The Co-operative Banking Group has become the first retail bank to implement a new solution to combine accounting and risk data in a central hub. Kevin Long of Teradata, joint developer of the solution with Microgen, considers the advantages of data integration and centralization.
The UK’s Independent Commission on Banking (ICB) has recently recommended that the investment and retail arms of banking are divided, but, in reality, banks are already decentralised and fragmented organisations. This situation has been made worse by the recent trends for acquisition and diversification, resulting in complex departmental divides, silo processing and mismatched technology.
When each division within an organisation runs its own systems, with separate accounting and risk functions, each with its own interfaces to risk analytics and the general ledger, it is almost impossible to achieve an overall view of the current state of the entire business, from either a risk or finance perspective. Today, retail banks are faced with additional concerns including demand for greater corporate accountability, increased regulatory pressures and harmonisation of accounting standards. As a result, the finance function is challenged to keep aligned with the business strategy.
Yet without a single view of the truth, how can banks improve the efficiency and effectiveness of their operational environment or provide the transparency now demanded by regulators and customers alike, let alone develop competitive strategies for the future or measure risk with any degree of accuracy. This was a question concerning the Co-operative Banking Group (CBG), part of the world’s largest consumer co-op and recognised for its ethical approach to banking. The CBG embraces The Co-operative Insurance, The Co-operative Investments and The Co-operative Bank and offers a range of financial products and services including high street and internet banking, current accounts, mortgages, credit cards, loans, pensions, unit trusts, insurance plus general financial advice.
To address the problem the CBG has become the first retail bank to work with a new partnership of Data Warehousing and business rules and processing specialists to re-engineer its accounting processes as part of its core financial transformation programme.
Through a comprehensive transformation strategy finance functions can improve the efficiency and effectiveness of their operational environment that is more in keeping with the business strategy
Teradata and Microgen have been working together for the past 18 months to optimise their complete solution. It appears a natural partnership. Teradata is known globally for its ability to process huge amounts of data. Microgen, with its Accounting Hub solution, can process millions of transactions every hour. Microgen takes account level data from disparate operational sources and via a rules-based approach undertakes complex computations to create the accounting entries for transactions, and postings to other operational systems. The granular account level input-data, the rules applied and the resultant calculations are all stored in the Teradata Data Warehouse. This rich source of consistent, reconciled auditable can be used for reporting, analysis and complex statistics. Increasingly the two companies found themselves working with the same customers, so decided to formalise the relationship by providing a joint business intelligence application designed for the financial services and banking industries.
The first release of the CBG’s Financial Transformation Programme had already been delivered to its corporate customers, but the bank needed to augment this new operational environment with a business intelligence solution. The bank has around seven million customers – and has to handle around four to six million times as many transactions every day. Therefore, flexibility, scalability and reliability were among the key requirements it looked for in a solution. Impressed by the high performance of the Teradata/Microgen partnership, especially in comparison with competitive solutions such as Oracle, it opted to become an early adopter of this new joint application.
The CBG made the decision to invest in Teradata’s Financial Services Data Model (FSLDM) to act as a firm foundation for credit risk and accounting-based business intelligence. As part of this solution, the Microgen Accounting Hub (MAH) brings together all disparate information, enabling all transactions to be processed in one place and a Microgen Aptitude business process management suite writes standardised accounting rules to ensure consistency. This information is used to feed the general ledger and the Teradata Data Warehouse with financial data.
The business rules ensure that data is of the quality required for all accounting purposes in all regions, avoiding the problem of discrepancies between different reporting regimes. As a result, all departments can share the same data, enabling an accurate view with the single source of truth. This standardisation also deals with the problem of incongruous risk and finance reporting which undermines control and comparisons across an organisation.
For the CBG, the hub supports customer account level journal information, as well as summary general ledger data. It is this level of detail that enables CBG to align risk and finance data back to the general ledger and group financial statements. The hub, together with Microgen Aptitude also enables CBG to de-risk the implementation of other strategic systems by creating flexible accounting rules to replace older, less open, interfacing into the general ledger. Changing these rules is managed by business users, rather than IT, but in a well-controlled and auditable manner.
The FSLDM can be scaled across the entire enterprise so that other functional business intelligence needs can be met in the future. When decision makers are presented with a single, reliable source of data, they no longer have to have the time-consuming task of reconciling inconsistent sources of information, leading to shaky predictions and increased risk. Instead they can focus on adding value by using data wisely, increasing potential to upsell solutions and products or more accurately assessing credit risk. By integrating profitability with risk data, banks can enhance their management of capital, ensuring the best return and protection against unexpected losses in a volatile environment.
The new, ultra-competitive, post-crisis landscape is intensifying the need for increased insight into the business and into customer behaviour. Consequently, technologies such as those developed by Teradata and Microgen are increasingly being seen as business-enablers rather than back-office functions. Greater transparency and accuracy in banking may be essential to satisfy the regulators, but they also bring significant business advantages too.
UBX appoints new Chief Investment Officer
In line with its strategy to explore and invest in companies and platforms of the future, UBX—the Fintech and Corporate Venture Capital arm of Union Bank of the Philippines (UnionBank) — is announcing the appointment of Matthew Kolling as the company’s Chief Investment Officer (CIO).
As CIO, Kolling will be managing UBX’s Corporate Venture Capital (CVC) fund. He will also play a key role in raising capital for UBX while assisting the company in key corporate transactions, including the structuring of joint ventures and acquisitions.
Prior to his appointment at UBX, Kolling has been Head of Venture Investments at Aboitiz & Company since 2019, wherein he had been working with UBX on investment portfolio decisions. Before that, he held senior positions in Private Equity, Venture Capital, and Investment Banking at firms such as Providence Equity Partners and Morgan Stanley in New York.
Kolling has more than 20 years of experience in managing investments and deals in the Technology and Telecommunications industries and is active in Venture Capital and startup communities in the Philippines and the Southeast Asian region. He currently chairs the Manila Angel Investors Network, among others.
“We at UBX are excited to welcome Matt as our new CIO. We firmly believe that Matt will be instrumental in driving value creation opportunities, both within the CVC fund and our corporate ventures. We look forward to working with him as we fulfill UBX’s vision of a future where banking services are embedded into everyday experiences that matter,” said UBX president and CEO John Januszczak.
Meanwhile, UnionBank president and CEO Edwin Bautista said, “The addition of world-class talents in our pool reinforces our strategy to future-proof the organization and our business as we prepare for many new opportunities that come with the changing times.”
It’s all relative: Older generations feel helping out the family financially is more important since the Covid-19 outbreak
Before Covid, 23% of people prioritised helping younger generations out financially, that increased to a third as a result of the pandemic
A recent survey* conducted by Hodge has revealed that the Covid pandemic has led to more people wanting to help younger family members financially.
A third (31%)** of those questioned said that since the Covid outbreak giving a financial gift to children or grandchildren is more important to them, compared to 23% who said it was a priority before the pandemic.
The traditional “Bank of Mum and Dad” is still very much open for financial help, with parents being responsible for 72% of the gifts, but the study also revealed that financial gifts can come from all corners of the family – including children (14%) and siblings (14%).
The survey also found that a third of people have received a financial gift from family, with those aged between 25-34 as the most likely to receive
The most popular reason for gifting money to family is for special occasions such as a quarter of gifts were given for weddings and birthdays but 11% of people have received money to help with big purchases such as cars and houses. In addition, 19% of people have received help with day to day finances, with around 14% of those receiving a gift have done so to pay off debt.
Emma Graham, Business Development Director at Hodge, said of the research: “Our study showed that, as a nation, we all want to help our family out when it comes to money. And whilst we all think of the Bank of Mum and Dad or Gran and Grandad as a traditional source, we were surprised to see that 14% of brothers and sisters are also helping out.”
The findings come from a recent intergenerational study conducted by Hodge, who interviewed over 3000 people about their attitudes towards finances and their aspirations for the future. The full research findings can be found at https://hodgebank.co.uk/2020/05/19/money-its-all-relative/.
As part of the study, people were also asked about paying back the gift, with 40% of beneficiaries expecting to pay their parents back, but this dropped to 28% if the gift came from grandparents.
From the gift donor’s perspective, 26% expect the gift to be paid back, however just 15% of grandparents expected the money back.
Hodge has produced a set of guides on how families can navigate the tricky subject of giving financial gifts within a family, as well as the considerations and steps that be families should think about taking before a gift is given, such as is it a loan or a gift and thinking about contingencies if the family member’s circumstances change. The guides can be found here: https://hodgebank.co.uk/news/
Emma continued: “It’s clear that families feel strongly about offering financial support to each other if they are able and this has increased since the Covid pandemic. Before Covid, 23% of people prioritised helping their families out financially in the next five years. Since the Covid-19 outbreak that has increased to a third of people saying helping a family member financially had become more important.
“So, it is clear that the Covid-19 lockdown and subsequent predicted economic downturn, has led to more families looking to share wealth to help younger children or grandchildren during this difficult time. Many people may look to Later Life mortgages, where many products have reduced their rates and have flexible lending criteria, to help out a loved during these difficult times.”
New report identifies the factors which will determine SMEs’ chances of a successful COVID recovery
· Analysis of the performance of over 1,000 UK small and medium-sized businesses by Allica Bank provides roadmap for SMEs
· Regular training, an openness to innovation, and a clear vision all contribute heavily to an SMEs’ chances of success
· Allica Bank has launched a programme of free workshops to expand on the findings and support business owners
Business bank, Allica Bank has combined data and insight from over 1,000 UK SMEs with a multiple regression analysis to determine what factors most closely aligned with an SMEs’ chances of success and separated the highest-performing businesses from their peers. These ‘rules for success’ have been compiled from the research data to support British businesses as they look to chart a course to post-Covid recovery.
The full report identifies six behaviours for small and medium businesses to follow, to maximise their chances of a successful COVID recovery. The six top-line rules emphasised by the data were:
Rule 1: SMEs should regularly train staff
Of the top-performing businesses analysed, 47% provided training for employees at least on a quarterly basis, compared to just 32% of other businesses. Regular employee training was linked closely to success by the model.
Despite this, many small businesses have neglected training and nearly half (46%) of the small businesses analysed only provide training for employees about once a year or less often. This included 15% that never provide employer-funded training. This discrepancy could represent a significant opportunity for small businesses to unlock the potential of their employees and thrive in the post-Covid economy.
Rule 2: SMEs need to focus on innovation and technology
Looking again to the best performing businesses, 76% were found to either continually (39%) or often (37%) be considering new opportunities for technology in their business. This is compared to only 51% for businesses considered to be outside of the top ranks, out of which only 27% admitted to continually looking for new technology opportunities.
Rule 3: Small business must have a formal, long-term vision
Nearly two thirds (66%) of the most successful businesses in the survey had a formal, long-term vision, compared to just 50% of businesses outside the top 100. Looking to the businesses that scored the lowest on the SME Performance index, only 37% claimed to have a formal, long-term vision.
Rule 4: SMEs should broaden their customer reach and find new markets
Of the top-performing businesses, 65% of these have overseas customers compared to just 40% of the worst performing businesses. Among the best performing SMEs, over a third (34%) identified international expansion as one of the top three drivers for their success.
Rule 5: SMEs need to develop reinvestment plans
22% of the best performing SMEs reinvested some of their profits into the business in the past three years with an average 9% of profits being redeployed. Tellingly, this is nearly double what other businesses admit to reinvesting in their business (5%).
Rule 6: SMEs should engage with local business organisations and networks
Of the top 100 SMEs, 30% had obtained external credit to expand over the past three years (compared to 24% of other businesses). Meanwhile, only 16% of all other SMEs had engaged with local enterprise partnerships or growth hubs in the past three years (compared to 23% of the top 100 SMEs).
Chris Weller, Chief Commercial Officer, Allica Bank, said:
“All small businesses are different, as are all small business owners, but one trait they share is an innovative resilience. Whilst the coming months and years will undoubtedly continue to present extreme challenges, there is no doubt that small and medium sized businesses across the UK will rise to meet them head on.
“To give them the best chance to succeed, though, they need to be equipped with the right tools. There is certainly no silver bullet or panacea for every small business, but as this study has found, there are a number of common factors found in the most successful businesses that allow small enterprises to thrive and that they can consider individually for their business.
“This research has identified common ‘rules for success’ that speak to every aspect of running a business, not just the financials. Once we saw these results, we wanted to use them to help small businesses begin to re-build and prosper, by outlining common factors and then examining how best they can be practically applied to businesses in all sectors of the economy.
“Small business owners and their employees have been hit hard by the crisis, but they have the drive and resourcefulness to breathe new life into the economy and bring energy to post-Covid Britain. Our commitment at Allica Bank is to give them the support they need to do so, every step of the way.”
The full report contains a wealth of additional data and insight into each of these topics. As part of its mission to empower small businesses, Allica Bank is making the findings freely available and running a series of free online workshops with relevant partner organisations for businesses to attend.
5 reasons to rebrand now
By David Langton, president of Langton Creative Group and co-author of Visual Marketing (Wiley Publishers). Ineffective Logo. How well does your name...
UBX appoints new Chief Investment Officer
In line with its strategy to explore and invest in companies and platforms of the future, UBX—the Fintech and Corporate...
Workforce Diversity Matters To Our ESG Evaluation
We believe the limited representation of Black voices in key decision-making processes prevents companies from reaping the benefits of a...
Blackline reveals CEO succession plan
By President & COO Marc Huffman appointed CEO as of Jan. 1st, 2021; Founder Therese Tucker to serve as executive...
From furlough to returning to work – employees are feeling insecure in their future
New data looking into 6,273 employees, commissioned by Perkbox, the employee experience platform, has revealed the considerable impacts of the...
How mortgage regulations are changing globally
By Globalaw members Oliver Foerster, Partner @ Huth Dietrich Hahn, Roberto Sparano, Partner @ Quorum Legal ,Paul Tully, Managing Director and Partner...
Return to work: Flexibility, preparation and communication are key
By Matt Weston, Managing Director, Robert Half UK As lockdown restrictions ease for the foreseeable future, conversations across the business...
How sustainable AI improves the triple bottom line
An investment in green AI enables financial services firms to align people, profit, and planet By Nick Dale, EVP business...
The impact and implications of Covid-19 on financial reporting
By Mark Billington, Regional Director, Greater China & South-East Asia, ICAEW The economic consequences of Covid-19 have been unprecedented, affecting...
Contis enters RBS Capability and Innovation Fund bid seeking £35 million for disruptive SME growth strategy
Leading payments provider, Contis, has applied for two grants from the RBS & BCR Alternative Remedies Package, totalling £35 million. Unlike most applicants who...