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Financial Services: innovation in a risk-averse environment

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Financial Services: innovation in a risk-averse environment

Tim Wakeford, Vice President of Financials Product Strategy, EMEA,Workday

We are now in an era where financial services companies and institutions are having to innovate to compete with new fin-tech startups and keep up with customer expectations, developing emerging technologies and adopting new business models.

This situation was brought into sharp focus most recently in PwC’s Global FinTech Report, in which the vast majority (88%) of executives surveyed reported part of their business was at risk due to standalone fintech companies. Plus, over three-quarters(77%)revealed how they plan to increase internal innovation efforts over the next three to five years, in order to disrupt from within.

But how can firms innovate effectively without overlooking their most important asset – their employees – as well deal with all that this new landscape is throwing at them?

Innovate beyond the customer experience

The customer experience is, more often than not, the key focus of innovation efforts for both market-disrupting fintechs and for the in-house digital innovation teams in traditional financial services firms.

The reason for this is clear: if a financial institution can optimise customer experience, they are able to rely on their customers’ “share of wallet” to generate revenue.

However, this is not the only area where financial services firms should be using new technologies to innovate and disrupt. Firms need to look at their own internal systems and consider, in particular, the employee experience as well as the customer experience.

This is important as, for one, customer experiences are determined by all of their interactions with a company. Therefore, interactions with employees, as well as interactions with a firm’s products and services are all crucial to an overall experience.

IBM’s recent global study on “The Employee Experience of Financial Services Workers” clearly revealed how positive employee experiences improve staff performance, discretionary effort and retention. And providing “meaningful work” is the key driver of employee experience, which ensures that staff are using their skills and talents to their full potential and that they feel aligned with the company’s core values.

From performance management to performance enablement

In addition to those provided to customers, consumer-grade mobile and technology experiences are just as important for those employees on the front line of customer communications and those back-office staff responsible for getting the business done in the fastest, most reliable and satisfactory way for the customer.

Employees need quick, easy and reliable access to the right information to help them do their jobs efficiently, without getting bogged down due to outdated IT systems that require too much manual input and too many repetitive tasks on the part of the employee.

The aforementioned IBM study stresses that financial services companies have to allow their staff to fully utilise their talents and skills in order to have a really positive employee experience. Employee engagement is absolutely key to helping staff align their own goals with those of their teams and their employers.

This requires a shift in organisational culture and a move away from outdated internal systems that were designed by firms centred on performing top-down backward-looking staff reviews. Employees need access to accurate, up-to-date personal and financial information and they need the best analytics tools in place to gain these business insights that will help them do their jobs to a high standard.

Innovating responsibly while managing risk

Finally, there is the issue of how financial services companies – in an industry that is heavily regulated and, traditionally, risk averse –can really innovate fast enough. The outdated legacy IT systems prevalent in these firms are not capable of providing the kinds of consumer or employee experiences required to compete in today’s fast-moving market.

In order to compete with tech-first startups and agile, fast-moving fintechs, more established financial services organisations have stronger compliance controls in place, which means that they are still best-placed to manage risk and innovate responsibly.

Cloud technologies allow traditional financial services firms to operate at a scale and elasticity that just would not be possible with their legacy IT systems from ten or twenty years ago. Modern cloud solutions deliver intuitive, scalable platforms which allow companies to rapidly adapt to any emerging digital security threats and to release new features, updates and fixes quickly and easily, as and when needed.

Importantly, cloud technology developers are also able to swiftly update their software services to ensure that they and their clients are compliant with emerging and new regulations within the industry.

With all of this in mind, it is crystal clear why PwC predicted that the cloud is set to become the dominant infrastructure model in financial services. It’s because to meet both customer and employee expectations, financial services organisations need to be agile, nimble, able to adapt quickly to changes in the marketplace, to new demands from consumers and to emerging regulations across the industry.

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Sunak to use budget to expand apprenticeships in England

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Sunak to use budget to expand apprenticeships in England 1

LONDON (Reuters) – British finance minister Rishi Sunak will announce more funding for apprenticeships in England when he unveils his budget next week, the government said on Friday.

Employers taking part in the Apprenticeship Initiative Scheme will from April 1 receive 3,000 pounds ($4,179) for each apprentice hired, regardless of age – an increase on current grants of between 1,500 and 2,000 pounds depending on age.

The scheme will extended by six months until the end of September, the finance ministry said.

Sunak will also announce an extra 126 million pounds for traineeships for up to 43,000 placements.

Sunak’s March 3 budget will likely include a new round of spending to prop up the economy during what he hopes will be the last phase of lockdown, but he will also probably signal tax rises ahead to plug the huge hole in the public finances.

Sunak is also expected to announce a “flexi-job” apprenticeship scheme, whereby apprentices can join an agency and work for multiple employers in one sector, the finance ministry said.

“We know there’s more to do and it’s vital this continues throughout the next stage of our recovery, which is why I’m boosting support for these programmes, helping jobseekers and employers alike,” Sunak said in a statement.

(Reporting by Andy Bruce, editing by David Milliken)

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UK seeks G7 consensus on digital competition after Facebook blackout

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UK seeks G7 consensus on digital competition after Facebook blackout 2

LONDON (Reuters) – Britain is seeking to build a consensus among G7 nations on how to stop large technology companies exploiting their dominance, warning that there can be no repeat of Facebook’s one-week media blackout in Australia.

Facebook’s row with the Australian government over payment for local news, although now resolved, has increased international focus on the power wielded by tech corporations.

“We will hold these companies to account and bridge the gap between what they say they do and what happens in practice,” Britain’s digital minister Oliver Dowden said on Friday.

“We will prevent these firms from exploiting their dominance to the detriment of people and the businesses that rely on them.”

Dowden said recent events had strengthened his view that digital markets did not currently function properly.

He spoke after a meeting with Facebook’s Vice-President for Global Affairs, Nick Clegg, a former British deputy prime minister.

“I put these concerns to Facebook and set out our interest in levelling the playing field to enable proper commercial relationships to be formed. We must avoid such nuclear options being taken again,” Dowden said in a statement.

Facebook said in a statement that the call had been constructive, and that it had already struck commercial deals with most major publishers in Britain.

“Nick strongly agreed with the Secretary of State’s (Dowden’s) assertion that the government’s general preference is for companies to enter freely into proper commercial relationships with each other,” a Facebook spokesman said.

Britain will host a meeting of G7 leaders in June.

It is seeking to build consensus there for coordinated action toward “promoting competitive, innovative digital markets while protecting the free speech and journalism that underpin our democracy and precious liberties,” Dowden said.

The G7 comprises the United States, Japan, Britain, Germany, France, Italy and Canada, but Australia has also been invited.

Britain is working on a new competition regime aimed at giving consumers more control over their data, and introducing legislation that could regulate social media platforms to prevent the spread of illegal or extremist content and bullying.

(Reporting by William James; Editing by Gareth Jones and John Stonestreet)

 

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Britain to offer fast-track visas to bolster fintechs after Brexit

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Britain to offer fast-track visas to bolster fintechs after Brexit 3

By Huw Jones

LONDON (Reuters) – Britain said on Friday it would offer a fast-track visa scheme for jobs at high-growth companies after a government-backed review warned that financial technology firms will struggle with Brexit and tougher competition for global talent.

Finance minister Rishi Sunak said that now Britain has left the European Union, it wants to make sure its immigration system helps businesses attract the best hires.

“This new fast-track scale-up stream will make it easier for fintech firms to recruit innovators and job creators, who will help them grow,” Sunak said in a statement.

Over 40% of fintech staff in Britain come from overseas, and the new visa scheme, open to migrants with job offers at high-growth firms that are scaling up, will start in March 2022.

Brexit cut fintechs’ access to the EU single market and made it far harder to employ staff from the bloc, leaving Britain less attractive for the industry.

The review published on Friday and headed by Ron Kalifa, former CEO of payments fintech Worldpay, set out a “strategy and delivery model” that also includes a new 1 billion pound ($1.39 billion) start-up fund.

“It’s about underpinning financial services and our place in the world, and bringing innovation into mainstream banking,” Kalifa told Reuters.

Britain has a 10% share of the global fintech market, generating 11 billion pounds ($15.6 billion) in revenue.

The review said Brexit, heavy investment in fintech by Australia, Canada and Singapore, and the need to be nimbler as COVID-19 accelerates digitalisation of finance, all mean the sector’s future in Britain is not assured.

It also recommends more flexible listing rules for fintechs to catch up with New York.

“We recognise the need to make the UK attractive a more attractive location for IPOs,” said Britain’s financial services minister John Glen, adding that a separate review on listings rules would be published shortly.

“Those findings, along with Ron’s report today, should provide an excellent evidence base for further reform.”

SCALING UP

Britain pioneered “sandboxes” to allow fintechs to test products on real consumers under supervision, and the review says regulators should move to the next stage and set up “scale-boxes” to help fintechs navigate red tape to grow.

“It’s a question of knowing who to call when there’s a problem,” said Kay Swinburne, vice chair of financial services at consultants KPMG and a contributor to the review.

A UK fintech wanting to serve EU clients would have to open a hub in the bloc, an expensive undertaking for a start-up.

“Leaving the EU and access to the single market going away is a big deal, so the UK has to do something significant to make fintechs stay here,” Swinburne said.

The review seeks to join the dots on fintech policy across government departments and regulators, and marshal private sector efforts under a new Centre for Finance, Innovation and Technology (CFIT).

“There is no framework but bits of individual policies, and nowhere does it come together,” said Rachel Kent, a lawyer at Hogan Lovells and contributor to the review.

($1 = 0.7064 pounds)

(Reporting by Huw Jones; editing by Jane Merriman and John Stonestreet)

 

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