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BANKS SHOULD ASSESS EXISTING IT INFRASTRUCTURE WHEN PLANNING TO DELIVER MOBILE INNOVATION

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BANKS SHOULD ASSESS EXISTING IT INFRASTRUCTURE WHEN PLANNING TO DELIVER MOBILE INNOVATION

Derek Britton, Director, Micro Focus

As technology evolves, and new trends emerge, employee demands and expectations of software applications consistently change. The proliferation of smart devices offers employees social, on-demand access to their favourite personal applications. This is driving users to expect businesses to provide the same level of accessibility for corporate applications.

Mobile Banking is a great example. Close to two thirds (64%) of people online who hold a current account with a bank or building society would prefer to conduct their banking on the Web or via a mobile application[i]. And, as retail and commercial customers increasingly use mobile, employees will also see the benefit of mobile apps to perform tasks using tablet computers.

Derek Britton

Derek Britton

The benefits to banks in meeting this demand for mobile apps on tablet devices are clear:  anywhere, anytime accessibility allows organisations to easily perform or provide core business functions such as on-boarding new customers, and performing remote customer transactions. The efficiency, competitive advantage and cost management potential is significant.

UK-based banking giant Barclays, last November purchased 8,500 iPads to facilitate face-to-face customer interaction beginning with a new application enabling fast market-wide searches for mortgage loans.Today, financial services organisations represent the highest mobile device adoption of any industry sector, accounting for 24% of all enterprise mobile device deployments and 30% of iPad activations.

However, in August 2013, an investigation by the Banking Commission revealed that banks were struggling to extend access to core applications on mobile platforms. The reason? They were found to have patchy and outdated in-house IT systems. These IT systems can make it difficult, time intensive and costly to develop apps for mobile.

The need to act quickly is growing, especially for established banks
With the introduction of more nimble challenger banks in the marketplace, the need to empower the workforce to innovate and become more productive is increasing. Challenger banks are not often weighed down by the responsibility of maintaining and managing a vast array of decades-old business systems, and supporting untold existing services. This means that they can quickly offer new services to customers and compete with established banks for market share.

The innovation challenge

Yet, the challenges of shrinking IT budgets, growing system maintenance effort and pressure to support dynamic environments threaten to eat into IT budget just to keep the lights on. In fact, Gartner Group states that 70% of IT budgets are spent on lights-on activities.

Without investment in mobile and new services development, software developers at established banks are less able to deliver innovation to the business. This is reflected in the CIO’s view of their development teams. A global survey of 590 CIOs conducted by IT market research firm Vanson Bourne and commissioned by Borland, a Micro Focus company, found that a third of CIOs consider their mobile development team to be sluggish, middling or outpaced.

Lack of investment and fear of failure

Chris Skinner, chairman at the Financial Services Club, networking group for senior executives in the financial sector, holds the opinion that banks should replace the traditional IT foundations in the light of digitisation and trends such as bring your own device (BYOD) or they leave themselves open to competitors. In doing so, Skinner argues, less will be spent on maintaining these business systems in the long term and more can be spent on innovative new development projects.

Ripping and replacing IT systems is not the panacea to the problems experienced with delivering applications to mobile platforms. Applications running on mainframes are stable, secure and efficient, irrespective of “backlog” or other operational concerns. According to research by IBM, between 70-80% of global 2,000 companies rely on mainframes to process core business applications, and mainframe revenues and processor usage continue to increase.

Modernisation: the core applications are key

The trick is to start from a position of strength. That position is the existing, working, trusted core applications that will likely form the backbone of any new ‘mobile service’ being requested. This means re-using as much as possible of what is already working, and only building new software when absolutely needed (in this case only the presentation logic for mobile devices). Rewriting the back-end application or ripping and replacing for the sake of a new user interface is overcomplicating an already complex IT task, not to mention an extremely risky undertaking[ii].

Many existing banking systems include green screen applications which can already connect the employee to core applications through web portals. However, these interfaces can all too often be cumbersome and difficult to operate, especially on a mobile screen. In fact, according to a Vanson Bourne survey of 590 CIOs, 98% of respondents claim new green screen features would enhance productivity, but many think modernisation is too difficult.

The future potential for these core systems is much more viable. Transforming the existing green-screen user interface and providing access from a choice of devices including web browsers and iPads is a very simple undertaking, possible within a matter of hours. Such technology can turn mainframe 3270 applications into touch-screen apps, and integrate customisable controls such multi green-screen tables, tabs, images calendars and drop down menus. All of which can be achieved without resorting to new application development, to provide a rapid and low-cost solution to business efficiency challenges. The option of leveraging this approach for internal users or external customers then becomes an internal policy decision, rather than a technical one.

Developing for mobile: use what works, build new interfaces

If banks really want to ensure their workforce is supplied with innovative technology across platforms, maximising the systems they already have will be quicker, and less costly than a system overhaul. This will drive a more efficient operation that will be better equipped to fend off competition from new challenger banks in a competitive market.

[i] http://www.finextra.com/news/fullstory.aspx?newsitemid=25590

[ii] Add reference to the Standish Group report.

Banking

Citigroup considering divestiture of some foreign consumer units – Bloomberg Law

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Citigroup considering divestiture of some foreign consumer units - Bloomberg Law 1

(Reuters) – Citigroup Inc is considering divesting some international consumer units, Bloomberg Law reported on Friday, citing people familiar with the matter.

The discussions are around divesting units across retail banking in the Asia-Pacific region, the report https://bit.ly/3pD57WP said.

“As our incoming CEO Jane Fraser said in January, we are undertaking a dispassionate and thorough review of our strategy,” a Citigroup spokesperson told Reuters.

“Many different options are being considered and we will take the right amount of time before making any decisions.”

The move, part of Fraser’s attempt to simplify the bank, can see units in South Korea, Thailand, the Philippines and Australia being divested, the Bloomberg report said.

However, no decision has been made, according to the report.

Revenue from Citi’s consumer banking business in Asia declined 15% to $1.55 billion in the fourth quarter of 2020.

The divestitures could be spaced out over time or the bank could end up keeping all of its existing units, the Bloomberg report said.

The firm is also reviewing consumer operations in Mexico, though a sale there is less likely, the report said, citing one of the people.

Last month, New York-based Citigroup beat profit estimates but issued a gloomy forecast for expenses. Finance head Mark Mason said the lender’s expenses could rise in 2021 in the range of 2% to 3%, weighing on its operating margins. (https://reut.rs/2ZwXRB1)

(Reporting by Niket Nishant in Bengaluru; Editing by Maju Samuel)

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Banking

European shares end higher on strong earnings, positive data

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European shares end higher on strong earnings, positive data 2

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)

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Banking

ECB plans closer scrutiny of bank boards

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ECB plans closer scrutiny of bank boards 3

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)

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