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Vision to Reality: Creating a Universal Digital ID for UK Financial Services Consumers

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Vision to Reality: Creating a Universal Digital ID for UK Financial Services Consumers

By Brian Smith, Senior Director of Product and Innovation at DST Systems now part SS&C Technologies

Brian Smith

Brian Smith

Improving compliance, efficiency and customer satisfaction with a single solution

The UK is one of the world’s dominant financial services markets, and much of the sector’s strength comes from broad consumer participation. According to the Financial Conduct Authority’s 2018 Sector View, UK retail banks hold some 73 million personal accounts. Wealth managers and brokers oversee around £824 billion (US$1 trillion) in client assets under management, and consumers have invested £548 billion (US$706 billion) via investment platforms. Holdings in workplace and personal pension plans combined total £570 billion (US$734 billion).[i]

Yet in many respects, the financial sector is surprisingly inefficient and customer-unfriendly. One glaring example of the barriers to doing business with financial providers is the lack of a simple, universal identification system. In the US, the Social Security Administration functions as a de facto national identity registry, issuing individual ID numbers that enable authorized entities to obtain financial background information on customers. Other European countries have successfully implemented single sign-on solutions such as Norway’s BankID, which provides 3.9 million customers with access to every Norwegian bank, certain public agencies and a growing number of commercial enterprises.

The UK has no such system. Financial institutions rely on a cumbersome process of documenting applicants’ payment and credit histories and account relationships. This makes it difficult to perform required anti-money laundering (AML) and know-your-customer (KYC) due diligence, as well as to onboard new customers efficiently and deliver targeted services. From the customer’s perspective, it adds a layer of friction in trying to access banking and investment services, making it difficult to open accounts or transfer funds among institutions. While most consumers are managing their financial affairs online, they have to maintain multiple logins and passwords across numerous digital services, which is not only inefficient but also poses security risks. When consumers use the same credentials across several accounts, one breach can give data thieves access to all their business.

Building Digital Trust

The FCA is keen on consumer protection, fairness, disclosure and transparency, and advocates access to financial services with the fewest possible impediments. It is up to the industry, however, to take the lead in improving the customer experience and driving greater satisfaction. Above all, for a universal identity system to be successful, the industry needs to build digital trust – a major challenge with a populace that is famously skeptical of institutional intentions and hesitant to surrender personal data. Consumers will need to be convinced that the industry has their best interests at heart, and that a universal ID system, independent of government control, would be a step toward financial empowerment. To accomplish all that while simultaneously improving operational efficiency and reducing servicing costs would be a win-win for the industry and its customers alike.

Taking the Lead

Having built and managed customer experiences for UK asset managers over the last 15 years, our team has gained deep insight into the online interactions between consumers and their financial services providers.Accordingly, we have joined the Tax Incentivised Savings Association (TISA) and leading UK financial institutions to advance an initiative to develop a strong, trusted digital identity capability for the commercial sector. With a leadership role on TISA’s Digital Innovation Policy Council, we are helping to shape the trust framework and technology solution that will make this vision a reality.

Initially for use among banks and asset managers, the envisioned digital ID would enable consumers to access a variety of services easily and securely across multiple institutions and government agencies.It would also enable financial services providers to help customers more efficiently and proactively, delivering relevant information and suitable products. The long-term vision is a universal ID system with full interoperability for all UK financial services.

Importantly, this is an industry initiative and not the result of regulatory pressure. Financial services providers and their technology partners have recognized the need to reduce inefficiencies and make it easier for consumers to do business with the financial sector. It is simply, on many levels, the right thing to do.

Advantages of a Digital ID

Financial institutions and their customers stand to benefit from a digital ID system in several ways. “Customers expect seamless, omni-channel service delivery and will migrate to services that offer the best customer experience,” notes Harry Weber-Brown, Digital Innovation Director at TISA. “A federated digital identity allows customers to access a broad range of services with a single sign-on and enables them to control the release of their personal data.” Among the benefits he cites:

Improved customer relations: A digital ID will enable organizations to strengthen customer relationships by delivering a range of interconnected online services that help consumers to better manage their financial lives. The financial sector will be positioned to become the trusted identity provider, offering a single ID that can eventually be used across borders and a range of sectors, including public agencies, education, health care and travel.

Potential for new products and revenues: The system will create opportunities for institutions to broaden their services and generate new revenue streams through the development of products specifically to leverage digital ID.

Increased operational efficiency: Institutions stand to reap substantial efficiency gains. “A digital ID system is an opportunity to streamline current processes and increase automation, while reducing account opening abandonment, human error and human intervention,” Mr. Weber-Brown points out. It will “streamline and improve onboarding and compliance processes through access to a reliable and consolidated digital view of the user’s identity and attributes.”

Cost savings:The digital ID will reduce customer onboarding costs and new business processing costs related to AML-KYC reviews and the processing of account transfers. It can also lower institutions’ IT costs through industry-wide standards for customer ID systems.

Improved security and reduced risks: The current paper-based information collection process is extremely vulnerable to exploitation by malicious actors. The envisioned system has the potential to reduce risk of fraud and identity theft, along with the resulting liabilities for financial institutions. It will improve the industry’s risk assessment capabilities by creating more holistic and accurate customer risk profiles to enable more effective monitoring for suspicious transactions and to inform credit‐ and risk‐based product decisions.

Regulatory compliance: The digital ID system will meet consumer protection and due diligence provisions of multiple regulatory regimes governing UK financial services, including GDPR, Open Banking, PSD2 and AML4. The digital Identity capability will be designed for compliance with relevant control and governance regulations that may arise in the future.

The Consumer Experience

For consumers, the process of obtaining a universal digital ID will be similar to signing up for a social platform or setting up online access with a single institution. They will have the option to register through an institution with whom they have an existing account relationship and established online credentials, in which case their data is transferred directly to their new digital ID. Conversely, they can register directly with the ID service by creating a user name and password, building a profile, verifying their identity with a current account, and answering a few questions about their financial history.

Once the digital credentials and customer profile are established, the information can be re-used any time the customer wishes to open a new account, transfer funds or access financial services.

Driving Adoption

One of the big challenges in implementing such a system is creating awareness, winning consumer trust and driving adoption, which is a key focus of the initiative. TISA has strong ties with the FCA, government agencies and UK banks, and is actively working with them to accelerate industry buy-in and consumer education.

The rollout is taking place two phases. For Phase 1our team in the UK built a prototype user experience for the digital ID sign-up and sign-in processes. Pilot testing with consumers is already underway. Based on learnings from the testing, Phase 2, the full, general-availability rollout, is planned for 2019.

Better for All

The concept of a single digital ID promises economic benefits for the financial sector while serving the social good by enabling easier access to financial services and broader participation in the financial system. We are fully committed to advancing this type of innovation, which helps our clients improve their processes, increase efficiencies and reduce operating costs. It will take a coordinated effort between the industry and the regulators, but consumer acceptance will be the critical factor in the initiative’s ultimate success. The key will be delivering a trusted and genuinely seamless solution, backed by wide industry support and consumer communication, to make this vision a reality.

Finance

Corporate treasuries under pressure need multi-banking trade finance technology

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Corporate treasuries under pressure need multi-banking trade finance technology 1

By Andrew Raymond, CEO, Bolero International

The pressures on corporate treasuries in global trade have continued to mount since an HSBC survey last December found many felt ill-equipped to meet the demands placed on them.

Since then the pandemic has caused massive disruption and has overturned many carefully-laid plans. The same pressures identified in the survey remain, but have intensified. Treasurers still face ever-more complex flows of information from multiple systems while relying substantially on manual processes. At the same time they are expected to drive change and provide strategic insight.

It was no surprise then that two-thirds of treasurers in the survey were planning changes to the technology they used as part of transformation programmes to increase efficiency and bring greater visibility to treasury operations.

Reliance on manual methods and paper documents makes little sense and is unsafe

As we move through the pandemic, pressure on cashflow and working capital remain potent factors. Many treasurers working for enterprises engaged in global trade know that continuing to use manual methods to manage credit lines, and important trade finance instruments such as letters of credit (LCs) or guarantees is hard to justify in an age of digitisation and multi-banking trade finance solutions.

Not least because of the constant problem of fraud and forgery in relation to paper documents, which has led some banks to withdraw from involvement in commodity trade finance. The allegations of prolonged major fraud against the oil trader Hin Leong in Singapore are a case in point, sending tremors through the trade finance world. Court documents reportedly allege the fraudulent use of 58 import letters of credit that were not supported by any underlying transaction. Forged bank statements, bills of lading, sales contracts and invoices are also allegedly involved in very substantial fraud designed to cover losses and give a false impression of liquidity.

The case has not just exposed the susceptibility of paper trade documentation to forgery – it has also prompted some well-known European long-term commodity finance banks to withdraw or review their activities in this field. None of this makes everyday operations any easier for corporate treasuries still using paper in trade finance.

Reducing fraud through digitisation of trade finance

With fraud such a substantial problem, treasurers need to think hard about digitisation and how it reduces the risks. Paper documents can be forged when out of sight while being couriered around the globe. Once a document is digitised, however, fraud or forgery become extremely difficult because of encryption and audit trails. The electronic document remains completely visible at all time, but only to those engaged in the transaction and only the legitimate holder can amend it.

Increasing the efficiency of each trade transaction through digitisation

Digitisation substantially reduces the chances of fraud, but it also transforms how treasuries manage credit lines, letters of credit and guarantees, vastly increasing the speed and efficiency of transactions. It also maintains relationships with preferred banks.

In a digitised workflow, automation takes care of the data-uploading for LCs, while transfer between parties is at the click of a mouse across secure digital networks. LCs are notoriously complex instruments requiring close attention to detail and strict compliance with the rules governing their use. Compliance-checking can also be automated to reduce the administrative burden on treasuries and increase accuracy.

These advantages are important because the use of paper under LCs can imperil a transaction at many potential break-points. Documents must be presented physically, often to a prescribed location. Yet being time-limited, LCs (and bank guarantees) often expire before they are used, or their presentation periods are found to have been exceeded. Prevention of these problems requires constant supervision and many hours of work. When lines expire, new and potentially more expensive credit must be negotiated, while failure to present on time threatens transactions, leads to substantial extra costs, delays in releasing cargo and poor relationships between counterparties.

Consolidating credit lines and trade finance on a single, easy-to-use platform

The most effective form of digitisation for corporate treasuries is through a multi-bank trade finance platform which will slash the time involved in supervising credit lines, LCs and guarantees. An exporter may have thousands of LCs and guarantees with dozens of different banks. Optimising their use still requires laborious logging in and out of banking portals. Finding a single LC or guarantee relating to a transaction can be very difficult.

If treasuries implement multi-banking trade finance solutions, they will eliminate the need to toggle between different bank portals. They gain quick and easy access to all their banks, along with far greater visibility and control of all their credit lines and individual LCs. From a single platform they can manage and edit all their trade finance documentation and electronic presentations, as well as open account transactions and electronic bills of lading. All tracking and reporting is accomplished with a few mouse-clicks, while communications with banks remain secure. This is a major advantage when remote working is on the increase in so many areas of the globe.

As the world changes, but the pressures intensify, there is an urgent need for treasuries to grasp greater efficiency and visibility in their management and optimisation of credit lines and trade finance. It makes the adoption of multi-banking trade finance solutions an obvious first move.

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Finance

How can financial services companies deliver great customer service and retain customer loyalty? 

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How can financial services companies deliver great customer service and retain customer loyalty?  2

By Chris Angus, Senior Director, 8×8

The reality many banks are facing now is that given Amazon Prime can deliver goods to our doors in less than 24 hours, even during a pandemic, consumers expect the banks they use to keep up with their needs.

People want to be able to access their bank accounts, services and speak to an expert within a matter of minutes, whether it’s via an app on their device, web-chat or over the phone – their expectations are high. Adding to this, the World Health Organisation has advised consumers to use cards instead of banknotes during the Covid-19 pandemic – changing the way consumers pay for products.

With the recent health crisis forcing contact centres to shift to home working, collaboration can be more challenging, especially without the appropriate IT systems and applications in place. A delay in communication or unavailable information can, over time, cause reputational damage.

According to Deloitte, the bank of 2023 will look very different from today, making it clear that financial institutions should consider how they  prepare for the future.

  1. Review your business communications strategy – both inside and out.

A crucial part of this preparation needs to be on reviewing business communications – both internally and externally – ensuring that employees can seamlessly collaborate and connect regardless of their location.

And technology is key to this movement, not only between teams, but also with customers. With the right communication tools in place, employees can gain better insight and deliver services that meet customer expectations. This results in not only satisfied customers, but also happier, and more motivated employees. All of which goes towards truly building a solid foundation for business recovery and continuity.

For many businesses right now, the future feels uncertain, so it’s important to consider the flexibility of solutions before deployment. Cloud computing, for example, allows businesses to stay nimble, scaling up and down their requirements to reflect the needs of the business and their customers.

  1.  Implement an ‘Operate from anywhere’ strategy 

The first half of 2020 was defined by the need for agility, an adjustment in how we operate our day-to-day lives and how we communicate both professionally and personally. The remainder of 2020 and beyond will focus on the application of technology to define how we reinvent working and connecting with each other, our customers, partners, and beyond.

Chris Angus

Chris Angus

To deliver great customer service, while ensuring employees are happy, productive and most of all safe, businesses need to be able to operate from anywhere. Yet, for many with contact centre requirements, this is not an easy transition. Enabling contact centre agents to work flexibly and from remote locations is now a critical component of business operations that must be top of mind for the entire C-suite.

Agents need to have the right tools to ensure they can continue to provide the same level of customer service, from any location. For an operate-from-anywhere strategy to be effective, organisations should consider how they can combine voice, team chat and video meetings on a single technology platform.

The use of multiple apps for multiple purposes can have the opposite effect than intended. Unifying communication channels enables collaboration and productivity while minimizing complexity. It also means a more streamlined and efficient experience for both employees and customers aiding great customer service.

  1. Meeting expectations is key

Not only have recent events affected contact centres operations, but the traditional, in-person branch experience has also been significantly impacted. Bank branches can now only accommodate a small percentage of customers. These restrictions have accelerated the impetus for businesses to meet their customers’ needs online, but also, the expectations of customers  have also evolved rapidly.  Virtual instant communication between businesses and consumers is now becoming a basic customer need. For financial services, this means considering digital-first applications, such as chatbots or instant messaging, where possible.

Businesses now also need to be where their customers are and offer them an omnichannel experience. Via the cloud, businesses can continue to serve customer needs through multiple channels such as voice, video, email, SMS and more.

While meeting expectations needs to be a priority – it’s not enough. Financial services institutions need to ensure they meet those expectations at speed, being the new battleground for competition. When it comes to finances, consumers expect their problems to be dealt with at speed and to the highest standards.

In summary, taking a technology-first approach which enables both employees and consumers to operate and access their data and communication tools from anywhere is the defacto business priority. Helping the financial services industry empower employees to better serve customer expectations with speed and accuracy – and ultimately delivering great customer service.

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How payments can help streamline operations and boost customer satisfaction in the vending industry

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How payments can help streamline operations and boost customer satisfaction in the vending industry 3

By Darren Anderson, Business Development Manager, Self Service, Ingenico Enterprise Retail

The COVID-19 pandemic has had an astounding impact on the payments industry, causing cash usage to plummet as contactless and card-not-present volumes soared. Of course, this phenomenon was not unforeseen by payments professionals, who had predicted such a movement away from cash, but not at the speed the virus guidelines facilitated. In fact, due in part to the hygiene perks of contactless payment methods increasing its adoption, 50% of customers think that cash will disappear completely at some point in the future.

The unattended market was ahead of the pandemic in terms of contactless alternative payment method (APM) adoption, and it continues to upgrade its offerings to suit a wider range of industries. Nevertheless, the pain point for vending operators is that they’re often not sure exactly how these technologies work, or how to implement them. And with payments offerings constantly evolving, it’s becoming harder for vending operators to know which solution would be the best fit for their business.

As such, one easy way for vending operators to ease this load is to partner with a knowledgeable payments advisor who can not only provide the best solutions for their business, but guide them through the process and any need-to-knows. It’s also important to investigate the payments trends across the vending market, what the future might bring and what vending operators need to know about newer payments technology and the value it can bring to their unattended retail business operations.

Vending through the pandemic

Coronavirus has impacted the unattended market in various ways. In some cases, vending machine use has decreased as a result of lower footfall and closed premises. However, the nature of vending being self-service, for many it’s just been a case of upgrading systems to meet new guidelines and hygiene recommendations to start boosting their usage again. As cash usage decreased over the course of the pandemic, cards and APMs stepped in to provide a host of benefits, and as customers use and enjoy these seamless technologies, they are fast becoming the preference.

These developments have provided the opportunity for vending operators to embrace newer technologies which, although ultimately positive, can prove daunting if such retailers are not accustomed to working closely with payments. Fortunately, the vending market is in a great position to take advantage of new contactless technologies, being already low on human interaction and having 24/7 capabilities.

Darren Anderson

Darren Anderson

What’s more, the market can not only cater to consumers’ evolving needs, but it can also provide the flexibility and reliability that consumers are relying on as the world around them is changing. Many new technologies can also improve the general operations and management of vending, offering features such as easier on-the-go stock management and maintenance notification technology.

Keeping the consumer in mind

Consumers today want to enjoy the latest innovations and best-in-class customer experiences. These shoppers believe that self-service is a time-saver, and they also view cashless and contactless as faster and more seamless ways to pay – a fact which is reflected in the recent consumer demand for a wider variety of APMs. Customers now expect even more options to pay for their goods and services, from QR codes, to in-app payments and more.

Alongside the cashless trend, data-security and customer experience are two other factors driving the vending market evolution. With constantly evolving fraud developments in the online world, good security is more pertinent than ever, and has to be a central consideration to vending operators – as well as ensuring a seamless customer experience.

From a customer usage standpoint, mobile payments are becomingly increasing popular, as driven by the Gen Z market. According to our research, 63% of Gen Zers have said they would pay more for a mobile experience[1].

Trust and a good experience are also considerable factors across all customer groups, with 95% of customers claiming their loyalties lie with a company they trust[2], and 86% willing to pay more for a positive experience[3].

To appeal to ever-hungry consumers, vending operators need to provide the options they want. In the unattended market, this is relatively simple – not only do they provide a convenient and reliable method of payment for customers, but they also avoid face-to-face interaction. They can also supply a range of different products and accept a variety of payment methods to appeal to all customers, no matter their preference.

Using payments to drive revenue

Driving revenue is a two-pronged approach – you need to appeal to customers to keep them coming, and streamline operations to reduce overheads. In order to meet both parties’ expectations, it’s important to respond well to new vending challenges, taking note of the solutions that enable merchants to provide their customers with the payment methods they prefer.

Payments are complicated, so there’s no need to worry if you’re not hugely familiar with the offering out there, or unsure where to start – that’s where a payment service provider (PSP) can assist. With the expertise that a PSP brings, along with the technological solutions they offer, vending operators can improve customer journeys in all unattended environments.

Such technological solutions are flexible and can cater to specific business needs, while providing easy, quick, and secure payment methods that protect both the business and the customer’s personal data. They can also improve operational efficiency, increasing business performance with features such as real-time reporting and smart transaction management, to provide a best-in-class customer experience.

With smart devices, a secure gateway and advanced acquiring capabilities, PSPs can help vending operators design a flexible vending solution tailored to their individual and specific needs. To find out more about unattended retail and how your company can benefit from Ingenico’s unique expert knowledge, get in contact with Ingenico Enterprise Retail today at www.ingenico.com/smartselfvending.

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