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A New Banking Paradigm For A New Connected Social World

Ahmed Michla of financial IT leader Sopra Banking Softwaredescribes a possible digital banking future

To achieve growth in a rapidly globalised, increasingly regulated world, banks need to use digital assets and capabilities tocreate new value propositions for their customers. The best way to dothis, we believe, is to focus on not just milestone events (e.g. marriage, buying a home,having a child) but incidental moments that crop up in every customer’s 24 hours,seeking to add banking value in many micro-increments. This can be done, we are convinced, only by using customer data in a truly aggressive and innovate way.

With this principle in mind, let’s visualise what a customer’s daily interactions in such a scenario might look like. Meet Joey, a citizen of 2019, who has just got a Facebook message from his friend Gaby reminding him that she paid for his drinks last night as he had left his e-wallet at home.Joey clicks on the button at the bottom of the message; paying back the micro loan without even having to leave the social media app he’s on.

Ahmed Michla

Ahmed Michla

Joey is now entering the shopping centre, getting the latest discounts from the stores he visited previously on his wearable headset. Loyalty coupons and rewards are factored into the discounts, while his bank provides extra discounts at selected stores if he pays with the new brandedcredit card offering highly personalised promotions.

The bank flashes an update on his smart glasses; according to his e-recorded and agreed budget plans and forecast, he has 250 New Euros left to spend on personal goods this month.Joey starts browsing the stores and coupons– his attention is attracted to a TV and home cinema, and a 40% off discount.

Unfortunately, the set falls beyond his allowed spending for the month, plus thediscount only lasts a few days.Joey consults the retailer for a consumer loan, today at 4%, plus gets a quote from the bank. He instantly receives a 3.75% loan proposal – as his bank, knowing the retailer through geo-location, the rates offered by this retailer, as well as Joey’s credit rating, caninstantly make a better offer. Joey accepts the e-offer, the bank authorises the transaction and starts the loan plan there and then.

Science banking – not science fiction

Like Joey in our example, 2015’s banking customers are also looking for proximity, agility and speed from a financial service provider they can trust. Plus, they are more connected than ever, and expect this connectivity to extend to their bank. The better availability of information leads to better-informed customers that compare offers across different platforms, including social media and collaborative tools, central to the modern-day customer experience.

Other expectations include personalised services on demand, transparent and simple products and services that are easy to mix and match. Banking customers are often multi-banked, and interested in new alternatives like crowd-funding and P2P lending to support projects and communities they value.

In parallel to these social and technological changes, new regulations are supporting these trends by improving the transparency of fees and prices, the ability to easily switch between banks, and so on. The most significant change is arguably the acceleration of the pace of business: according to Barclays, while it took 13 years to get two million customers using Internet banking, it took just two months to reach that number for mobile banking.

Such acceleration is seen everywhere, toughening the challenge of dealing with the ever-changing business context. In particular, competition is now shifting to ‘business moments,’ the brief everyday moments in time when business opportunities that span multiple channels and ecosystems appear.

And just as with 2019’s ‘Joey,’ who got a customisedloan proposal at the very moment he was considering a purchase, a digital organisation will be able to spot and exploit such business moments before they vanish – or get picked up by a more agile competitor.

Banks have the opportunity to retain and expand their privileged position in the value chain by providing pro-active offers and services, some entirely out of the banking business scope. To do so, financial services leaders must integrate seamlessly into the life experience. Transactions and interactions must become smooth and invisible. Banking must be simplified to the point where it becomes abstract.

A New Banking Paradigm For A New Connected Social World

A New Banking Paradigm For A New Connected Social World

In essence, we will move from the current ‘Straight Through Processing’ standard to the next-generation ‘Touch Through Processing.’

In addition, core banking products must become simpler, modular, and transparent. In particular, customers are looking for products they understand, that they can buy without worrying about the small print, and that they can change easily (and without penalty) as their personal situation evolves. New value-added services such as wallet solutions or peer advisory can then uplift those products.

Another crucial element is the notion of pro-active advice; today’s customers expect banks to help them manage and optimise their cash and investments. For instance, when some money is left dormant on a low-interest rate account, banks should spontaneously suggest transferring it to a higher yield account. Suggestions should be accompanied bya clear simulation of the expected gains and based on the customer profile, ideally in an attractive, graphical form, delivered straight to their smartphone.

Similarly, customers expect to be informed of unnecessaryfees or redundant product combinations. In most cases, these proactive advices can be fully automated (think of Google Now in banking). They should also be offered in real-time and take account of context and location.

New thinking caps required

To achieve the agility and openness necessary to do all this, banks need truly modern tools, including multi-channel customer experience platforms, advanced analytics for CRM and marketing and open platforms for app stores and APIs.

That’s probably just the baseline in terms of what we need to do. Banks may well need to undergo a much deeper modification of their business, culture, and IT – as any of this next generation of digital banks will have to put innovation at their core and use data to create new business, revenue and customer engagement.

The good news is banks have the opportunity to engage with and to add value at almost every moment of the customer daily life, which will in turn create newrevenue opportunities.

But this journey needs to start now– as it will take a lot of bold new thinking to get off the drawing board.

The author is Head of Content Strategy at Sopra Banking Software ( Find out more by downloading a special Sopra whitepaper, ‘Banking in the digital age’, here


UK’s Co-op Bank cuts losses despite pandemic hit



UK's Co-op Bank cuts losses despite pandemic hit 1

LONDON (Reuters) – Britain’s Co-op Bank cut its annual losses in 2020 despite a 22 million pound hit from expected loan defaults due to the coronavirus pandemic.

The bank on Thursday reported pretax losses of 103.7 million pounds, down from 152.1 million pounds the previous year.

Co-op Bank has been labouring to turn around its finances since its near-collapse and rescue by a group of U.S. hedge funds in 2017.

Talks between the bank’s backers and potential buyer investment firm Cerberus collapsed in December without agreement.

“We will have (takeover) interest coming into our shareholders… I think it’s a fact for this bank with the shareholders we have,” Co-op Bank chief executive Nick Slape said.

“I’m just focused on running the bank and getting us profitable. These are distractions that happen every now and again.”

The lender expects to return to “sustainable profitability” from 2021 onwards, despite underlying losses tripling to 64 million pounds last year as the pandemic crunched the lender’s income.

Slape said growth in mortgage lending to take advantage of a housebuying boom and lower costs would help the bank to achieve its target.

Co-op Bank cut around 350 jobs and closed 18 branches last year to reduce costs.

The bank’s core capital buffer – a key measure of financial resilience – was 19.2%.

The lender also said it would link part of executive pay to environmental and social targets from 2022 onwards.

(Reporting by Iain Withers; Editing by Rachel Armstrong and Jane Merriman)

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StanChart profit falls 57% as COVID-19 inflates bad loans



StanChart profit falls 57% as COVID-19 inflates bad loans 2

By Alun John and Lawrence White

HONG KONG/LONDON (Reuters) – Standard Chartered PLC (StanChart) on Thursday posted a 57% fall in annual profit, missing analyst estimates, on higher credit impairments due to the COVID-19 pandemic.

StanChart, which earns the bulk of its revenue in Asia, posted a pretax profit of $1.61 billion. That compared with $3.71 billion in 2019 and the $1.85 billion average of analyst forecasts compiled by the bank.

Credit impairments last year more than doubled compared with a year earlier to $2.3 billion because of the pandemic, the bank said, but noted the majority of these took place in the first half of the year.

The London-headquartered lender said it would return capital to investors via a 9 cents per share dividend and $254 million buyback, with the total payout being the maximum permitted under temporary ‘guardrails’ set by the Bank of England.

The central bank last year told Britain’s largest lenders to suspend dividend payments and share buybacks for 2020 to help them maintain capital buffers against an expected hit to loan books from the pandemic.

“Having now resumed it, we expect to be able to increase the full-year dividend per share over time as we execute our strategy and progress towards a 10% return on tangible equity,” Jose Vinals, Standard Chartered’s chairman, said in the exchange filing.

The bank said its return on tangible equity, a key profit metric, would climb from 3% to 7% by 2023.

It also said overall income in 2021 is likely to be similar to 2020’s because of the impact of global interest rate cuts.

(Reporting by Lawrence White and Alun John; Editing by Christopher Cushing)

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Reasons Why You Should Be Opening an Offshore Savings Account Today



Reasons Why You Should Be Opening an Offshore Savings Account Today 3

By Luigi Wewege, Senior Vice President, and Head of Private Banking of Belize based Caye International Bank

No one has to convince you that savings accounts are a bad idea. As a safe investment, this approach is hard to beat. It also has the benefit of allowing you to set aside funds for all sorts of purposes while you earn a little interest.

While this can be done with a domestic account, there are compelling reasons to consider opening an offshore savings account. How can you eventually use those funds, and why would it be better to house them in an offshore setting? Here are some ideas to consider.

1. Setting Aside Funding for a Short-Term Goal

You have a specific financial goal that you want to reach in five or ten years. It could be saving the money for a down payment on a home or possibly buying real estate. Any such goal requires dedicating a part of your income to reach it. Placing funds in an interest-bearing account in the interim is a good option. That’s where an offshore savings account comes in handy.

The temptation to withdraw money from an offshore account is less likely. While doing so would be easy, it’s not unusual for people to turn toward the balances in their domestic accounts before pulling money from offshore ones. The result is that you’re more likely to consistently make progress toward building the funds needed to reach your goals successfully.

2. Creating a Contingency Fund

No matter what your life circumstances happen to be, it’s a safe bet that you’ll need emergency funds at some point. Think of what it would mean to have six months to a year’s worth of cash to carry you over if your company went out of business or if you lost your job. Even if it took some time to find another full-time position, the money in a contingency fund allows you to maintain a reasonable standard of living while you’re in search of opportunities.

Using an offshore account to house your contingency fund works well because you are less likely to withdraw funds until the need is significant. By opting to set up recurring funds transfers from a domestic account to your offshore account, you can add to those emergency funds without having to give the process much thought. When the day comes when you need the money, it will be easy to transfer the funds back to a domestic account or use the debit card supplied by your offshore bank.

3. Building Assets for Retirement

As many people learned during the last recession, employer-provided pension funds may or may not be around by the time you retire. If the investments made with the retirement contributions tank, there goes all or at least most of the money you planned on using to live after leaving the workforce. Establishing your resources for retirement, and diversifying them, protect your financial future.

An offshore savings account can be one of those solutions. A time deposit account lets you build more reserves for retirement. Since the account is not tied to your employment status or to the investments used to shore up your pension fund, it will be there when you need it.

4. Growing an Education Fund for the Kids

Perhaps the plan is not so much about investing in your financial future. Education for your children may be what’s driving you right now. Knowing how much a college education costs these days, you realize that now is the time to start saving. Even if the kids can secure scholarships that cover much of the expense, there will still be costs that need attention.

An offshore savings account provides an excellent means of setting aside funds for education. Let the balances roll over from year to year and earn more interest. Take advantage of offshore accounts that provide higher rates of interest when the balances exceed specific amounts. This strategy will make funding college a lot simpler.

5. Building Reserves for Purchasing a Vacation Property

You’re reaching a point in your life when having a second property to use for vacations sounds appealing. Now is the time to start setting aside funds that will aid in the purchase. An offshore account can be the means of growing the balance a little faster. The result is that when you’re ready to buy that second property, there will be considerably less that needs financing.

This solution also makes the process of transferring funds for purchasing international real estate easier. For example, you decide to buy a vacation home in the same country where your offshore account is based. Your bank can make withdrawing the funds and remitting the money to the seller much simpler.

6. Protecting Some Assets Just in Case

You don’t have to work in a high-profile field to be sued. What would you do if things didn’t go your way? The court could order most of your domestic assets seized to settle the judgment. How would you get by then?

Here’s something that you may not know about the money in offshore accounts – domestic courts can’t order a seizure of the account balances. Even if a lawsuit means every asset you have at home is taken away, there is still the money in your offshore savings account to help you rebuild. It may also be the way that you keep a roof over your head and food on the table while you decide how to go about rebuilding.

7. Taking Advantage of Higher Interest Rates
If you compare the interest rates offered in many international settings with what you can command at home, the difference is immediately evident. It’s possible to open an offshore savings account with a relatively low balance and gradually add to the balance. Over time, you reach a balance level that allows you to earn some of the best rates found around the globe.

When the plan is to place money in an account to accrue interest for over many years, an offshore savings account is the way to go. Once the day arrives when you want to use those funds, the balance will be noticeably more than if you had invested the same proportion in a domestic account. Think of how good you’ll feel knowing that your money was able to grow simply because you chose the right offshore location for the account.

8. Enjoying Peace of Mind

At times, it seems increasingly difficult to find peace of mind in today’s tumultuous world. With money placed in an offshore savings account, it’s possible to secure a little bit of tranquility even when everything else is upside down.

By establishing an account in a politically stable country, offers excellent returns in the form of interest, and is protected from any domestic court action, you know there will be assets to draw on no matter what. That’s a good feeling.

Get Help Setting Up an Offshore Savings Account

These are just a few reasons why opening an offshore savings account is a smart financial move. There is no better time to start than now, and an excellent offshore location to choose is Belize.

Caye International Bank, located on Ambergris Caye island in Belize, Central America has helped thousands of people establish offshore financial accounts. We can help you, too, in determining which offshore accounts work best based on your goals. You’ll find that setting up an account is a lot simpler than you anticipated.


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