Finance
HOW FS COMPANIES CAN FIND THE RIGHT BALANCE BETWEEN PEOPLE AND MACHINES

By Dee Houchen
Is financial services a people industry? The rising popularity of Artificial Intelligence and Process Automation suggests the answer is “no”. Recent research from Roubini Thoughtlabpredicts the uptake of these technologies will grow by 110% and 84% respectively over the next five years, raising serious questions about the effects this will have on financial services employees and the way companies interact with their customers.
For all the headlines about how machines will replace humans, let us not forget that financial services is about relationships and exchanges between people. Mortgages, loans and investments are not just figures on a financial statement – they are someone’s house, business loan, or retirement plans. Without humans, these instruments would have no reason to exist.
The challenge for financial services companies taking on new technologies like AI and automation is to marry the creativity and ingenuity of human reasoning with the efficiency of machines. This will require them to find a balance that serves their ambitions of engaging customers while also enhancing the way employees work.
We have already seen self-service portfolio management leave traditional stockbrokers in the dust and the rise of mobile banking apps eliminate the need for customers to visit a branch, but what does the steady creep of technology mean for people working in the industry?
Crucial to this endeavour is closer collaboration between Finance and HR teams. The Finance department, where a great deal of technology is being implemented, must work with HR leaders to understand where they need to have people managing processes and where it makes more strategic sense to automate.
The Roubini research reveals in which ways digital leaders in the financial services industry are already using AI and automation to help their teams work smarter and faster. Fifty-six per cent (56%) have seen increased productivity among their advisors, 50% have seen improvements in their ability to detect and anticipate cybersecurity risks, and 38% have been able to optimise and streamline their back office.
With AI and machine learning, organisations can crunch through huge volumes of data and uncover new insights in seconds, but these technologies are only half of the equation. It takes a human being’s judgment and penchant for critical thinking to apply this insight and use it to inform finance strategies, helping the business to meet increasingly complex challenges in a fast-shifting market.
Companies that still view their technology as distinct from their people are missing the point and will fail to achieve their full potential, on both fronts. Tools like AI and automation should serve to augment human decision-making, while people must be encourage to buy into these technologies and trained to use them effectively.
HR and Finance teams therefore need to join forces and foster a work culture that reflects this approach. This will ensure employees are not just willing to use new technologies as part of their day-to-day work but also able to do so and enjoy the benefits. Finance teams understand the benefits that technology can bring to employee workflows and decision-making, while HR teams play a major role in recruiting the right people, training them, and helping managers to transition employees to new ways of working
This collaboration speaks to a wider imperative within businesses. Roles and responsibilities that were once guarded by individual departments are now bleeding across multiple business units. For instance, consider how compliance has become a matter of organisational culture rather than the sole preserve of legal or finance departments.
As new technologies continue to transform the workplace, companies must adapt their team cultures and the way people use technology to do their jobs. In the financial services industry, this begins with closer collaboration between HR and Finance. Together, they can develop a model for interdepartmental cooperation; even more importantly, they can set the right precedent for how to marry the capabilities and limitations of man and machine.
Finance
Sterling gets vaccine boost to hit 8-month high vs euro

By Joice Alves
(Reuters) – Sterling rose to a fresh eight-month high against the euro on Wednesday as Britain’s faster COVID-19 vaccine rollout than in the European Union offered support to the pound.
Although Britain’s deaths from the coronavirus pandemic passed 100,000 on Tuesday, its faster initial vaccine rollout has fuelled hopes for economic recovery.
Sterling was up 0.3% at 88.28 pence at 1049 GMT, after hitting a fresh eight-month high of against the single market currency.
Graphic: Sterling 27 Jan, https://fingfx.thomsonreuters.com/gfx/mkt/jbyvrnbbbve/Sterling%2027%20Jan.png
Geoffrey Yu, senior EMEA market strategist at BNY Mellon, said “the general theme of UK doing well with vaccinations is playing a role” in lifting the pound, which is “not expensive and not over-owned yet”.
On the other hand, “the euro is clearly being undermined by ongoing concerns over vaccine rollout speed and supply,” Yu added.
Versus the greenback, sterling was flat at $1.3736, not far off a May 2018 high of $1.3759 touched earlier.
Hopes for a large U.S. fiscal stimulus package has fuelled risk sentiment in markets in recent weeks, benefiting sterling. Market participants are expecting Federal Reserve Chair Jerome Powell to renew a commitment to ultra-easy policy.
“It’s FOMC today so the adjustment in dollar positions may be playing a role as well,” Yu said.
As Britain left the bloc in December, the City of London said the capital’s loss of some financial business due to Brexit has not been catastrophic and it will thrive even if the European Union “irrationally” blocks access.
“For now Sterling continues to trade more on hope, vaccines, than current reality,” said Jeremy Stretch, head of G10 FX Strategy at CIBC Capital Markets.
(Reporting by Joice Alves in VARESE, Italy. Editing by Alexander Smith and Andrew Cawthorne)
Finance
Dollar advances as investors shy away from risk

By Saqib Iqbal Ahmed
NEW YORK (Reuters) – The dollar edged higher against a basket of currencies on Monday, as a burst of volatility in stock markets around the globe sapped investors’ appetite for riskier currencies.
Concerns over the timing and size of additional U.S. fiscal stimulus sent major U.S. stock indexes briefly more than 1% lower before they recovered to trade little changed on the day.
The sharp move in stock markets soured FX traders’ appetite for risk, Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto, said.
“Your high beta currencies – currencies that are highly correlated with equity markets and global risk appetites – are tumbling in synchrony with equity indexes,” Schamotta said.
Market sentiment turned more cautious at the end of last week as European economic data showed that lockdown restrictions to limit the spread of the coronavirus hurt business activity.
The U.S. Dollar Currency Index was 0.19% higher at 90.396, after rising as high as 90.523, its strongest since Jan. 20.
The euro was down around 0.28% against the dollar. German business morale slumped to a six-month low in January as a second wave of COVID-19 halted a recovery in Europe’s largest economy, which will stagnate in the first quarter, the Ifo economic institute said on Monday.
The Australian dollar – seen as a liquid proxy for risk – was 0.16% lower against the dollar.
U.S. stocks have scaled new highs in recent sessions even as concerns about the pandemic-hit economy remain. Investors are trying to gauge whether officials in U.S. President Joe Biden’s administration could head off Republican concerns that his $1.9 trillion pandemic relief proposal was too expensive.
Despite the dollar’s recent rebound – the dollar index is up about 1.3% since early January – analysts expect a broad dollar decline during 2021. The net speculative short position on the dollar grew to its largest in 10 years in the week to Jan. 19, according to weekly futures data from CFTC released on Friday.
The U.S. Federal Reserve meets on Wednesday and Chair Jerome Powell is expected to signal that he has no plans to wind back the Fed’s massive stimulus any time soon – news which could push the dollar down further.
Sterling strengthened on Monday against the weaker euro as Britain’s COVID-19 vaccine rollout over the weekend offered support to the British currency.
(Reporting by Saqib Iqbal Ahmed; Editing by Andrea Ricci and Sonya Hepinstall)
Finance
London and New York financial services treated the same, EU says

By Huw Jones
LONDON (Reuters) – An EU forum for discussing financial services with Britain will be similar to what the United States has, and it must be in place before market access will be considered, the bloc’s financial services chief said on Monday.
Britain’s Brexit trade deal with the EU from Jan. 1 does not cover financial services, leaving its City of London financial center largely cut off from the EU.
Both sides are committed to creating a forum for financial regulatory cooperation by March, but talks have not started yet, the EU financial services commissioner told the European Parliament.
“What we envisage for this framework is similar to what we have with the United States, a voluntary structure to compare regulatory initiatives, exchange views on international developments and discuss equivalence related issues,” Mairead McGuinness told the European Parliament.
U.S. and EU regulators took about four years just to agree on rules on cross-border derivatives.
Trading in euro shares has already left London, along with a chunk in swaps trading. That questions the value of any future EU access given that many banks and trading platforms from the UK have opened units in the bloc.
McGuinness said regulatory cooperation will not be about restoring market access that Britain has lost, nor will it constrain the EU’s unilateral equivalence process.
Equivalence refers to EU access when Brussels deems a non-EU country’s rules are similar enough to the bloc’s.
“Once we agree on our working arrangements, we can turn to resuming our unilateral equivalence assessments… using the same criteria as with all third countries, including anti-money laundering and taxation cooperation,” she said.
Britain plans to amend some EU rules.
“The United Kingdom intention to diverge requires a case-by-case discussion in each area. Equivalence and divergence are polar opposites,” McGuinness said.
“I am optimistic that over time, through cooperation and trust, we will build a stable and balanced relationship with our UK friends.”
(Reporting by Huw Jones; Editing by Dan Grebler)