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Getting machine learning right to help steer the path through change

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Getting machine learning right to help steer the path through change 1

By Richard Harmon, Managing Director, Financial Services at Cloudera

It is a well known fact that the UK is going into a recession and it can feel like everywhere you look there are predictions of doom and gloom when it comes to the financial implications of the COVID-19 pandemic. In the Financial Services sector in particular, 86% of profit warnings in the first seven months of 2020 cited Covid-19. Then if you add on Brexit, the uncertainties surrounding the future of the UK economy intensify. Individually both of these are highly disruptive events, however, together they leave a number of unknowns: the pandemic has already almost lasted a year, when will it end? What will the financial fallout from the many sectors that have been hit hardest be? What will the final Brexit deal be and how will that impact trade costs? How resilient is the UK economy in the longer term? There are a lot of questions that need to be answered.

However, it’s not all bad news. We have also seen massive strides in the advancement of technology in the past decade, and more than ever we have tools at our disposal to help weather this storm. One of the key advancements has been in machine learning models, which have been used to predict and prepare for change. However, the unprecedented nature of COVID-19 and its global impact, means that these models are facing their biggest challenge yet – predicting the unpredictable.

Preparing for the unknown

For financial institutions, Machine Learning (ML) models have become a critical element in how they operate, particularly in relation to preparing for what’s to come. This is primarily due to the ML model’s ability to enhance the financial performance, through data, for both businesses and their consumers. To illustrate this, consider the example of the United Overseas Bank. By analysing the myriad of data points from multiple sources, such as daily file uploads, the ML models have a more complete overview of transaction and customer data. As a result, ML helps United Overseas Bank to optimise fraud detection, map out distinctive customer experiences and improve businesses processes for the bank. It is precisely because of this use of ML that the United Overseas Bank can now ensure its customers’ banking experience is more reliable, simpler and safer.

The challenge that many organisations face, however, is that the ML models that are used today have been created using huge amounts of very granular, historical data. While this is effective in predicting outcomes that follow a similar pattern, it does not account for the extremely uncertain environment businesses find themselves in today. However, to alter these models is not straight-forward and there are a number of considerations to take into account before diving in.

Adapting in the face of change

Before any action is taken, it is of the utmost importance to determine whether the current disruption can be defined as a one-off ‘Tail Risk Event’ or a ‘Structural Change’. If the COVID-19 pandemic is a tail risk event, it’s basically an exception to the rule. This would mean that as and when the world recovers — financial markets, businesses and the wider economy would bounce-back to normal and should function in much the same way as they did before the pandemic. In this case, ML models face the challenge of avoiding being too heavily adjusted, influenced and biased in reaction to this one off, once-in-a-lifetime, event. In contrast, if COVID-19 is perceived as a systemic, structural change, then it is going to have a significant impact on how financial institutions, and the world at large, operates. There will be no ‘return to normal’ and the adjustment required will involve businesses needing to develop completely new ML models that can account for this new and evolving landscape.

Adjust, invest, progress

There is not one simple solution for businesses. However, there are some key actions financial institutions can follow in order to best utilise their machine learning models in order to navigate this challenge:

  • Modify existing models: This will be the starting point for all data science teams. Actions can range from using the latest data elements to modify current models, or creating scenario-based projections adjusted for various levels of model bias. There are a variety of techniques that can be utilised including a Bayesian approach to capture expert judgement into the models. One of the more innovative approaches to the lack of rich relevant data is a meta-learning approach. From a deep learning perspective, meta-learning is particularly exciting and adoptable for three reasons: the ability to learn from a handful of examples, learning or adapting to novel tasks quickly, and the capability to build more generalizable systems.
  • Industrialisation of ML: 2020 has created the opportune moment for businesses to invest in a platform that supports the entire ML lifecycle, from building and validating processes, to managing and monitoring all of their models across the entire enterprise. The data storm that occurred this year, means enterprises have been faced with ever-growing amounts of data on their customers, business and wider market. These data sets have been entering the organisation from a variety of different sources, from the customer service team to social media platforms. For ML models to operate at their optimum level, they need to be able to quickly understand what all this different data is saying, while simultaneously taking every stream of data into account. Having a unified enterprise cloud platform is the only way to ensure this can be achieved.
  • Stress testing: This step is crucial in helping businesses gather more clarity on their vulnerabilities before it’s too late. Importantly here, the responsibility cannot fall on one team. In order to set up multiple, dynamic stress testing scenarios, cross collaboration from finance leaders to Chief Risk Officers is essential. The findings from these tests should then be implemented and retested, to ensure businesses are in the best position possible to face the challenges that Covid-19 and Brexit will bring
  • Prescriptive Analytics: This is a complementary approach to ML and utilises simulations, brought on by shocks or market changes, to enable more accurate decision-making for different scenarios. A common approach to this is a bottom-up simulation for modelling of complex and adaptive systems called Agent-Based Modeling (ABM). ABMs help businesses put into play numerous future scenarios without having to depend on the limitations of historical data.

There have been an inordinate amount of challenges thrown at businesses this year and lessons needed to be learnt quickly. In these times of unpredictability and uncertainty,  financial institutions shouldn’t count on this type of wholesale disruption being a one-time occurance. In fact, the 2008 market crash proved this kind of sudden disruption and instability can happen. Instead, 2020 needs to be seen as an opportunity to ensure more long-term initiatives are put in place that enable financial institutions to be prepared to successfully react to the next crisis. This is the time for businesses to really evaluate what technological investments they have made, assess whether they are working well in the new circumstances and whether advanced tools such as ML models are truly being utilised to the best of their ability. The players that take the time now to assess how well their ML models are performing and make the necessary adjustments ,will be the ones that ready themselves for success beyond the pandemic.

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Hisham Itani and Resource Group Recognized in the 2020 Global Banking & Finance Awards®

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Hisham Itani and Resource Group Recognized in the 2020 Global Banking & Finance Awards® 2

Global Banking & Finance Review has awarded Hisham Itani the Chairman and CEO of Resource Group, Technology CEO of the Year Middle East 2020 in recognition of his vision, strategy and strong leadership that have contributed greatly to Resource Group’s success in winning the Most Innovative Holding Group Middle East 2020 in this Global Banking & Finance Awards®.

 

Resource Group is an investment group with a portfolio of diversified businesses that capitalizes on technology and human talent for value creation. The company has proven that it has gone the extra mile to develop innovative solutions aimed at improving people’s lives and helping Lebanon transition toward a knowledge-based economy. Global Banking and Financial Review, the renowned online and print magazine identified a number of areas that Resource Group has excelled. The company has been awarded Most Innovative Holding Group Middle East 2020, and Hisham Itani the Chairman and CEO, receives the award for Technology CEO of the Year Middle East 2020. Under his leadership, Resource Group has grown from a family security-printing business to a diversified international investment group, with a portfolio of companies across 10 sectors in over 75 countries.

Wanda Rich, editor Global Banking & Finance, said “Mr. Itani took the security printing business to another level and expanded into different technology verticals in an impressive list of success stories”. The list includes digital security, smartcard manufacturing, mobile value added solutions, cyber security and secure communication solutions, telecom infrastructure and managed services, elections supply chain services, lottery systems and operations, mobile and virtual reality games, among others.

Resource Group’s focus on technology has had a constructive and tangible impact on government automation and on citizen experience in target markets.

Editor Wanda Rich says “We are proud to offer Resource Group these prestigious awards and wish them continued success and growth into 2021 during these challenging economic times”.

Global Banking and Finance Review is a renowned online and print magazine. The magazine’s website alone receives over 7 million page views annually. Global Banking and Finance Review provides a balanced view with formative and independent news from the financial community. The Global Banking & Finance Awards® were created to recognize companies of all sizes that are prominent in particular areas of expertise and excellence within the global financial community. The awards are known throughout the global banking and financial community. They reflect the innovation, achievement, strategy, progressive and inspirational changes taking place within the financial sector.

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Bouncing back in 2021: Digital Transformation is no longer a choice as dependence on 5G, IoT and Data increases in society and business

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5G and Open Banking: Explosive growth or business as usual?

By Ivan Ericsson, Head of Quality Management, Expleo Group Limited

The global pandemic has put enormous strain on businesses and brought into sharp focus the importance of being agile, adaptable and able to increase the pace of innovation and change at short notice – catapulting technology right to the top of the agenda for many organisations.

As the economy works to get back on its feet, technology is only going to play a bigger role in our lives. At Expleo, as experts in digital transformation and the reliable implementation of technological innovations, we’ve outlined the biggest tech-driven trends that we expect to see in 2021 and beyond.

1)     “Digital transformation” no longer a choice

If the COVID-19 pandemic has taught businesses anything, it’s that they need to be poised to respond to abrupt market disruption at any moment, making digital transformation mandatory overnight.

With no room for delay, hugely complex corporations – that have historically been slow to adopt technology – have had to accelerate their reliance on technology just to keep afloat in recent months. Digital change, at speed, has become the norm.

Even last year, the idea of an unscheduled video conference call might put people on edge – now most of us wouldn’t think twice about calling a colleague over Teams or Zoom even for a 2-minute conversation. At the same time, social infrastructure has moved with the needs of its users, with telecoms giants strengthening and opening up networks so we can keep communicating despite social distancing.

There are now very few excuses left for operating in a non-digital way. All businesses need to be intelligent businesses that can change direction nimbly, with speed, confidence and composure. As we see more businesses putting this into practice, it’ll likely result in an increased number embracing and normalising some of the behaviours of tech-savvy giants like Apple and Amazon, who have no doubt thrived during this period.

Their success can largely be attributed to normalising an agile approach. By ensuring all applications have testing facilities built in – a “quality shadow” if you will – it allows for continuous improvements, and the ability to change direction quickly and confidently, when needed. This is particularly valuable today as the world becomes more fast-paced and increasingly unpredictable.

2)     Big data/AI/predictive analytics

We’re moving into a space where big data can be extracted from the most seemingly innocuous places. In a hyper-connected world, a move as simple as a dog walk could offer huge swathes of data to the right companies. Many businesses already realise the benefits of capturing and utilising big data, but not all have taken advantage of it. The businesses that move quickest are most likely to reap the rewards in a more impactful way than their ‘data shy’ competitors. Where data used to be a side effect of business operation, it is now the driving force.

As businesses begin to rely more heavily on data to make critical decisions, independent assurance becomes increasingly important to get those decisions right. Forward-thinking, data-driven organisations must therefore assure that the data is correct in the first place, to avoid giving businesses false confidence and risk them moving in the wrong direction – something that is rarely affordable in today’s competitive and fast-paced environment. If businesses are not 100% confident in assuring the quality and accuracy of their own data, they should look to a third party for support.

A key data trend we expect to see moving further into 2021 is the increased use of predictive analytics. At the moment, businesses will often use data analytics to give us insights into our past activities, or to tell us where we are right now. However, the real value lies in knowing where we are going and how we are going to get there. Data analytics will help to identify the optional levels that can be pulled to drive change and realise business benefit.

Secondly, as intuitive technology advances and becomes more accessible, we expect over the next 12 months to see companies of all sizes begin to adopt artificial intelligence (AI) to drive intelligent analytics. In this context, AI refers to various technologies that allow machines to learn, sifting through ‘messy’ big data in order to find and unlock valuable predictive insights into future events. This allows businesses to better adapt their strategy to likely future outcomes and get a head start in the market.

However, with this ever-increasing emphasis on data and data protection, ethical AI will have a more prominent role to play in 2021 and beyond. Protected, usable Data is a by-product of good data security and privacy measures; however, the public remain wary of how their data is being used, particularly after the fallout from Cambridge Analytica’s use of data to influence an election[1]. Businesses, therefore, must give their customers confidence that their data is secure and protected.

3)     Moral relevance/corporate altruism

Research shows that young people are increasingly researching and considering the ethics of brands they’re purchasing from. And it won’t be long before this attitude starts seeping into every other aspect of their lives, with more and more people wanting to work for what they consider to be “purpose-driven” businesses.

Talent is the lifeblood of any company, so for big corporations, many of whom were born to create profit, this could put them in a tricky position. They might already be influencing society in a positive way – but this is unlikely to have ever been their main goal.

Moving forward, however, all organisations will have to start thinking about the “Triple Bottom Line”. That means considering the environmental and social impact of your business, alongside your commercial imperative.

We’ll soon see a mindset switch across businesses, from ‘competing’ to ‘advancing’. Instead of wanting to be the “best,” the question will be, how can I better serve the world around me?

In line with this, businesses will have to start thinking more about how to use tech for good, as we’ve seen with the likes of Microsoft Teams connecting tens of millions of people every day, during this very dark time[2].

2021 is likely to bring even more inroads when it comes to using technology to improve society, whether it’s developing bespoke problem-solving technologies or using IT to ‘eco-proof’ existing sectors, the goal for businesses is to rise to this challenge and build a better future for people and the planet through the use of technology. But all organisations will continue to need to be able to justify technology use and prove that they’re using it ethically, and in a secure manner.

4)     5G new networks – just about all big trends are driven by/reliant upon faster networks – particularly relevant for a more distributed workforce

Greater access and utilisation of 5G networks across the country will underpin and accelerate all of the key trends discussed. Everything we do on our smart devices we can expect to do at higher speed, greater capacity and with lower lag times.

As our digital footprints extend beyond simple web browsing and into our daily lives through smart technology, we are creating huge amounts of data every minute. This vast flow of data is increasingly dependent on new high bandwidth networks to facilitate it. Therefore, the merging of technology and engineering will become critical in ensuring big data is carried successfully to drive analytics and drive business.

The fact we have managed to successfully work from home during COVID is a glowing recommendation for the quality of the networks as they exist today, and they will only get better.

The telecoms industry is already working overtime to ensure that people all over the country get reliable access to the internet – and the fact that there is still inequality in this area proves just how challenging this is. But, in line with this trend toward hyper automation, which will make data extraction and analysis a part of everyday life for businesses, the consolidation of tech and engineering will be ever more important.

Forward-thinking companies will look to incorporate 5G networks into their business strategy. This could be from an internal perspective to enhance the abilities of their remote workforce. Alternatively, this could relate to their own products or offerings – developing an internet of things (IoT) strategy, improve user experience, or bring products to market faster by analysing big data and adapting quicker. Either way, with increasingly improved networks, businesses are expected to take advantage of the huge increase in accessible and usable data.

Concluding comments:

For businesses to truly reap the benefits of these new technologies, they must be developed and adopted in the right way.

Quality assurance, trust and security are three key requirements that the technology of the future depends on to succeed. Having these requirements at the heart of any digital transformation will ensure that systems perform reliably, having been tested and assured.

By prioritising a seamless customer experience combined with an ability to create, test, and scale digital solutions and operationalise at pace, businesses will be in the best possible position to take advantage of the potential being unlocked by these new technologies.

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Ahli Bank, Oman, is SunTec’s 50th customer for its Indirect Taxation Solution

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Ahli Bank, Oman, is SunTec’s 50th customer for its Indirect Taxation Solution 3

SunTec’s GCC VAT compliance solution to help Ahli Bank automate end-to-end VAT compliance process, manage regulatory changes, and seamlessly integrate it with the existing IT ecosystem

SunTec, the world’s #1 relationship-based pricing and billing company and the provider of #1 GST and VAT compliance solution for Banks and Financial Services in GCC and India, has partnered with Ahli Bank, Oman, to provide its GCC VAT compliance solution.

The win is a landmark one for SunTec as it marks the 50th customer for its indirect taxation solution. SunTec has garnered 24 customers in India and this is the 26th customer in the Middle East to acquire the solution.

VAT is likely to be introduced in Oman in early 2021 and Ahli Bank has taken the proactive step of adopting a VAT compliance solution to ensure operational efficiency, enhance revenue, and augment customer experience.

Amit Dua, President – Client Facing Groups, SunTec, said, “We are delighted to partner with Ahli Bank, Oman in what marks a historic win, in their journey to ensure VAT compliance. We understand that the VAT landscape is evolving within the GCC, and therefore, our solution offers agility to respond to these changing regulatory requirements. With the Xelerate platform and GCC VAT compliance solution, Ahli Bank can digitize the entire VAT compliance process and comply with least number of changes to their existing technology infrastructure.”

He added, “VAT is a crucial step that the GCC countries have taken to implement tax regimes. It is imperative for banks and financial institutions to have a robust and scalable solution to accommodate their specific needs. Ahli Bank joins the list of more than 20 banks who have adopted our GCC VAT Compliance solution.  I’m proud to say that approximately 3 billion transactions per annum are processed through our GCC VAT/ GST compliance solution across our client base.”

Said Abdullah Al Hatmi, CEO at Ahli Bank, added: “It is extremely crucial for us to be ready for VAT compliance. We are very happy to partner with SunTec to deploy GCC VAT compliance solution. With SunTec we will have a single solution in place covering all aspects of VAT compliance and we will be future-proofed given that any future regulatory changes will be handled by the solution with ease.”

SunTec’s GCC VAT compliance solution based on the Xelerate platform will enable the bank to smoothly comply with GCC VAT regulations and manage potential regulatory changes with ease. The single end-to-end solution helps automate the entire VAT compliance process including centralized rule-based tax determination, input tax recovery, tax invoice, reconciliation, corrections, adjustments, statements, and regulatory reporting.

SunTec GCC VAT Compliance solution is architected to meet the unique needs of banks and financial services firms and can easily integrate with existing IT systems. The solution is designed to process all taxable transactions across business lines and applications, reduce cost of compliance, mitigate potential risk of compliance violations, penalties, and reputational risk.

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