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Financial services firms and innovation : How thinking small can pay off

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Financial services firms and innovation : How thinking small can pay off 1

By Andy Mather, European Financial Services Industry Specialist, Telstra

There’s no question that financial services players understand the need to innovate, with recent research showing that innovation ranks among their senior executives’ top priorities.[1]The problem, however, is that most remain cautious about what to do – for example, in not introducing new ways of working despite having assigned executive responsibility and allocated budget for fostering innovation.

Andy Mather

Andy Mather

It turns out that “ways of working” is precisely where the focus needs to be, based on the particular nature of banking technology. To understand why, we need to start by looking at the challenges that financial services providers face when it comes to moving their business forward.

Put simply, banks have a huge amount of legacy issues to deal with. Some of this may be due to organic growth. Or it could be the result of various acquisitions over the years, each one adding new technological complications (which ultimately become yet more legacy). Or it could stem from a general reluctance to decommission old technology in a timely way, a reluctance borne out of fear of unexpected consequences.

All of that can lead firms to feel that if they are going to make a change, it has to be big. Yet large-scale overhauls – big bang projects – are not what innovation is about. Innovation is about constant improvement.

Taking a new approach

In such an environment, how can firms successfully innovate? The first thing they need to do is think small.

Firms need to base their innovation strategies on lots of small, incremental changes. They need to think in terms of multiple events, not single large ones. Together, all of those small steps can end up having big effects.

In a legacy-dominated environment, this may be easier said than done. But that doesn’t mean it’s not possible.

In one case, my firm was working with a company that wanted to enhance its price data with additional algorithms to create new content for its customers. Looking at the technology stack it had, the client realised it would need to move databases and use batch processing to make the new content available. The problem was, these new processes would take hours and would need to take place at the end of the day, making the added content far less valuable.

The answer to this particular problem was not to add technology layers, or even to change any of the technology. It was to run the algorithms on the source data and then effectively virtualise the data so that as the source data moved, the new analytics were created and distributed instantly.

Thinking small is about not necessarily changing what a firm has, but changing the way it thinks about what it has. In this way, small steps can end up being radical. The journey in this case was more of a mental one than a technological one.

Fostering this kind of change requires a cultural shift for many firms. The good news is that the financial services industry, despite its naturally cautious tendencies, has a good track record in terms of recognising the need to change.

When algorithmic trading started to take off more than a decade ago, trading firms knew they needed to bring in a whole new type of talent. Suddenly trading floors began to be populated by people who had had little contact with the financial world before, people with doctorates in physics, aerospace, engineering and other scientific fields. These were individuals who took a fundamentally different view of what a trading firm was trying to achieve and who introduced radically different ways of doing business.

The right people, the right questions

If further evidence of the need to prioritise innovation, PriceWaterhouseCoopers have suggested a litany of examples of how financial disruption has now become the norm. From the sharing model to blockchain to artificial intelligence, emerging technologies are changing huge swathes of the way financial services are provided.[2] Unsurprisingly, PwC suggests acquiring the right talent as one of its top strategic priorities for firms seeking to navigate the new terrain.

The new breed will be people who can think about the end-result for customers but who aren’t constrained by old ways of working. “Financial institutions in general simply do not have the internal knowledge and expertise they will need to implement a ‘what do our customers want?’ approach,” the PwC report says.

One of the best ways, then, to start to innovate is to collaborate. Bringing in multiple third-party firms to work on a project, each with its own specialist skills, might sound daunting to some firms. But it can end up saving large amounts of time and resource, because each supplier can contribute the expertise needed, rather than one firm trying to do it all over a longer period of time.

One of the fringe benefits of this approach is that the people trying to solve problems are focused on outputs, and what those outputs they will look like, rather than on the existing technology and all the constraints that come with it. It’s all about asking different questions than firms have in the past.

Thinking small, taking a collaborative approach, focusing on outputs and asking different questions — these are some of the key ingredients for innovation. This is what “new ways of working” looks like. And this, in the end, is what will mark the difference between firms that are stuck in the past and those that are constantly leaping into the future.

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Australia says no further Facebook, Google amendments as final vote nears

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Australia says no further Facebook, Google amendments as final vote nears 2

By Colin Packham

CANBERRA (Reuters) – Australia will not alter legislation that would make Facebook and Alphabet Inc’s Google pay news outlets for content, a senior lawmaker said on Monday, as Canberra neared a final vote on whether to pass the bill into law.

Australia and the tech giants have been in a stand-off over the legislation widely seen as setting a global precedent.

Other countries including Canada and Britain have already expressed interest in taking some sort of similar action.

Facebook has protested the laws. Last week it blocked all news content and several state government and emergency department accounts, in a jolt to the global news industry, which has already seen its business model upended by the titans of the technological revolution.

Talks between Australia and Facebook over the weekend yielded no breakthrough.

As Australia’s senate began debating the legislation, the country’s most senior lawmaker in the upper house said there would be no further amendments.

“The bill as it stands … meets the right balance,” Simon Birmingham, Australia’s Minister for Finance, told Australian Broadcasting Corp Radio.

The bill in its present form ensures “Australian-generated news content by Australian-generated news organisations can and should be paid for and done so in a fair and legitimate way”.

The laws would give the government the right to appoint an arbitrator to set content licencing fees if private negotiations fail.

While both Google and Facebook have campaigned against the laws, Google last week inked deals with top Australian outlets, including a global deal with Rupert Murdoch’s News Corp.

“There’s no reason Facebook can’t do and achieve what Google already has,” Birmingham added.

A Facebook representative declined to comment on Monday on the legislation, which passed the lower house last week and has majority support in the Senate.

A final vote after the so-called third reading of the bill is expected on Tuesday.

Lobby group DIGI, which represents Facebook, Google and other online platforms like Twitter Inc, meanwhile said on Monday that its members had agreed to adopt an industry-wide code of practice to reduce the spread of misinformation online.

Under the voluntary code, they commit to identifying and stopping unidentified accounts, or “bots”, disseminating content; informing users of the origins of content; and publishing an annual transparency report, among other measures.

(Reporting by Byron Kaye and Colin Packham; Editing by Sam Holmes and Hugh Lawson)

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GSK and Sanofi start with new COVID-19 vaccine study after setback

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GSK and Sanofi start with new COVID-19 vaccine study after setback 3

By Pushkala Aripaka and Matthias Blamont

(Reuters) – GlaxoSmithKline and Sanofi on Monday said they had started a new clinical trial of their protein-based COVID-19 vaccine candidate, reviving their efforts against the pandemic after a setback in December delayed the shot’s launch.

The British and French drugmakers aim to reach final testing in the second quarter, and if the results are conclusive, hope to see the vaccine approved by the fourth quarter after having initially targeted the first half of this year.

In December, the two groups stunned investors when they said their vaccine would be delayed towards the end of 2021 after clinical trials showed an insufficient immune response in older people.

Disappointing results were probably caused by an inadequate concentration of the antigen used in the vaccine, Sanofi and GSK said, adding that Sanofi has also started work against new coronavirus variants to help plan their next steps.

Global coronavirus infections have exceeded 110 million as highly transmissible variants of the virus are prompting vaccine developers and governments to tweak their testing and immunisation strategies.

GSK and Sanofi’s vaccine candidate uses the same recombinant protein-based technology as one of Sanofi’s seasonal influenza vaccines. It will be coupled with an adjuvant, a substance that acts as a booster to the shot, made by GSK.

“Over the past few weeks, our teams have worked to refine the antigen formulation of our recombinant-protein vaccine,” Thomas Triomphe, executive vice president and head of Sanofi Pasteur, said in a statement.

The new mid-stage trial will evaluate the safety, tolerability and immune response of the vaccine in 720 healthy adults across the United States, Honduras and Panama and test two injections given 21 days apart.

Sanofi and GSK have secured deals to supply their vaccine to the European Union, Britain, Canada and the United States. It also plans to provide shots to the World Health Organization’s COVAX programme.

To appease critics after the delay, Sanofi said earlier this year it had agreed to fill and pack millions of doses of the Pfizer/BioNTech vaccine from July.

Sanofi is also working with Translate Bio on another COVID-19 vaccine candidate based on mRNA technology.

(Reporting by Pushkala Aripaka in Bengaluru and Matthias Blamont in Paris; editing by Jason Neely and Barbara Lewis)

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Don’t ignore “lockdown fatigue”, UK watchdog tells finance bosses

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Don't ignore "lockdown fatigue", UK watchdog tells finance bosses 4

By Huw Jones

LONDON (Reuters) – Staff at financial firms in Britain are suffering from “lockdown fatigue” and their bosses are not always making sure all employees can speak up freely about their problems, the Financial Conduct Authority said on Monday.

Many staff at financial companies have been working from home since Britain went into its first lockdown in March last year to fight the COVID-19 pandemic.

One year on, the challenges have evolved from adapting to working remotely to dealing with mental health issues, said David Blunt, the FCA’s head of conduct specialists.

“During this third lockdown, there has been a greater impact on mental well-being, with many people struggling with job security, caring responsibilities, home schooling, bereavements and lockdown fatigue.”

Bosses should continually revisit how they lead remote teams, he said.

“The impact of COVID-19 is creating a huge workload for those considered to be high performers, while the remote environment potentially makes it much more challenging for those who were previously considered low performers to change that perception,” Blunt told a City & Financial online event.

Companies should consider “psychological safety” or ensuring that all employees feel confident about speaking out and challenging opinions.

“We’ve heard varying reports of how successful this has been,” Blunt said.

Pressures in the financial sector were highlighted this month when accountants KPMG said its UK chairman Bill Michael had stepped aside during a probe into comments he made to staff.

The Financial Times said Michael, who later apologised for his comments, had told staff to “stop moaning” about the impact of the pandemic on their work lives.

Blunt was speaking as the FCA next month completes the full rollout of rules that force senior managers at financial firms to be personally accountable for their decisions to improve conduct standards.

There have only been a “modest” number of breaches reported to regulators so far as firms worry about being “tainted” but more cases will become public as sanctions are revealed, Blunt said.

“Regulators won’t be impressed by lowballing the figures.”

(Reporting by Huw Jones; Editing by Mark Heinrich)

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