Fintech CityAM 2018 by Lyonsdown

OPENING THE VAULTS Will open banking lead to a new era of convenience?

POWER OF THE CHATBOT As AI improves, fintechs are taking on more chatbot projects

WHAT HEALTHTECH CAN LEARN FROM FINTECH How healthtech and fintech could have more in common than we might think

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AWARD-WINNING BUSINESS JOURNALISM • FEBRUARY 2018

Smashing the system

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FINANCIAL TECHNOLOGY Why the open banking revolution will give companies and customers the power to decide how their money works

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News clippings Bitcoin mania has not only gripped investors, but also the press “What is bitcoin?” and “how to buy bitcoin?” were among Google’s most searched questions in 2017. And although the bubble hasn’t burst (yet), cryptocurrency is here to stay. Here are five articles that caught Business Reporter’s attention amid the bitcoin buzz

Bitcoin is a bubble, but the technology behind it could transform the world The Guardian Looking for a clear explanation of what bitcoin is? Want to know what the currency’s impact on our future will be? Look no further than this piece from The Guardian’s Will Hutton, who sees bitcoin not as money, but rather as a commodity that uses blockchain to make settlements faster. He predicts that every industry – from banking to health – will undergo similar transformations. http://bit.ly/2DFRTl9

Beyond the bitcoin bubble The New York Times Steve Johnson thinks something needs to be done about the internet. In this brilliant essay in The New York Times, he writes that he is not convinced bitcoin will survive as a currency, but he sees real value beyond the bubble. That value lies in the open-ledger system provided by blockchain, which, he argues,

has “the potential to break up large concentrations of power and explore less proprietary models of ownership.” Johnson gives an overview of the evolution of the internet and what allowed tech giants like Facebook and Amazon to monopolise the space. The ideas unleashed by bitcoin’s creator, Satoshi Nakamoto, pose the most significant challenge to the hegemony of internet titans, argues Johnson. “History is replete with stories of new technologies whose initial applications end up having little to do with their eventual use,” he says. Bitcoin may flop as a currency, but what it represents is crucial to the future of online culture. http://nyti.ms/2B4lZfD

scramble for bitcoin, you might want to research other cryptocurrencies on the market. Gizmodo outlines six alternatives you should know about. http://bit.ly/2n6QWvC

The hard math behind bitcoin’s global warming problem Wired

quietly, whereas now they pivot towards blockchain. The tendency is especially favoured among start-ups that “already employed a system of points or credits for transactions”. Griffith also notes how publicly traded companies are adding “bitcoin” and “blockchain” to their names – and seeing a spike in share value. http://bit.ly/2CLJFYM

Is your start-up stalled? Pivot to blockchain Wired How is the start-up world responding to bitcoin? Erin Griffith writes in Wired that traditionally, stalled start-ups disappeared

Six bitcoin alternatives you should know about Gizmodo What do Cardano, Iota, Monero, Litecoin, Ether and Ripple have in common? With the recent frenzied

Bitcoin may be exciting, but how much energy does it actually consume? If you want to know more about the cryptocurrency’s impact on our environment, this article by Adam Robbins in Wired unveils some jaw-dropping truths about its energy consumption. One alarming statistic, taken from the cryptocurrency website Digiconomics, reports that worldwide bitcoin mining is using more electricity than the entirety of Serbia. Robbins has studied the maths, physics and economics and is not convinced of bitcoin’s sustainability, although he does see the rise of more energy efficient cryptocurrencies. http://bit.ly/2z2Ui5U

Putting the tech into fintech The award-winning 7th annual European Information Security Summit

INTECH IS a broad term to describe change within the industry. It’s more of a movement than a collection of companies – a statement of intent to deliver things in a certain way. However, in the headlong rush to develop better customer experiences, perhaps firms have over-focused on the customer-facing front-end. “In 2018, businesses will find that it is the back-end tech as much as the front-end ‘fin’ that drives strategy forwards. After all, the back-end influences the types of propositions developed, but also speed-to-market and the ability to innovate and iterate,” says Jonathan Bennett, CCO, CashFlows.

When change is the new normal…

Building an agile cyber-security culture 20-21 February 2018, London www.teiss.eu

The businesses best able to capitalise on an uncertain future invariably have three things in common, believes Bennett. They align their technology behind their strategy. They can scale quickly as volumes increase or with sudden trading spikes or seasonal peaks. And they have a can-do culture liberated from legacy systems and mindsets. “Any business strategy has to be agile. So does a payments strategy and payments partner,” says Bennett. “So, I always advise choosing the right payment technology provider for the longer term.”

CashFlows is a fintech provider of multichannel payment solutions. Our technology and payments expertise allows European businesses to accept card payments from all major card schemes, plus alternative payment methods. We also provide innovative payment solutions to merchants looking to reduce cost and improve payment success. INDUSTRY VIEW

+44 (0) 1223 550920 www.cashflows.com

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PEN BANKING under the Second Payment Services Directive (PSD2) will revolutionise banking as we know it. The rules, which came into effect on January 13, are intended to open competition and innovation in the marketplace. Banks and payment companies are now forced to share customer data (subject to approval) with third parties. Data on how we spend our money, from where we shop to which electricity company we use, will now be shared to develop new products, giving consumers and businesses greater choice. Third parties also have the opportunity to take money directly from their bank accounts instead of going through a payment provider, opening the way for tech giants such as Facebook and Amazon to act like financial services companies. “Banks are losing the monopoly that they currently have and innovative players can use that information to consumer benefits,” says Christoph Rieche, co-founder and CEO of iwoca, a lending platform for SMEs. According to Rieche, the biggest difference open banking will make is in educating consumers and businesses about how various financial products compare. “As a society we have mostly underperformed in financial education, and open banking can be a huge step to alleviate that,” he says. “Over time, as these applications filter through and awareness of open banking improves, its benefits will really come to light. It will significantly increase the competition, because it will be easier to compare the value that the products provide.” In the past, Rieche explains, people have had reservations about financial players because fees surrounding products have not been transparent. But with open banking banks will have to adapt to a new world of transparency. Banks currently have an oligopoly, points out Rieche. “There are four or five banks in every country sharing 80 per cent of the entire banking industry,” he says. “Open banking is a way to remove the monopoly banks have over customer data. It will change product structures – competition will create a better outcome for consumers.” He points out that Facebook, for example, could take money out of one account and transfer it to another without the need to do it via bank transfer. “That is another exciting element of PSD2,” he says. But Rieche does not think this means the end for banks. He explains

Throwing open the vaults Open banking has opened up a whole new world for fintechs, but will it really improve competition and transparency in banking products? Joanne Frearson investigates that although competition will slowly creep in from fintechs, banks still have a strong brand and relationship with the consumer. “At the end of the day they benefit very much from that legacy,” he says, adding that it will take time for consumers to discover the opportunities that come from open banking. Although, he says, while banks will still benefit over the next few years on the legacy that they have, they will still need to adapt to the changing landscape. “The question is, how many of the banks that are currently dominating will still be dominating in 10 years?” he asks – pointing out that their 80 per cent share of the market could drop to as little as 50 per cent. “It’s unlikely they will completely go out of business,” Rieche adds. “They will adapt to change their product structures. Maybe they will find new ways to monetise their customers which are open to them as well.” The way Rieche sees banks evolving are to take more of a backoffice role in financial services, while fintechs or other third parties will be taking care of the customer-facing aspect. “Through open banking the level playing field in regards to data information is levelled,” Rieche explains. “We are at a disadvantage today, as we do not have this direct access to financial transactional

80% The share of the finance sector that traditional banks currently hold. This is expected to fall as the open banking initiative takes hold

data of small businesses.” Open banking, he believes, will cut out a lot of time-consuming processes. “For someone to get all their bank statements of the last few months together and then upload it to our system is a hurdle. There is a drop off which is costly to us. Also the information isn’t 100 per cent reliable – there is always a risk that people [will modify] their bank statements. Open banking can eliminate that risk of fraud because we see the same quality of information that currently banks have a monopoly on.” According to Rieche, companies will be able to see a much longer credit history of someone, as well as additional information that they are currently not able to access. “We get higher quality information and we get longer history and eventually more information, which leads to better credit decisions at our end, which enables us to write better terms to customers,” he says. “We can also see the information on an ongoing basis, as long as the customer does not revoke the access to the information.” Companies no longer have to continually ask customers for additional information as they have it at their fingertips. Rieche says: “These are the hurdles that hopefully have been taken away, which enables us to compete much more

head-to-head with banks than we could have in the past. It has the potential to be a real benefit for customers.” But, adds Rieche, open banking is still in its early days – and whether it will work as well as most fintechs are hoping is largely down to how accommodating the big banks intend to be. “We really hope banks are buying into this,” he says. “While the order from the Competition and Markets Authority is clear, it is very important, for example, that you can access information in a seamless and fast way.” Rieche is also concerned the outdated technology and legacy systems banks often rely on could make this information unreliable or slow to hand over. There is also a worry, he explains, that banks might “temporarily suspend access to the information because they are concerned of x, y, or z. If banks find a reason to suspend the access temporarily, that certainly would be a big blow.” It’s certainly early days for open banking, and although Rieche is hoping it will be a smooth transition, he expects the process won’t necessarily be as seamless as fintechs might like. Much still needs to be done for it to reach its full potential, but when the pieces fall into place, everyone could benefit.

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Harnessing the power of the chatbot

HATBOTS ARE increasingly part of the conversation when financial services firms look at how AI can help them win customers. A survey by Personetics revealed that over three quarters of financial institutions viewed chatbots – software either rulesbased or powered by AI that can talk to users and perform tasks – as a “viable commercial solution” now or within the next two years. Almost half already have an active chatbot project for customer conversations in place across mobile apps, web portals or Facebook Messenger. Finance likes them, Personetics added, because they are conversational and mean customers don’t need to learn new interfaces or navigate hidden menus. However, less positively, the research found that response time and quality when banks are contacted via Facebook Messenger “left a lot to be desired.” Less than 20 per cent of responses were received in less than 15 minutes, with 50 per cent being more than an hour. Fintech firms are racing to provide better service. One example is KAI Banking from Kasisto. Its AI chatbot helps customers manage money, track expenses, analyse spending and make payments using datadriven insights. Customers include DBS digibank and Standard Chartered utilising

“The AI can answer questions instantaneously because we have such a breadth of data and knowledge which is growing all the time.” – Zor Gorelov, Kasisto

82% The percentage of DBS digibank customer requests currently handled by chatbots

the chatbot on their mobile and online offerings. “It is about creating human-like, natural, friendly conversations. They are contextualised and personalised,” explains Zor Gorelov, chief executive of Kasisto. “With the chatbot we can interact with customers at a time and the channel of their choosing. The AI brain can answer their questions instantaneously because we have a breadth of data and knowledge that is growing all the time.” Gorelov says the system handles 82 per cent of all customers requests for DBS’s 1.5 million users, with the remainder being directed to live-chat sessions with human agents. “As Kai gets smarter, the amount of human intervention is declining, but the

system also develops a greater understanding of when agents need to get involved. DBS chose to escalate all questions about account fraud to a human agent. Also, if an upsale opportunity is spotted, then it will be handed off to humans,” he explains. Gorelov says this “hybrid” system between AI and humans will continue as the sector expands. “Chatbots will grow, helped by better customer education and smarter data, including from non-financial sources such as social networks,” he says. Peter Wannemacher, senior analyst at Forrester Research, also anticipates further growth, even though he declared in a report back in 2016 that “bots are not ready to be bankers”. “The technology has advanced

positively since then. Chatbots have dramatically got better,” he states. “However, there are still questions around what value the customer gets out of them. Nobody’s experience with a chatbot is entirely frictionless.” He says chatbots either provide valuable customer insights on their finances but with little guidance on what action to take, or conversely, offer action with little insight. “There is no complete package,” he says. “Open banking will help as fintechs get hold of more customer data, but customers are yet to do a 180-degree turn and fully accept chatbot systems. Nobody is yet choosing a bank or a financial firm on the strength of their chatbot. We see solid rather than leaping growth.”

ICOs and investor protection: being transparent with the risks $4bn The total amount raised by ICOs globally passed $4bn in 2017

N ITS capacity as the financial watchdog, the FCA has made some public murmurs on its position in relation to the emerging cryptocurrency and initial coin offering (ICO) craze. But its statements have been surprisingly vague. As recently as September, it opined that “ICOs are very high-risk, speculative investments”, but also that “many ICOs will fall outside the regulated space”. At first instance, this may seem difficult to parse, leaving those considering launching ICOs and their advisers in the curious position of having to apply relatively archaic rules and laws to a new form of technology that just doesn’t seem to fit. When looking closer, it becomes apparent that the regulatory landscape, and therefore the FCA’s jurisdiction and mandate to protect consumers, is relatively narrow. For example, the summary definition of a transferable security provided by the applicable regulation (MiFID), is those securities “negotiable on the capital market” including “shares in companies” and their equivalents. If an ICO token is precluded by contract from being transferable (indeed, it is questionable whether a cryptocurrency exchange would even constitute a capital market) and does

not purport to give any equitable right over the future success of the issuing entity, then it becomes very difficult to conclude that the wider framework around transferable securities and other designated investments, as well as financial promotions rules, have relevance. Broadening the search for applicable definitions within the financial services industry, we see one in particular that stands out: “a way in which start-ups can raise money through online portals to finance their activities”, which the FCA warns that “investors should understand that they may

lose some or all of their money.” Now, this sounds much more like the ICO craze we are discussing! In fact, it is the FCA’s official commentary on crowdfunding, which is heavily regulated. Turning back to ICOs, it seems counterintuitive that a product so close to crowdfunding in terms of risks and ultimate purpose would circumvent the regulatory landscape on a legal technicality, potentially putting consumers’ savings at risk (doubly so given ICOs’ strict regulation in other jurisdictions, such as the US). In addition to the standard antimoney-laundering and data protection

measures, ICO issuers in the UK should also be considering what steps to put in place to protect and educate their investors (or customers), even if they are not legally dealing in securities. This is critical for the long-term health of the wider asset class and the reputation of the issuer, and may also serve to appease regulators should they deem any retrospective action appropriate once rules are tweaked or clarified to more clearly capture crypto-assets. There are any number of controls that can be implemented to achieve this and secure a good outcome for participants, f rom restricting initial access to sophisticated investors only to posing appropriateness-based questions as part of onboarding. Being transparent with the risks (as well as the possible rewards) is the surest way to achieve a good outcome for investors, with or without regulation. INDUSTRY VIEW

Calum McWhir (left) is compliance consultant at Thistle Initiatives 020 7436 0630 www.thistleinitiatives.co.uk

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RGANISATIONS THE world over, facing disruption from greater global competition, changing market demands and accelerated technological advances, recognise the need for robust, customer-centric digital strategies. For many, these strategies hinge on digital transformation – the integration of digital technology to enhance the customer experience, improve organisational performance, and uncover new opportunities. Digital transformation can cover everything from updating IT systems to redesigning external user experience and internal processes and technologies. It is an important journey for organisations because it can “fundamentally change the way they will operate in the future to better serve their customers and better manage their employees and drive their organisation into a more effective, successful [one] in the future,” said senior partner at McKinsey & Company Anand Swaminathan, during an interview for an episode of Projectified with PMI. A recent Forbes Insights-Hitachi survey confirmed digital transformation is the top strategic priority for half of all top management. According to Accenture study Digital Transformation in the Age of the Customer, improving the overall customer experience is a top business priority for companies and a main driver behind digital transformation ambitions. “Our customers are the driving force behind our digital strategy,” confirms Alicia Aitken, who leads the transformation and change capability at ANZ, one of Australia’s leading banks and a Project Management Institute (PMI) partner using the institute’s approaches to organisational change. “Putting the customer at the heart of everything we do begins with understanding what our customers truly need and want not just today but tomorrow.”

Leveraging project management for successful digital transformation

“Organisations must continue delivering to customers while making changes in real time”

Project waste It is no secret that strategies are implemented through sound portfolio, programme and project management processes. Yet research from PMI’s Pulse of the Profession global survey shows that on average, organisations waste 9.7 per cent – or £97million – for every £1billion invested in projects. Much of this waste is due to poor implementation rather than flawed strategy. A recent Brightline Initiative™ study, conducted by the Economist Intelligence Unit, showed that 59 per cent of senior executives admitted their organisations struggled to bridge the strategy implementation gap. The result: only one in 10 organisations successfully reach their strategic goals. Digital transformations present unique challenges. Large, global organisations such as banks and other financial services companies, among others, often have legacy technology, ingrained ways of doing business and third-party partners that add to their complexity, making them vulnerable to disruption by smaller, nimbler, digitaloriented start-ups. Such companies merely have to execute a digital strategy without the need to focus on a digital transformation. Adding to the challenge is that organisations must Mark A Langley

continue delivering to customers while making changes in real time, in customerfacing environments and activities. Leveraging project management can help increase the odds of success in digital transformation. Project management – the application of knowledge, skills, tools, and techniques to project activities to meet project requirements – brings rigour, discipline, standardised methodologies and a common language to complex change initiatives, ensuring organisations take the necessary steps to help effect desired results.

• E xecution: Looking at practices that enable organisations to deliver the expected results • Sustainment: Looking at practices that enable organisations to sustain benefits and achieve strategic objectives Giving project, portfolio, and programme managers a sense of how their work impacts the strategy and the business helps them maintain the necessary focus on outcomes at all three stages of benefits realisation.

Adopt both ‘agile’ and ‘agility’ Focus on outcomes The complexity of digital transformation demands a strong focus on benefits realisation management: examining and capturing the value created by the successful implementation of projects and programmes. In organisations with high maturity in benefits realisation, 45 per cent more projects meet original goals, compared to organisations with low benefits realisation maturity. This translates to significantly le s s money wa sted due to p o or project performance – only 5 per cent in highly mature organisations when compared with 16.6 per cent in organisations with low maturity. But too few organisations have effective, if any, benefits realisation management processes in place. Benefits realisation management happens in three stages: identification, execution and sustainment. • Identification: Looking at the practices performed at the start of a project or programme that enable organisations to identify expected benefits

PMI research has shown that the use of agile approaches has been identified as a key reason for improved results with strategy implementation. Though the term “agile” has been used in project management for the past decade to refer to a series of specific practices and approaches, organisations now recognise more value when they think broadly of organisational agility as a strategic competence rather than a set of tools and templates. Agility is the capability to quickly sense and adapt to changes to deliver relevant results in a productive, cost-effective manner. Agile is a mindset based on a set of key principles designed to better enable collaborative work and deliver continuous value through a “people-first” orientation. Agile transformation is an ongoing, dynamic effort to develop an organisation’s ability to adapt rapidly within a fast-changing environment and achieve maximum business value by engaging people, improving processes, and enhancing culture. The most for ward-think ing organisations are embracing a continuum of practices that range from predictive

to agile, well-defined to iterative, and more to less controlled. Agile approaches allow teams to deliver projects piece by piece and make rapid adjustments as needed – a necessity for digital transformation.

Maintain executive support Clear, transparent, frequent communication between the project management team and senior management is essential to establish the trust that will help ensure project success. Bad news should not be hidden but communicated as early as possible so the necessary adjustment to such factors as scope, budget, time constraints and expected outcomes can be made.

Adhere to the Brightline Principles The Brightline Initiative is a non-commercial coalition dedicated to helping organisations bridge the gap between strategy design and strategy delivery. Its 10 principles serve as a foundation for helping organisations improve results w it h st rateg y implementation. Finally, it’s also important to recognise that by their nature, digital transformations never truly end. The digital world is not static and demands both a cultural and an organisational structure that allows for the ability to be responsive to market needs. Says ANZ’s Aitken, “We will be constantly working with our customers to understand what their needs are so we can deliver the best outcome for them and as those needs change, we will continue to evolve our products, processes, and ways of working.” INDUSTRY VIEW

Mark A Langley is president and CEO, PMI www.pmi.org.uk

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The IT director will see you now… Patients, priorities, performance: How digital can transform the NHS

Digital visionaries: (left to right) Tim Moore, Simon Jones, Shauna McMahon, Karl Goatley, Nathan Marke, Stephen Docherty, Andy Dunn

CALE IS a concept the NHS has wrestled with since its birth. Today, more than 1.7million people work within it, making it the fifth-largest employer in the world. But with an ever-increasing demand on its services – aligned to intense pressure on its budget – crippling inefficiency, it seems, is an incurable ill. Scrub in for a technological opportunity – but not necessarily the devilishly difficult kind which once split the atom or decoded DNA. The real opportunities to positively disrupt the under-siege NHS are hiding in plain sight, and, according to the visionaries intent on leveraging them, they have the potential to revolutionise patient care. “The assumption for many is that money is the great change-blocker,” says Sussex Partnership NHS Foundation Trust IT director Karl Goatley. “Yes, there are overarching constraints and challenges, but we have to be smarter than that. We have to extract more value for our investment.” Goatley is already championing the power of digital in a specialist NHS mental health trust providing services across Sussex and Hampshire. There, community nurses connect to electronic patient records via iPads, and clinicians team up with police officers to deliver critical care to vulnerable patients in crisis. This “Street Triage Team” has secure, round-the clock, at-a-glance access to patient history, drug regimes, and risk assessment. And not only is on-the-spot delivery of care driving up the quality of clinical outcomes, but the patients in question frequently avoid an often-inappropriate encounter with the criminal justice system – ultimately saving the taxpayers’ purse. “This illustrates how digital technology can address the complexity of need and increased demand,” adds Goatley, who recently chaired a progressive discussion forum on the subject with like-minded peers and two of the largest enablers of digital Britain – end-to-end solutions and services provider Daisy Group, and global market leader in business communications, Mitel. But to deliver the kind of impactful reboot they all believe is essential, a crucial disconnect has to be resolved. “We have to separate digital transformation from the day-to-day IT function,” says Shauna McMahon, chief information management and technology officer at

Photo: Neil Atkinson

1.7m The number of people working in the NHS – making it the world’s fifth-largest employer

“The real opportunities to positively disrupt the under-siege NHS are hiding in plain sight”

Frimley Health NHS Foundation Trust. “We are no longer managing kit, but instead partnering with the business to find solutions that will enable change at the front face of care delivery.” “The NHS can’t allow risk-aversion to paralyse progress. We need to shift from old processes and adopt new ways of working,” she adds. “My Trust board is tuned into the digital opportunity, which will help us to use our finite funding in the best possible way.” The clock is ticking loudly, too. The government has already imposed a deadline of 2023 on fully digitising the NHS. In 2015, the government announced the establishment of Sustainability and Transformation Plans (STPs) to guide NHS Trusts. It is widely accepted that digital strategies must play a key role. But, most importantly, every stakeholder must be on board. “The STP is starting to bring people together,” says Stephen Docherty, chief information officer at South London and Maudsley NHS Foundation Trust and chair of the London CIO Council for Health Providers. “Digital enablement can’t be seen as the IT department managing bits of tin. We can add immense value by helping the adoption of technology by others. We have to show by example what the art of the possible looks like. And we have to raise – and in many cases change – the profile of the IT department whilst creating the right culture. “We recently rebranded ours to ‘Digital Services’. It cost pennies to design but the impact has been significant. The IT service desk was named Team of the Year

at our Trust’s annual internal awards; a great achievement when up against clinical teams. As South London and Maudsley is part of the Global Digital Exemplar (GDE) programme, we now have the opportunity to create the digital blueprints for others to adopt.” Tim Moore, head of digital at Horsham and Mid-Sussex CCG and a member of the NHS Digital Steering Group, agrees. “We are successfully raising the profile of digital transformation, but it’s taking time,” he says. “CIOs need a seat at Trust board tables; clinicians have to understand how we can positively impact patient care and budget control; there has to be a powerful business case.” Goatley goes further. “It’s as if the NHS is a disenfranchised franchise,” he says. “We do a lot of the same things in many different ways. That kind of unwanted variation wastes a lot of money. Digital can unify processes but everyone has to be on the same page: the clinicians, the enablers, the decision makers. The NHS is a vast team, and every player matters.” Simon Jones, head of public sector and healthcare at Mitel, concurs. “Our mission is to make communications seamless, simple and intuitive – empowering collaboration over any medium,” he says. “Unified communications technologies are the instruments of this change and huge drivers of productivity, but they are comparatively impotent if they are not aligned to an effective strategy with which the end-user is engaged. This is why it is so encouraging to hear that NHS Trusts are realising the importance of

shifting the attitudes towards digital transformation.” Daisy Group availability services director Andy Dunn works with organisations keen to go on that journey, but who are unable to reach their favoured destination alone. “Understanding the true potential of digital is still a challenge for many organisations,” he says. “There is still a gap between the aspiration and the deliverable. They need a guiding hand to hold.” It’s that current disconnect which Nathan Marke, chief digital officer at Daisy Group, is on a mission to resolve. “Digital does have the capability to transform budgetary control, staff efficiency, and productivity, while simultaneously improving patient care and clinical outcomes,” he says. “But, in order for that to happen, everyone playing a part in the wider piece has to adopt the technology. “Yes, that means giving them the essential digital foundations; yes, that means connecting them to a robust, secure and 24/7 network; yes, that means putting services and data in the cloud; and yes, that means putting a device in their hand or giving them a tutorial on how to use a key application. “But the real trick is enabling meaningful, practical adoption of those digital tools. The diagnosis is misguided resistance. The prognosis is optimistically healthy. The prescription is enthusiastic change.” INDUSTRY VIEW

www.daisygroup.com www.mitel.co.uk

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What healthtech can learn from fintech As people begin to manage their health like they do their finances, Anna Delaney asks whether healthtech and fintech have more in common than we might think

ANKING IS one of the world’s oldest businesses. Thirty years ago the thought of managing your bank account from a smartphone was unthinkable. Bank managers, accountants and financial advisors were the bastions of trust who handled our money. Now, not only can we check our accounts, manage funds and create portfolios online, we can do all of this without the help of a financier. Control has passed to the consumer, via the device in your pocket. While the demise of the bank as we know it is still far off, technology has not only disrupted the way we handle our finances, it has also impacted our relationship with the industry itself. Another industry undergoing transformation is healthcare. The sector has been markedly sluggish in its technological advancement, relying on legacy systems and inefficient methods of working. Even until recently, doctors still used pen and paper for patient files. However, things are set to change and healthtech has been touted as one of the tech trends to watch over 2018. CES (The International Consumer Electronics Show) in Las Vegas at the start of this year saw enthusiasm for tech related to self-care, elderly care, health monitoring, fitness and healthy living and sleep. A survey taken by M3 Global Research says that almost 26 per cent of doctors see that investment in self-diagnosis technology will have the most impact on patients over the next five years. As this shift develops, will people begin to manage their health like their finances, becoming increasingly independent from the doctors on

“We can learn a lot from fintech, mainly that we need to ensure that we develop trust” – Josh Lachkovic, Thriva

Above: the rise of fintech could prove a good template for developing and implementing healthcare technology

whom they had been so reliant in the past? Josh Lachkovic, head of growth at online health screening service Thriva, puts the recent interest in healthtech down to “opportunity”. “This is a long-term trend which began with people taking a proactive interest in monitoring their health and fitness,” he tells Business Reporter. “It started with basic tracking tools and health monitoring, for example with Fitbit, step counters and sleep monitors via apps and wearables but now we’re in the second wave. People are taking a more rigorous approach to monitoring and taking control of their health.” As tech advances in the health sector, Lachkovic thinks insight can be gained from fintech. “We see healthcare moving in much the same way, with people becoming increasingly comfortable managing their own health. We can learn a lot from fintech, namely that we need to ensure that we develop trust.” Lachkovic underlines the need to provide safe, reliable and effective products to nurture this trust, ensuring the medical side is under proper scrutiny by using NHS-trained GPs and labs with recognisable accreditation (as with Thriva).

Lachkovic points out that fintech is no flash in the pan, and offers customers genuine value. “This is not technology for technology’s sake,” he says. “It is disrupting and improving current services, working with existing bodies to provide the best service for customers.” This, he believes, is a good model for healthcare tech to follow. “Collaboration between start-ups and existing healthcare providers will be key to establishing trust and unlocking better products for people in the future,” he adds. Lachkovic feels that in many ways, people taking control of their health is not just down to recent technological progress, but part of a bigger behavioural shift, which has seen people take an interest and manage their personal information. “Combine this with the rise of apps and on-demand services and you start to see the natural progression towards people managing their own health with technology,” he says. “People are used to digitallyenabled, streamlined services at their fingertips and this is as true for managing your finances as it is for ordering a taxi or monitoring your health.” Lachkovic believes that the rise in innovation in healthcare and the

move towards preventative care is a vital solution to help support the struggling healthcare system. “There’s no silver bullet but at the moment our NHS is a sick-care service, not a health service,” he says. “We’re facing an ageing population, funding cuts and complex problems that the current system is not set up for, financially or culturally. The CEO of the NHS, Simon Stephens, has said that we need to ‘pull out all the stops on prevention, or face the music’. “If we can offer patients the responsibility and control to keep themselves healthy and out of doctors’ surgeries and hospitals, then of course that’s going to have a positive impact on the care we can offer across the board, and hopefully it will also start to shift behaviours on a deeper level and ensure we all stay healthier for longer.” Lachkovic singles out Londonbased Babylon, which is working with the NHS on GP at Hand, the health service’s 24/7 video-enabled smartphone GP service. “If the healthcare system works with technology companies, that’s where we will start to see the real benefits,” he adds. Lachkovic rejects the notion that these trends in healthcare are mere hype. “Absolutely not. This is a trend that has been developing over many years and is still in its infancy,” he points out. So what does the future look like? “We’re going to see much greater shifts in consumer behaviour, with people moving their trust away from institutions and taking a proactive interest in managing their own data and health. More investment in the space is going to boost innovation and the quality of the services we can offer. That said, this is a decades-long trend, not a flash in the pan.” The potential for what big data, machine learning and AI can do for our lives is enormous and we will inevitably see more and more startups develop tech to prevent, monitor, diagnose and cure both physical and mental conditions. However, whether we are talking health or finance, at the heart of this transformation are people – crucial to unlocking the value and ensuring trust.

February 2018

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Untangling business-to-business cross-border payments “N Sinead Fitzmaurice, co-founder, TransferMate

“It’s a winwin for both sides of the transaction – that’s when you know you’re onto something”

O ONE ever said cross-border payments were going to be easy, but I never thought they’d be this hard” says Sinead Fitzmaurice, following her traumatic experiences of the global payment system eight years ago. “As a financial controller of an international business responsible for the smooth operation of our outbound payments, I never realised the havoc a fundamentally broken global payments system could wreak on our business. Our company specialised in gap-year visas and international tax reclaims, but making international payments was just about the least straightforward process I’d encountered in all my years as an accountant.” Fitzmaurice winces as she recalls how she would call her transacting bank, lock in what appeared to be an exorbitant exchange rate, as well as international wire fees, only to be told her payment would reach its destination in no less than five working days. The bank couldn’t guarantee when or exactly how much would arrive in a payee’s account as it would need to go through intermediary and receiver banks beforehand, with each one taking a cut. “I wondered if they were sending the money by boat,” she adds. “Meanwhile, the consequences to our business were severe. Not being able to pay our intermediaries meant a poor unfortunate was stuck in Sydney airport without a visa or had no money to live on following their gap year.” “I was being called up by frustrated payees, asking where the payment was and when it would arrive. I couldn’t give them any visibility. I had to pay over and above the amount due to payees, just so I’d know they’d be paid in full after all the intermediary bank fees. I then had to manually reconcile the FX gain or loss on each individual payment in my accounting software at the end of every month. It was a nightmare.” “I thought, there has to be an alternative. And so I did some research and tapped my network to see how they were getting around the problem. They weren’t. We were all in the same boat. And it was sinking”. “On behalf of fellow accountants across the world, I resolved that I was going to fix the problem.” Fitzmaurice approached her mentor and CEO of Taxback.com, Terry Clune, with her idea of streamlining cross-border business payments, backed by some high-level statistics. An ideas man, Clune was blown away by the size of the problem as well as

the cross-selling opportunity with his existing business. Eight years later, Fitzmaurice is cofounder and CFO of TransferMate, whose payments process is light years ahead of what she used to go through. Its mission is to make international B2B payments faster, transparent and affordable by controlling the end-to-end process. TransferMate has its own proprietary payments platform, an account infrastructure consisting of more than 200 local banks, and is regulated to make and receive payments between more than 117 currencies in the EU, USA, Canada, Australia and New Zealand.

The problem with correspondent banking The rationale for using TransferMate is compelling. By removing correspondent banks, it can offer same-day international payments, competitive rates, full transparency over payment delivery, and accounting software integration for a seamless experience. Buyers also benefit from mass payments capability, accounts-payable efficiencies, improved cashflow and better relationships with trading partners. Equally, payees know exactly how much, and when, they’re being paid and improve cash conversion by receiving payment faster. “It’s a win-win for both sides of the transaction – that’s when you know you’re onto something”, says Fitzmaurice.

Banks still process 90 per cent of £105billion in annual global B2B cross-border flows, and are entirely reliant on the slow, opaque and costly correspondent banking network to do so. “Different account structures, messaging and bank systems mean corrections, returns and stalled payments. Back-office functions are running like hamsters on a wheel trying to manually fix the problems of a fundamentally broken infrastructure,” says Fitzmaurice. Adds Clune: “There are no signs of correspondent banking reform happening any time soon. Alternatives to this network are the only way to improve speed, efficiency and transparency for cross-border payments.”

Technology-driven growth One of the ways in which TransferMate has grown is through integrating with accounting software and ERP partners, such as Intuit QuickBooks, Xero and SAP, which partners and clients are equally happy about. Intuit recommends TransferMate as “the provider of choice when sending and receiving international payments”, adding that it has “revolutionised the international payments process, streamlining the way in which our clients process invoices, and freeing up resources to focus on their core business”. For Connolly-RedMills, an international animal nutrition business, TransferMate

streamlined the international payments process, saved on wire fees and rates, and created efficiencies through its SAP integration. According to Connolly-RedMills’ Financial Controller: “TransferMate’s SAP integration saves us time on admin and accounting, while also saving money on wire fees. We would highly recommend TransferMate and the SAP integration provided to SAP users globally.”

Outlook In November 2017, TransferMate secured an impressive €30million minority investment and strategic partnership from the pillar Irish bank AIB, positioning it to drive a step-change in its land grab of the global B2B cross-border payments market. Keen to capitalise on the level of inbound interest in the AIB partnership, TransferMate has since commenced discussions with five of the top 15 global banks. Clune sees this model being rolled out widely across TransferMate’s core markets. “In 2018, banks will look to partner with genuine disruptors offering a meaningful alternative to the traditional B2B transfer system,” he says. INDUSTRY VIEW

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