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Banks need to reinvent themselves or they will die

Banks need to reinvent themselves or they will die 1

Banking as our fathers knew it is a thing from the past. Nowadays, Banks with big branches do not exist and in a few years they will be a fairy tale only seen on screen.

Pedro Pinto Coelho, Banco BNI Europa CEO

Pedro Pinto Coelho, Banco BNI Europa CEO

To survive Banks need to embrace the FinTech ecosystem and adjust to the new world through collaboration. Banks with no physical branches and Bank as a service are the future. And the future is just around the corner.

Over the past few years, challenger banks have risen as competitors to the large established lenders, providing a digital current account and money management services. With digital-only banks promising lower fees, better customer service, and snazzy user interfaces, they have long been threatening to replace the traditional high street giants.

Initially there was a vision that FinTechs would eventually get away with replacing banks, however, there has been a shift in sentiment. FinTechs have begun to realise it would be difficult for them to get clients, even if they provide a great service and the best technology, they would have to spend a lot to bring on customers. Instead, these technologies could be integrated into solutions which the banks do require. Assuming they can be integrated within the core banking system, they can leverage the bank’s ability to be a service provider and the process for them will much quicker.

So, perhaps the winning model will be a hybrid, so not just a bank or a FinTech. It is impossible for banks to keep up with innovation and technology, so ultimately, they will have to adjust to this new world. The FinTech ecosystem will really allow them to do so, and the sooner the banks embrace this model, the better it will be for clients.

Despite the market seeing a move towards more and more collaboration, competition for the bank’s business doesn’t just come from FinTechs. There are some larger players in other markets coming in and effectively replacing some parts of the bank, for example players like Alibaba, Starbucks and Amazon are now suddenly supplying credit and payment services. They aren’t FinTech, but they are playing the role of the banks and attracting clients and providing an alternative service.

With the future of banking lying in the ‘hybrid model’, Pedro Pinto Coelho, Banco BNI Europa CEO argues that a bank doesn’t need to be completely started from scratch. Instead, they can ‘catch up’ by doing the partnerships BNI Europa is doing.

Launched in July 2014, Banco BNI Europa has risen to become Portugal’s fastest growing digital-only Bank, aiming to challenge the traditional banking sector through strategic partnerships with fast-moving FinTech businesses, and had won several awards both in Portugal and abroad.

Nowadays, Banco BNI Europa is an international reference as a “Challenger Bank” based on its strategy of open architecture and differentiation. This positioning also allows Banco BNI Europa to stand out as the leader in the new “Fintech” generation of European banks and to continue with significant growth rates. In this context, Banco BNI Europa has also been specializing in the management of alternative solutions for raising funds and credit, having already established partnerships with several European Fintech’s providing term deposits and credit products in several European jurisdictions, namely Germany, United Kingdom, Netherlands, Austria, France, Belgium and Finland. Those credit products include consumer credit, student loans, credit to SME’s, factoring and real estate bridge lending.

Banco BNI Europa

Banco BNI Europa

“We will certainly be looking at more opportunities in the future to expand our spectrum of offerings, especially in areas where the clients are not necessarily happy with their current encumberments offer,” Pedro Coelho said. In particular, BNI’s focus is on finding technologies that will give the bank an edge over the rest of the market.

“We are not at the stage to start buying FinTechs, we don’t have the resources that the large incumbent banks have,” he added. “But we also believe it is easier to start with collaboration, not necessarily through capital investment but through partnerships, and leave them independent.

“We are different because we are happy to promote FinTech products without any conflicts of interest. We also play a very specific role on parts of the value chain. We respect the independence of the FinTech.”

With a host of partnerships already in the bag, BNI Europa is eyeing more collaborations in future as it looks to tackle the segments of the market which have been traditionally ignored. However, he stressed the importance of finding the ‘right partner’, as some platforms may have difficulties becoming more profitable and trying to prove their model going forward.

“We are looking for players in different markets which allows us to access these markets and diversify. Whether that’s SME lending, consumer lending, discount lending, or student lending etc. We will certainly be looking at more opportunities to expand our spectrum of offerings and towards areas where the clients are not necessarily happy with their current encumberments offer.”

One area of particular interest to BNI Europa is the advancements in Regulatory Technology (RegTech). With the financial services industry facing unprecedented levels of regulation this year, RegTech has promised to ease the burden on compliance officers.

“There is a time frame. We are preparing for PSD2 and we see that as an opportunity as we can access client information from other sources and the other banks,” according to Pedro.

“We are looking at RegTech opportunities because it will reduce the manual labour and the paper work that we have. This is an area that we are looking into and how RegTech company can help us. We have not yet had a partnership but we actively looking, he added.”

One thing is certain, Banks need to reinvent themselves or they will die, and Banco BNI Europa intend to be in a 22 century bank.

Banking

How new trends are creating the perfect recipe for rapid digital transformation throughout the world’s oldest institutions

How new trends are creating the perfect recipe for rapid digital transformation throughout the world's oldest institutions 2

By Wayne Johnson, CEO, Encompass

Digital banking has drastically changed the landscape of financial transactions over the last few years. Technologies used to be limited when it came to banking, however, now they cover every step of banking or investment services, from behind the scenes due diligence checks to customer facing channels. Embracing this change through emerging technologies is the future for the financial industry.

In recent years, financial technology (FinTech) has developed to facilitate online payments, instant banking, trading, lending, and more.

This new era of digital transformation has been driven by technologies such as artificial intelligence (AI), APIs, blockchain, process automation, and internet of things (IoT) technologies, which have provided vital upgrades to the outdated legacy IT systems institutions historically relied on. The aforementioned technologies streamline and enhance processes, consequently generating a much more reliable and pleasant customer experience. These technological advancements have transformed modern banking operations, changing how the banking industry operates today.

Every new advancement in technology in the finance sector, like expanding a financial service offering to business customers, brings with it new risks and compliance obligations, but the latest trends are creating the perfect recipe for rapid digital transformation throughout the world’s oldest institutions.

The acceptance of new-age technologies

Technology is already driving massive changes in the banking landscape as we know it, and it will be an influential contributor to shaping the industry of the future.

Focus on improving customer experience

One of the areas that banks are increasingly trying to improve through digital banking is customer

experience. Customer expectations for online services are constantly being influenced by the experience provided by big tech companies like Google, Amazon, Apple, and Facebook. With their influence, everyone is looking for a similar experience from their own providers. While digitally savvy Millennials are mainly responsible for the rise in expectations across the board, the wide-spread use of digital technologies in most industries has meant that it is more important than ever for banks to be on top of their delivery at all times.

Wayne Johnson

Wayne Johnson

Interactive banking channels

There has been a huge decline in branch visits in recent years, with some re-evaluating their very role, and an increasing shift from just providing transactional services to allowing for a practical banking experience. This was initially done by moving banks to key locations in town centres, investing in video chat services and offering self-service points – all of which has only been possible through the use of digital technologies. Financial institutions have realised that customers, with their busy and demanding lifestyles, like to have a choice and rely on a full range of channels, online access and 24/7 availability.

The rise of open banking

The increased popularity of open banking and rise in API usage is set to drastically change the industry with the flexibility offered by APIs allowing financial institutions and FinTech’s to put innovation at the heart of their service, resulting in improved customer service and enhanced convenience.

The importance of organisational structure transformation

In order to achieve true digital transformation, financial services institutions need to change their organisation functions from the inside out. To reap the greatest rewards, they must promote a “digital first” strategy internally. Only then will they see a positive change and truly release the benefits of digital transformation and the solutions available today.

The  market is constantly evolving , and adapting, and whilst the survival of traditional institutions is not under immediate threat, key players are going to have to modernise their processes and ways of working to keep up with developing requirements and customer needs.

Financial institutions are now starting to recognise the importance of digitalisation, which many other businesses realised was a priority years ago. This is demonstrated by the emerging trends mentioned, which indicate a rapid altering of the operating environment, from increased customer expectations and improved processes, back-end technology and newer operating models to organisational priorities shifting with the times. Digital transformation can no longer be ignored, and financial services organisations will have to embrace it if they want to remain competitive

 

This is a Sponsored Feature.

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Banking

Standard Chartered Bank partners with Microsoft to become a cloud-first bank

Standard Chartered Bank partners with Microsoft to become a cloud-first bank 3

Standard Chartered Bank and Microsoft Corp. on Tuesday announced a three-year strategic partnership to accelerate the bank’s digital transformation through a cloud-first strategy. This partnership marks a significant milestone for Standard Chartered in making its vision for virtual banking, next-generation payments, open banking and banking-as-a-service a reality. Leveraging Azure as a preferred cloud platform, the companies will also co-innovate in open banking and real-time payments to help the bank unlock new banking experiences for clients.

Standard Chartered Bank partners with Microsoft to become a cloud-first bank 4

Embarking on a cloud-first strategy

As part of its digital transformation, Standard Chartered will adopt a multicloud approach, where significant applications, including its core banking and trading systems and new digital ventures such as virtual banking and banking as-a-service, will be cloud-based by 2025, subject to regulatory approvals. The bank will also adopt a cloud-first principle for all new software developments and major enhancements.

As technology reshapes the banking industry, Standard Chartered recognizes that a cloud-first strategy is critical to the bank’s ambition to make banking simpler, faster and more convenient. By being digital-first, the bank will be able to meet the demand for seamless banking virtually anytime, anywhere, and make banking more accessible to people across its network.

Michael Gorriz, Group Chief Information Officer of Standard Chartered, said, “Cloud is a cornerstone of Standard Chartered’s strategy to meet the present and future banking needs of our clients. Cloud providers have invested massively in the reliability and automation of infrastructure and platforms. Using cloud services improves our ability to be agile and innovative, while increasing our operational efficiency and resilience. As disruption in the financial industry continues, we can focus on client benefits by deploying our solutions quicker and allowing for faster integration of new business models and partners. To realize our digital ambitions, Standard Chartered has chosen Microsoft as a strategic partner and this partnership marks a major milestone for the bank in adopting a cloud-first approach.”

Bhupendra Warathe, Chief Technology Officer, Cloud Transformation at Standard Chartered, added that “The pandemic has shone a spotlight on the need for businesses and banks to be resilient from a risk mitigation, cost and security perspective. With the increasing trend of an always-on digital economy, commercial and consumer clients are looking for applications and services that empower them to do online banking from anywhere, flexibly and efficiently. The speed and scale of continuous innovation offered by Azure allows us to innovate with the latest AI services to meet evolving client needs. We can pilot new apps in one market and scale them rapidly across others. This is especially important for a bank with a footprint as broad and diverse as ours.”

Standard Chartered will adopt Microsoft Azure as a preferred cloud platform to meet the bank’s need for resilient data centers and cloud services and addressing customers’ security, privacy and compliance requirements across the bank’s global footprint.

The first set of capabilities to move to Microsoft Azure will be Standard Chartered’s trade finance systems, allowing for seamless cross-border trade for the bank’s corporate and institutional clients.

The partnership will also advance the bank’s digital workplace transformation with Microsoft 365 and Microsoft Teams providing modern productivity and collaboration tools to Standard Chartered’s 84,000 employees across its 60 markets.

Co-innovating the future of banking

Standard Chartered will also use Microsoft Azure artificial intelligence (AI) and data analytics capabilities to enhance and automate banking processes as well as deliver hyper personalization of its client products and experiences. Co-innovation in open banking application programming interface (API) and Internet-of-Things-based, real-time payments will also help the bank unlock new banking experiences for clients.

Bill Borden, Corporate Vice President of Worldwide Financial Services at Microsoft said, “Cloud computing is an enabler for financial institutions to modernize their infrastructure and systems, to gain the agility they need to respond to competitive pressures, regulatory environments and customer demand. We are committed to helping Standard Chartered Bank in its ongoing digital transformation journey as it strives to address evolving customer needs and build the next generation of banking experiences.”

Addressing the social needs of communities in the emerging markets

Standard Chartered strives to understand the evolving needs of its communities and be an enabler for change. As a part of the strategic partnership, the bank and Microsoft will explore sustainable finance and business initiatives to expand sustainability across the industry.

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Banking

What does the future hold for accessing earnings? Introducing the world’s first Earnings on Demand payment and debit card

What does the future hold for accessing earnings? Introducing the world’s first Earnings on Demand payment and debit card 5

By James Herbert, CEO & founder, Hastee

Let’s begin by looking at how our brains are wired. Think about the hunter-gatherer mindset: when we expend effort, we expect an immediate reward.

It’s therefore no surprise that over time, different areas in society have adapted to our nature as humans. Almost everything we want, we can get on-demand. Whether it’s instantly streaming movies on Netflix, online shopping from Amazon, or fast-food delivery from the likes of Just Eat. And, because of such technological innovations our expectations have accelerated when it comes to the pace of delivery. This isn’t individual to us as consumers in our day-to-day lives, it’s also reflected in the workplace. We ultimately want work to work for us.

Part of this of course comes down to accessing wages. Workers should be able to access a portion of their earned wages whenever they need it, in advance of the monthly pay cycle – whether to help during challenging times or in day-to-day life. We solved this solutionBut, to take this up a level, ready for the future, we introduced the world’s first Earnings on Demand contactless debit card, powered by Visa – giving users access to their accrued earnings in real-time, with the card’s balance dynamically increasing every day they work.

So what is the card, and how will it change how we access earnings in the future?

The basis is very much the concept of Earnings on Demand. At university I set up a company called Brightsparks to connect students with work opportunities so they could earn money. Yet I noticed a common trend. With students often having to wait for the monthly pay cycle to get their earnings, many were having to turn down work simply because they couldn’t afford the travel day-by-day. It became very apparent that not having £20 today could stop them earning £200 tomorrow.

It struck me that payday itself doesn’t have to be a rigid construct that people have to wait for. But this isn’t specific to students. Liquidity is a widespread issue faced by people in all industries and of all ages, and according to our most recent Workplace Wellbeing Study, 82 per cent of people turn to high-cost methods of financing to tide them over when needed.

The Hastee Card effectively makes wages directly accessible: it simply lets people spend a portion of  what they’ve already earned.

Some people might wonder why they’d want to step away from the standard monthly pay cycle. But consider this: the monthly payroll (via a cheque) only came about in the 1960s as an Act of Parliament. Before this, most people were paid weekly in cash. The first major firm that shifted to monthly payments did it for cost-cutting. It worked for the employer more than the employee. In fact, that firm’s employees had rejected their employer’s change of payment type when it was first trialled a decade before (look up ‘Pye Radio’). So the way that workers and organisations interact around pay is not set in stone – it changes as technology and society shifts.

The way we perceive and use money keeps evolving. Apple Pay, Monzo, and PayPal have completely changed the way payments can happen, yet payroll still remains largely unchanged. It’s only a matter of time before disruption becomes more widespread.

Looking at it from the employer side, it has its benefits too. Before the climate changed, businesses were accommodating enhanced workplace benefits such as no-desk policies, flexible or remote working. In all cases by businesses offering more, they tend to see a more engaged, happier and less financially stressed workforce – leading to increased productivity.

Earnings on Demand is ultimately a perk that presents an ethical alternative to high-cost credit options such as payday loans, credit cards and overdrafts. And existing solutions offer zero impact on payroll processes, zero impact on the cashflow of the business and are designed for quick, simple integration.

The Hastee Card is an evolution of this all – preparing for the future. It builds upon and enhances the user experience by reducing friction and offering immediate spending power as well as a path to greater benefits such as cashback and rewards in the not-to-distant future.

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