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Open Banking and the need for integration technology

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Open Banking and the need for integration technology

By Derek Thompson, Vice President EMEA,Dell Boomi 

 The introduction of Open Banking at the beginning of 2018 transformed the face of the UK’s financial services industry.

Designed to provide consumers with greater control over their financial data, and make it considerably easier to view and manage their finances, the new regulation allows customers to give permission for banks to securely share their financial data with third-party technology companies.

As a result, consumers are now able to view all of their bank accounts through one provider’s interface, for example, or make payments to online retailers directly from their account as a bank transfer.

While the move has provided a more seamless banking experience for consumers, it has forced traditional banks to invest further in their IT infrastructures in order to keep pace with their competitors and maintain relevance in the face of disruption from new online and mobile offering such as Monzo, Starling and Atom Bank.

Fragmented digital infrastructure and inflexible legacy IT systems can often hinder the attempts at a digital transformation by more established financial services providers. The development of cloud-based services, however, eliminates the need for organisations to introduce new hardware although it does introduce additional complexities with regard to integration. It’s important that businesses are able to integrate new services with existing applications without leaving them with a deluge of disconnected data.

To ensure they are able to successfully migrate their functions to a digital space, therefore, traditional banks require a reliable platform that will enable them to tap into and integrate the capabilities of a modern cloud platform which will fundamentally underpin the delivery of an improved customer experience while eliminating data redundancy.

Liquid expectations

Today’s consumers expect a seamless, friction-free interaction with a company’s products and services, whether that company is a bank, an energy provider, Amazon or Apple. The introduction of Open Banking has amplified these ‘liquid expectations’ with regard to financial services, and customers now expect range of engagement channel options. A monthly bank statement sent by mail is no longer sufficient, for example; customers now want to purchase new products, or activate or change services within a matter of minutes rather than days or weeks.

Traditional banks have, of course, been operating in a regulated environment for years, in which there has been little or no competition. As a result, meeting these demands will put new demands on their internal operations and processes. For banks to capitalise on the opportunity that Open Banking offers for an experience that puts the customer first across all available channels requires integration.

Each of the third parties that now has access to a customer’s account details, for example, will typically have their own touchpoints or individual business processes, and these applications will tend not to be integrated. Indeed, in the case of traditional banks, many will be decades old and have no public APIs.

Integration and orchestration

The ideal integration solution will pull together several modern applications and components essential in meeting today’s customer expectations. A front-end component, for example, presenting engagement channels such as Facebook, Twitter, web, email and phone will allow customers to contact their financial services provider via their preferred channel.

To ensure banks and third parties alike deliver an engaging and personalised customer experience, the solution should provide a 360-degree view of the customer, providing service agents with all the information on that customer and their interactions with the financial services provider in one place, regardless of whether those interactions took place online, over the phone, or by email.

The solution should employ an integration and orchestration layer to surface legacy system data and connect this with sales, service and marketing data, in order to drive efficiency and greater customer success. In addition, as many banks will have been essentially locked out of modern cloud platforms, because of their inflexible IT infrastructure and legacy systems, this integration layer should help them tap into and maximise the capabilities of the increasing range of SaaS applications.

Many banks and associated third parties will have separate organisations for handling customer care, and the provision and management of new and existing products and services, each of which may use different channels and distinct technology systems. As a result, customers may feel as if they’re dealing with three or four separate companies rather than one single, integrated entity. By integrating many of these processes, there will be a single source of data which will help create a consistent customer experience.

Open Banking has given customers greater control of their financial services than ever and, at the same time, increased expectations for a seamless experience. In order to meet these expectations, financial services providers must avoid being hindered by legacy IT infrastructure and make the most of the agility, speed and flexibility offered by developments in cloud technology. Only by implementing a reliable integration platform will they remain competitive, particularly in today’s disruptive technology landscape.

Banking

Commerzbank to lose 1.7 million clients by 2024 – Welt am Sonntag

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Commerzbank to lose 1.7 million clients by 2024 - Welt am Sonntag 1

FRANKFURT (Reuters) – Commerzbank expects to lose 1.7 million customers by 2024 as part of its current restructuring, resulting in a 300 million euro ($364 million) hit to revenue, weekly Welt am Sonntag reported, citing sources close to the bank.

The lender hopes to offset the drop by growing its loan business as well as by expanding its business with corporate and very wealthy clients, the report said, without giving any further detail of why customer numbers were expected to decline.

It also didn’t say if any specific category of client was most likely to be lost.

Commerzbank declined to comment.

According to the bank’s website it serves around 11.6 million private and small-business customers in Germany and more than 70,000 corporate and other institutional clients worldwide, so the reported loss of customers would suggest a drop of around 15%.

The bank earlier this month reported a $3.3 billion fourth-quarter loss, sinking further into the red as it continued a major restructuring and dealt with the fallout of the COVID-19 pandemic.

The bank’s restructuring plan involves cutting 10,000 jobs and closing hundreds of branches in the hope it can remain independent.

($1 = 0.8253 euros)

(Reporting by Christoph Steitz and Tom Sims; Editing by David Holmes)

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Citigroup considering divestiture of some foreign consumer units – Bloomberg Law

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Citigroup considering divestiture of some foreign consumer units - Bloomberg Law 2

(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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European shares end higher on strong earnings, positive data

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European shares end higher on strong earnings, positive data 3

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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