Chairman and CEO Varun Sash Editor Wanda Rich email: wrich@gbafmag.com

Dear Readers’

Head of Distribution & Production Robert Mathew

Project Managers Megan Sash, Amanda Walker

Video Production and Journalist Phil Fothergill

I am pleased to present Issue 32 of Global Banking & Finance Review. For those of you that are reading us for the first time, welcome.

Graphic Designer Jessica Weisman-Pitts Client & Accounts Manager Chanel Roberts Business Consultants Rick Saikia, Monika Umakanth, Stefy Abraham, Business Analysts Samuel Joseph, Dave D’Costa Advertising Phone: +44 (0) 208 144 3511 marketing@gbafmag.com GBAF Publications, LTD Alpha House 100 Borough High Street London, SE1 1LB United Kingdom Global Banking & Finance Review is the trading name of GBAF Publications LTD Company Registration Number: 7403411 VAT Number: GB 112 5966 21 ISSN 2396-717X.

This issue is filled with exclusive insights from financial leaders across the globe.

In the race against the climate crisis, businesses are coming under increasing pressure to transition to green power supply. Many businesses are often unsure where to start with the transition. Take a look at some of the financial solutions available that help businesses begin the change on page 28.

As we approach the end of 2021, we take a look at the e-commerce trends we saw in 2021 and what we can expect to see in 2022 (page 12). Discover how the last 18 months have shaped adoption and use of accounting and financial software (page 20).

We strive to capture 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!

The information contained in this publication has been obtained from sources the publishers believe to be correct. The publisher wishes to stress that the information contained herein may be subject to varying international, federal, state and/or local laws or regulations.

The purchaser or reader of this publication assumes all responsibility for the use of these materials and information. However, the publisher assumes no responsibility for errors, omissions, or contrary interpretations of the subject matter contained herein no legal liability can be accepted for any errors. No part of this publication may be reproduced without the prior consent of the publisher

Wanda Rich Editor

®

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Issue 32 | 03

CONTENTS

BANKING Why younger generations are demanding ethical banks and what this means for the growing Islamic finance market

24

Eelco-Jan Boonstra, Managing Director EMEA, Mambu

46

From laggard to leapfrog How CEC Bank made the digital leap with Low-Code Adela Weiner, CEO, Aurachain

BUSINESS

12

E-commerce trends of 2021 and predictions for 2022 Dave Keighron, Head of Innovation and Professor of Marketing, Strategy and Entrepreneurship, University Canada West

26

Why raising startups takes more than just money Jayne Chan, Head of StartmeupHK

28

Multiple solutions for the same goal: corporations leading the fight against climate change Zharin Atanasov-Lankes, Financial Solutions Manager, BayWa r.e. Power Solutions GmbH

40

A visionary founder is not the same as a growth minded leader James Burgess Andrew Jones, CEO, Agility in Mind

04 | Issue 32

6 Driving Women’s Entrepreneurial Talent – From Mining To Longan Amret Microfinance Institution Oeurn Samon, longan farmer and one of Amret’s many successful clients

CONTENTS

TECHNOLOGY

16

Combating Financial Crime In The (Post-Covid)

Digital Age: New tools for new battles

INVESTING

10

Investment apps: a new era of investing for Gen Z Hamzah Almasyabi, CEO, MintedTM

Idan Keret, Chief Customer Success Officer, ThetaRay

20

Education, Integration, Cloud Adoption and COVID: How the Last 18 Months Have Shaped Adoption and Use of Accounting and Financial Software Dan Well, Founder & CEO, GrowCFO Chris Tredwell, Enterprise Business Development Manager, Aqilla

Putting sustainability at the heart of investment strategy Iain Ramsay, Chief Investment Officer, AHR Private Wealth

32

36 Cybersecurity Is Not A One-Stop-Shop

Rob Hancock, Head of Platform, Giacom Kelvin Murray, Threat Researcher, Webroot

50 Why Process Automation is the

key to unlocking potential in the finance industry Xanthe Bennett, Head of Business Solutions, Expleo

FINANCE

42

To Give Away your Life Savings, Press One… Barry Tuffs, Sales and Marketing Director, Invosys

16

Simplifying data architecture within financial institutions Jon Payne, Manager – Sales Engineering, InterSystems

20 Why Process Automation is the

key to unlocking potential in the finance industry

FINTECH

48 FinTechs, it’s time to grow up

– don’t be put off by the food chain Ivan Zhiznevskiy, CEO, 3S Money

Xanthe Bennett, Head of Business Solutions, Expleo

Issue 32 | 05

Driving Women’s Entrepreneurial Talent – From Mining To Longan

Oeurn Samon, longan farmer and one of Amret’s many successful clients.

Coming from a struggling second-generation farming family with original roots bound to the business of traditional gemstone mining in Pailin Province, Ouern Samon shares her life journey of transformation, accomplishment and success with us.

Q1. Tell us about yourself Married with two children, I am 33 years old and own a longan farm and trading business in Pailin. Starting with just two hectares of farming land, I now own a 13-hectare longan plantation in my hometown that distributes up to 10 tonnes of fresh longan every week. I was born into a traditional gemstone mining family. Although my parents were struggling financially when I was growing up, they managed to provide adequately for us during the mining boom. However, it all changed drastically when my father passed away unexpectedly in 1999. And being a widowed single parent, my mother had to shoulder the sole responsibility of supporting a family with two young children. Years later with the gemstone mining industry in decline, our family’s financial situation deteriorated to the point that on some days my mother was unable to generate any income at all. This prompted her to turn to farming in order to supplement the family’s meagre income derived from mining work as I turned 15.

Although my mother’s venture into farming provided our family with an additional source of income, it did very little to make a big difference. It all improved and changed for the better financially for the family when I got married and started a longan business in 2010.

Q2. What inspired you to start the longan business and what were the challenges faced in getting it started?

It all started when longan cultivation became popular throughout the Pailin provincial region about 10 years ago.

Despite having no prior experience in growing longan or having any connection to the industry, I saw a great opportunity in the business as a local trader. Being anxious and worried at first about investing years of hard-earned savings in a business I was unfamiliar with, I eventually cast all my doubts aside with the encouragement and support of my husband and started the longan business in 2010.

Longan Fruit It was really tough going for us at the beginning. I had to reach out to local farmers, negotiate a fair price and come to a purchase agreement for longan supply in Pailin as soon the trees started blooming while my husband established a distribution network at Phsar Neak Meas in Phnom Penh at the same time. Furthermore, wholesalers that my husband initially approached were either reluctant to stock our products or demanded to be supplied on consignment basis with better profit margins. And while we did not make much profit at the beginning, we persevered with these bittersweet challenges that taught us invaluable lessons in our business journey. Over time, we succeeded in building a loyal base of wholesalers that gave us the breakthrough opportunity needed to expand our business further. Having established a stable source of income, I was able to invest in acquiring trucks to lower logistics cost and purchase land to start a plantation of our own with financial assistance from Amret. This has enabled us to fulfill our wholesale orders on a larger scale with supply volume of 10 tonnes or more every week and also to meet additional orders over the festive and wedding seasons. What we have learned over the years in business is that we have to be prepared for many unforeseen challenges that lie ahead. Challenges that may come in the form of price fluctuations, unstable market demand and even rough road conditions that contribute towards affecting the profitability and bottom line of the business.

Q3. As a businesswoman with a family, how do you balance your time while focusing on running a successful business?

Managing an agribusiness is very demanding and often tiring at times. I have to set aside some time for my family while at ensuring I spend sufficient hours to business operational matters. I have get up at the crack of dawn every day to coordinate groups of labourers – usually two to three groups – and transport them to various plantations within Pailin province. Once this task done, I have to travel back and forth to every plantation to check that the fruit picking process is performed correctly to ensure the fruits harvested fulfil the quality expectations of our wholesale customers and prevent our products from being rejected. After harvest collection, I have to coordinate the transportation of labourers back to the warehouse while organising food to be prepared in advance for them for the following day.

Preparing tasks for the next day ahead of time, allows me to create time for my family. Running an integrated longan plantation and trading company is truly challenging. With the right planning and commitment, achieving the goals I have set for my business becomes both simple and rewarding. And at the end of the day, the greatest joy for me is seeing the smile of my children as I return home. It gives me the satisfaction and energy to perform my work and get me going every day.

Q4. What is the greatest ordeal you have faced since establishing your business?

2020 has been the toughest year for my business. In the wake of the Covid-19 pandemic, demand for longan has been considerably lower in comparison to past years. Social distancing measures practiced throughout the country have restricted festive and wedding celebrations that have contributed to falling sales volume. In addition, declining orders from the international market in the aftermath of the pandemic has also disrupted our business significantly. And this is clearly reflected in the ordering trend of our wholesale customers where orders have become irregular rather than daily as in the past. Our biggest concern at present, is the recent slump in prices for longan that has been felt by producers throughout the year. This has also been compounded by the obligation of our company to continue purchasing longan harvested from farmers. To mitigate this crisis, my husband and I have set up a warehouse to process the harvested longans to enable us to keep them fresh for two to three more days while we seek assistance from our network of partners to penetrate into new markets in Thailand. However, Thai customers are more demanding, their requirement for quality is significantly higher than that of the domestic market, meaning that only a few farms can meet their quality expectations. The quality of products is very important consideration for international markets.

Q5. What is your advice to young women who wish to venture into business?

Like any other businesses, to reach success, one must be committed, resilient, and bold enough to make difficult decisions when needed. Looking back 10 years ago when I first started, if it were not for my boldness, decisiveness, and devotion, I would not have achieved what I have today. My advice to young women out there who dream of venturing into business is to never give up during the rough times. You must be willing to go the extra mile to achieve their goal. You must always love what you do and success will come knocking before you know it.

Like the saying goes, if you love what you do, you will succeed in life! I would like to take this opportunity to thank my husband and mother who has always been very supportive of me in every step of the way to assist and guide me through this rewarding journey. Finally, I wish all the Cambodian business women great success and Samnang La’or in their business venture.

INVESTING

Investment apps: a new era of investing for Gen Z Facing uncertain career prospects and the rising cost of living, it’s unsurprising that the younger generation are taking their financial security into their own hands, by investing. This tech-savvy group of individuals are switching their attention to the new investment apps hitting the market, promising a safer way to make money and save for the future.

The investment market has recently seen a rise in fintech companies that are offering smarter solutions for the everyday investor. With a particular focus on cryptocurrencies and precious metals, new app technologies are changing the way people manage their money by offering a safer and more accessible alternative. Research carried out by precious metals savings app, Minted, found that 71% of 16–24-year-olds are now investing their money. Although Gen Z were already notably savvy when it came to digital banking and saving, data shows that the pandemic played a significant role in the increasing financial interest amongst this demographic, with over 60% choosing to start saving

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more and over half to start investing.

Precious metals, stocks and shares, and cryptocurrencies amount to almost 60% of total investments for this age group, making it clear that they are not afraid of exploring differing investment options.

The pandemic left many with feelings of financial uncertainty, but particularly the younger generation, who are now facing uncertain career prospects and the rising cost of living. With the rise of ‘finfluencers’ – financial influencers - social media also had a role to play in increasing the number of young investors. Terms such as bitcoin and dogecoin regularly feature on trending pages and TikTok and Instagram reels offer a plethora of advice on how to get started with investing.

The rise of digital banks such as Monzo and Starling have also shown that technology is making anything possible in the world of personal finance. Gone are the days when a physical bank is needed to support investing habits and thanks to the abundance of fintech companies

entering the markets, smarter investing and banking solutions, such as app investing, are now readily available. Offering users low entry costs and starting amounts, young people can delve straight into building their investment portfolio using just their smartphone.

One of the companies on a mission to offer young people a safe and convenient route into investing is Minted. Investing should be a viable option for the everyday person and young people should be able to invest their money where is matters.

Whether they’re looking to boost their bank account or build an investment portfolio of precious metals and cryptocurrencies, investing should be made accessible to all.

However, with any form of investment, a certain amount of knowledge is essential. The financial landscape is ever-changing, and markets can be volatile, so proper research and education into investment routes is vital to mitigate against any potential risks.

INVESTING

Hamzah Almasyabi CEO MintedTM

Hamzah Almasyabi is an investment platform which allows individuals to buy and sell precious metals.

Firstly, it’s important to be aware that each investment type has different levels of risk. Due to their volatility, cryptocurrencies, such as bitcoin can be considered particularly high risk, whereas investments into precious metals, such as gold and silver, could be considered a safer option, as they hold their intrinsic value. Undertaking prior research and having an in depth understanding of investment options is important.

Those turning their attention to modern investment tools such as apps should begin by undertaking thorough research into their chosen platform to gain an understanding of its credibility and the service it offers. Users should ask themselves what they are looking for from their investments and what their long-term goals are. Is it to make money quickly, or invest slowly over time for a more gradual financial growth? Are they looking for a physical product, such as gold? Establishing these goals and comparing them to

the app’s offering, can help ensure that the investor is making smart financial decisions that will benefit them and suit their situation.

The credibility of platforms is not to be overlooked. To understand how reliable the platform is, users should research how established the company is and what they reviews are from other investors and financial professionals. Being aware of any additional fees and details of the terms and conditions is also essential in preventing any nasty shocks further down the line.

For many young people, it may be their first step in the world of investment, so it’s important to start slow and build up experience. It is generally also good practice to spread risk by investing in different asset classes and industries. By setting up a range of smaller investments, rather than one large sum, users are better protected against substantial loss and able to build a wider investment portfolio. Another element to consider is affordability. Encountering financial

difficulty can lead to a number of problems down the line, particularly with securing loans from banks or lenders, so it’s important for users to be realistic about what they can afford to invest. Markets can change quickly, so not reacting rashly to a changing landscape is vital if a portfolio is to be managed effectively.

Thanks to the rise in investment apps and cryptocurrencies, investing has never been easier. As modern technologies continue to rapidly diversify, no one can say for certain what is on the financial horizon.

However, with all the tools needed to get started with investing, it is clear that the younger generation will play a significant role in popularising new and developing platforms, as well as challenging the stereotypes of what people invest in and how.

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BUSINESS

E-commerce trends of 2021 and predictions for 2022

The last two years have seen incredible growth for e-commerce, thanks in large part to the COVID-19 pandemic. As we enter the last quarter of the year, let’s look back at the trends we saw in 2021 and what we can expect to see in 2022.

Last year, e-commerce giant Shopify published a report outlining the five key trends e-commerce businesses should act on for 2021. Many other organizations and associations also identified similar trends within the e-commerce space.

Some of these key trends included: Increased online competition due to COVID-19 Over the past couple of years, we have seen unprecedented growth in the digital marketplace. We have heard e-commerce success stories of businesses that flourished as customers could not access physical stores. But we have also seen complete devastation for some, such as resellers unable to access products to sell through online platforms such as Amazon.

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As businesses scramble to meet the growing online demand and respond quickly to changes, we are starting to see cracks in business models that weren’t equipped to service customers in multiple places. This has opened the door for relatively unknown direct-to-consumer business models to seriously compete with long-established brick-and-mortar businesses that didn’t move quickly enough to meet their customers’ needs in an omni-channel world.

In 2022, businesses need to start or continue, to respond and be responsive to their customers' needs no matter where they are through a multiple channel approach. Customers are using different ways to interact and engage with retailers, and retailers need to adapt and build a multiple channel approach to meet customers' needs.

New consumer behaviours encourage retailers to make changes As more customers move towards online shopping, retailers need to adapt their businesses to improve the customer experience and increase engagement.

Jamie Ritchie, Head of UX and Design at the Digital Marketing Institute, recently talked about how the growth in online shopping has changed consumer behaviour, which means retailers need to adapt to meet the needs of these new customers.

“As digital marketing becomes more and more sophisticated, customers expect more from your brand,” Ritchie said. “The rise of e-commerce means purchase transactions are happening on your website every minute of the day and with that, customers expect to be able to connect with your brand at any point of their journey.”

However, for many businesses offering 24-hour support is a challenge. This is where conversational marketing tools, like Drift, and chatbots, like Intercom, can help fill that role and have subsequently grown in popularity in 2021.

“Being transparent that the customer is speaking with a ‘bot’ is important, and it won’t have a negative effect as long as the customer's needs are being met with well thought out conversation flows that are engaging and meaningful,” Ritchie said.

BUSINESS

Businesses also need to apply new technologies, such as augmented reality (AR), 3D images and virtual reality (VR), to create a similar experience to what a customer would have in a physical store. Retailers can use VR technology to create a virtual changeroom, 3D imagery to allow customers to see all dimensions of a product or leverage AR to show how furniture will fit into a customer’s space.

Leveraging these new technologies will not only improve the customer experience but will also lead to further engagement with customers, providing organizations with more data to help personalize the consumer experience and retain customers.

New demands to get products faster has made fulfillment a competitive advantage As technology advances, customers are becoming more demanding – not only do they want more convenient options to access products or services, but they also want it sooner.

Most customers surveyed today expect a minimum of a two-day turnaround in receiving their products or services. However, more and more customers expect to have their product delivered on the same or next day. This demand has led to more organizations looking at ways to improve and speed up their logistics processes. And more of these organizations are leveraging this potential into a competitive advantage over the competitors. Many large organizations, such as Amazon, Walmart and Best Buy, have diversified their business models to create new opportunities to provide logistical support to smaller retailers.

As more businesses move online, we need to start defining core competencies and how to best serve customers. It is next to impossible for small businesses to meet all the needs of customers. However, they can look to find strategic partners to help achieve these outcomes.

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BUSINESS

A customized experience and personalization are quickly becoming key components of building a brand

Increasing costs and new regulations around privacy prompt shift to focus on retention

For several years, marketers have focused on building an organization’s brand strategy through brand awareness, brand equity (brand name, logo, etc.), and brand sentiment (the underlying emotion expressed in a mention of a brand). All these practices are still relevant when it comes to branding, but there is now a new approach to customizing and personalizing a customer’s experience with a brand.

With the changing regulations around data privacy, Google’s plan to discontinue the use of cookies in 2022, and the increasing acquisition cost of digital advertising campaigns, more and more organizations and marketing professionals are looking for new ways to retain customers and leverage them to help acquire new customers.

Marketers need to work closely with consumers to personalize the customer experience through leveraging key internal and external data to better align the brand personality with the personalities of individual customers.

For example, Tesla allows customers to design their own vehicle, Nike and Adidas allow customers to design their own shoes and many fashion companies allow consumers to design and customize clothes.

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From launching new reward or loyalty programs to engaging customers with new products and services, businesses will need to get creative and find ways to continuously engage with customers and encourage them to participate to build long-term brand loyalty.

Dave Keighron Head of Innovation and Professor of Marketing, Strategy and Entrepreneurship University Canada West

HEADER

Megabank has created a platform that made it possible to make the necessary payments using a smartphone without having to visit a bank branch, in any convenient place and at any time.

Megabank serves a large number of utility bills of customers, which created the task to release a mobile application to meet customers’ needs. This is how the idea of launching todobank was born.

"The driving force behind the creation of products in the bank is customers’ expectations"

Issue 32 | 00

TECHNOLOGY

Combating Financial Crime In The (Post-Covid) Digital Age: New tools for new battles All evidence suggests that many changes made during the Covid-19 pandemic will endure.

Legacy banks and financial institutions that were forced to digitize in order to survive Covid now face associated challenges. With much of their data in the cloud and a significant proportion of their workforce operating remotely, they are more vulnerable to financial crimes than ever before.

Since the start of the pandemic, financial criminals have found increasingly innovative and daring ways to profit from a rapidly changing online business environment for which most businesses were not adequately prepared. Legacy AML systems created for the pre-Covid reality were programmed using predetermined rules that no longer apply. In order to tackle the new reality and the new wave of financial crimes, we need new systems, built from the ground up.

Unbiased AI is the answer. Because it is intuitive, adaptable, and acts much in the same way as human intelligence, it can learn normal patterns and spot suspicious behavior in any environment without needing prior programming. In the complex world of AML, where it is virtually impossible to anticipate what tactics criminals will dream up next, unbiased AI will ensure secure banking and financial services in the digital age.

So much so that even regulatory bodies are jumping on the bandwagon.

Irreversible changes Covid forced banks into what Deloitte coined “a digital arms race." Traditionally an industry rich in face-to-face interactions, banks began

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to spend billions on digital transformation to move in-house services online. In reality, Covid only precipitated a trend that had started prior to the pandemic. 83% of Generation Z consumers (born between 1997 and 2015) had expressed frustration with traditional banks and financial institutions before the pandemic and declared themselves as actively seeking alternatives. Since Covid, boomers (those born between 1946-55) have joined the fray becoming the fastestgrowing demographic in the online banking space. Once customers have experienced the convenience of a digitized banking environment, they are unlikely to return to the old ways, even after the crisis is over.

As fintechs rapidly gain market share, traditional banks are continuing to innovate, recognizing that they must prepare for a future where most of their services are digital and much of their data will be in the cloud.

It’s a jungle out there - the rise in financial crime Real-time payments and app-based banking are great news for customers, but they are a headache for the banks. Sophisticated criminal groups take advantage of new technologies and rapidlychanging conditions to carry out increasingly daring and complex schemes. The financial services sector is 300 times more vulnerable to cyber-attacks than any other industry, and 74% of banks and insurers experienced a rise in cybercrime since the pandemic began.

The following factors further exacerbate financial crimes in this sensitive era:

TECHNOLOGY

FinCEN breach The recent FinCEN breach supplied criminals with a goldmine of information to inform their nefarious practices. The leak exposed over 2,500 classified documents that banks had sent to the US authorities between 2000 and 2017. The contents of these documents included classified information about suspicious client activities. Unfortunately, the contents were leaked to Buzzfeed News, from where they were widely distributed throughout the world, revealing many of the international banking system's most closely- guarded secrets. The more insider information criminals have, the easier it is to find new ways to breach banks’ security protocols.

Remote working According to IBM, 54% of organizations required remote work in response to Covid. Remote workers must access sensitive information from their personal devices something that security systems were not designed for. Since the change to remote working happened so quickly and unexpectedly, many companies did not have the time to institute effective cybersecurity policies that deal with the weak points resulting from so many employees working from home.

BaaS The rise of banking-as-a-service (BaaS) has forced legacy banks to open up more application programming interfaces (APIs) for fintech and third-party app development. Banks and fintechs are increasingly granting third-party providers and fintechs access to their infrastructure and consumer data to develop new digital services.

This gives criminals yet more potential access points to sensitive banking data.

Cyber-attacks on the rise All kinds of cyber attacks on financial institutions have increased since the start of the Covid-19 pandemic: • • • • • •

•

Ransomware attacks: up 35% Phishing attacks: up 35% Mobile malware attacks: up 32% Insider threats were up 29% since 2019 Large-scale data breaches: up 273% in the first quarter of 2021 Nearly 1.4 million reports of identity theft were received through the Federal Trade Commission (FTC)’s IdentityTheft. gov website in 2021 Over 23,000 victims under the age of 21 fell victim to online scams in 2020, up 156% from just over 9,000 in 2017.

A broken system The rising level of online and financial crimes that are not intercepted reveal that something in the old system is broken. Most banks use some kind of AML solution but, as these systems were not designed for the current reality, there are flaws and inefficiencies which make them unfit for purpose.

Out with the old - Why firstgeneration AML systems are not up to scratch AI and machine learning are dedicated to making computers mimic human intelligence using data and algorithms to find ways to let computers “learn” and perform tasks without being explicitly programmed to do so.

Harnessed in the right way, AI and ML can detect suspicious behavior more reliably and faster than humans can, freeing up time and reducing the burden on personnel. Using these technologies will help to clean up an industry that has become a principal target for cybercriminals, making it safer for institutions and customers and providing a stamp of assurance that the institution that deploys the solution has the capacity to deal effectively with financial crimes.

Issue 32 | 17

TECHNOLOGY

AI and ML are also good news for regulators who are increasingly exploring the usage of these technologies for themselves and recommending them for the industry as a whole. As far back as 2017, The Head of Financial Crime at the UK Financial Conduct Authority (FCA), Rob Gruppetta highlighted AI’s potential to prevent financial crime and to improve anti-money laundering processes. Regulators are themselves adopting AI solutions to prevent financial fraud, detect and combat money laundering and terrorism financing, improve techniques for risk assessment and prevention, and make regulatory reporting more robust.

transitions that meet this criterion will be reliably raised, the system will completely miss smaller transactions, which may also be fraudulent.

Much of the fraudulent activity in today's online environment includes repeated events involving small amounts of money. To try and capture these crimes, the system needs different rules. The same goes for other criteria, such as blocking transactions to certain countries, using customer data to select accounts for additional monitoring, and categorizing merchant accounts based on prior transactions.

Significant shortcomings in the rulesbased approach include:

In all these cases, knowing what to "tell" the system to capture every suspicious event and transaction is complicated. More so because criminals constantly try to reinvent and upgrade their approach to make themselves undetectable to AML systems. Many of the rules-based systems currently used were not designed for the current reality and the added layer of vulnerability in cloud-based digital banking. This means that many financial crimes fall through the net and are not detected.

Not sensitive enough Rules-based AI will only flag up the problems they are programmed to spot in the rules that are fed to them at the start. For example, a typical rule might say, "any transaction over 10,000 USD should raise a flag." While all the

Too sensitive In a bid to try and capture more fraudulent activity, teams managing rules-based AI may be tempted to add more and more rules to the algorithm.

This creates the opposite problem where too many alerts are generated

Flaws in rules-based AI systems Most of the AML solutions on the market today are rules-based. While they can undoubtedly churn through high volumes of data and flag up any problems faster and more reliably than a human can, this doesn't mean they are effective at raising alerts for all kinds of financial crimes.

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- the most widely used AML solutions in banks today raise as many as 95% false-positive alerts. Each alert must be investigated in case it is genuine, which means employing personnel dedicated to carrying out these investigations. Much of their time and effort ultimately leads nowhere as so many alerts are false.

Banks today generate 400-600 times the volume of alerts than they did before the pandemic.

Hackability It is not difficult for a determined criminal to work out the underlying rules that form the basis of the most commonly-used AML systems and find ways around them.

A changed and changing world Most rules-based systems were created for the pre-Covid world and do not consider new realities (e.g., the mass shift to the cloud) or the fact that the fundamental behavior of the market has changed. As all kinds of cyber crimes have proliferated in the Covid era, it is clear that these older systems are no longer fit for purpose. They are based on logic and training that seeks to identify patterns that are no longer relevant.

To have any meaningful utility going forward, rules-based models would need to be re-written, retrained, and recalibrated, which will be expensive and heavy on resources.

TECHNOLOGY

Fortunately, there is a better way.

Start with a clean slate To protect themselves in the postpandemic reality, banks must recognize that banking of the future will be conducted primarily through web and digital channels and AML programs must be adapted to meet this change. This will undoubtedly involve modernizing technology and adopting new solutions.

Given the expense involved in recalibrating and redesigning rulesbased AML systems to suit the new reality, it doesn’t make sense to rewrite legacy programs. Especially as everything might change again in a few years.

What's needed is a much more versatile AML system - one that can adapt to current realities, whatever they may be.

Introducing intuitive AI A new branch of AI, known as intuitive AI, is presenting itself as the best solution to a rapidly evolving world. Intuitive AI is the result of years of academic research, and while not explicitly formulated for AML systems, its characteristics make it especially suited to the task.

Intuitive AI is based on unsupervised machine learning, which means that the way it processes data is unrelated to predetermined human rules and suppositions. Instead, it analyzes large chunks of data and "learns" for itself what is "normal" in the dataset. Because it derives its conclusions from the data itself and not from any information fed into the system by a human being, it can spot fraudulent activity much more reliably. What's more, it can effectively adapt itself to changing realities. All it needs is the data set, and it will make its own conclusions.

Idan Keret Chief Customer Success Officer ThetaRay

Results speak for themselves The results of this technology in practice are staggering. Used in detecting money laundering, 95% of the alerts raised were genuine. Even better, these systems highlighted suspicious activities that a rulesbased system could not detect because the crime scenarios were unfamiliar and could not have been known to the rule-makers.

Where to next?

Financial crimes are on the rise, especially in this new era of digital online banking. The best thing banks and financial institutions can do to protect themselves against fraud is forget about the past. What's needed is a fresh approach to new problems and a new system that can cope with

current (and future) realities. The solution already exists in the form of intuitive, unbiased AI, and the results achieved by these technologies in the battle against online fraud is incredible.

Innovation can be costly, and it can be a headache, but failing to innovate in a competitive and dangerous climate could be much worse. The new breed of AML tools can integrate with legacy infrastructure and allow banks to benefit from highly accurate fraud detection and virtually zero false positives from the get-go. The best practice is not to become paralyzed by over-analysis and inaction and start exploring these new solutions today.

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TECHNOLOGY

Education, Integration, Cloud Adoption and COVID: How the Last 18 Months Have Shaped Adoption and Use of Accounting and Financial Software

All figures quoted in this article come from the 2021 GrowCFO Finance Function Survey. The survey gathered the thoughts and opinions of finance leaders across public, private, and notfor-profit sectors in start-up, SME, Mid-Sized, and Enterprise organisations.

Cloud and Hybrid Working Uptake As we enter the final quarter in 2021, it seems an opportune time to look back on the last 18 months and take stock of how senior finance professionals have adapted to COVID — and the role accounting software has played over that time. Looking at GrowCFO’s most recent survey, it’s reassuring to know that 93% of respondents said they seamlessly adapted to remote working when the UK Government announced the first lockdowns — albeit in some instances with a couple of minor workarounds (7%). Only 1% said that they could not.

This is reflected in the fact that 70% of respondents now use cloud-based accounting and finance software, while 26% have onpremises solutions that allow remote access.

Just 3% of finance departments said they still used on-premises software that did not allow remote access. This marks a significant shift in attitude for a sector that has often been accused of conservatism when adopting new technology.

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However, one of the most profound results of the lockdowns was the unprecedented long-term, post-pandemic shift by finance leaders to home working — and the realisation that they could do their job effectively without needing to be in the office Monday through Friday. Indeed, 90% of respondents told us that they plan to adopt a hybrid way of working.

The Case for Even Tighter Integration The planned increase in hybrid working requires even tighter integration between accounting and finance software and other core business systems. Yet, according to our findings, there’s still a long way to go.

The most regularly adopted integrations are currently Expenses (21%), CRM (9%) and Reporting/BI (9%). However, financial teams are also starting to show early signs of integrating Robotic Process Automation, Banking, HR, Payroll Software, Optical Character Recognition (OCR), and Making Tax Digital. Looking ahead, accounting teams are planning to integrate their systems with other software across their organisations. Some examples include Advanced BI (41%), Workflows (39%), Mobile Expenses (33%), Cloud (33%), OCR (30%) and AI (29%).

TECHNOLOGY

It’s interesting to note that most current and planned integrations occur with applications outside of the traditional accounting function — but with those that still impact and influence the department. This speaks of a need for specialist best-in-class software for each part of a business, rather than an inter-departmental, one-sizefits-all approach that would undoubtedly lead to compromised functionality within each team. It’s also symptomatic of the evolving analytical role and strategic reach of financial departments.

Education is key Although the intention is there to take advantage of more advanced accounting software functionality, there’s still a lot of misunderstanding amongst some finance leaders about what their current software can actually do. Anecdotally we can tell you that, when quizzed about Sage50 in our survey, some professionals thought it was cloud-native, others thought it was an on-premises solution that was available remotely, and a third set said that it was an on-premises solution that did not have any remote access capabilities. The same disparity was present when we asked respondents whether their software could offer group consolidations.

This kind of confusion could have arisen because accounting software is not always updated as often as it should be. Most cloud software

provides regular free automated updates, but updates for some legacy solutions must still be done manually and be paid for. It’s worth noting that 50% of respondents said they receive automatic updates as part of their contract. But when a fee is payable, 20% of finance leaders will only apply the update if there’s a relevant functional improvement. The problem here is that it’s not always apparent at the time whether newly available functionality will be needed just a few months further down the line. Our advice, however, is that upgrades should always be implemented even if the purpose behind them isn’t immediately obvious. Remember that regular updates also include software and bug fixes that keep cyber defences current — and may offer enhanced protection from viruses and malware.

A Perennial Problem W hile som e positive c ha nge s to f ina nc e de pa r tme nts have c ome a bout due to COVID, som e pe re nnia l proble m s still ne e d to be re solve d, suc h a s the tim e it ta ke s to c lose m onth- e nd a nd c re a te ma na ge m e nt re por t pa c k s .

Some re sponde nts say tha t it ta ke s more tha n 1 5 day s to c lose out e nd- of - month, while othe rs c a n do it in a day. Sim ila rly, re sponde nts told us tha t c re a ting a mana ge me nt re por t pa c k c a n ta ke m ore tha n a we e k .

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TECHNOLOGY

From our experience in the field, finance leaders want to close monthend much more quickly, but they don’t believe there’s a solution to help achieve that. These results show that it is possible — but that it may require a change in accounting software or a refresher on the capabilities of the current solution. Either way, it’s becoming even more important to close the month promptly. This is because the world of finance is changing. It’s moving from a transactional-based role to a more analytical role. Boards are demanding more analysis and insight from their accounting and financial teams, and if it’s taking three weeks (as some respondents admit it does) to close each month-end, then financial leaders will struggle to find the time to deliver meaningful insights at board meetings.

Modern, highly automated accounting software is one way to achieve faster closeouts and develop more detailed analytical reporting — and the technology is there to help. But some financial leaders still harbour concerns about replacing their existing software. Respondents told us, for example, they’re concerned about potential disruption and the time it would take to install new software. Our survey revealed that the time varied considerably for those companies that did undertake an upgrade. Most respondents (36%) said it took less than a month, with just 5% saying it was more than a year. Although it depends on the size and complexity of the installation, our data indicate that in more than threequarters of cases, accounting and financial software can be replaced in under six months.

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Conclusion It’s clear from our investigations that there’s a significant disparity between finance leaders when it comes to getting the most from their current accounting software and knowing what to look for when they’re considering a change. They might not be quite ready for seemingly futuristic functionality like robotic automation and optical character recognition — and might not know the value and ROI of having those features available to them right now. But the reality is that all too often, accounting heads will look for a new solution that fixes old problems — and, as a result — can end up almost overnight with a new product that isn’t up to dealing with the latest accounting requirements. That’s why it’s crucial to find a software provider, reseller, or consultant with the knowledge, understanding, and stability to help on that journey and help get the best from whichever technology they choose.

Dan Well Founder & CEO GrowCFO

Chris Tredwell Enterprise Business Development Manager Aqilla

BANKING

Why younger generations are demanding ethical banks and what this means for the growing Islamic finance market In recent years, we’ve seen growing consumer demand for banks to become more ethical in their practices. But this is by no means a new approach in the world of finance.

Islamic banking, which is built on a set of moral and ethical principles aligned to the Islamic faith, has existed for decades.

Today, it’s one of the fastest-growing markets within financial services, estimated to be worth $2 trillion globally – with this figure set to reach $3.8 trillion by 2023. Driving this demand is a new wave of sociallyconscious millennial and Gen Z Muslims, who are expected to account for three quarters of Islamic banking revenue within the next ten years.

Tech savvy and socially aware As consumers continue to become more tech-savvy, this younger generation has grown up in a time of significant technological advancement. They have access to information in a way that previous generations have not, and this has shaped their view of the world.

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It’s now easier than ever to see evidence of poor corporate behaviour and unethical practices, which can have a damaging impact on consumer attitudes - as customers rightly seek to hold firms to account.

they must adapt to retain and attract new customers. This is especially important for young Muslims, given the impact that their faith has on all aspects of their lives - not least their financial behaviours.

Research from Mambu’s ‘Faith and Finance: The changing face of Islamic banking’ report shows that 75% of young Muslims want their banks to make investments that ‘do good in the world’. The figures represent a call for greater transparency and better governance from financial institutions.

When it comes to social responsibility, consumers are looking for companies to show them the efforts they’re making, not just tell them.

The accessibility gap

The younger generation in particular is gravitating towards banks that align with these ethical principles. If they want to attract this key demographic, it’s paramount that they are front and centre when developing new products and services.

It will be important for banks to understand that consumer expectations have changed and that

With 53% of young Muslims reporting that they would adopt Islamic banking if it were more accessible, Islamic banks must also address common barriers to entry.

These include a limited range of products and digital services compared to those offered by conventional banks. Such drawbacks are particularly challenging for millenials and Gen-Z consumers, who are more geographically and socially mobile than their parents and grandparents.

With nearly three quarters (74%) of young Muslims agreeing it’s important they can access banking services via a mobile app, modern Islamic finance services must be easily accessible on the go, anywhere in the world.

BANKING

Eelco-Jan Boonstra Managing Director EMEA Mambu

In fact, a further 76% of millenial and Gen-Z Muslims cite the availability of online banking options as a deal-breaker when it comes to adopting Islamic finance services.

It’s clear, then, the industry will need to embrace innovative technology solutions to remain competitive with conventional banks, as well as attract younger users to cement its future and reach its forecast potential.

Fintech disruption While the Islamic Finance sector is ready for disruption, its core ideals present a huge opportunity for financial institutions worldwide. A swathe of Islamic fintech businesses - financial technology firms focused on providing digital Shariacompliant services - have recently recognised this market opportunity.

Globally, the sector is estimated to be worth approximately £125 billion by 2025, with this boom in Islamic fintechs extending beyond Muslim-majority business hubs. The UK currently has 27 fintechs, catering to the needs of predominantly British Muslims; that’s more than the United Arab Emirates, which has 15 Sharia-compliant fintechs.

The growth of Islamic fintechs demonstrates the global relevance and promise of this industry, as well as a demand for an alternative financial system that is both ethical and accessible.

A Final Word Islamic banks that don’t act now to digitise their services risk losing customers to digitally-enabled competitors, especially as conventional banks also seek to develop ethical-led offerings in response to consumer demand.

This doesn’t mean the Islamic finance opportunity should be ignored. But the demand and expectations of younger generations must be met through rapid technological innovation that will be critical in supporting online and digital services.

Islamic banks have long paved the way for consumers to take an ethical approach to financial services. As younger users drive demand for value-led services, they have a unique opportunity to embrace digitisation and become the ethical market leaders in a cloud-enabled world.

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BUSINESS

Why raising startups takes more than just money COVID-19 has been a disruptor as it inspired radical changes to the way we live, work and interact with others.

There are many lessons to be learnt, such as the critical need for young enterprises to acquire the right skills in order to weather future storms.

That is one of the reasons why both the public and private sectors are called to invest in startups – not just in cash, but also in time, expertise and connections.

A wholistic community of players For startups to thrive, we need a wholistic community of players that involves universities, public and private enterprises, and governments.

In the last 80 years or so, universities have become key drivers in the startup scene. Silicon Valley, which, if it were a country, would be considered amongst the richest in the world with US$128,308 GDP per capita. The world’s foremost tech hub owes a large part of its success to Stanford University supporting and aligning its interest with tech companies and fostering entrepreneurship among its student body.

Nowadays, as the world is still struggling to wrap its head around the newly emerging COVID-19 variants, the role of universities is more important than ever in supporting startup development. According to a recent research by Youth Co: Lab, 92% of sampled youth-led enterprises in the Asia-Pacific region were set back by the pandemic as they failed

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to steer their businesses through lockdowns, changes in consumer behaviour, broken supply chains and credit crunch. On the other hand, some university-led entrepreneurship projects, including Oxford University spin-off Vaccitech, have achieved milestone success.

But how do we foster a culture of entrepreneurial behaviour? For universities, they need to provide an environment that defies the norms. An entrepreneurially-minded university sees learning as a reciprocal process where students contribute to the institution’s growth, and uses its network to connect students with the business world so that external entrepreneurs can provide funding, knowledge transfer, and mentorship.

Hong Kong, with five of its universities in the Top 100 of the QS World University Rankings, has a number of initiatives to support student entrepreneurship. The Entrepreneurship Minor Program at the Hong Kong University of Science and Technology is a perfect example, incorporating knowledge transfer, mentorship, competitions and funding. Meanwhile, the University of Hong Kong has introduced its latest Technology Startup Support Scheme, enlisting successful companies founded by its students, who may receive a maximum of HK$1.5M for up to three years. City University of Hong Kong, on the other hand, aims to create 300 startups in three years through its HK Tech 300 scheme.

Governments also need to play their part in identifying opportunities or gaps in its startup ecosystem, and develop appropriate policies to support the growth of the startups.

Regular review of requirements, incentives, and tax exemptions for young entrepreneurs should be on the card. Hong Kong-based startups, for example, are reaping benefits from the joint-policies in the Greater Bay Area.

A Hong Kong/Shenzhen Innovation and Technology Park is now underway, where innovators can connect across the border with reduced bureaucratic burden under the Memorandum of Understanding signed between Hong Kong and Shenzhen.

BUSINESS

The roles of enterprises: funding, knowledge and mentorship

Setting the stage for tomorrow’s success

For the next generation of startups to prosper, private enterprises should be open to deploying technology from startups which could give them an edge, and benefit the startups through hard to get sales in those early years.

Another way for big companies to help would be to create dedicated investment funds for empowering the next generation of entrepreneurs.

Here again, Hong Kong boasts a solid ecosystem, with large enterprises going the extra mile in supporting startups, be it the HK$1 billion Alibaba Entrepreneurs Fund, or the accelerator programmes by The Mills Fabrica, PwC and KPMG.

It takes a village to raise children.

In the same manner, a closely knit community of universities, entrepreneurs and governments will provide the right kind of environment and opportunities for startups to learn, to mature, and to flourish even in the toughest economic climate. We don’t know what tomorrow may bring, but we do know that our future starts with the choices we make today.

Jayne Chan Head of StartmeupHK

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BUSINESS

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BUSINESS

Multiple solutions for the same goal: corporations leading the fight against climate change

In the race against the climate crisis, businesses are coming under increasing pressure from investors and customers to transition to green power supply. Despite the urgency, corporations must ensure that the purchase of electricity from renewable sources is competitive and reliable. For this reason, flexible financial solutions that do not require initial investment – and ultimately do not put pressure on a company’s line of credit- have gained popularity in the corporate world in recent years.

The benefits of these financial solutions are multiple, but often businesses are unsure where to start with the transition to green energy.

There are multiple routes that corporations can take to reach the same goal: making a positive contribution to the fight against climate change, without impacting financial results.

Power Purchase Agreements (PPAs) PPAs are an increasingly popular model for companies that wish to obtain energy from renewable sources, such as wind or solar. It is a contract between a company and an energy producer to buy energy– at a pre-agreed price and for a specified period of time. The agreement stipulates the commercial terms of the sale of electricity: duration of the contract, point of supply, delivery times, volume, price and product. Electricity purchased through a

PPA can come from power plants located either outside of the customer’s property (off-site PPA) or on-site (from a newly built project).

This model allows the customer to pay only for the electricity consumed without initial costs or risks associated with ownership. In this case, it is not necessary for the client to manage the operation and long-term maintenance of the system, as these services are covered within the PPA. This type of contract makes it easy to plan and forecast within a given timeframe.

Finance Lease (Lease) Another route for corporations is leasing, a financial solution that allows the integration of renewable energy as a means to generate electricity for business operations, without the need for initial investment – and without putting pressure on the bottom line. Per the requirements of the leasing model, the company is charged by monthly rates, until ownership of the renewable energy plant is transferred at the end of the lease. Within the contract, the cost is predictable and adjustable to inflation levels. Leasing contracts are shorter and more flexible in comparison with the PPA model and in general much more straightforward.

Another advantage is that under most standard accounting practices, the customer can claim depreciation of the asset.

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BUSINESS

BayWa r.e.’s financing solutions are offered through third party leasing providers. Contracts can be extended or the terms modified. In any case, clients are advised throughout the negotiation and signing process. In short, a leasing option can be a way to save on a company’s electricity bill while maintaining total control of its level of investment, including the individual customization of specific terms and conditions required by the client.

Operate Lease (Renting) A further option for companies committing to green energy is Renting, very similar to the previous model of Leasing, however with an important difference: the customer does not automatically end up owning the asset when the contract ends and as such under some circumstances, assets under renting may not appear on the balance sheet of the customer.

Additionally, the costs associated with this model can be fully recognized in the company’s income statement as operating expenses.

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Direct Investment (EPC [EngineeringProcurement-Construction] project) Finally, the customer has the option to directly invest in their renewable energy solution tailored to their specific needs – be it PV-based roof-top, ground-mounted, a carport including e-mobility and a battery storage solution – or even a floating installation if a suitable water surface is part of the area in question. Another long-term benefit for businesses is the reliable generation of green electricity for the owner. Of course, such an installation requires an initial investment, yet mostly with overaverage payback times.

Going Green A company wishing to transition to renewable energy solutions – without taking the risk of a long-term investment – is in the right place when considering one of the described options and the benefits derived thereof.

With exactly those benefits in mind, many innovative companies of today are now accepting the challenge of being part of the energy transition, aware that a forward-thinking and proactive strategy can unlock the full potential of a green business and significantly increase value.

Zharin Atanasov-Lankes Financial Solutions Manager BayWa r.e. Power Solutions GmbH

INVESTING

Putting sustainability at the heart of investment strategy Investing in a socially and environmentally responsible way is not new. For decades, those in the financial services sector have known that to help tackle the issue of global warming and irreversible climate change, we need to hold businesses to account for their carbon footprint. So often, cash is king, and diverting investments to businesses and sectors which favour environmental responsibility is the best way to show a desire for change.

The search for sustainable investment opportunities has also recently been accelerated by the coronavirus pandemic.

More than half of investors today are likely to take sustainability into account when making investment decisions.[1] A combination of banks, insurers and investors – worth in excess of $130 trillion vowed to put tackling climate change at the heart of their efforts, in a bid to align with global net-zero pledges and climate considerations.[2] This is just the latest in a long line of industry and governmental policy changes that reflect the need for environmental accountability.

However, for the everyday investor, understanding how to navigate the often complex world of bonds, equities, derivates and many other asset classes can be hard enough, let alone knowing which are also genuinely sustainable. Creating an investment strategy that prioritises sustainability, social responsibility and ethical standards demands specific knowledge. It should also rely on solid investment principles, but currently these waters are muddied.

Currently, there is no standard measurement for the ESG performance of investment opportunities and this creates challenges for investors, as well as the advice professionals that serve them.

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INVESTING

Greenwashing is the newest buzzword and it’s only going to fall further into the limelight Cutting through the noise to offer value At its core, sustainable investment portfolios should demonstrate a commitment to sustainable business practices and positive impact. However, as with any other type of investments, understanding investor’s needs and values is essential to building a portfolio that offers relative value.

As such, a key part of providing ESG aligned advice is primarily, a deep understanding of client objectives in relation to sustainability goals.

Advisers should start by establishing what their clients’ interests in sustainability issues are, and how these can connect to investing objectives, so that they can in turn provide a clear outlook of what the ESG portfolio could look like.

Additionally, whilst some clients might wish to simply employ a screening for companies that have strong ESG scores by using third party sites, others will want to actively seek companies that are positively contributing to global sustainability in areas such as renewable energy and gender diversity. Some funds which pledge to do ‘no harm’, will instead screen out companies breaching any environmental, social and governance principles such as those in the tobacco or fossil fuel industries. Those objectives will result in a very separate criteria for investment selection and may impact risk management and investment performance objectives differently.

With a clear understanding of the goals and requirements of their clients, advisers can offer more tailored advice. However, they should also do this with a view to build a long-term relationship. Increased regulation and widespread awareness about sustainable investing is only going to continue on an upwards path and this will help both advisers and clients to understand more clearly the sustainability criteria of their selected investment products. As a result, companies marketing themselves as ‘ESG’ focused, and who have no clear ESG mandates are likely to get rapidly caught up by regulations such as the EU Sustainable Finance Disclosure Regulation (SFDR).

Finding the true value of green bonds and ethical investments The other side of the coin from understanding just what clients mean when they say they want to ESG optimise their investment portfolios is knowing where to find such assets.

The financial value of sustainable investments has long been questioned, however, ethical funds have regularly performed well compared to other funds and continue to do so, with Morningstar reporting that over 50% of sustainable funds had performed better than their traditional counterparts in 2020.

This is partly due to the fact that those funds were less exposed to the sectors which struggled during the pandemic. A good example of the correlation seen between ESG principles and fundamental investment criteria, is the fact that

Iain Ramsay Chief Investment Officer AHR Private Wealth

those companies with effective corporate governance tend to deliver greater shareholder returns over the long term. Companies that have strong ESG criteria also have strong fundamentals that would traditionally qualify them as attractive investment opportunities, and advisers can therefore combine the two to deliver effective client outcomes.

Advisers also have various processes available to them to go about finding the right fund for their clients, including the introduction of thorough investment screening processes alongside any sustainability screening processes to ensure returns and value remain a priority. In addition to that, better-run companies also tend to be more robust in the face of potential scandals or market volatility. By helping investors develop long-term aspirations in line with their values and by guiding them through the right screening processes, advisers can strengthen clients’ portfolios with stronger and more purpose-driven investments.

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2021

FINANCE

To Give Away your Life Savings, Press One…

Caller identity fraud I am sure each one of us will either have directly experienced a fraud attack or know somebody close who has been a target. Attacks of this nature can range from a single unrecognised transaction on a credit card or a dubious claim on an insurance policy, right through to a full-on emptying of a bank account. Thankfully, in many instances, it is the provider who ultimately incurs the loss, but not without significant disruption for the victim. In every case, the victim will be left scratching their head, wondering where they exposed their details to the criminals or which of their past transactions was used to harbour the information.

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FINANCE

While these criminal occurrences appear to be a one-time ‘hit-andrun’ event, it is often far more than a straightforward data breach that enables highly organised gangs to commit the fraudulent act. The mining and piecing together of the victim’s data can take many months and thousands of attempts to gather the information necessary to carry out the attack successfully.

Data mining Data mining, or data farming, typically begins with a snippet of information that becomes available either in the public domain or for a fee on the ‘Dark Web’.

This information may have been released from a previous mass data breach or from details gained via an unscrupulous third party. But wherever the details came from, they are unlikely to be sufficient to commit fraud. It is not a difficult task to use the various social media channels to discover somebody’s date of birth, pet’s name, mother’s maiden name, children’s names and birthdays — all among many other details people tend to incorporate into passwords or set as answers to their security questions.

However, we have all had texts, emails and voice messages alerting us to activity on an account or with an agency we have no association with.

The fraudsters send out these alerts across various mediums, sometimes with a scatter-gun approach, hoping

that the random recipient opens the message and clicks the link that takes them through to a web page or data capture form purporting to be associated with an organisation they have a relationship with. Here, the sole aim is to obtain as much personal information as possible by the victim disclosing it in full.

Yet, it is likely that the alert message was not completely random. A contact number or email address may have been leaked along with the client reference (account number or customer code). These messages requesting a call to action can be far more targeted. Messages from several similar organisations are sent over a period to target the victims using different methods. If a potential victim responds to one message and not others, the fraudsters can creep closer to knowing where to focus their efforts.

Criminal gangs often use their target organisation’s interactive voice response (IVR) or telephony menu as their tool of choice.

The self-service systems allow the fraudsters to go about their data mining totally unnoticed. Multiple attempts can be made to enter a valid customer ID number or account code without the victim ever becoming suspicious. Of course, some systems can look out for recurring calls from the same number, but the crime syndicates are becoming ever more technically advanced.

Undoubtedly, the move to IP-based telephony has lowered costs, increased resilience and enabled an almost endless list of possibilities, but not without added concerns.

Traditionally, enabling a caller to speak to somebody at their desired destination was only possible because of a continuous connection on the copper network between the two specific endpoints. As more modern technology effectively uses the internet to transmit phone calls, there is far more going on than the simple passing of sounds from end to end.

Before the call connects, certain criteria need to be met to satisfy both the networks and the end devices.

The criteria are verified within the data element of the call, like a kind of digital footprint.

Readily available technology now exists to manipulate the ingrained data, altering the very core of the call. As a direct result, fraudsters can present a different telephone number with every call they make, even if it originates from the same device.

They can even go as far as presenting a genuine customer telephone number, which may be all the proof the organisation needs to pass the first line of security and gain access to basic client information or the next set of virtual locks. Changing the presentation number of a call in this way, when done for genuine reasons, is known as ‘CLI Flexing’. Instances of presenting different numbers with deceitful motivations are known as ‘spoofing’ — and it happens alarmingly frequently.

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An increasing problem During the pandemic, many businesses had to change the way they operate, with many departments working from home or even closing with employees on furlough. Potentially, this shift to remote working drives more incoming enquiries into businesses’ automated systems. Many companies will choose to retain their new practices to reduce the size of their workforce and lower ongoing costs. Unfortunately, higher call traffic and automation has given the criminal groups even more cover to go about their business. If call volumes have increased anyway, organisations will be oblivious as to whether the increase is from genuine callers or thanks to calls of a less desirable nature.

Have you heard of the infinite monkey theory? This hypothesis says that if you give enough monkeys a typewriter each, one will (eventually) inadvertently write the full workings of William Shakespeare. Many others will come close, perhaps with just a single spelling mistake. It is a similar challenge with fraudsters. If they make enough attempts to an unmonitored IVR system, they will eventually get a correct combination.

The fraudsters do, however, have a head start, as they only have ten digits at their fingertips rather than twenty-six letters (plus punctuation).

By removing any combinations that are known to be invalid, the target becomes easier to locate.

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Automated diallers will be doing the vast majority of the ‘monkey work’ and will be programmed to identify the different IVR responses for recognised numbers. This work determines with which institute or business the initial pieces of information are associated.

It is not uncommon for an automated system to give out an account balance or order status update based on the caller’s number being recognised, along with a valid account code or client ID entered on the keypad.

All this information helps to piece together the jigsaw of where and when to focus the efforts of the fraudsters.

The last thing the fraudsters want at this stage is to be put through to an actual agent. They are happy camping out in the IVR, untangling the data.

The reality is that I may have just been connected to a three-way call, where the fraudster is already on a call within my provider’s IVR. Once connected, the fraudster sits silently listening to me key in my security codes and answer my ID checks. Then, just as I am being connected to the right department, the fraudsters disconnect my leg of the call, leaving them to speak to the agent and do whatever they like, such as change my PIN, reset my online password or transfer a large amount of funds. The criminals will call me back (do not forget — they can present any number they choose to), apologise for the call dropping and tell me there is nothing to worry about, before wishing me a good day.

It could be months later when the actual fraud causes a loss to take place, but there are scenarios where the fraudsters can act much quicker.

Although this type of crime is more prevalent within the financial sector, there are many other industries where fraudulent phone calls will be occurring. But how many and how often is incredibly hard to say.

Have you ever had one of those calls with the digitised voice, asking you to ‘press one’ to be connected to your bank? I always hang up but do often wonder what would happen if I did press the relevant button. My guess is that I would be asked to enter a security number using the phone’s keypad and somebody, or something, would record the tones and decipher my code. However, there is a chance I would be connected to the genuine organisation and its automated menu system, albeit not directly. There is a reasonable chance I would not notice anything amiss.

Two factors combine to impede quantifying IVR fraud. Firstly, there is the fact that any attack on the IVR usually precedes the actual fraudulent transaction, which could have been the result of hundreds of mining attempts. So, any data analysis is retrospective and potentially ambiguous.

Secondly, any organisation affected

by IVR fraud will be extremely reluctant to publicise facts and figures. The Telecommunications UK Fraud Forum (TUFF) suggests that affected businesses should share best practices and highlight their own weaknesses to other similar businesses. TUFF also recognises that admitting to these shortcomings could be the worst kind of publicity, so many businesses will keep their findings to themselves.

FINANCE

As an ever-increasing number of companies strive to minimise their costs and working remotely becomes the new norm, the IVR and connected automated services will only continue to grow. It is, therefore, imperative that businesses and their customers have the utmost faith in the technology they are accessing or providing.

Any business found to be in breach of the rules faces potential penalties of 4% of their turnover or €20 million.

Why should my business care?

Thankfully, whilst fraudsters may be creative and bold, they are also often lazy. They will always go for the easiest of wins. Which is why the scam emails we all receive usually contain spelling errors or grammatical mistakes that are obvious to most people. They do not want everyone to respond and waste their own time taking a target down a route that they will eventually realise is not what it seems. They want the more easily led. It is for this reason — fraudsters choosing the path of least resistance — that organisations operating phone systems need to be aware of this type of activity and look for ways to combat it.

Whilst this type of activity is most prevalent in the financial sector, any business operating a telephone system could be a target. The opportunities for thieves to prosper from presenting themselves are endless.

On the 25th of May 2018, the EU’s GDPR regulations came into play, making organisations take much more accountability for how they handle any customer’s personal information.

Personal data is described as follows: • • • • • •

∙ ∙ ∙ ∙ ∙ ∙

Name Home address Email address Bank details Medical information A computer’s IP address

This kind of fraudulent activity has serious implications for individuals and organisations alike. It is big business for criminal gangs. How big?

Nobody really knows.

So, if your business holds any of that information about a customer and it is distributed over the phone, whether automatically or by an employee, you would be breaking the law if it is given to an imposter.

The laws state that any data breach must be disclosed by the affected organisation within 72 hours of being made aware of the contravention. Of course, there is the ability to plead ignorance as you could be unaware for an undefined period, or even indefinitely. But consumers are far less likely to do business with an organisation that is non-compliant.

Barry Tuffs Sales and Marketing Director Invosys

Issue 32 | 39

BUSINESS

A visionary founder is not the same as a growth minded leader

Private equity investments are made with the belief that the core value proposition established by the original founders is sound and can be scaled. Yet too many investors looking to scale companies fail to reckon the fact that it is not just about value proposition. Faith in the skills and abilities of the organisation’s leaders are paramount. Making an assessment regarding the experience and capabilities of leadership to undertake a period of growth, that will deliver and support the proposition at scale, is a challenge that must be met.

Ultimately, a willingness to identify and resolve growth pains and reckon with the fact the initial assessment contains errors, is important. Not all investments go to plan, and, at some point, it might become clear that the leadership of the organisation does not quite have what it will take to grow a business. Yet a responsiveness to this issue is often hard to come by, particularly when investors are captivated by the vision of company from which it can be hard to detach its founder or leader.

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Identifying the skills required to scale a business Ensuring a responsiveness to this challenge requires investors to first identify what skills are required in the leadership of an organisation attempting to scale. Investors must put in place mechanisms such that timely actions can take place when these skills are absent. This does not always require a top-down change of leadership. Continuing to draw upon the insights and creativity of the creators and founders while quickly establishing scalable practices throughout the organisation is certainly an achievable and desirable goal. The important point is that investors understand how they can align growth-minded leaders with the initial spark that made the investment attractive. This is something that has become apparent through the numerous interventions Agility in Mind has actioned in growing companies.

Over the past decade, our experience working with businesses of varying sizes, and across a multitude of

sectors, has shown that the goal for company leadership in the scaling phase should always be to create a working model that delivers on the promises made to customers and shareholders. We have observed the challenges successful founders face when they receive the investment support required to scale up the proposition and exploit greater market opportunities. Regularly, our analysis leads us to bring attention to the fact that founders are often passionate about their proposition, insightful of their industry domain, creative in their approach and expert in selling the concept to others. However, they often lack the experience to build an organisation fit to deliver growth.

One example is our work with an organisation that created a platform to support clinical trials - a growing market with drivers to improve efficiency and rigour, helping pharmaceuticals achieve returns while remaining safe. There was a perceived problem within their engineering function which was a crucial to bring their technological solutions

BUSINESS

Andrew Jones CEO Agility in Mind

to market. It was, however, not immediately clear why they were not able to achieve the promised date for product launch and why there was no visibility on progress. This was also causing disappointing results in other departments such as sales.

Our analysis of their engineering approach showed that there were clearly areas of discipline, rigour and collaboration that needed to be addressed. But most significantly, we saw the desperate need for new leadership – something which can be underestimated by those looking to scale an organisation.

The founders of this particular organisation faced fundamental questions about their roles and experience leading a product-centric organisation through the growth phase. There was a clear void within the product management function and a lack of alignment with the overall strategy of the company - areas they were specifically responsible for.

Changes were needed, and urgently.

Reckoning with growth pains In pointing out these areas to the founders and their backers we brought home the reality that alterations were required from leadership through product and across engineering, to align market needs with investments in technology. They needed experienced insight into how to build a company that remained creative but also focused on the ultimate objective.

Growth. The interventions we made brought this and, in the matter of just a few months, the business was transformed. The founders were placed in roles they could excel at, new leadership was put in place and effective engineering practices established. This speaks to a broader point about the nature of private equity investments.

Private equity businesses buy undervalued or underperforming private companies, improve their performance and sell at a profit at a later stage, on average 5.9 years later.

There is nothing new here, but it is worthwhile to point out that if we can reduce that time by 50%, returns are made on that initial investment twice as quickly. Although due diligence takes place prior to an investment,

the realities revealed at growth stage are often hard to capture.

Investors are so often captured by the passion, creativity, and drive of the founders, not the realities of their capabilities when challenges arise.

These challenges are revealed by the process of growth itself. Investors must position themselves to make rapid interventions where necessary rather than accepting the high failure rates of investments in digitally enabled companies, which can be as high as 70%, investors should plan for interventions at the point of acquisition.

Ensuring a flexible approach at the top of a growing company, and transparency in process at each composite level, will help a business overcome the challenges of growth pains. In many ways this flexible mindset applies not just those looking to maximise profits from a company they have invest in. It also highlights how instilling a trajectory of growth requires a culture of evidence-based management where all changes are scrupulously examined based on their potential value. Only then will a trajectory growth be truly embedded in an organisation.

Issue 32 | 41

TECHNOLOGY

Cybersecurity Is Not A One-Stop-Shop Since the start of the pandemic, the way business is conducted has changed permanently, with many workforces continuing to work remotely as restrictions have eased. As companies relax and rules have eased, life is expected to return to a form of ‘new normal.’ But, the issues around cybersecurity are here to stay, and the gas pedal must not be eased – especially with the increased risks associated with continued remote working.

If anything, security should be more reinforced now than ever before to ensure all aspects of a business are secure. But this isn’t the case.

Rob Hancock, Head of Platform at Giacom and Kelvin Murray, Threat Researcher, Webroot, detail the importance of embedding a trilogy security approach into organisations, and this is where a strong CSP/MSP relationship can be invaluable.

to change the working landscape. With indoor spaces back open, employees will want to venture out to new spaces to work, such as coffee shops and internet cafes – but working on open networks and personal devices creates unlocked gateways for cyberattacks to take place. Since this hybrid and remote way of working looks like it’s here to stay, businesses must ensure they have the right infrastructure in place to combat any cyber threats.

The Risk Grows

For instance, research by the National Cyber Security Centre shows that there has been a rise in COVID-19 related cyber attacks over the past year, with more than one in four UK hacks being related to the pandemic.

This trend is not likely to ease up any time soon either. And, going forward, hackers could take advantage of excited travellers waiting to book their next holiday, deploying fake travel websites, for example.

Despite lockdown restrictions easing, cybersecurity risks remain and are likely to grow as COVID-19 continues

Aside from the bad actors in this wider scenario, part of the problem here is that many IT teams are not making

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use of a holistic and layered approach to security and data recovery; which can lead to damaging consequences as data is stolen from organisations.

Such issues continue to resonate strongly across businesses of all sizes, who will, therefore, turn to their MSPs for a solution.

The Importance of a Layered Approach Cybersecurity is not a one-stopshop. A full trilogy of solutions is required to ensure maximum effect.

This includes a layered combination of DNS networking, secure endpoint connections, and an educated and empowered human workforce.

The need for DNS security cannot be ignored, especially with the rise of remote workforces, in order to monitor and manage internet access policies, as well as reduce malware.

DNS is frequently targeted by bad actors, and so DNS-layer protection is now increasingly regarded as an essential security control – providing an added layer of protection between a user and the internet by blocking malicious websites and filtering out unwanted material.

TECHNOLOGY

Similarly, endpoint protection solutions prevent file-based malware, detect and block malicious internal and external activity, and respond to security alerts in real-time. Webroot® Business Endpoint Protection, for example, harnesses the power of cloud computing and real-time machine learning to monitor and adapt individual endpoint defences to the unique threats that users face.

However, these innovative tools and solutions cannot be implemented without educating users and embedding a cyber security-aware culture throughout the workforce.

Humans are often the weakest link in cybersecurity, with 90% of data breaches occurring due to human error. So, by offering the right training and resources, businesses can help their employees increase their cyber resilience and position themselves strongly on the front line of defence.

This combination is crucial to ensure the right digital solutions are in place – as well as increasing workforces’ understanding of the critical role they play in keeping the organisation safe.

In turn, these security needs provide various monetisation opportunities for the channel as more businesses require the right blend of technology and education to enable employees to be secure.

The Channel’s Role Businesses, particularly SMBs, will look to MSPs to protect their businesses and help them achieve cyber resilience. This creates a unique and valuable opportunity for MSPs to guide customers through their cybersecurity journeys, providing them with the right tools and data protection solutions to get the most out of their employees’ home working environments in the most secure

ways. Just as importantly, MSPs need to take responsibility for educating their own teams and clients. This includes delivering additional training modules around online safety through ongoing security awareness training, as well as endpoint protection and anything else that is required to enhance cyber resilience.

Moreover, cyber resilience solutions and packages can be custombuilt and personalised to fit the needs of the customer, including endpoint protection, ongoing enduser training, threat intelligence, and backup and recovery. With the right tools in place to grow and automate various services – complemented by technical, organisational and personal support – channel partners will then have the keys to success to develop new revenue streams too.

Rob Hancock Head of Platform Giacom

Conclusion Hackers are more innovative than ever before, and in order to combat increasing threats, businesses need to stay one step ahead. Companies must continue to account for the new realities of remote work and distracted workforces, and they must reinforce to employees that cyber resilience isn’t just the job of IT teams – it’s a responsibility that everyone shares.

By taking a multi-layered approach to cybersecurity, businesses can develop a holistic view of their defence strategy, accounting for the multitude of vectors by which modern malware and threats are delivered. Within this evolving cybersecurity landscape, it's essential for SMBs to find an MSP partner that offers a varied portfolio of security offerings and training, as well as the knowledge and support, to keep their business data, workforces and network secure.

Kelvin Murray Threat Researcher Webroot

Issue 32 | 43

FINANCE

Simplifying data architecture within financial institutions Banks and financial institutions collect, store, and manage enormous amounts of personal data, from names and addresses to rich insights on payment transactions. To protect sensitive data and ensure it is used and shared appropriately, they have to adhere to strict regulations. However, data governance is something many still struggle with.

More often than not, the reason for this lies within the IT infrastructure itself. With disparate systems scattered across different departments, financial organisations find themselves struggling to bring all the necessary data together for analysis. With many of these systems holding differing or duplicated information on the same customers, it is nearly impossible to build a full and accurate picture of the customer and of data across the enterprise. This results in the inability to collate the most up-todate information and achieve a 360-degree view of a customer, possibly exposing the risk radar to false negatives and not flagging for enhanced due diligence. Struggling with Know Your Customer (KYC) initiatives, financial institutions can also find themselves unable to understand and deliver the types of products and services that will most resonate with their customers, losing competitive edge as a result.

It should, therefore, be a priority to find the best way to simplify the data architecture in order to gain a single source of truth. By utilising the latest technologies, financial services firms can benefit from up-to-date, accurate and consistent information that they can use to better inform their future decisions.

Simpler access to data To overcome the ever-present data governance challenges, enterprise data fabrics could be the answer. This is an emerging architectural approach which speeds and simplifies access to data assets

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across the entire institution. It accesses, transforms, and harmonises the data from multiple sources, on demand, making it usable and actionable for a wide variety of applications.

Smart data fabrics takes this initiative one step further by embedding a wide range of analytics capabilities, including data exploration, business intelligence, natura language processing and machine learning directly within the fabric. This makes it faster and easier for financial institutions to gain new insights and power intelligent predictive and prescriptive services and applications.

Another benefit of a smart data fabric is that it allows data to remain at source. That way financial institutions can maximise the value from their previous technology investments, benefitting from new functionality and flexibility at the same time.

Implementing this technology will make data more accessible from a smaller number of places, which will allow financial firms to gain the agility required to enhance data governance and operational efficiency.

With a more connected ecosystem, the sharing of data will also become more seamless and, when using the right data platform technology, more secure.

Better data practices The use of smart data fabric will help financial organisations overcome many complex data management and data governance challenges by streamlining their data architecture. It can help them better understand data lineage to ensure accurate, complete and trustworthy information is being used to drive important decisions. In addition, it can give them greater controls and visibility over who uses the data and for what purposes. Poor data governance can put the whole institution at risk, therefore, these capabilities can’t be overlooked.

FINANCE

Gaining agility

The possibilities ahead

Simplifying data architecture will also help financial organisations gain agility to rapidly evolve to changing market trends and future-proof their operations.

After all, simple systems are far easier to understand, use and adapt than those made up of hundreds of different applications dispersed across many locations. The need to gain this agility has certainly become more prominent as a result of recent global health emergency and will allow financial services firms to better respond to everything from changing regulation to customer demand and market volatility in the future. It will also help keep on top of regulatory compliance by ensuring high data quality.

As financial firms turn their attention towards implementation, it is worth working closely with experienced technology providers to make the best use of various data management, integration and analytics technologies that make up a smart data fabric.

This will go a long way to not only help financial services organisations improve their data governance, but also security, speed and agility to future-proof operations and offer better customer experience.

Jon Payne Manager – Sales Engineering InterSystems

Issue 32 | 45

BANKING

From laggard to leapfrog How CEC Bank made the digital leap with Low-Code

According to research by Cornerstone Advisers, many banks still have a “long, long way to go” to reach their digital transformation ambitions. Its recent study found that just around one quarter of banks and credit unions had launched a digital transformation strategy prior to 2019 and 45% hadn’t started on the journey before 2021. This is not great news for banking customers who want to benefit from easier ways of transacting and managing their finances. But it is an opportunity for financial institutions that can move quickly and get ahead of the competition.

Sometimes, the incentive to modernize comes from the past. A bank that, in the scheme of things isn’t all that old, might feel it has less work to do to keep ahead. As a result it might actually be slower and less organized when it comes to digital transformation. In contrast, banks with a long legacy may feel a greater need to jump forward and leapfrog competitors entirely, overtaking them on digital process improvement.

two years ago. Today it is one of the fastest growing banks in Romania and pioneering several digital banking products. However, its digitalisation is part of a belief that people should always come first. Digital is not a replacement for its branches (of which there are over 1,000). It is about enabling both genuine human connection and technology, together.

As a state-owned bank in a former communist country, CEC found it had catching up to do in its adoption of information and digital technology. It relied on outdated and legacy software which made it difficult to respond quickly and efficiently to market needs and changes.

Benefiting from a capital injection, in 2019 CEC laid out plans for “growth, results, and investment for modernization”.

Digitalisation was a priority, to embed an omnichannel customer approach with products and services available both through branches and online.

Fast tracking with Low-Code

This is certainly the case at CEC Bank, the oldest and one of the largest banks in Romania, founded in 1864. CEC embarked on a major digital transformation initiative

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CEC played a clever hand early by realising that not all digital transformation needs to follow the same track. There were the

necessary upgrades to essential banking platforms of course, but these are complex projects typically taking several years.

However CEC needed a way of addressing pressing issues and launching new digital products to market quickly while these background upgrades took place. It’s answer to this was Low-Code Application Development, a technology that allowed it to build software applications at scale with minimal coding, building process flows and connecting elements such as databases and other software through intuitive user interfaces. This fast tracking really helped to make a quick impact.

Aurachain is one Low-Code platform CEC is working with as part of its digital transformation programme. Solutions developed include an integrated system for monitoring and maintenance of the bank’s ATM and POS fleet, and one for online onboarding of SME customers. A third project is under development – to digitalise online trade finance solutions for SMEs. Applications in action The incident management application is now helping CEC identify problems in

BANKING

its ATM, BNA (Bank Note Acceptor) and POS networks as well as monitoring how and when they are fixed. Real time overviews of the entire fleet of devices, and a ticketing system for use by IT, enables CEC to take a more proactive strategy, reduce outage time and increase service availability.

The onboarding platform for SMEs allows completely paperless online contracting of current account packages for SME customers.

This is an industry first in Romania with CEC the only institution that allows the opening of online accounts for companies with a complex shareholding structure, or SMEs with non-Romanian resident shareholders (e.g. EU resident shareholders), whether private individuals or legal business entities.

Looking to an increasingly digital future CEC Bank has made positive progress on its digital journey, but this is only the beginning of a digitalisation process to extend its online banking products using Low-Code to accelerate time to market.

Digitalisation through Low-Code has become an essential pillar of CEC Banks’ omnichannel strategy and it is accelerating investment in technology to allow customers to have a unified online and in-branch experience.

Adela Weiner CEO Aurachain

While many banks are still struggling to transform digitally at pace, some like CEC Bank are finding that they can accelerate the process and, in some cases, leapfrog the competition through the use of LowCode application development.

Issue 32 | 47

FINTECH

FinTechs, it’s time to grow up – don’t be put off by the food chain

It’s no secret there are plenty of B2B FinTechs successfully targeting microbusinesses and smaller enterprises. Why? Because not only is it often easier to do so, it’s also much more difficult for FinTechs to achieve cut-through with larger organisations.

Primarily, this is because the bigger the business, the more complex its operations. Smaller organisations are generally more flexible and easy to work with and often have simpler challenges to address.

But this is a problem. Larger businesses are missing out on the innovative services FinTechs provide because of FinTechs’ reluctance to target them. Likewise, investors are missing out on this huge, underserved and highly lucrative portion of the market.

It’s time for FinTechs to put their reservations aside and start innovating in this space. It’s time for FinTechs to grow up.

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Moving up the food chain

Grow up by striking the right balance

As organisations make their way up the food chain, business operations inevitably become more and more complex. Many FinTechs are hesitant to address such problems as it usually involves recruiting additional manpower. And, in an industry focused on scaling fast, people-heavy strategies can quell the appetite of investors, put off by increased outgoings and a perception of less disruptive business models.

It’s clear FinTechs need to put their reservations surrounding larger organisations aside and grow up.

And there is a way it can be done both efficiently and effectively: striking the right balance between technology and people.

This, obviously, is detrimental to the future success of any FinTech looking to make their way in an increasingly competitive sector. And if they’re a fresh face in the industry, putting off the investor community can prove harmful for business development and as a result hamper scaling efforts. It’s a cycle that needs to break.

The clue is in the name – FinTechs’ value proposition is, more often than not, the innovative tech embedded into their services. And the power of this technology can be immense. Any issues surrounding complexity can be addressed via automation, so they should automate where they deem fit!

But FinTechs must be conscious not to automate for the sake of it, as if this is applied to every part of the targeting strategy towards larger organisations, it could prove ineffective. This is because big businesses will always be more complex, so having a pure technological approach doesn’t compare with the layer of genuine support and service that real people can offer.

FINTECH

Ivan Zhiznevskiy CEO 3S Money

As such, FinTechs must consider the benefits of a human touch as part of their propositions.

Maintaining the human element is essential for nurturing and growing relationships across big businesses. And this in turn will bring new opportunities. If done successfully, FinTechs can reach their targeted businesses with the effective corporate nous needed to leverage relationships for future business development.

The human touch

Ultimately, it’s about striking the right balance.

Chatbots, for instance, can sometimes come across as cold and unsuited to complex problems. Having a team of people that offer 24/7 personal client support and representation not only ensures you don’t automate for the sake of automation, it also means you utilise the people within your organisation wisely.

Customer service always begins and ends with people. But the benefits people provide must be harnessed appropriately in line with efficient technologies. Going forward, FinTechs should recognise that the answer to targeting the mid-higher level organisations has always been in front of them.

In other instances, it makes sense to automate other areas such as onerous processes of compliance, including transaction monitoring.

In this case, there is no reason to designate much needed people-power on tasks that take time and energy such as these. This gives businesses time to spend on understanding complex business models and structures, while helping nullify any risk associated.

The world of big business has naturally been slower to adopt new FinTech applications given its comfort with traditional banking.

But FinTechs should remember that even the largest, most established corporations can’t survive without the new ideas that innovative FinTechs bring.

FinTechs need to grow up, gain some confidence and believe in their people, technology and potential. By striking the right balance between technology and people, FinTechs will be best placed to serve an underserved market, drive innovation for larger businesses and create new industrywide opportunities.

Issue 32 | 49

TECHNOLOGY

Why Process Automation is the key to unlocking potential in the finance industry

The finance industry is experiencing its biggest disruption in decades. With the rise of FinTechs, fast-changing customer demands and a global pandemic catapulting the world of banking online; Financial Institutions (FI’s) today need to move quickly and purposefully to survive.

Over the past few years, we have seen banks and FI’s quietly adopting Process Automation (PA) as a way of gaining efficiencies, improving team morale and reaping cost savings that will allow them to remain competitive into the future. A recent research report by Expleo found that by 2024, over 75% of organisations will implement some level of automation across multiple processes to drive higher levels of process optimisation and free up operational cash.

In the competitive finance industry, PA may be the answer to ‘having your pound and spending it’ by improving the productivity and skills of teams, whilst making significant cost savings across the organisation.

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Evolving to meet customer demands Traditionally, customers had no option other than to travel to the nearest bank to pay off their bills, withdraw money or deposit savings – and it was widely accepted that these things would take days, even weeks, to process. In today’s connected world, with digital banking, chatbots and online payments made available at the touch of a button, FI’s are far more at the mercy of consumer demands and if they don’t adapt, they may be at risk of collapse.

Using Process Automation, we can train computers to automatically take on a range of customer-facing processes, such as receiving and distributing online enquiries, gaining customer feedback, and even selling relevant products and add-ons to the appropriate audiences. The capabilities of technology today mean that these processes can be carried out quickly and seamlessly, without the risk of human error – something that is increasingly likely as our workdays become longer, and workloads become larger. And

in a competitive space where it’s easier than ever for customers to switch banks, it’s important that their experience is smooth and convenient at all times. This doesn’t mean that human employees should be disregarded – it simply means that these teams can be freed up to focus on the value-adding tasks which require more of a human touch.

In addition to improving the customer experience journey, computers can also be programmed to collect data and feedback at different customerfacing touchpoints. This can be extremely valuable in establishing trends, and importantly predicting how those customers might behave in the future. Currently, predictive analytics within the finance industry is in a relatively early stage, with FinTechs and online banks leading the way in implementing the technology thus far.

However, as we see the landscape change, and with Covid-19 acting as a catalyst for digital change, this will become more important for all FI’s to remain relevant and competitive.

TECHNOLOGY

Driving productivity – take your people with you In an industry where retention can be challenging, it is critical to keep employees happy and engaged. One of the main benefits of automating processes is that over-stretched employees can be relieved of the mundane tasks that have traditionally taken up so much of their time. They can have more hours in the day to focus on high value functions such as creative problem solving, strategic planning and evaluation, which tend to be more fulfilling and promote higher job satisfaction. The concept of ‘working smarter, not harder’ is not new – but the way in which we can do this is becoming more sophisticated with PA. It all sounds good in theory – but what about in practice? In fact, Expleo’s recent research report found that up to 50% of Process Automation programmes are found to fail on their first attempt – not because of technology issues, but because of a struggle to adapt to new challenges and novel ways of working.

As with any widespread organisational change, success is dependent on the people who are driving it. Despite the image we might be fed from Hollywood of robots taking over the world, these technologies are still very much reliant on direction from humans, and if they don’t have the appropriate knowledge, it won’t work.

Issue 32 | 51

TECHNOLOGY

It is therefore essential that the change is managed effectively. Companies who are change-resistant or don’t have the resources to manage the transformation might look to onboard a third-party, who can help integrate the new operating models with existing workflows and processes, and can ensure employees are brought on board from the beginning.

Building a digital workforce The global pandemic has highlighted a digital skills shortage across the globe, an issue which has significantly impacted the finance industry. A recent study by Visier found that 84% of HR leaders in UK financial services companies say their organisation is facing a skills crisis, which may affect their business transformation plans.

This skills gap can be detrimental to both the company, whose teams may be underqualified to perform their role effectively, and to the employees who may not be receiving the support needed to fulfil their potential. By utilising process automation within the business, time and resources can be freed up to invest in reskilling and upskilling the workforce. This means that these forward-thinking companies get the upper hand in building out stronger teams who are more digitally resilient and adaptable to change – so when external disruptions happen, they are far better prepared.

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The digital skills gap has also highlighted a tug-o-war which has been emerging between traditional banks and FinTechs for skilled resources. With a competitive talent market, individuals now have the power to decide who they want to work for; be it a young, digitally present FinTech, or a reputable, well-know traditional bank. Having the time and resources to spend on training and upskilling will be a key attraction to jobseekers in this industry in the future – and could be make or break in securing a star candidate into the company.

With around 80% of finance leaders having implemented or planning to implement RPA, according to Gartner, those who fail to do so risk being left behind in developing an agile digital workforce which optimises human intervention for maximum impact. And in today’s highly challenging global business environment and amid a backdrop of economic uncertainty, it’s now or never for financial institutions to begin their Process Automation journey if they wish to achieve their desired success.

Xanthe Bennett Head of Business Solutions Expleo

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