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BANKS MUST HAVE WARNING BEACONS TO AVOID ANOTHER PAYMENT DISASTER

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Dave Lewis, Director, Alpha Insight

By Dave Lewis, Director, Alpha Insight

One of the fundamental problems within the banking industry is the notoriously complex IT infrastructures found within institutions.

Created piecemeal to deal with particular challenges, but fostering all kinds of hidden bottlenecks and snag-points, banks often have no true end-to-end view of their payment systems.

The misfortune that struck RBS last month is a case in point, sending reverberations around the entire UK banking sector. Here, yet again, was a major bank that had suffered an IT failure with significant consequences.

In this instance, 600,000 payments failed to enter the accounts of its customers, leading to widespread inconvenience and embarrassment, as well as very public criticism from politicians.

Wages, tax credits and benefits were among the payments that were affected, while small businesses were unable to access their banking facilities. The failure affected almost the entire spectrum of retail banking, also hitting the operations of NatWest, Coutts and Ulster Bank, which are part of the same group.

Political flak came from Andrew Tyrie, chairman of the House of Commons Treasury Committee, who said the delay in processing the affected payments was “unacceptable”. A long-time critic of banks over their IT failures, he said he would be writing to RBS, the Financial Conduct Authority and the Prudential Regulation Authority to ensure the necessary measures were taken to prevent a repetition of such problems.

Restoration of payments should be a top priority. It is crucial for those in the greatest financial need and also those who find it difficult to go to a branch,” he said.

This is not the first time RBS has suffered such a failure, having been fined £56 million by regulators over a malfunctioning 2012 software upgrade. Indeed the latest difficulty comes on the heels of an IT outage at Nationwide Building Society which meant customers had problems with online payments following its bungled system upgrade.

Anthony Browne, the chairman of the British Bankers’ Association quickly set the RBS experience in the wider context of banks spending £3 billion a year on improvements to what he termed “creaking IT systems”. The institutions were aware of their IT shortcomings, but it was unacceptable for them to experience failures like RBS, he added.

Setting all the criticism to one side, the truth is that such difficulties can be avoided if banks establish what it is they should be paying closest attention to from their billions of metrics, and then have the right business logic in place, on top of their monitoring tools, so they can achieve it.

Dave Lewis, Director, Alpha Insight

Dave Lewis, Director, Alpha Insight

The RBS example is just one of the many different kinds of glitches that can afflict banks. In this instance it is likely that overnight processing of a large amount of payment data failed, missing an important deadline. This is a process that seems simple enough to an outsider and which ought to be flagged up to the bank’s staff.  After all, what can be more significant to a bank than processing payments?

The problem for most banks is that their current monitoring solutions do not allow them to see their payments processing end-to-end because of the inherited jumble of systems added to the side-effects of extensive outsourcing.

They lack the crucial business insight that tells them what is really important and then measures and represents it in an easily comprehensible way. A bank may have dashboards and screens that monitor its every process, but they are of little use if staff looking at them do not know what it all really indicates at a business level.

In effect, despite having what appears to be a robust monitoring solution, the bank or institution has no end-to-end view of the millions of transactions it must handle every day. Nor does it know how to sort the wheat from the chaff when it comes to billions of potential metrics. Nobody really understands what is critical and the system lacks the transparency that would let them find out. When market conditions lead to a sudden spike in activity, such as a significant increase in transactions, they will never know if the system is coping until a problem hits them.

Secondly, even when the processes are monitored with any degree of effectiveness, the alerts and signals they relay are usually behind the curve. They may suddenly indicate that a process is failing, but by then it is too late to fix anything. What is required is monitoring that possesses the in-built power to predict a failure, allowing for preventive action that removes the threat before damage is inflicted.

Having the right monitoring tool is important, but having the right business logic and knowing what to monitor is vital. This may seem straightforward, but for most banks their systems do not make its execution easy. Banks need to acquire the ability to understand end-to-end payment flows and performance criteria and then apply that thinking to the monitoring tool.

In this way it is possible to establish what really matters and then create a set of meaningful metrics around it, establishing very clearly what must happen and by when.

The criteria can be set so that if say, a bottleneck is building up in one area, a warning will be issued at a set time before the deadline, giving staff the chance to intervene, manually if necessary, and eradicate the problem. This approach quickly establishes what is normal and benchmarks performance against it.

The methodology successfully avoids the snare of examining every transaction and only explores the detail when a risk is indicated.

Once a bank uses the right business logic and knows what is critical to its operations, where and precisely when, it will rapidly see a return on its investment in the form of hugely enhanced continuity and efficiency.

Its processes are far less likely to suffer costly and embarrassing failures, building a solid reputation with clients and customers for reliability and stability.

Achieving this level of transparency and automation means that fewer man-hours are required for monitoring, giving both IT and business access to the critical metrics. The value of pre-existing monitoring tools can be doubled or tripled.

At a time when all eyes are on the banking sector – including those of regulators – it is to everybody’s benefit for a bank to have the technology in place that shows it is in control of its processes and is paring back risk to the bare minimum.

Banking

RegTech 2020: The rise of Open Banking

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RegTech 2020: The rise of Open Banking 1

This month on the RegTech 20:20 podcast, host Alex Ford is joined by industry experts Gavin Littlejohn, Chairman of The Financial Data and Technology Association (FDATA) and Jamie Leach, Regional Director of FDATA ANZ and Founder of Open Data Australia, to discuss developments in Open Banking, and the place of RegTech.

Today, the focus is on the digital customer experience and the insight offered indicates that there has been a major shift in the FinTech ecosystem as a source of potential innovation for banks, rather than being a direct competitive challenge.

In the podcast, Alex quizzes Jamie on the concept of sharing data and the impact of the introduction of Open Banking rules under the Consumer Data Right (CDR) in Australia. Jamie shares that it is an exciting time to be involved in the sector:

“…what we really need to consider is that Open Banking in Australia is very different to Open Banking in the UK. Really, what has spurred Open Banking in Australia under the Consumer Data Right is the pursuit of creating greater competition and greater innovation, while allowing consumers to do more with their data.”

Gavin, who has many years of experience in the industry and, as well as his role with FDATA is also a key member of the UK Open Banking Implementation Entity, speaks on the theme of advocating Open Finance in the UK.,’

Delving deeper into Open Banking, he highlights the fact that it has been an interesting journey and states that “the important thing to understand is the difference between the UK’s Open Banking order and the wider payment services directive.”

Not only concentrating on Australia, Jamie also works across the sector in the UK and, also looking at its evolvement here, she suggests that the people creating the rules are now taking notice, adding: “We are just getting started – the UK has been at it for nearly three years and it is still gaining momentum.” 

With regards to future predictions, Jamie believes “It’s going to take 12, 18 or 24 months before we see any mainstream major adoption and where the potential of Open Banking can go in this market”

Moving to the  differences between Open Finance and Open Banking. Gavin defines the latter  as “payment initiation and access to payment data, which enables a third-party provider or fintech with a customer relationship to initiate a payment and get access to the data relating to transactions.”

“…the concept of Open Banking is a bit like electricity – you don’t use it directly; you use an appliance that uses it. This could mean loans, money management apps, or cloud accounting platforms, which all use Open Banking.” 

Throughout the episode, both guests provide interesting insights and hint at the significant potential of Open Banking.and the connection to RegTech within this domain.

It is clear that what we see today is only the beginning. Despite the industry still being in the early stages of implementation in almost all cases, there is increasing interest in moving beyond this to include a far broader spread of financial products.

You can listen to the full episode at https://www.encompasscorporation.com/regtech2020-podcast/ or across all major platforms, including Apple Podcasts, Google and Spotify.

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Banking

New digital first bank – Monument – announces its key technology providers

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New digital first bank - Monument - announces its key technology providers 2
  • Monument selects Mambu, Salesforce, Amazon Web Services, Persistent Systems and Accenture as key providers for its technology build
  • Monument is the first challenger bank in the UK to service the unmet demands of more than 3.5 million mass affluent clients: professionals, property investors and entrepreneurs
  • It is building a modern, unique, lego-like technology platform which takes best of breed SaaS providers and integrates them in a cloud based microservices architecture

  • This will deliver an exceptional client experience and enable Monument to innovate and to introduce new components on a frequent basis
  • Monument today announces that Mambu will be the central core banking engine in the platform alongside Salesforce for CRM, and AWS for cloud services
  • Monument has also engaged Persistent Systems and Accenture Interactive to support the platform build

Following receipt of its banking licence with restriction on 6 October 2020, Monument has now signed agreements with a number of key technology providers to enable the build of its bespoke technology platform.

Monument wants to deliver exceptional client experiences by using technology solutions that are modern, flexible, easy to integrate and ultimately, if necessary, able to be replaced should the need arise. The design of its lego-like technology platform is Monument’s solution to the huge challenges faced by the legacy systems of established banks. Having assessed the market over many months, Monument concluded that no appropriate single solution existed in the market for the products and services that Monument will launch in 2021.

In addition, Monument only wishes to develop its own technology where it can deliver significant competitive advantage, for example in the mobile and web services to be used by clients. Much of   the technology platform is therefore based on best of breed solutions from modern, cloud-based providers.

Mambu has developed the leading cloud banking engine which is an excellent fit for the platform that Monument is building.  Similarly, Salesforce provides an industry leading CRM (customer relationship management) solution which can easily be integrated with Mambu and other solutions. AWS, as a leading provider of cloud-based infrastructure, provides a range of components to ensure the platform is reliable, scalable, secure and flexible.

To support Monument in building and integrating a platform with more than 18 different components/providers, Monument has chosen to work with Persistent Systems, a leading global solutions provider specializing in digital with extensive experience in software as a service (SaaS) solutions. To support Monument in rapidly building its mobile app and web-based channels, Monument has chosen to work with Accenture Interactive, which has significant expertise in building innovative digital experiences in both the financial and non-financial sectors.

Steve Britain, Monument’s Chief Operating Officer said:

“We have been working closely with our chosen providers for some months now, to lay the foundations for the build of our platform. We are delighted at how much we have already achieved, particularly as much of the work has been done by a highly distributed team because of COVID-19.  We are now focused on completing the work to build a unique configuration of best in class software components that will make us highly flexible for the future and deliver market leading client service.”

More announcements will be made shortly as other key components of the architecture are confirmed.

Sudip Dasgupta, Monument’s Chief Technology Officer added:

“It was essential to me that we selected the strongest providers available. Those that offer us modern technology solutions with the best degree of integration that we need, together with flexibility for the future and proven operational reliability. In Mambu, Salesforce and AWS we have certainly achieved that objective and we are excited about our future engagement with them. Equally, as we rapidly build our platform for launching with clients in early 2021, we wanted support from providers  who have been on this journey before and in Persistent and Accenture Interactive, I am delighted to say we have found that.”

Monument will be the only bank to offer its clients an entirely digital journey for buy-to-let and property investment lending of up to £2million. It will offer market leading, top quartile savings rates and its model is designed to reward loyalty. So, if a saver deposits money for a subsequent fixed term, they will get a better rate than a new customer. And a borrower who renews their loan will also be offered a favourable rate.

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Banking

UKRSIBBANK, part of BNP Paribas Group, announces a strategic partnership with financial wellbeing startup Dreams, to enhance the digital user experience of its 2 million customers in Ukraine

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UKRSIBBANK, part of BNP Paribas Group, announces a strategic partnership with financial wellbeing startup Dreams, to enhance the digital user experience of its 2 million customers in Ukraine 3
  • The technology powering popular consumer app, Dreams – which has helped 460,000 users save over 440M EUR – will be made available to UKRSIBBANK’s users in Ukraine.
  • Through the integration of the Dreams platform within UKRSIBBANK’s own digital tools, customers of the bank can set and achieve money-saving goals, track and improve their financial lives.

Dreams (https://www.getdreams.com/en/b2b/), the Stockholm-born fintech empowering millennials to save and feel better about their money, today announces a strategic partnership with Ukrainian commercial bank UKRSIBBANK, a subsidiary of French international bank BNP Paribas Group.

This partnership follows the announcement earlier this year of Dreams’ first enterprise partnership with banking software provider Silverlake Symmetri, and the recent unveiling of a new department in Stockholm dedicated to the development of Dreams’ B2B partnerships. The announcement marks an expansion of the company’s business model as it consolidates its B2B offering and evolves its services as a provider of white label solutions for financial institutions.

Through the integration within UKRSIBBANK’s own digital tools of the Dreams Platform – which is rooted in scientific principles – customers can set and achieve money-saving goals through clever, automated saving features, in addition to nudges and saving hacks.

The Dreams Platform will be included as part of UKRSIBBANK’s digital banking offering for its 2 million+ customers, and is set to grant millions of potential consumers across Ukraine access to products which will help keep their finances on track and improve their financial lives.

The rise in digital self-help tools has long been anticipated by Dreams and forward-thinking financial institutions. The current global economic uncertainty brought about by the COVID-19 pandemic has also placed significant strains on people’s finances, and the demand for better personal finance tools has only accelerated. The partnership with Dreams is welcomed by UKRSIBBANK which is currently striving to equip its customers with the best possible banking solutions whilst helping them achieve a more sustainable lifestyle.

Dreams is firmly established as an authority in its industry, having launched its consumer-facing app in its native Sweden in 2016 and Norway in 2018 – where it has already achieved a 16% market share of all 20-39 year olds.

Henrik Rosvall, CEO and founder of Dreams, comments: “It’s a true honour to be partnering with UKRSIBBANK and BNP Paribas Group, and we’re incredibly excited to be introducing the Dreams solution to UKRSIBBANK’s customers and the wider Ukrainian market.

“Dreams and UKRSIBBANK can now lead the charge, with BNP Paribas Group’s corporate strategy having shifted in recent years to focus on guiding customers towards responsible consumption and sustainable personal finance management. I’m confident that our mission of helping millennials save more and feel better about their money makes us the ideal partners.

“Our financial wellbeing platform – which is built upon behavioural science and personal finance management principles – will provide the perfect tool for UKRSIBBANK to help its customers make better financial choices and become more sustainable in the way they handle their finances. This partnership will also help UKRSIBBANK safeguard the loyalty of its customers and futureproof its digital banking offering against a growing number of challenger banks and fintechs.”

Konstantin Lezhnin, Head of Retail at UKRSIBBANK BNP Paribas Group, comments: “I believe that banks have a role to improve their customers’ lives. Planning and saving for important life events improves our quality of life by reducing stress levels, and we wish to make our customers feel more confident and in-control of their lives.

“UKRSIBBANK has always applied innovative ways to assist our customers in financial planning, so we are very happy to now be working with Dreams, the best European player in behavioural savings. They have an extremely solid track record in Sweden and Norway based on scientific research, so we are confident that this partnership will work positively for our customers in Ukraine. This also demonstrates our strategy to cooperate with startups and innovative companies that seek ways to expand their operations.”

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