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THE DIGITAL DISRUPTORS: CAN DEVOPS SAVE THE BANKS?

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THE DIGITAL DISRUPTORS: CAN DEVOPS SAVE THE BANKS? 1

By Nigel Beighton, VP of Technology, Rackspace

Traditional banks are facing huge competition from digital disruptors. So much so, they are no longer too worried about what their longstanding competitors are doing, instead they are watching what brands like Apple, PayPal or Facebook are up to in the finance sector. Whether this involves the use of digital wallets, new lending facilities, wearable technology or even the use of new virtual currencies, the banks’ traditional methodologies are evolving quickly as the payments industry wrestles with digital transformation.

To compete, the banking sector must replace legacy systems with an IT infrastructure capable of meeting the needs of today’s consumers. With 24 hour online and mobile banking now a minimum expectation, an app or site that is not up to scratch or experiences any downtime whatsoever could mean losing customers. Replacing old technologyis no mean feat though. There is strict compliance and regulation to adhere to, fraud detection processes and complex IT environments to overcome. However, the bank’s inability to keep pace with more nimble digital offerings that fit the always connected customer is a sign that things should change. According to a recent report from Ovum[i], more than two thirds of banks plan to modernise their payments systems to accommodate demand for mobile and immediate payments and head off competition from disruptive competitors.

Nigel Beighton

Nigel Beighton

So what can banks learn from these digital disruptors to drive the change that is so badly needed?  New software application development and deployment methods are a good place to start, and this is where DevOps comes in. DevOps is a set of principles and processes that promotes closer collaboration between different IT groups, particularly the development and operations teams, in bringing a product or service to market. And this product or service is always based around a common business goal to deliver value to the end customer.

Take for example mobile banking; over the past year mobile banking app use for customers at the five major UK High Street banking groups has almost doubled according to the BBA.[ii] For many customers this is now the majority of their communication with their banks, so it is essential that upgrades, new features, bug fixes and so on are delivered on an almost constant basis.

While operations has traditionally left the technology to developers, by adopting DevOps processes they canbe right on the edge of innovation through their understanding of the customers which are the driving force behind faster and improved deployment. In consumer driven organisations, like banks, the operations team has never been so important and developers can no longer work without them. The combined power of the developer and the operation teams means that the focus can turn to innovation and speed – enabling DevOps teams to get feature rich, stable applications to market as quickly as the customer demands it. In addition to DevOps being an enabler for businesses to scale efficiently, it also permits them to scale more securely. Taking a DevOps approach to security enforces greater levels of testing, development rigour and governance which is vital for the financial services industry.

In light of this, it’s alarming that y, 22% of the financial services IT decision-makers surveyed in our recent DevOps Adoption Study were not familiar with the concept of DevOps and of those that were familiar with it, only 38% have actually implemented DevOps practices. Yet those financial technology businesses being slow to adopt DevOps could be missing out on huge competitive advantage. In fact, the same study found that businesses using DevOps are making several gains including increased customer conversion (40 per cent), reduced IT infrastructure spend (32 per cent) and reduced application downtime (41 per cent).

The implications of DevOps are massive, but for this traditional industry a complete reshuffleis needed, andthe industry must encourage organisations to cooperate when bringing payment infrastructure into the twenty-first century. As we have recently seen with the record fine thatRBS was penalised for its IT failure in 2013, there can be no risk of failure or extended downtime. Essentially, if the banks want to maintain their current mobile banking offerings, as well as bring new products to market to stay ahead of competition, they must find a method like DevOps which enables them to be more agile, secure and become disruptive themselves.

[i]http://www.ovum.com/data-tool/ict-enterprise-insights/

[ii]https://www.bba.org.uk/news/press-releases/bba-launches-major-new-work-on-digital-banking/#%2EUzka0qhdVic

Banking

European shares end higher on strong earnings, positive data

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European shares end higher on strong earnings, positive data 2

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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Banking

ECB plans closer scrutiny of bank boards

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ECB plans closer scrutiny of bank boards 3

FRANKFURT (Reuters) – The European Central Bank plans to increase scrutiny of bank board directors and will take look more closely at diversity within management bodies, ECB supervisor Edouard Fernandez-Bollo said on Friday.

The ECB already examines the suitability of board candidates in a so-called fit and proper assessment, but rules across the 19 euro zone members vary, so the quality of these checks can be inconsistent.

The ECB plans to ask banks to undertake a suitability assessment before making appointments, and they will put greater emphasis on the candidates’ previous positions and the bank’s specific needs, Fernandez-Bollo said in a speech.

The supervisor also plans more detailed rules on how it will reassess board members once new information emerges, particularly in case of breaches related to anti-money laundering and financing of terrorism, Fernandez-Bollo added.

Fernandez-Bollo did not talk about enforcing diversity quotas, but he argued that diversity, including diversity in gender, backgrounds and experiences, improves efficiency and was thus crucial.

“Supervisors will consider furthermore all of the diversity-related aspects that are most relevant to enhancing the individual and collective leadership of boards,” he said.

“Diversity within a management body is therefore crucial … there is a lot of room for improvement in this area in European banks,” he said.

(Reporting by Balazs Koranyi, editing by Larry King)

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Banking

Where are we with Open Banking, and should we be going further?

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Where are we with Open Banking, and should we be going further? 4

By Mitchel Lenson, Non-Executive Chairman, Exizent

Open Banking has the power to revolutionise the way we manage our money, but most (65%) consumers are still not aware of it, while many financial institutions continue to treat it as an obligation rather than an opportunity.

For Open Banking to truly reach its potential, consumers need to have more trust in its benefits. However, this will only happen if banks and other financial institutions start to embrace it, rather than simply accept it.

Covid-19 has proven to banks that digital banking and open finance innovation is not simply a ‘nice to have’. It is vital for their own survival. With so many challenger banks now coming into the market, many of whom have entirely digital models and therefore invest heavily in technology, banks are starting to become aware that if they don’t embrace it, they’ll get left behind.

So, fuelled by a mixture of competition and Covid-19, banks are starting to realise that Open Banking is not about giving away valuable data, but it is about collaborating with third party fintechs to explore the endless opportunities data sharing can bring – to all sides.

By making open finance easier for developers, banks can not only save time and money by improving their own services but help create useful solutions that add real value for their customers.

Open Banking for all?

There is one, yet untapped area of consumer finance that could be immeasurably improved by Open Banking, and that is estate administration.

Mitchel Lenson

Mitchel Lenson

Recent research from Which? found that many executors contend with delays, errors and poor knowledge from their banks during the probate process. Our own research shows that most legal professionals admit the process does not work as it should, and the time it takes to complete probate is unacceptable.

Like the Which? survey, we found that the main issue is the administration involved, with most legal professionals saying that the time it takes for financial institutions to get back to them with the information they need is the main cause of delays.

Given that the system is not working for consumers, something clearly needs to be done. The good news is that the technology and data is already available – we just need to harness it to create a better system.

That is why we are developing the first ever platform to connect executors, legal professionals, and financial institutions to create a better, quicker, and more secure probate experience for everyone.

Our first release of the platform – a bespoke cloud-based solution to enable legal services firms to integrate directly with financial institutions making information gathering and processing more straightforward – was released in 2020. We are now building on that foundation to accelerate our development work with financial institutions to deliver additional value for all sides.

We also see huge potential in working with banks to utilise the digital financial infrastructure, powered by Open Banking, to improve things even further. But there is one, fairly sizeable issue – currently, Open Banking consent ceases at the point of death.

Is it time for legislative change?

Open Banking is not as open as is should be for those who can give consent, so we are certainly some way off from Open Banking for the deceased.  However, the more that banks acknowledge Open Banking and its potential and are prepared to collaborate with third party fintechs to develop better experiences for consumers, the more likely we are to get to a point where we can tap into that potential to improve things for the bereaved.

Many of the problems – highlighted by Which? – that consumers face when managing someone’s estate could be reduced significantly if open finance continued to apply to the deceased.

Open Banking provides a huge opportunity to speed-up and reduce friction for loved ones faced at some of the hardest moments of their lives, and there is a strong argument here for the current position to be reviewed to enable better access to a deceased person’s assets.

With our current platform, we are showing how technology is playing an incredibly significant role in dealing with the complex, tangled process that is probate and the potential of open finance in radically enhancing what we are already doing cannot be understated.

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