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SYNECHRON SURVEY FINDS REGULATION REMAINS TOP 2017 FINANCIAL SERVICES PRIORITY

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SYNECHRON SURVEY FINDS REGULATION REMAINS TOP 2017 FINANCIAL SERVICES PRIORITY
  • 38% of firms cite Regulation as their top priority with enterprise-level Data Management (14.4%) & Systems Integration (10.6%) coming in second & third
  • MiFID II is the top regulatory priority (42.6%) followed by Dodd-Frank (29.6%); potential future Regulations related to tech Innovations like Blockchain and AI are also a top focus (29.2%) 
  • Innovation and automation remain on every firm’s agenda, with 2017 priorities shifting towards tangible business solutions

Synechron Inc., the digital, business consulting and technology services provider, has today announced its predictions of top Financial Services Trends for 2017, supported by survey data from TABB Group. The survey of over 200 senior-level, global financial services business and IT decision-makers across the U.S. U.K. and Europe found 38% of respondents placed Regulation as their top priority for 2017, followed by Data Management (14.4%), Systems Integration (10.6%), Artificial Intelligence (AI) (9.7%) and IT Business Transformation (8.3%). These results clearly show that while digital innovation remains a long-term priority over the next five years, businesses need these programs to achieve pragmatic results for them in 2017.

Faisal Husain, Co-founder & CEO of Synechron, commented: “While digital innovation is at the heart of our business, financial services firms need immediate solutions to the problems they are facing today. Regulation, cost-pressure and out-dated technology systems and operations are part of almost every client conversation, so it is no surprise these items toped their 2017 priorities list. MiFID II, Dodd Frank, Basel II and FRTB are all driving data and IT changes within organizations and have paved the way for firms to reimagine their business architectures and embrace established techniques in artificial intelligence, systems integration best practices and design thinking. 2017 will be a year where technology is asked to offer tangible business value at an enterprise level.”

Given these survey results and input from Synechron’s global clients across digital, business consulting and technology engagements, Synechron has outlined its predictions on top ten trends and priorities to expect in 2017:

  1. Regulatory Reigns Supreme – Given that 38% of firms cite Regulation as their top priority for 2017 and Data Management came in #2 at 14.4%, expect data-driven regulations to bea hot-button topic over the next year. This includes regulations like MiFID II and Dodd-Frank which topped the list at 42.6% and 29.6% respectively but also others like the DOL Fiduciary Rule and Basel III which 15.3% of respondents said they’d be focused on over the next year. Regulatory uncertainty related to technology Innovations like blockchain and AI are also a top concern (29.2%). 
  1. Uncertainty Remains – Regulations related to technology Innovations like Blockchain and AI are also a top concern (29.2%) according to the survey; however, in this case, it is the uncertainty of future regulations that could be prompting inaction or staving off innovation. Global events like Brexit, the results of the U.S. election, the threat of Frexit and more, have also created an environment of regulatory uncertainty that will prompt more steering committees in 2017 to assess options and develop plans that can be quickly enacted at the trigger moment. Synechron has released more detailed research on this topic which can be found here. 
  1. Data Management & the Chief Data Officer (CDO) – With 14.4% of respondents focused on enhancing their data management initiatives, we also expect the role of the CDO to continue to gain prominence within the business organization. This will mean a louder voice in the boardroom and stronger authority across the organization to drive forward initiatives and invest in technologies like AI and Blockchain. 8.8% of firms have even designated Blockchain initiatives to sit within their data function. 
  1. Systems Integration – The #3 priority thatrespondents highlighted as a focus for 2017 was Systems Integration at 10.6%. As one of the leading experts in systems integration related to trading technologies like Murex, Calypso, Summit, and others, Synechron is seeing an interest in enhancing systems responsible for liquidity risk management, credit risk management, counterparty-risk and collateral management whereby near-shoring, smart-shoring and offshoring can be employed along with an agile development methodology. 
  1. The Year of the Chatbot – 2017 will be the year of the ‘BOT’. In one chat, banks can do everything from help someone onboard and make an important financial decision, to apply for a mortgage, personal loan or process an insurance policy. By combining hands-on service with some element of automation, alert notifications and auto-dialers, for example—financial institutions can manage customer relationships easier and with a degree of personalization. Expect to see a whole range of customer service and virtual assistant bots going live in 2017 to enhance banking, trading and insurance interactions.
  1. Artificial Intelligence & Advanced Machine Learning – With 9.7% of firms citing AI as a top priority for 2017, AI has reached a critical tipping point and will be at the heart of a convergence of technologies including Data Science, Internet of Things (IoT), Optical Character Recognition (OCR), Natural Language Programming (NLP) and Blockchain. In 2017 Robotic Process Automation will become a key priority for bank executives looking to do more with less and unique combinations of AI techniques will power new applications. Throughout the year expect the industry to launch a range of hybrid robo-advisor services targeted at millennials and high-net-worths. Also expect that AI will continue to and increasingly be used to address one of the industry’s greatest concerns across the enterprise – cyber security.
  1. The Future of FinTech – In 2017, we can also expect to see the fall of what were hoped to be future fintech unicorns – as several significant fintech startups will have received more than 3 to 4 years of funding and if the market is not conducive to a healthy IPO, or results are not showing the massive potential once envisaged, the taps are likely to get turned off.  This trend will be no surprise given that most technology VCs expect only 1 in 10 investments to pay-off, but it means that the fintech startup scene, and associated hype cycle, may get a little dose of commercial reality and start to feel deflated in 2017.
  1. Bank APIs and The Cloud – As the Banking Financial Services and Insurance (BFSI) industry moves towards an environment that is fast and agile, runs in the cloud, and where customer acquisition is expected to be lightning fast, many firms will begin to launch their own app marketplaces through Open API programs in 2017.  Over the past 12 months there has been a consistent uptake in such platform solutions from leading organizations like Citi and BBVA, and pioneering leaders like Santander have established reliable business models for fintech banking borne out of open APIs. In 2017 open, unified solutions will continue to be launched by banks and insurers and make it possible to deliver new digital products and services, whilst still maintaining a multidimensional customer experience across all digital channels. We are also seeing a rise of the usage of Public cloud technologies in Banking, with firms moving or considering moving risk and IT infrastructure to Google or Amazon.  This indicates a major shift, after a gradual adoption of private cloud technologies and recent FCA guidance green-lighting cloud computing.   
  1. Design Thinking – Many financial institutions have embraced a mobile-first strategy or omni-channel strategy, placing mobile design as a critical component of their UX and CX strategies.  Design Thinking, which has been around now for over a decade,is a design methodology that helps businesses understand their problem statements better by rooting them in end user research and using that research to influence a more impactful design solution. As financial services organizations look to elevate their brands, communicate authenticity and engage with their customers, design thinking can deliver meaningful data to support those initiatives and is being considered by many as part of an integrated digital strategy. 
  1. More Blockchain – 2017 will continue to be a year of Blockchain experimentation, and whilst we are likely to see the rise and fall of some blockchain consortiums, one trend that will remain is the appetite for banks to work together and leverage blockchain accelerators to run proof of concepts or controlled pilot programs.  The biggest challenge facing the industry today is the scarcity of Blockchain talent, not only from an application development perspective, but also from a domain expertise angle in which business use cases are validated and earmarked for blockchain transformation – making real development experience a unique asset. In fact, when asked if their company currently has enough talent capable of implementing blockchain technology, our survey results found 39.3% of respondents answered No – Blockchain technology talent is still difficult to find and 31.3% said No – We’re working with partners, vendors to supplement – as compared with 23.4% saying they would reallocate resources and 6.1% support training.

Finance

The Psychology Behind a Strong Security Culture in the Financial Sector

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The Psychology Behind a Strong Security Culture in the Financial Sector 1

By Javvad Malik, Security Awareness Advocate at KnowBe4

Banks and financial industries are quite literally where the money is, positioning them as prominent targets for cybercriminals worldwide. Unfortunately, regardless of investments made in the latest technologies, the Achilles heel of these institutions is their employees. Often times, a human blunder is found to be a contributing factor of a security breach, if not the direct source. Indeed, in the 2020 Verizon Data Breach Investigations Report, miscellaneous errors were found vying closely with web application attacks for the top cause of breaches affecting the financial and insurance sector. A secretary may forward an email to the wrong recipient or a system administrator may misconfigure firewall settings. Perhaps, a user clicks on a malicious link. Whatever the case, the outcome is equally dire.

Having grown acutely aware of the role that people play in cybersecurity, business leaders are scrambling to establish a strong security culture within their own organisations. In fact, for many leaders across the globe, realising a strong security culture is of increasing importance, not solely for fear of a breach, but as fundamental to the overall success of their organisations – be it to create customer trust or enhance brand value. Yet, the term lacks a universal definition, and its interpretation varies depending on the individual. In one survey of 1,161 IT decision makers, 758 unique definitions were offered, falling into five distinct categories. While all important, these categories taken apart only feature one aspect of the wider notion of security culture.

With an incomplete understanding of the term, many organisations find themselves inadvertently overconfident in their actual capabilities to fend off cyberthreats. This speaks to the importance of building a single, clear and common definition from which organisations can learn from one another, benchmark their standing and construct a comprehensive security programme.

Defining Security Culture: The Seven Dimensions

In an effort to measure security culture through an objective, scientific method, the term can be broken down into seven key dimensions:

  • Attitudes: Formed over time and through experiences, attitudes are learned opinions reflecting the preferences an individual has in favour or against security protocols and issues.
  • Behaviours: The physical actions and decisions that employees make which impact the security of an organisation.
  • Cognition: The understanding, knowledge and awareness of security threats and issues.
  • Communication: Channels adopted to share relevant security-related information in a timely manner, while encouraging and supporting employees as they tackle security issues.
  • Compliance: Written security policies and the extent that employees adhere to them.
  • Norms: Unwritten rules of conduct in an organisation.
  • Responsibilities: The extent to which employees recognise their role in sustaining or endangering their company’s security.

All of these dimensions are inextricably interlinked; should one falter so too would the others.

The Bearing of Banks and Financial Institutions

Collecting data from over 120,000 employees in 1,107 organisations across 24 countries, KnowBe4’s ‘Security Culture Report 2020’ found that the banking and financial sectors were among the best performers on the security culture front, with a score of 76 out of a 100. This comes as no surprise seeing as they manage highly confidential data and have thus adopted a long tradition of risk management as well as extensive regulatory oversight.

Indeed, the security culture posture is reflected in the sector’s well-oiled communication channels. As cyberthreats constantly and rapidly evolve, it is crucial that effective communication processes are implemented. This allows employees to receive accurate and relevant information with ease; having an impact on the organisation’s ability to prevent as well as respond to a security breach. In IBM’s 2020 Cost of a Data Breach study, the average reported response time to detect a data breach is 207 days with an additional 73 days to resolve the situation. This is in comparison to the financial industry’s 177 and 56 days.

Moreover, with better communication follows better attitude – both banking and financial services scored 80 and 79 in this department, respectively. Good communication is integral to facilitating collaboration between departments and offering a reminder that security is not achieved solely within the IT department; rather, it is a team effort. It is also a means of boosting morale and inspiring greater employee engagement. As earlier mentioned, attitudes are evaluations, or learned opinions. Therefore, by keeping employees informed as well as motivated, they are more likely to view security best practices favourably, adopting them voluntarily.

Predictably, the industry ticks the box on compliance as well. The hefty fines issued by the Information Commissioner’s Office (ICO) in the past year alone, including Capital One’s $80 million penalty, probably play a part in keeping financial institutions on their toes.

Nevertheless, there continues to be room for improvement. As it stands, the overall score of 76 is within the ‘moderate’ classification, falling a long way short of the desired 90-100 range. So, what needs fixing?

Towards Achieving Excellence

There is often the misconception that banks and financial institutions are well-versed in security-related information due to their extensive exposure to the cyber domain. However, as the cognition score demonstrates, this is not the case – dawdling in the low 70s. This illustrates an urgent need for improved security awareness programmes within the sector. More importantly, employees should be trained to understand how this knowledge is applied. This can be achieved through practical exercises such as simulated phishing, for example. In addition, training should be tailored to the learning styles as well as the needs of each individual. In other words, a bank clerk would need a completely different curriculum to IT staff working on the backend of servers.

By building on cognition, financial institutions can instigate a sense of responsibility among employees as they begin to recognise the impact that their behaviour might have on the company. In cybersecurity, success is achieved when breaches are avoided. In a way, this negative result removes the incentive that typically keeps employees engaged with an outcome. Training methods need to take this into consideration.

Then there are norms and behaviours, found to have strong correlations with one another. Norms are the compass from which individuals refer to when making decisions and negotiating everyday activities. The key is recognising that norms have two facets, one social and the other personal. The former is informed by social interactions, while the latter is grounded in the individual’s values. For instance, an accountant may connect to the VPN when working outside of the office to avoid disciplinary measures, as opposed to believing it is the right thing to do. Organisations should aim to internalise norms to generate consistent adherence to best practices irrespective of any immediate external pressures. When these norms improve, behavioural changes will reform in tandem.

Building a robust security culture is no easy task. However, the unrelenting efforts of cybercriminals to infiltrate our systems obliges us to press on. While financial institutions are leading the way for other industries, much still needs to be done. Fortunately, every step counts -every improvement made in one dimension has a domino effect in others.

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Finance

Has lockdown marked the end of cash as we know it?

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Has lockdown marked the end of cash as we know it? 2

By James Booth, VP of Payment Partnerships EMEA, PPRO

Since the start of the pandemic, businesses around the world have drastically changed their operations to protect employees and customers. One significant shift has been the discouragement of the use of cash in favour of digital and contactless payment methods. On the surface, moving away from cash seems like the safe, obvious thing to do to curb the spread of the virus. But, the idea of being propelled towards an innovative, digital-first, cashless society is also compelling.

Has cashless gone viral?

Recent months have forced the world online, leading to a surge in e-commerce with UK online sales seeing a rise of 168% in May and steady growth ever since. In fact, PPRO’s transaction engine, has seen online purchases across the globe increase dramatically in 2020: purchases of women’s clothing are up 311%, food and beverage by 285%, and healthcare and cosmetics by 160%.

Alongside a shift to online shopping, a recent report revealed 7.4 million in the UK are now living an almost cashless life – claiming changing payment habits has left Britons better prepared for life in lockdown. In fact, according to recent research from PPRO, 45% of UK consumers think cash will be a thing of the past in just five years. And this UK figure reflects a global trend. For example, 46% of Americans have turned to cashless payments in the wake of COVID-19. And in Italy, the volume of cashless transactions has skyrocketed by more than 80%.

More choice than ever before

Whilst the pandemic and restrictions surrounding cash have certainly accelerated the UK towards a cashless society, the proliferation of local payment methods (LPMs) in the UK, such as PayPal, Klarna and digital wallets, have also been a key driver. Today, 31% of UK consumers report they are confident using mobile wallets, such as Apple Pay. Those in Generation Z are particularly keen, with 68% expressing confidence using them[1].

As LPM usage continues to accelerate, the use of credit and debit cards are likely to decline in the coming years. Whilst older generations show an affinity with plastic, younger consumers feel less secure around its usage. 96% of Baby Boomers and Generation X confirmed they feel confident using credit/debit cards, compared to just 75% of Generation Z[2].

Does social distancing mean financial exclusion?

As we hurtle into a digital age, leaving cash in the rearview, there are ramifications of going completely cashless to consider. We must take into consideration how removing cash could disenfranchise over a quarter of our society; 26% of the global population doesn’t have a traditional bank account. Across Latin America, 38% of shoppers are unbanked, and nearly 1 in 5 online transactions are completed with cash. While in Africa and the Middle East, only 50% of consumers are banked in the traditional sense, and 12% have access to a credit card. Even here in the UK, approximately 1.3 million UK adults are classed as unbanked, exposing the large number of consumers affected by any ban on cash.

Even when shopping online – many consumers rely on cash-based payments. At the checkout page, consumers are provided with a barcode for their order. They take this barcode (either printed or on their mobile device) to a local convenience store or bank and pay in cash. At that point, the goods are shipped.

There are also older generations to consider. Following the closure of one in eight banks and cashpoints during Coronavirus, the government faced calls to act swiftly to protect access to cash, as pensioners struggled to access their savings. Despite the direction society is headed, there are a significant number of older people that still rely on cash – they have grown up using it. With an estimated two million people in the UK relying on cash for day to day spending, it is important that it does not disappear in its entirety.

Supporting the transition away from cash

Cashless protocols not only restrict access to goods and services for consumers but also limit revenue opportunity for merchants. While 2020 has provided the global economy with one great reason to reduce the acceptance of cash, the payments industry has billions of reasons to offer multiple options that cater to the needs of every kind of shopper around the world.

Whilst it seems younger generations are driving LPM adoption, it is important that older generations aren’t forgotten. If online shops fail to offer a variety of preferred payment methods, consumers will not hesitate to shop elsewhere. With 44% of consumers reporting they would stop a purchase online if their favourite payment method wasn’t available – this is something merchants need to address to attract and retain loyal customers.

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UnionPay increases online acceptance across Europe and worldwide with Online Travel Agencies

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UnionPay increases online acceptance across Europe and worldwide with Online Travel Agencies 3
  • UnionPay International today announces that two of Europe’s leading travel companies, Logitravel and Destinia, have started accepting UnionPay.
  • This acceptance will enable users of the groups’ travel websites to make purchases using UnionPay payment methods.

The acceptance partnerships between the OTAs and UnionPay began in July 2020 for customers across 13 European countries and another 90 countries and regions worldwide.  The European countries covered by the agreements include the UK, Germany, France, Italy, Spain, Portugal, Norway, Denmark, Sweden, Austria, Switzerland, Hungary and Ireland.  The brands covered by these acceptances include Logitravel.com and Destinia.com which together deliver more than 8.5 million worldwide travel bookings each year covering flights, hotels, holidays, car hire and other experiences.

With over 8.4 billion cards issued in 61 countries and regions worldwide, UnionPay has the world’s largest cardholder base and is the preferred payment brand for many Chinese and Asian expatriates and students based in Europe, as well as an increasing number of global customers. These cardholders are also particularly attractive to the two OTAs.  Despite the impact of Covid-19, Logitravel and Destinia expect to see the demand for travel across the European continent as well as that between Europe and Asia return to growth in the coming years. They are now placing significant focus on offering more payment options and smoother payment services to meet this demand.

The partnerships incorporate UnionPay’s ExpressPay and SecurePlus technology, which will ensure seamless transactions for the customers, contained within a single process through the relevant websites.  UnionPay’s technology also provides for the requirement to authenticate transactions under the EU regulation Payment Services Directive 2 (PSD2) ensuring that sites will be compliant as soon as the relevant countries apply the requirements.

Wei Zhihong, UnionPay International’s Market Director, said: “This is a major partnership with two of Europe’s leading online travel companies.  Logitravel and Destinia are brands which have been at the forefront of e-commerce for many years and we are very excited to be working with them to extend their reach to new audiences. This highlights the work that we have carried out in ensuring that our technology provides effective solutions for the biggest e-commerce sites both in Europe and around the world. We look forward to announcing many more similar agreements in the near future.”

Jesús Pons, Chief Financial Officer at Logitravel Group said: “UnionPay has always been on our radar, and since travel has become a crucial part of its development, Logitravel felt it important to develop this important partnership. It really was an obvious decision for Logitravel since both companies share a passion for e-commerce and emphasising the payment experience for their customers.”

Ricardo Fernández, Managing Director at Destinia Group said: “We believe that this is the beginning of a really strong relationship.  Our discussions with UnionPay in reaching this partnership have demonstrated their understanding of the needs of major online merchants and their ability to deliver the highest quality systems.  We look forward to working together on further partnership as we move forward.”

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