By Mike Heffner, Vice President — Global Industry Leads at Appian
The financial services (FS) sector is currently experiencing one of the most challenging periods in history. The ongoing Covid-19 pandemic, fierce competition amongst fintech challengers and the encroachment of large technology platforms have made it necessary for banks and insurers to react in order to survive.
CIOs at financial institutions are well aware of the challenges and have been acting fast to modernise their infrastructure, automate processes and streamline systems. Technology enablement is at a critical stage, with KPMG marking it as the number one priority for financial services firms looking to recover from Covid-19.
Many FS companies have had success in digitally reorienting their business, and there is strong evidence that when it is done well, traditional market players can reap the benefits from their technology investments to modernise their business.
Unfortunately, there is no magic formula or secret sauce to success. So in this turbulent environment for the financial sector, what else can CIOs do to automate and future-proof their business?
Perhaps unsurprisingly, many successful CIOs have made mistakes on the path to automating their business. This is normal and expected. Any success, big or small, should be celebrated. These small victories, such as automating tasks with low complexity or simple processing paths, may even have only delivered limited business value. Still, they do prove the potential of automation and pave the way for more significant implementations at a larger scale to come.
In the banking sector, for instance, many credit approvals, card management and Anti-Money Laundering (AML) checks have been successfully automated, resulting in reduced manual input and an increase in the speed and efficiency of those tasks. For example, Addiko Bank with banks throughout Central and Eastern Europe, was able to reduce their complex business loan decision time from one week to three working days by automating the loan decision process on a digital platform.
Increasingly there are opportunities to use automation for much more complex tasks and the rewards go far beyond increasing efficiency. These range from improving agility throughout an entire organisation – a necessity during a time where workforces are stretched due to the pandemic – to reducing the total compliance burden.
In insurance and banking, regulatory change has traditionally led to the creation of new processes and manual reporting tasks; though it is possible to automate many tasks. For example, GDPR (General Data Protection Regulation) in the European Union requires companies to have greater oversight of all their customer data. That data may be held in different systems across an organisation and creates a significant manual workload to access, update and maintain customer records in different business units. A leading global commercial property and casualty insurance company, CNA, is using a low-code automation platform to manage their underwriting process end-to-end and improve efficiency across time zones and languages. Furthermore, it is possible to automate the process, using a digital bot to collect the data and present it to employees in compliance to view and act on.
Simplifying the reporting process enables businesses to address new regulations more quickly and ensure they don’t fall foul of the fast-moving regulatory environment. FS companies can also use bots to stay ahead of the curve in identifying new regulations, by searching regulatory bodies and cross-comparing existing requirements with announced changes.
Beyond compliance, there are also opportunities to create tangible value for customers through identifying accounts that are at risk of closure and identifying products which are most suitable for an individual customer’s needs. Piraeus Bank in Greece, for example, has digitised and created innovative applications to gain efficiency with Business Activity Monitoring (BAM) capabilities to track Key Performance Indicators (KPIs). They transformed how they handle customer questions and complaints, comply with customer protection regulations, handle cash transfer and order legal documents. By equipping the bank’s employees with comprehensive access to the data, processes, collaborations, reports and dashboards needed to optimize how work gets done across the organization, Piraeus Bank has gained substantial business value from their digital investments.
You can see how these technology-enabled adaptions can prove immensely useful in this fast-moving Covid-19 era. In the UK, we’ve seen the rapid rollout of the UK Coronavirus Business Interruption Loan Scheme – a much-needed initiative that has seen over £12.6 billion in support given to over 57,000 businesses so far. Since its introduction in March, banks and lenders have faced unprecedented demand in processing these applications. This is another example where automation tools have been rolled out to make this process far more agile. Through a low-code application, banks can automatically check applicants’ eligibility, processing and verifying supporting documents in order to make their lending decisions faster. The technology will prove invaluable as the scheme continues.
From a technology perspective, these developments mean moving beyond simple rules-driven activities and basic automations. This may sound like a daunting prospect, but complementary technologies are already highly accessible. CIOs are now able to build and integrate a portfolio of automation tools comprising best in class Robotic Process Automation (RPA), Machine Learning and Artificial Intelligence (AI). The concept of having a unified full-stack automation platform encompassing these key automation technologies working in harmony is now a reality and necessity. Having connected data anywhere across systems gives CIOs the flexibility to gather business insights, take actions and make changes quickly to result in impactful business results.
It‘s also important to maintain an open dialogue with suppliers and the wider-industry to monitor developments in AI and machine learning to see how vendors are either developing their own tools, acquiring new capabilities or partnering with third-party specialists. Monitor the developments in machine learning and artificial intelligence. In particular, how Business Process Management (BPM) and RPA vendors are looking to incorporate, acquire or partner to develop these capabilities.
Finally, CIOs must prepare the foundations for future intelligent process automation by digitising more complex decision-based tasks, invest in data scientists and machine learning algorithms that determine logic flows and key decision points. Data, analytics and rules will still be critical for providing the guidance and required outcomes for intelligent automation. A low-code platform can provide the necessary speed to deliver automation in a timeframe that can serve business needs, in weeks rather than months or years.
This need for speed has never been more critical than now during a global pandemic and in the face of an economic turndown. CIOs have long known they need to invest in technologies, address the siloes and legacy systems that sit within their business. Those systems that have been a significant cause of inefficiency and wasted time. Now, CIOs must get ahead. Build a portfolio of automation tools. Deploy them with precision throughout the organisation. Taking these steps now will reap dividends when it comes to managing this period and flourishing in the future.
Technology: the saving grace of the month-end headache in financial reporting
By Tiffany Newkirk, Financial Solutions Manager at SplashBI
The end of the month is a challenging time for many accountants and financial analysts as they race to close their books and complete their reporting on time. Whether they are using Oracle Cloud or on premise solutions, the final hurdle has its highs and lows. With accounts to reconcile and financial statements to analyse, accountants and financial analysts are left with little time before the crucial deadlines are in front of them. As a result, time needs to be maximised so that they have all the answers at their fingertips when presenting to the business, board members and executives. These are the aspects of the role that financial analysts adore – and manual intervention shouldn’t be the blocking stone of success.
Preparation for month-end reporting involves financial analysts spending long periods of time focused on analysing spreadsheet after spreadsheet. Tiffany Newkirk, Financial Solutions Manager at SplashBI, explains that month-end reporting shouldn’t be as problematic and frustrating as it is. To move forward, financial analysts need to incorporate technology to provide a visual representation of the data so their role becomes as efficient and sustainable as possible.
A new beginning
Overtime and stress are two common issues that accountants and financial analysts experience when completing month-end close reporting. As many as one in four financial analysts describe the pressure of financial reporting being overwhelming, resulting in employees leaving the job they love; a situation that no senior management team wants to occur.
According to a recent survey, as many as 73% of accountants and financial analysts are still operating in a manually intensive, spreadsheet-driven system that limits or removes any time for analysis. In the same survey, 84% said they would prefer the financial close process to take up less time, that could in turn be devoted to more strategic financial projects. From a health and wellbeing perspective, the drive to utilise technology will help improve the efficiency and accuracy, especially at this turbulent time, and allow more time to be spent exploring the results and having the answers readily available for senior-level discussions.
A long-awaited transition
Companies of all shapes and sizes have long sought ways to streamline their processes so that accountants can spend less time collecting numbers and more time analysing the impact and results with senior stakeholders. Finding the right equilibrium between speed, accuracy and employees’ needs is key, and financial experts need to embrace technology and its visual qualities in order to achieve this.
While spreadsheets are a useful tool, they can be prone to errors, especially if formulas are entered incorrectly. Management teams want to understand the implications of the data in front of them, and with the aid of financial experts, bring the data to life in a much more visual and empowering way, ready to spot the next business opportunity. Working solely in a spreadsheet rarely allows this to happen.
Instead, technology can help drive smarter decisions, by making the data come to life and presented in a variety of visual formats. By combining the numerous, disparate systems required to achieve a successful month end close, financial analysts and CMOs can view real time data at a click of a button to make informed decisions in the future.
In an increasingly digitised world, real time financial reporting and accurate forecasting are more vital than ever to achieve a sustainable and efficient business model. Given the circumstances faced throughout 2020, effective financial management provides businesses with a competitive advantage and greater insights to drive profitability and efficiency.
Letting go of tired and archaic practices will drive financial roles forward and open the door for a myriad of opportunities when accountants and financial analysts expand their reliance on technology and move away from traditional methods. Moving forward, organisations that don’t incorporate technology into their month end reporting will be left behind, and not reap the rewards. It’s time for the face of financial reporting and analytics to change to become a seamless, stress-free and data-driven process.
Entersekt provides clarity on Secure Remote Commerce authentication techniques for financial institutions
New whitepaper from Mercator available: Revisiting Authentication in the Age of SRC and EMV 3-D Secure
Is it time for a new authentication strategy in light of international mandates for Secure Remote Commerce (SRC) and EMV 3-D Secure? This is the question posed to financial institutions (FIs) in a new Mercator Advisory Group whitepaper entitled Revisiting Authentication in the Age of SRC and EMV 3-D Secure.
The paper, licensed by Entersekt for public distribution, delves into the role SRC and EMV 3-D Secure will play in the European Union’s Strong Customer Authentication (SCA) requirements under the revised Payment Services Directive (PSD2). It finds that now would be the ideal time for FIs to rethink customer authentication strategies, particularly with the deadline for full SCA compliance approaching on the 1st of January 2021.
“Consumers face an increasingly complex authentication landscape, which can vary greatly depending on the communication channels they use,” said Frans Labuschagne, UK&I country manager at Entersekt. “Multiple authentication techniques create unwanted friction and uncertainty. This paper gives actionable advice to FIs that need to keep security top of mind while also providing a good user experience.”
All card issuers competing for top of wallet will find useful insights in this whitepaper, which states that, “Since it is well recognised that convenience is critical to consumer adoption, it is time for financial institutions to rein in the multiplicity of authentication methods they use to identify account holders and even employees.”
Some of the key findings include:
- The lack of an integrated solution results in an inconsistent user interface.
- Inconsistency not only detracts from a customer’s experience but is likely to disrupt any cross-channel implementation plans an organisation might have.
- A customer who is presented with the same authentication technique for every interaction becomes more familiar with that technique.
- The authentication technique should be implemented on a smartphone, which 89% of UK residents between 16 and 75 already have.
- Consumers increasingly trust smartphone-based biometrics and are growing accustomed to using smart speakers for a range of use cases.
To download the whitepaper in full, please visit: https://www.entersekt.com/resources/white-papers/revisiting-authentication-src-3ds
This is a Sponsored Feature
Using AI to identify public sector fraud
When it comes to audits in the public sector, both accountability and transparency are essential. Not only is the public sector under increasing scrutiny to provide assurance that finances are being managed appropriately, but it is also vital to be able to give early warnings of financial pressures or failures. Right now, given the huge value of funds flowing from the public purse into the hands of individuals and companies due to COVID measures, renewed focus on audit is essential to ensure that these funds are used for the purposes intended by parliament.
As Rachel Kirkham, former Head of Data Analytics Research at the UK National Audit Office and now Director of AI Solutions at MindBridge, discusses, introducing AI to identify and rectify potential problems before they become an issue is a key way for public sector organisations and bodies to ensure public funds are being administered efficiently, effectively and economically.
The National Crime Agency has warned repeatedly that criminals are seeking to capitalise on the Covid crisis and the latest warnings suggest that coronavirus-related fraud could end up costing the taxpayer £4bn. From the rise in company registrations associated with Bounce Back loan fraud, to job retention scheme (furlough) misuse, what plans are in place for government departments to identify the scale of fraud and error and then recoup lost funds?
There is no doubt that the speed with which these schemes were deployed, when the public sector was also dealing with a fundamental shift in service delivery, created both opportunities for fraud and risk of systematic error. But six months on, while the pandemic is still creating economic challenges, the peak of the financial crisis has passed. Ongoing financial support for businesses and individuals remains important and it is now essential to learn lessons in order to both target fraudulent activity and, critically, minimise the potential loss of public funds in the future.
Timing is everything. Government has an opportunity to review the last 6 months’ performance and strengthen internal controls to ensure that further use of public funds is appropriate. Technology should play a critical role in detecting and preventing future fraud and error.
If the public sector is to move beyond the current estimates of fraudulent activity and gain real insight into both the true level of fraud and the primary areas to address, an intelligent, data-led approach will be critical. The use of Artificial Intelligence (AI) in public sector IT systems can be used to detect errors, fraud or mismanagement of funds, and enable the process changes required to prevent further issues.
HMRC is leading the way, using its extensive experience in identifying and tackling tax fraud to address the misuse of furlough – an approach that has led to many companies making use of the amnesty to repay erroneous claims. Other public sector bodies, especially smaller local authorities, are less likely to have the skills or resources in place to undertake the required analysis. If public money is to be both recouped and safeguarded in the future, it is likely that a central government initiative will be required.
Data resources are key; the government holds a vast amount of data that could be used, although this will require cross-government collaboration and co-operation. It is possible that the delivery speed of COVID-19 responses will have led to data collection gaps – an issue that will need rapid exploration and resolution. It should be a priority to take stock of existing data holdings to identify any gaps and, at the same time, use Machine Learning to identify anomalies that could reveal either fraud or systematic error.
In addition to identifying fraud, this insight can also feed back into claims processes providing public sector bodies with a chance to move away from retrospective review towards the use of predictive analytics to improve control. With an understanding of the key indicators of fraud, the application process can automatically raise an alert when a claim looks unusual, minimising the risk of such claims being processed.
While many public sector bodies may still feel overwhelmed, it is essential to take these steps quickly. Even at a time of crisis, good processes are important – failing to learn from the mistakes of the past few months will simply compound the problem and lead to greater misuse of public funds. The public sector, businesses, and individuals need to learn how to operate in this environment, and that requires the right people to spend time looking at the data, identifying problems and putting in place new controls. With an AI-led approach, these individuals will learn lessons about what worked and what didn’t work in this unprecedented release of public funds. And they will gain invaluable insight into the identification of fraud – something that will provide on-going benefit for all public sector bodies.
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