Connect with us

Banking

“Your basket contains: one microwaveable lasagne, and a mortgage. Proceed to checkout”

Published

on

“Your basket contains: one microwaveable lasagne, and a mortgage. Proceed to checkout”

By Paul Bowen, Head of Financial Services, Avanade UKI

The idea of buying financial services from a tech firm or online retailer is no longer fanciful –in fact, it’s started to seem like an attractive option for consumers who are frustrated by the traditional banking sector’s apparent resolve to stay stuck firmly in the 20th century.

Paul Bowen

Paul Bowen

Retail banking was once the most “unchallenged” of industries, with new entrants to the market facing significant barriers to entry, such as obtaining startup capital and creating a national network of branches. The arrival of Tesco Bank to the UK in 1997 should have raised the alarm, showing how a new entrant could exploit its hundreds of physical stores and enormous financial muscle to provide banking services to its customers. Then came Amazon, which since 2011 has surpassed $3 billion of loans to small businesses through its Amazon Lending division.

It’s not their enormous market capitalisations that make companies like Amazon such a threat, but rather the fact that they have consistently demonstrated their ability to provide fantastic shopping experiences and customer service that puts their High Street rivals to shame. New online-only entrants harness the power of new technology, such as chat bots and predictive analytics, to dispense with the most frustrating elements of traditional banking, such as endless phone queues and long lunchtime lines at the branch.

Losing the race for relevance 

Little wonder, then, that almost nine in ten (85%) senior technology decision makers in the banking industry in Europe believe they are being overtaken by disruptive competition. According to Avanade’s latest in-depth research into attitudes towards disruption in the retail banking industry, there is widespread recognition that investment in technological innovation is absolutely critical if established institutions are to have any hope of catching up with new digital challengers.

Established banks are facing a race for relevance, where nimble startups (as well as established giants in the retail and technology sector) are far ahead in delivering great customer experiences and better financial products and interactions.

Perhaps the only positive for the traditional banking sector is that they understand the urgency of investing in technology to improve the services they provide, with 88% saying they need to improve customer experience. This includes factors such as increasing personalisation, providing a more seamless experience across multiple channels, and closing physical branches and embracing online-only services.

Strangled by legacy IT 

One of the main factors holding back the established banks from embracing new technologies is the fact that they are lumbered with a web of legacy infrastructure that is strangling any attempt at innovation. The only answer is to cut the Gordian knot, and make significant investment in replacing legacy IT systems. Expensive as this may be in the short term, the only alternative is to continue spending significant sums on administering clapped out, unreliable systems.

This makes poor business sense, with around half of banks saying that they spend more on maintaining their old IT infrastructure than challenger institutions do for their much more modern systems. With almost half of respondents saying that legacy IT costs too much to maintain, and two fifths believing that their IT department spends time on maintenance, now is surely the time for banks to embrace the power of the cloud.

Optimising operations and efficiency 

Currently less than a fifth of bank infrastructure is deployed on private cloud, and barely 10% on public cloud. In spite of this, banks realise the cloud is key to achieving operational efficiency, improving productivity, and deploying new services for customers.

Challenger institutions are making great strides with services based on cognitive automation, machine learning, and robotic process automation, benefitting from the scale and flexibility of the cloud. But moving IT infrastructure to the cloud can only be the first step, and almost every bank appreciates that it must engage third party services to access the skills and resources they need to develop and deploy new customer services or boost employee productivity.

Reimagining the customer experience 

Challenger banks offer a dazzling array of slick new services, from mobile money management to automated customer chat bots, but the basis of a great customer experience (CX) is actually quite a simple matter. Consumers’ main demand is access to a full range of services and products, coupled with the reassurance that their personal data is protected by industry-leading security technology, along with a desire for engaging digital interfaces on their chosen device.

These goals are highly achievable for any retail bank, with almost nine in ten of our respondents believing that their organisation could improve the way they personalise services for their customers, while more than half plan to remove human interactions from their retail services. Yet 64% admit that they struggle to provide a truly seamless experience – hardly surprising given their reliance on legacy technology and low levels of cloud adoption.

Most banks regularly hear the complaint that smarter, more disruptive competitors outperform them in delivering great customer experiences, and a clear majority (91%) say that they will need to spend more to improve the services they provide. On average, however, only 14% of annual IT budgets go towards enhancing CX – compare that to the 19% spent on maintaining legacy infrastructure, and the cost of old IT systems is put into stark relief.

No-one is claiming that updating decades-old  IT infrastructure will pay for itself overnight; however, the only alternative for established banks is to sink further into obscurity and irrelevance while their more nimble competitors forge ahead, unencumbered by branches and legacy technology. The one advantage the banks still hold over the disruptors is their large customer base; it’s high time, then, to begin treating them as valued consumers, and investing in the services they crave.

Banking

Mastercard Delivers Greater Transparency in Digital Banking Applications

Published

on

Mastercard Delivers Greater Transparency in Digital Banking Applications 1
  • Mastercard collaborates with merchants and financial institutions to include logos in digital banking applications
  • Research shows that ~25% of disputes could be prevented with more details

As more businesses turn to digital payments, and the number of connected devices grows, one thing is becoming increasingly clear: consumers are demanding more clarity around what they bought and who they bought it from.

Most everyone has experienced the frustration of trying to decipher confusing and brief purchase descriptions when reviewing online statements. This confusion forces cardholders to contact their banks unnecessarily to dispute unrecognized transactions, adding extra steps for consumers and generating an array of costs for merchants and banks.

A new initiative from Mastercard and managed by Ethoca, the company’s collaborative fraud and dispute resolution technology, aims to eliminate this confusion and improve the customer experience. All merchants are encouraged to visit www.logo.ethoca.com and upload their logos for inclusion in online banking and payment apps. The merchant logos will be linked to corresponding transactions, adding clear visual cues to help cardholders quickly identify legitimate purchases. Participating merchants are provided an opportunity to simultaneously extend their brand presence as well as eliminate expensive and time-consuming chargebacks. This program is also available to all financial institutions.

Mastercard Delivers Greater Transparency in Digital Banking Applications 2

A recent Ethoca-commissioned Aite Group study of the US market revealed that 96% of consumers want more details that help them easily recognize purchases, and nearly 25% of all transaction disputes could be avoided by delivering these details – including logos. It’s estimated that global chargeback volume will reach 615 million by 2021, fueled in large part by frustrated consumers turning to the dispute process unintentionally.

“With greater digital dependency, having real-time purchase details is critical for consumers, merchants and card issuers alike,” said Johan Gerber, executive vice president, Cyber and Security Products at Mastercard. “We continue to collaborate with industry partners to bring clarity and simplicity before, during, and after transactions. By enriching transaction details, merchants can alleviate friendly fraud, reduce chargebacks and improve the customer experience.”

This endeavour is part of comprehensive efforts to deliver the most efficient, safe, and simple payment experience from the minute a consumer begins browsing to once they’ve made the purchase. This includes Click to Pay, Mastercard’s one-click checkout experience, to the integration of biometrics to secure both digital and physical transactions, and Ethoca’s full suite of consumer digital experience solutions.

Continue Reading

Banking

AML and the FINCEN files: Do banks have the tools to do enough?

Published

on

AML and the FINCEN files: Do banks have the tools to do enough? 3

By Gudmundur Kristjansson, CEO of Lucinity and former compliance technology officer

Says AML systems are outdated and compliance teams need better controls and oversight

The FinCEN files have shown that it’s time for a change in AML. We must take a completely new approach in order to catch up with the speed of innovation in financial crime.

Despite what you’ll read in news headlines, we can’t lay all of the blame for anti-money laundering failures at the doors of the banks. The majority of compliance teams are doing what they can, and what they are being asked to do.

Historically, AML has, in large part been a box-checking exercise. Banks have weaved through mountains of false alerts, investigated cases, sent SARs, and then got on with business as usual. In some jurisdictions, banks can‘t even interfere with customers under investigation, in fear of jeopardizing cases.

But the sentiment towards banks’ responsibility in AML is changing. They are increasingly looking at AML as a corporate social responsibility issue and even a competitive advantage. Banks are looking to protect their brands from the horrors of an AML scandal, and as such are taking a more proactive approach.

They are also throwing a lot of money at the problem. Deutsche Bank claims to have invested close to $1 billion in improved AML procedures and increased its anti-financial crime teams to over 1,500 people. Most big-brand banks have a similar story to tell.

With reputation on the line, better AML controls can become good business.

So where does the problem lie?

From the thousands of SARs discovered in the FinCEN files, lack of customer oversight is evident. Banks need to establish a method of knowing their customers through their actions across the organization and beyond the organizational walls. By doing so, banks can better understand AML and compliance risk, which gives them the necessary tools to bar customers from doing business or limiting their activity.

While banks are striving to better enforce regulations by pouring money and resources into CDD and transaction monitoring, forming this type of intelligent customer overview might be the real solution. Proper Customer Due Diligence and customer risk monitoring can only be achieved by continuously tracking customer behaviour and transactional networks. With the latest developments in Artificial Intelligence – that is now possible.

But, the reality for compliance teams is they are hindered by outdated technology in their risk assessment and transaction monitoring systems and because of this, banks are fighting a steep, uphill battle against serious organised crime.

In 2019, the Bank of England issued a statement that claimed: “existing (money laundering) risks may be amplified if governance controls do not keep pace with current advancements in technological innovation.”

I know from my time working as a senior compliance technology officer that many traditional AML systems are inefficient, slow and labour intensive, and often lead to inaccurate outcomes. In fact, most of the systems pre-date the iPhone, so they are using last-generation technology and techniques to detect criminal activity.

In short, legacy AML systems are not fit-for-purpose. Legacy vendors built them for the box-checking world of the past, and they are focused on one suspicious transaction at a time – rather than looking at ‘bad actors’ in the financial system, and patterns in their behaviour.

As launderers constantly evolve their techniques to circumvent rule-based or simple statistical detection, the AML systems market has not kept up. There is a dire need for innovation.

Unless systems are updated, banks can continue to file suspicious activity reports (SAR), but if bad actors can conduct their business ‘as usual’ and shuffle money around the globe to hide its malicious origin, the effectiveness of a SAR is significantly diminished.

What’s the solution?

I believe we need to rethink our entire approach to AML. We need to empower compliance departments with better controls and oversight, and move away from outdated, traditionally rule-based systems and towards a modern, AI-enabled, behavioural approach.

While the bad guys have learnt how to evade rule-based systems, they find it extremely difficult to get around AI algorithms that search for anomalies in behaviour. The advancement of AI algorithms, especially in the field of deep learning, provide an opportunity for banks to detect more complex and evasive money laundering networks.

So the answer is to establish continuous automated risk monitoring and implement a workflow system that provides money laundering risk scores for customers.

The latest AI software could kickstart a new age of customer AML risk-based overview. Instead of relying on static and self-reported KYC data, AI systems can analyse behaviour over a period of time and compare it with peer-groups and past actions. It provides compliance teams with a continuous risk-rating of their customers, actor insights and summaries to facilitate efficient and thorough investigations, and an organizational-wide overview.

Recent advancements in AI have not only made the above possible, but also practical. Our latest Human AI models contextualize and explain the appropriate data, making it easier for banks to spot sophisticated crime.

By looking at AML not simply as a box-ticking exercise, but as a competitive advantage that can increase customers’ trust in their financial institutions, banks have a lot to gain. Moving towards behaviour-based AML systems is a move towards making money good.

Continue Reading

Banking

Local authorities and business networks play a key role in small business success, and must be protected during COVID rebuild

Published

on

Local authorities and business networks play a key role in small business success, and must be protected during COVID rebuild 4
  • 23% of UK’s top performing businesses have been supported by local enterprise partnerships and growth hubs
  • Similarly, 30% of Britain’s strongest businesses have obtained external finance in the last 3 years
  • New findings come as part of an independent, holistic study into small business success, commissioned by Allica Bank to support British businesses

A new study, commissioned by business bank, Allica Bank, shows that a high level of engagement and interaction with external institutions and resources, is central to SMEs’ prospects of success.

The study analysed data from over 1,000 companies and ranked their success on a scale that evaluated factors including productivity, growth, consistency and outlook. To measure SMEs’ external engagement, survey respondents were asked whether or not they had engaged with local enterprise partnerships, growth hubs, or external financial advisers, as well as whether they had obtained credit or sought re-financing advice, in the last three years.

The benefit to small businesses in making the most of external resources are clear to see, with a quarter (23%) of the UK’s top performing SMEs – those in the top tenth percentile – actively engaging their local enterprise partnership or growth hub in the last three years. This compares to just 16% of all other small businesses. With such a clear benefit to businesses, these external networks must not only be protected but prioritised by any Government plans to rebuild the economy post-COVID.

Similarly, of the top performing SMEs in the country, 30% have obtained external credit in the past three years, compared to less than a quarter (24%) of all other businesses. This figure drops even further for the weakest performing businesses – those in the ninetieth percentile – where just 12% of businesses have obtained external financial support in recent years.

Chris Weller, Chief Commercial Officer, Allica Bank, said:

“At Allica Bank we understand that no two businesses are the same. We also know that no-one knows a business as well as its owners and managers. But they can’t be expected to be experts on everything.

“In the UK there is a wealth of external advice and support for small businesses and we urge each and every business out there to tap in to the external resources around them. Third-parties, such as business clubs, chambers of commerce, local enterprise partnerships and trade bodies, can be invaluable sources of advice and further resources. And although they have excelled in their given field, business owners may still lack knowledge in many other areas of running and growing a business. Therefore, engaging with third parties can give business owners the kinds of insight – and fresh perspectives – they need to succeed.

“As the economy and the country comes to terms with the impact of the COVID-19 pandemic, it is important these vital SME resources are protected and given the funding they need to continue providing invaluable insight and support to small businesses up and down the country.”

Allica Bank’s SME Guide to Success identified six ‘rules to success’ that were more likely to be displayed by top-performing SMEs compared to their counterparts. The full report contains a wealth of additional data and insight into each of these topics.

As part of its mission to empower small businesses, Allica Bank is making the findings freely available and running a series of free online workshops with relevant partner organisations for businesses to attend.

Continue Reading
Editorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.

Call For Entries

Global Banking and Finance Review Awards Nominations 2020
2020 Global Banking & Finance Awards now open. Click Here

Latest Articles

Mastercard Delivers Greater Transparency in Digital Banking Applications 5 Mastercard Delivers Greater Transparency in Digital Banking Applications 6
Banking46 mins ago

Mastercard Delivers Greater Transparency in Digital Banking Applications

Mastercard collaborates with merchants and financial institutions to include logos in digital banking applications Research shows that ~25% of disputes...

Success beyond voice: Contact centres supporting retail shift online 8 Success beyond voice: Contact centres supporting retail shift online 9
Business1 hour ago

Success beyond voice: Contact centres supporting retail shift online

As the nation continues to overcome the challenges presented by COVID-19, customers have shifted their channel preferences, and contact centres have demonstrated...

7 Ways to Grow a Profitable Hospitality Business 10 7 Ways to Grow a Profitable Hospitality Business 11
Business2 hours ago

7 Ways to Grow a Profitable Hospitality Business

Hospitality requires charisma and innovation The hospitality industry is a multibillion-dollar industry with lots of career opportunities in hotels, theme...

AML and the FINCEN files: Do banks have the tools to do enough? 17 AML and the FINCEN files: Do banks have the tools to do enough? 18
Banking2 hours ago

AML and the FINCEN files: Do banks have the tools to do enough?

By Gudmundur Kristjansson, CEO of Lucinity and former compliance technology officer Says AML systems are outdated and compliance teams need better...

Finding and following your website’s ‘North Star Metric’ 19 Finding and following your website’s ‘North Star Metric’ 20
Business2 hours ago

Finding and following your website’s ‘North Star Metric’

By Andy Woods, Design Director of Rouge Media The ‘North Star Metric’ (NSM) is one of many seemingly confusing terms...

Taking control of compliance: how FS institutions can keep up with the ever-changing regulatory landscape 21 Taking control of compliance: how FS institutions can keep up with the ever-changing regulatory landscape 22
Top Stories3 hours ago

Taking control of compliance: how FS institutions can keep up with the ever-changing regulatory landscape

By Charles Southwood, Regional VP – Northern Europe and MEA at Denodo The wide-spread digital transformation that has swept the financial...

Risk assessment: How to plan and execute a security audit as a small business 23 Risk assessment: How to plan and execute a security audit as a small business 24
Business3 hours ago

Risk assessment: How to plan and execute a security audit as a small business

By Izzy Schulman, Director at Keys 4 U Despite the current global coronavirus pandemic and the uncertainty it has placed...

Buying enterprise professional services: Five considerations for business leaders in turbulent times 25 Buying enterprise professional services: Five considerations for business leaders in turbulent times 26
Business4 hours ago

Buying enterprise professional services: Five considerations for business leaders in turbulent times

By James Sandoval, Founder and CEO,  MeasureMatch  The platformization of professional services provides businesses with direct, seamless access to the skills...

Wireless Connectivity Lights the Path to Bank Branch Innovation 27 Wireless Connectivity Lights the Path to Bank Branch Innovation 28
Technology5 hours ago

Wireless Connectivity Lights the Path to Bank Branch Innovation

By Graham Brooks, Strategic Account Director, Cradlepoint EMEA As consumers cautiously return to the UK high street in the past...

Financial Regulations: How do they impact your cloud strategy? 29 Financial Regulations: How do they impact your cloud strategy? 30
Technology5 hours ago

Financial Regulations: How do they impact your cloud strategy?

By Michael Chalmers, MD EMEA at Contino How exactly do financial regulations affect your cloud strategy? It’s a question many of...

Newsletters with Secrets & Analysis. Subscribe Now