By Neerav Shah, General Manager, SnapLogic EMEA
The race is on for organisations of all sizes, across all industries, to digitally transform. But, this doesn’t happen overnight and there’s no silver bullet for success. In fact, our research uncovered that 40% of enterprises are either behind schedule with their digital transformation projects or haven’t started them yet. This is certainly true in financial services.
Banks are wrangling some of the largest data sets around. Having so much data should be a huge advantage – after all, driving faster and better business decisions based on data is one of the leading benefits of digital transformation. However, our research found that 82% of financial organisations have more data than ever before, but are struggling to harness it to generate useful business insights. Perhaps an unsurprising result considering much of the data within banks lives across disparate, disconnected legacy systems, holding them back from achieving their digital dreams.
Challenger banks entering the market
While traditional banks are held up by legacy infrastructure and unable to reap the immediate benefits of data – in its many forms, from its many sources – there’s been a surge in challenger banks entering the market. From Unity Trust Bank to Secure Trust Bank, these smaller retail banks are taking on the traditional financial institutions and transforming the way we save, manage and spend our cash.
Because they’re not tied to outdated IT systems in the same way traditional banks are, challenger banks are better able to quickly and seamlessly evolve through digital transformation, leveraging new technology such as AI, machine learning, IoT or block chain to help accelerate their growth and bring in new business. Their ability to quickly adopt new and proven technology has helped them deliver a wide range of new service offerings and customer experiences that consumers have come to expect, and it’s now up to traditional banks to compete with this.
Benefits of the cloud
Many of the new challenger banks and fintech firms are born in the cloud. If you look at the likes of Starling Bank, Monzo and a number of emerging payment providers, they all belong to a new cloud generation of companies, which comes with its benefits. This includes being able to take advantage of the tremendous operational cost savings, nearly limitless data processing power, and the instant scaling options the cloud provides.
For heritage banks, without the right investment in technologies like the cloud, they’ll struggle to adapt. In a move to digitally transform, many will go through a ‘lift and shift” strategy, where they move their on-premises data cluster to the cloud. But historically this has also come with its own inherent issues, and a lot of the challenges with moving big data projects to the cloud have centred on simply getting the right data in the right place – not to mention having the right skilled talent to do so.
Banks that are able to take a step back and remove the complexities surrounding cloud migration and integration means that businesses will finally be able to use their big data project for innovations and deliver business value.
Automation through AI
It’s not only the adoption of cloud that brings benefits. AI and automation technologies are transforming how work gets done across organisations.Analysts estimate that AI will save the banking industry more than $1 trillion by 2030. To capitalize on the automation opportunity, banks are investing in intelligent technologies to automate repetitive business processes, freeing up workers to focus on strategic pursuits that drive the business forward.
Hampshire Trust Bank is an example of a challenger bank which uses AI and machine learning to bring speed, quality and accuracy to data-driven decisions. By using AI to automate key processes, HTB can enhance the service it delivers for its brokers and customers, helping it to roll out digital initiatives faster. Enterprises must identify where they can put new AI or machine learning technologies to work, and if done right, this will be a powerful accelerant to their digital success.
European shares end higher on strong earnings, positive data
By Sagarika Jaisinghani and Ambar Warrick
(Reuters) – Euro zone shares rose on Friday, marking a third week of gains, as data showed factory activity in February jumped to a three-year high, while upbeat quarterly earnings boosted confidence in a broader economic recovery.
The euro zone index was up 0.9%, with strong earnings from companies such as Acciona and Hermes brewing some optimism over an eventual economic recovery.
The pan-European STOXX 600 index rose 0.5%, as regional factory activity was seen reaching a three-year high on strong demand for manufactured goods at home and overseas.
Another reading showed the euro zone’s current account surplus widened in December on a rise in trade surplus and a narrower deficit in secondary income.
Still, the STOXX 600 marked small gains for the week, having dropped for the past three sessions as investor concern grew over rising inflation and a rocky COVID-19 vaccine rollout.
But basic resources stocks outpaced their peers this week with a 7% jump, as improving industrial activity across the globe drove up commodity prices.
“This week’s slightly adverse price action has all the hallmarks of a loss of momentum temporarily and not a structural turn,” said Jeffrey Halley, senior market analyst at OANDA.
“There is not a major central bank in the world thinking about taking their foot off the monetary spigot, except perhaps China. (Markets) will remain awash in zero percent central bank money through all of 2021 (and) a lot of that will head to the equity market.”
Minutes of the European Central Bank’s January meeting, released on Thursday, showed policymakers expressed fresh concerns over the euro’s strength but appeared relaxed over the recent rise in government bond yields.
The bank’s relaxed stance was justified by the euro zone economy requiring continued monetary and fiscal support, as evidenced by a contraction in the bloc’s dominant services industry in February.
The STOXX 600 has rebounded more than 50% since crashing to multi-year lows in March 2020, with hopes of a global economic rebound this year sparking demand for sectors such as energy, mining, banks and industrial goods.
London’s FTSE 100 lagged regional bourses on Friday due to a slump in January retail sales and as the pound jumped to its highest against the dollar in nearly three years. [.L] [GBP/]
French carmaker Renault tumbled more than 4% after posting a record annual loss of 8 billion euros ($9.68 billion), while food group Danone and German insurer Allianz rose following upbeat trading forecasts.
(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Sriraj Kalluvila and Shailesh Kuber)
ECB plans closer scrutiny of bank boards
FRANKFURT (Reuters) – The European Central Bank plans to increase scrutiny of bank board directors and will take look more closely at diversity within management bodies, ECB supervisor Edouard Fernandez-Bollo said on Friday.
The ECB already examines the suitability of board candidates in a so-called fit and proper assessment, but rules across the 19 euro zone members vary, so the quality of these checks can be inconsistent.
The ECB plans to ask banks to undertake a suitability assessment before making appointments, and they will put greater emphasis on the candidates’ previous positions and the bank’s specific needs, Fernandez-Bollo said in a speech.
The supervisor also plans more detailed rules on how it will reassess board members once new information emerges, particularly in case of breaches related to anti-money laundering and financing of terrorism, Fernandez-Bollo added.
Fernandez-Bollo did not talk about enforcing diversity quotas, but he argued that diversity, including diversity in gender, backgrounds and experiences, improves efficiency and was thus crucial.
“Supervisors will consider furthermore all of the diversity-related aspects that are most relevant to enhancing the individual and collective leadership of boards,” he said.
“Diversity within a management body is therefore crucial … there is a lot of room for improvement in this area in European banks,” he said.
(Reporting by Balazs Koranyi, editing by Larry King)
Where are we with Open Banking, and should we be going further?
By Mitchel Lenson, Non-Executive Chairman, Exizent
Open Banking has the power to revolutionise the way we manage our money, but most (65%) consumers are still not aware of it, while many financial institutions continue to treat it as an obligation rather than an opportunity.
For Open Banking to truly reach its potential, consumers need to have more trust in its benefits. However, this will only happen if banks and other financial institutions start to embrace it, rather than simply accept it.
Covid-19 has proven to banks that digital banking and open finance innovation is not simply a ‘nice to have’. It is vital for their own survival. With so many challenger banks now coming into the market, many of whom have entirely digital models and therefore invest heavily in technology, banks are starting to become aware that if they don’t embrace it, they’ll get left behind.
So, fuelled by a mixture of competition and Covid-19, banks are starting to realise that Open Banking is not about giving away valuable data, but it is about collaborating with third party fintechs to explore the endless opportunities data sharing can bring – to all sides.
By making open finance easier for developers, banks can not only save time and money by improving their own services but help create useful solutions that add real value for their customers.
Open Banking for all?
There is one, yet untapped area of consumer finance that could be immeasurably improved by Open Banking, and that is estate administration.
Recent research from Which? found that many executors contend with delays, errors and poor knowledge from their banks during the probate process. Our own research shows that most legal professionals admit the process does not work as it should, and the time it takes to complete probate is unacceptable.
Like the Which? survey, we found that the main issue is the administration involved, with most legal professionals saying that the time it takes for financial institutions to get back to them with the information they need is the main cause of delays.
Given that the system is not working for consumers, something clearly needs to be done. The good news is that the technology and data is already available – we just need to harness it to create a better system.
That is why we are developing the first ever platform to connect executors, legal professionals, and financial institutions to create a better, quicker, and more secure probate experience for everyone.
Our first release of the platform – a bespoke cloud-based solution to enable legal services firms to integrate directly with financial institutions making information gathering and processing more straightforward – was released in 2020. We are now building on that foundation to accelerate our development work with financial institutions to deliver additional value for all sides.
We also see huge potential in working with banks to utilise the digital financial infrastructure, powered by Open Banking, to improve things even further. But there is one, fairly sizeable issue – currently, Open Banking consent ceases at the point of death.
Is it time for legislative change?
Open Banking is not as open as is should be for those who can give consent, so we are certainly some way off from Open Banking for the deceased. However, the more that banks acknowledge Open Banking and its potential and are prepared to collaborate with third party fintechs to develop better experiences for consumers, the more likely we are to get to a point where we can tap into that potential to improve things for the bereaved.
Many of the problems – highlighted by Which? – that consumers face when managing someone’s estate could be reduced significantly if open finance continued to apply to the deceased.
Open Banking provides a huge opportunity to speed-up and reduce friction for loved ones faced at some of the hardest moments of their lives, and there is a strong argument here for the current position to be reviewed to enable better access to a deceased person’s assets.
With our current platform, we are showing how technology is playing an incredibly significant role in dealing with the complex, tangled process that is probate and the potential of open finance in radically enhancing what we are already doing cannot be understated.
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