Kris Sharma, Finance Sector Lead at Canonical - the publisher of Ubuntu - offers Finance Monthly his thoughts on APIs and how firms are already using them to enhance their services.
Cloud computing, big data analytics, artificial intelligence (AI), machine learning (ML), distributed ledger technology and process robotics are all playing a key role in reimagining financial services for a digital world. A growing number of financial institutions are drawing plans to adopt these technologies at scale as part of their digital transformation initiatives to accelerate financial data processing, deliver mass personalisation and increase operational efficiencies.
Most organisations currently deploy a complicated mix of technologies, legacy software platforms, applications, and processes to serve customers and business partners. On their digital journey, financial firms will have to integrate data, processes and business functionality from legacy systems of record to this set of new technologies. Many businesses have tried to adopt various transformation approaches such as re-platforming and re-hosting, direct integration between applications, rip and replace, and deploying middleware technology to deal with legacy systems and their integration with new technologies. But each of these approaches have their own drawbacks and can limit the adoption of new solutions within the constraints of legacy technology debt.
An evolutionary approach to digital finance, however, will unify information and data without the need to merge operational systems. Application programming interfaces, or APIs, can overcome the challenges involved with adopting new technologies and more innovative solutions while integrating with legacy run-the-business applications.
Where APIs become a core piece of the puzzle
APIs are increasingly playing a central role in digital finance. They essentially bind different parts of the financial value chain together, even though the underlying components may be based on different systems, technology, or supplied by different vendors. Using APIs, financial firms can securely share digital assets while masking backend complexity, integrating software applications and focusing on maximising their proprietary strengths by sharing data, systems, and functionality with customers, partners and developers. This in turn drives digital transformation without a complete overhaul of existing infrastructure.
Application programming interfaces, or APIs, can overcome the challenges involved with adopting new technologies and more innovative solutions while integrating with legacy run-the-business applications.
Since APIs are self-contained, they can be readily deployed and leveraged for innovation at speed, enabling financial institutions to introduce and integrate new features. When powered by the cloud, firms can develop, test and launch new services to customers quickly and cost-effectively, fuelling business growth. For example, insurance firms can make more timely offers by cross-selling home, auto and life policies. Financial institutions can leverage APIs to connect sources and use cloud computing to handle massive amounts of data, as well as AI and ML services live in the cloud, thereby analysing all this data faster and cheaper than they can on-premises.
Who is successfully using APIs?
Challenger bank Starling was designed and built completely on AWS cloud to deliver and scale infrastructure on demand. Additionally, by building a bank with open APIs from day one, Starling is natively compliant with the European Union’s Payment Services Directive (PSD2) directive.
According to ProgrammableWeb research, financial services is ranked highly in the fastest growing API categories, given the rise in digital forms of payment, an ever-increasing customer demand for connected solutions, and open banking initiatives. APIs are at the heart of the PSD2, the UK’s open banking mandate, as well as the Bank of Japan and the Monetary Authority of Singapore’s open banking initiatives.
Finastra’s Open Banking and collaboration: State of the nation survey 2020 finds that “86% of global banks surveyed are looking to use open APIs to enable Open Banking capabilities in the next 12 months”.
As APIs attract an ecosystem of developers, a financial API provider can encourage participation to fill go-to-market gaps and extend its services and data to new markets and use cases. Barclays is fostering collaboration and generation of new ideas through secure, innovative APIs. The Barclays API exchange has built an API library that is available for use by third parties to develop and test new products. Barclays and third-party developers work together to create, develop and test new product ideas before releasing them to the regular API catalogue. Similarly, Starling Bank provides a marketplace that enables developers to build their own products and integrations using its API.
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Unleashing the potential
There is an opportunity for financial firms to leverage the power of APIs by bringing them together with digital technologies to broaden the possibilities for innovation and expand customer experiences. Financial institutions need to reimagine APIs as product offerings that will drive business expansion and increase revenues.
The future of digital finance will be driven by organisations building digital business models, redefining their API strategies and bringing new customer propositions to life using modern web architectures, best-in-class technologies and new ecosystems.
Payrolls, for a majority of the workforce, acts as a motivational factor. It is only when they get accurate and timely income that they feel inspired to keep putting their best foot forward. After all, it is all about money at the end of the day.
This is what makes it important to effectively process payrolls. Accurate payrolls makes sure that employees are neither getting underpaid nor are they getting anything more than they were expected to receive.
Moreover, effective management is also about handling confidential documentation, ensuring accurate benefits, sorting out reimbursements correctly, and everything else that revolves around the employees income.
So, how exactly do you manage payrolls effectively so that both employees and employers keep happy? Read about the solution below.
Get most out of advanced technology
Thanks to advancements in technology, there are now ample tools and software on the market that have been developed to make business operations a lot easier, even payroll management. Payroll system software was designed specifically to ensure that organisations manage their payrolls effectively.
These tools automate almost every payroll-related task. Not only is this tool reliable to get accurate timings and amounts, but there are variations that come with additional helpful features. These features could include tracking attendance, managing budgets, filing taxes, calculating overtime of employees, tracking employee work hours, and many more.
You can easily find a tool that basically takes care of everything related to the human capital of your organisation. All you need to do is select the tool effectively and with patience and research.
Payroll system software was designed specifically to ensure that organisations manage their payrolls effectively.
Streamline tasks
Organisation is the key to success. The more organised you are, the easier your life will be. When there is chaos, the chance of errors increases.
Thus, make sure you are always working to get more organised at work and in life. Start by reviewing how your current processes are. Learn about all the areas that need improvement.
Once you have these areas, start working on them. Determine the type of pay schedule that will work best for your organisation as well as your employees. If you have distributed hours, identify the best course of action to take care of that.
When you are trying to improve, start by analysing and identifying.
Go paperless
In this world of digitalisation, it is perhaps high time to adapt to more advanced technology. After all, the digital world is the future. There are plenty of benefits that going paperless can bring.
The main benefits include offering an easy and less cluttered way to employees to manage and monitor their finances. When you opt for digital solutions, employees won’t have to stand in line and pick up their checks. This will save time and offer them more hours to focus on more important tasks like achieving their targets.
You can offer a self-service portal where employees can themselves look into their documents and payslips when the need arises.
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Consider outsourcing payroll management
Many find it difficult to delegate tasks. They feel the more they keep the work to themselves, the better and more accurate it will be. That’s completely wrong.
When you have too much on your plate, it is going to be truly difficult for you to focus on even one thing. Neither would you be able to carry out payrolls effectively nor the other tasks in hand. And payrolls need accuracy. Thus, consider outsourcing your payroll management. This will help you retain your employees and keep them productive as they will be getting accurate and timely pays. No delays. This is because the chances of the brands that you will outsource payroll management from will probably already have updated software.
Thus, consider letting go of the burden of manual payrolls and begin storing important documents securely.
Conclusion
The bottom line is that automation and easy life goes hand in hand. If you can find any way to automate your tasks, be it using a digital tool or by outsourcing the management, you should certainly consider doing that. It will give you more time to focus on things that actually matter.
Ride-hailing giant Uber has moved to sell its driverless car research division to self-driving startup Aurora, a significant shift in the company’s plans for future development.
The autonomous driving unit, known as Advanced Technologies Group (ATG), will be sold as part of a reported $4 billion deal which will see Uber investing $400 million in Aurora in return for a 26% stake in the company. The deal will also give Aurora access to Toyota, which has invested in ATG.
Uber CEO Dara Khosrowshahi will also be joining Aurora’s board, and the two companies expect to collaborate in bringing driverless cars to Uber in the coming years.
“Few technologies hold as much promise to improve people’s lives with safe, accessible, and environmentally friendly transportation as self-driving vehicles,” Khosrowshahi said in a statement. “For the last five years, our phenomenal team at ATG has been at the forefront of this effort – and in joining forces with Aurora, they are now in pole position to deliver on that promise even faster.”
Aurora is a Silicon Valley-based startup founded by former Tesla, Uber and Google executives and backed by Amazon and Sequoia Capital. The firm develops sensors and software for autonomous vehicles, with a focus on the commercial trucking sector over automated ride-hailing taxis. It currently employs over 1,200 workers.
The news follows a prediction from Volkswagen CEO Herbert Diess that autonomous vehicles will be ready for the consumer market between 2025 and 2030. In an interview with weekly German magazine Wirtschaftswoche, Diess said that autonomous driving technologies had progressed significantly, with advances in artificial intelligence continuing to accelerate.
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Germany’s Ministry of Transport has already begun to draft legislation to allow driverless vehicles to operate on public roads. Trials of self-driving cars began in the UK in October as part of the government-backed research scheme “Project Endeavour”.
Tiffany Carpenter, Head of Customer Intelligence at SAS UK & Ireland, offers her thoughts on how established banks can offer customers a better remote service.
Businesses have faced numerous challenges as a result of COVID-19; perhaps the greatest they have ever had to contend with. However, from a customer experience point of view, there have also been some new opportunities. Across the private sector, SAS research shows that the number of digital users grew 10% during lockdown, with 58% of those intending to continue usage. This represents a whole new dataset of customers with a digital footprint, offering the chance for businesses to engage with them in a more personalised way.
It seems that many businesses have been taking advantage of this already. Across the board, a quarter of customers noted an improvement in customer experience over lockdown. Yet, in the banking and finance industries, 12% of customers claimed that their customer experience had diminished, which was more than the average for the private sector.
What makes this particularly concerning for banks is that, as an industry, they are one of the most digitally mature. Of all the industries, they had the highest number of pre-existing digital users, with 58% of customers using an app or digital service prior to lockdown. So, the question is: why did the most digitally mature industry struggle to support all its customers through digital channels during the pandemic?
A truncated digital experience
As demonstrated by the sheer number of customers using their digital services and apps, the banking industry hasn’t struggled to get its customers to go digital. However, it has clearly struggled to support all of its customers during the pandemic.
While more customers noted an improvement in the customer experience over lockdown (27%), 12% still felt that it had got worse. Branch closures and lengthy call waiting times to speak to an advisor by telephone won’t have helped. In this age of digital transformation, customers were unable to access immediate support or advice through digital channels and were forced to pick up the phone or fill out paperwork to complete an action. Many businesses applying for bounce back loans found themselves in error-riddled, drawn-out processes, often waiting weeks with no status update, while customers wanting advice on payment holidays found their bank’s digital communication channels offered no support at all.
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Going the extra mile
Since the scheme was introduced there have been over 1.9 million mortgage payment holidays granted in the UK and, with stricter lockdown measures reintroduced, this number could rise even further.
The problem for banks and customers alike is that much of the decision-making process is manual, such as determining a customer’s eligibility. Automating these decisions would enable banks to deliver support and decisions in real-time to customer applications across their websites and mobile apps, eliminating manual back-end processing tasks and reducing the need for phone calls, paperwork or in-branch communication.
What’s more, automated decisioning does not require a complete overhaul of legacy infrastructure. Cloud-based intelligent decisioning applications allow banks to rapidly deploy solutions that can analyse customer data and behaviours in real time, determine customer intent and needs and arbitrate next best actions across digital channels without the need to rip and replace the current architecture.
While the pandemic remains part of our everyday life, it’s likely that banks will have to contend with sporadic branch closures and/or customers unwilling to either come in-branch for appointments or spend a long time waiting to speak to someone over the phone. Customer feedback has demonstrated that banks have the correct building blocks in place to deal with this effectively. However, they’re still struggling to support their entire customer base. If banks are to compete and succeed both in the short and long term, it’s essential that they complete the ‘last mile’ of their digital transformation.
Karoline Gore explores the current state of the EV market and the trends that have sparked its rise – and what this may portend for automated vehicles too.
The electric vehicle (EV) market is one that has an absolutely undeniable place in the future, but investment markets haven’t reflected that in value. According to experts providing comment in USA Today, Tesla saw a bear market in the early part of 2020, before striking upwards into their now sky-high value. A few key events have led to this surge, but they’ve now successfully started a trend. For a few key reasons, EVs have now established themselves as a bull market that will continue to rise – and big names are showing the way.
Big companies buy in
Tesla and their associated manufacturers are, of course, big names, but they lack a little bit of credibility as compared to the old-school big American auto houses. While EVs have an unassailable status as the future of the automotive market, it’s been a slow process to get these older manufacturers onboard. This has changed with the huge market intervention of GM, who have recently put $2 billion into EV production to up their share of the market. This has led to news outlets, including CNN, advocating an investment portfolio that looks into companies like GM – a sharp change from recent months; March saw their stock drop to a low not seen since before 2012. This type of disruption from the institutional auto manufacturers of the USA indicates the upwards trend and interest in the market; something which should only continue to become more relevant in a geopolitical sense.
Geopolitical movement
The Trump administration has been broadly opposed to green measures, whereas a Biden government has promised to become more climate-positive. Whatever the ultimate outcome of the election, there are indications that public opinion will keep moving forward in favour of green measures. According to the BBC, areas of industry and energy production have continued to grow where they favour green measures, and shrink in areas where they rely on fossil fuels and processes harmful to the environment. This points towards a future where society is dictating what products they want, and that’s a good one for EVs – especially when considering their logical, efficient endpoint.
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The automated revolution
EVs will ultimately give way to automated vehicles. There are already plenty of models on the market that achieve 1 and 2 stage automation, meaning that the driver still has most control, with stage 3 being absolute control by the computer of the vehicle. This is the logical place where EVs will move to in the future, and offers huge benefits for business. Businesses as huge as Walmart have already invested heavily in the technology, given the benefits it can bring to the bottom line. As a result, automation can only grow, and putting money into the industry will only yield returns as the years go on.
For that reason, this form of investing favours a long-term view. That being said, it’s a good time to start getting involved – before huge gains are made by the big auto houses and the industry is swamped.
Neil Murphy, Global VP at ABBYY, examines the shifting role of CFOs and a new way in which they can bring effective transformation.
With the speed of digital transformation ever increasing, businesses and financial organisations are working hard to keep up. When they do, transformation often means expanding the responsibilities of those in charge – but it’s not all about the CIO, CTO, or even CEO. Nowadays, the Chief Financial Officer (CFO) is at the centre of this change. As such, the role of whole finance team will evolve, as they are placed at the strategic heart of the enterprise.
The CFO is in a unique position to bring intelligent solutions to the enterprise. Gartner predicted that by 2021, 85% of all customer interactions will be managed without a human. By introducing technology, businesses will be empowered to forecast how competitors will react, how customers will respond, and where risks will emerge. Nowhere is this level of competition more fierce than in banking and financial services (FS) – as such, the FS industry has become a battleground.
If they want to come out on top, finance teams will need to do more than just engage customers online. They need to strategise and map out their battle plan to attract and onboard new customers digitally, while creating a speedy and secure digital experience for existing ones. They need to invest in digitising their back-office systems and processes to enhance front-line interactions. Where better to gain a broad, accurate view of their organisation and processes than a ‘digital war room’?
Why a war room?
In many firms, including in banking and FS, the CFO and their team rely heavily on data that comes in from customer-facing operations, so they can link predictive analytics with customer behaviour. The sheer volume of data can be cumbersome, but with better management, financial institutions can anticipate the needs of customers, make banking easier, and pursue the right partnerships to increase capabilities and scale.
If they want to come out on top, finance teams will need to do more than just engage customers online.
Enter the digital war room. Here, CFOs can get visibility into every single process in their business as they actually behave. They can see variances, bottlenecks and delays, and put all this data to good use, mapping out how to better meet customer and business needs.
Process analytics can help to deliver insights from data that already exists within a financial organisation. With trends and customer needs constantly changing, it’s important that CFOs and banks stay ahead of the curve by capturing meaningful insights. In fact, 98% of banking and FS bosses agree that technologies (like process mining) would be helpful to their business. An example of this is delivering personalised services based on the customer profiles that banks have. They can use the data on customer preferences, buying history, demographics, and behaviour to better understand their needs.
A C-suite seat for process intelligence
Setting up your digital war room is only half the battle. The real challenge is about knowing which technologies to use in it. Whether it is account opening, loan applications, payment processing, or any of the thousands of other possible processes, the right technology is the missing link – a sure-fire way to win new customers and keep existing ones.
Attempting to automate your processes without first knowing which work well and which don’t is a losing battle – you’ll only make bad processes bad faster. This is where process intelligence comes in as a critical component of any digital war room. Right now, only 55% of banking and FS businesses we surveyed said they frequently use tech to assess business processes. This means almost half don’t have visibility of their data and can’t spot bottlenecks and blind spots in customer interactions – not to mention in their back-end processes. This might be causing more problems than the CFO realises – and could be the key to solving some age-old dilemmas.
Using the right technologies in the right setting is critical in helping finance teams nail the processes that trip them up. The war room can empower the CFO and its staff with oversight and control over the processes they work with every day. This means they can ensure that customer experience remain a priority – as this is critical for revenue generation – whilst making better business decisions than ever before.
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Digital transformation has blurred the lines between organisational change and technological. To keep up, CFOs will need not only to lead digital transformation efforts both big and small, but to quickly learn the strategic skills to create a war room – and win both the battle and the war.
Chris Brooks, CFO at Modulr, offers Finance Monthly their perspective on how businesses can turn payments to their advantage in fraught times.
As the Chief Financial Officer at Modulr and someone with over 15 years’ experience in the finance industry, I’ve witnessed a great deal of change in the way businesses manage their payments. But to date, no period has been as transformative as the one we’re entering right now.
For decades, small businesses have been let down by their payment processes. That’s because the majority rely on outdated, manual and inefficient payment services from traditional banks with legacy IT systems. The problem is compounded by the inefficiency of banks when disbursing loans, which are often critical to getting small businesses off the ground. In fact, some small business owners claim to have been left on the verge of collapse after the amount of time taken to process their bounce-back loans.
Sometimes it takes a crisis to shake businesses out of apathy. COVID-19 has shone a light on payment inefficiencies and highlighted the urgency of digitalisation.
Fortunately, fintechs are flourishing across the UK and providing new technologies that could transform the payment space. Here are three areas where payments innovation could help businesses become more resilient, future-proof and competitive.
Sometimes it takes a crisis to shake businesses out of apathy.
1. Maintaining security and business continuity
When COVID-19 led to sudden and widespread remote working, it starkly exposed the hidden inefficiencies in existing processes. Companies that were stuck in the old, manual way of managing payments suffered major disruption. While those that were ahead of the digitalisation curve managed to maintain business continuity.
In the accountancy space, many practices had already embraced cloud computing and payments automation. They were able to make the transition to remote working seamlessly – accessing client workflows from home and managing payments through centralised portals like Sage Salary and Supplier Payments, just as they would in the office.
But we’ve also heard from accountants who, prior to the crisis, had still been in the habit of driving to their clients’ offices and picking up folders of paperwork. Many more were doing things digitally – thanks in part to Making Tax Digital - but not in a completely centralised way, which required the ad-hoc sharing of files across insecure methods like email or third-party file transfer systems.
These workarounds are highly problematic in a time of crisis. Fraudsters will actively seek to exploit new vulnerabilities. According to UK Finance, Authorised Push Payment (APP) fraud cost UK businesses £138.7m in 2019. Only £33.8m was reimbursed. And since COVID-19, we’ve seen the emergence of entirely new scams and techniques.
Fortunately, new payment technologies such as Confirmation of Payee (CoP) are being introduced to help businesses safeguard funds. With CoP, payment service providers (PSPs) will be able to check if the name of the individual or organisation entered by the payer matches the identifying information of the account paid. This can prevent consumers and businesses from being tricked into pushing funds to a fraudster’s account.
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2. Reducing operational costs
As businesses seek to recover from the impact of COVID-19 and navigate this tough economic environment, finding ways to maximise efficiency and reduce operational costs will be critical. This is especially true for businesses that have furloughed employees and are forced to work with leaner teams.
Manual payment processes are a heavy burden for finance teams in today’s fast-paced, challenging environment. They waste time, incur errors and result in significant administrative costs. That’s why fintechs are developing sophisticated solutions that allow businesses to automate all aspects of the payments workflow.
A good example is payment splitting. This is when a business receives an incoming payment, divides it based on a calculated percentage, and sends two payments out to end beneficiaries. When done manually, it’s a time-consuming process. But automation offers a powerful solution, allowing payments to be split automatically based on customisable rules.
Imagine a property management business that’s collecting rent from tenants. Rent collections are typically complex and unwieldy, as payments are sent to the estate agent’s bank account and then manually reconciled and split before sending funds to the landlord. But with automated payment splitting, rules are set to automate the amount collected and sent on – drastically cutting down admin time and reducing operational costs.
That’s just one example of the power of automation. It can have a significant impact on all aspects of payments – receivables, payables, collections and disbursement. Not only does this reduce operational costs, it can help businesses to maintain payments continuity when employees are forced to work away from the office.
3. Improving cashflow management
Cashflow is the lifeblood of any business, and right now it’s even more vital for survival.
Faster Payments is a relatively new scheme compared to traditional methods like Bacs, but it’s already having an immense impact on UK commerce and business uptake is likely to accelerate. Initially designed to speed up the payment process for retailers, Faster Payments are meant to clear in less than 2 hours, though this is often far lower; at Modulr we’ve reduced it to seconds. This is a major improvement on Bacs payments, which can take up to three days to clear, meaning funds are held in limbo for that time period.
Cashflow is the lifeblood of any business, and right now it’s even more vital for survival.
The impact of using Faster Payments can be far-reaching. By allowing just-in-time payments and the ability for a business to hold onto cash right down to the very second, Faster Payments enables greater control, visibility and forecasting of cashflow throughout the year. Finance teams can more accurately predict what cash they will have and when, and plan to pay invoices at strategic times. This will be increasingly critical as businesses strive to recover from the impact of COVID-19.
To summarise; technology is going to continue disrupting all areas of business. And the same goes for the payments industry. New solutions being developed by fintechs can help companies to improve cashflow management, significantly reduce operational costs and protect their money.
With such a challenging and uncertain economic environment in the months ahead, there’s never been a bigger incentive for change. Companies are faced with a critical choice – to keep relying on slow, outdated payment methods, or overhaul everything and find better ways of moving and accepting money. By choosing the latter, businesses can boost their resilience and weather future storms. And those that move first might that find payments become their competitive advantage.
Michelle Shelton, Product Planning Director at MHR, explores how crisis management can be improved through automated solutions.
In any business, people are your biggest asset and your biggest cost.
It is why amid the turmoil of the coronavirus lockdown, business continuity has rightly focused on providing full support to millions of employees working from home.
The danger is that functions such as payroll and HR find themselves overlooked or overburdened. There’s often an assumption that these departments run on rails no matter what happens.
When almost everyone works from home, however, payroll and HR can be overwhelmed by the volume of queries about pay, expenses, bonuses, commissions, and the limitless range of concerns employees have about sickness pay, curtailment of earnings, family matters, and so on. This is compounded by changes in government legislation or rules about furlough or holidays that need to be considered. What is the right response from a technology perspective?
Cloud-Based Applications Are Proving Their Worth
It is imperative, therefore, that payroll and HR staff have access to the applications they use daily, so basic functions remain operational and they continue communicating across the business. But many organisations have found, to their cost, that remote working is not just a matter of lifting and shifting from the office to the home. A survey of companies with more than 1,000 employees last year found 52% were still using spreadsheets for payroll admin and more than a third were using paper timesheets. This is almost impossible to run effectively with a remote workforce. Businesses that have bespoke payroll systems operating from on-premises servers are suffering almost as badly, because these vital applications are now inaccessible.
The plain fact is that for many company payroll and HR departments there will be no alternative to the adoption of new, cloud-based applications that boost collaboration and streamline efficiency.
Implementation is swift. A major software and outsourcing provider with 650 employees has been able to shift to full remote working in three days, transacting more than 50 payroll functions quickly and seamlessly.
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Saving Thousands of Hours
A good example, from more normal times, is Swinton Insurance, which has 4,000 employees across the UK. It saved 132 working days through automation of absence authorisation and the introduction of digital payslips, having previously depended on spreadsheets. All the difficulties of employee queries and the confusion about the combination of pay and benefits were resolved through adoption of a cloud platform. The company’s HR department made the transition from a highly transactional unit to one helping drive up performance across the business.
Chatbots and Voicebots Offer Employees Instant Answers
Payroll and HR should also consider deploying chatbots and virtual assistant-type voicebots to help relieve them of the time-consuming burden of repetitive queries about pay and employment matters when employees are stuck at home. Within 24 hours it is possible to have a chatbot capable of answering 50 common queries. A more advanced cloud-based platform will offer these technologies. Employees can even upload receipts with a quick smartphone photograph, automating the administration of expenses claims and making the whole process much easier.
The global COVID-19 crisis has triggered the most disruptive period to British society in peacetime history. The impact on the public and our healthcare system has been devastating, and our economy is facing the prospect of a recession much deeper and more painful than the economic crash of 2008.
However, this must be seen differently to 2008; a time where a culture of risk-taking by banks and from within the financial services industry left consumers and businesses reeling as credit lines were pulled. Back then the ‘casino culture’, which was so widespread in the city, was seen as the root cause of the crash, triggering substantial unemployment and misery for millions.
Now, we are all in it together, with the coronavirus hitting start-ups, small traders, shopkeepers and global businesses without discrimination. Companies are already collapsing into administration, with millions of workers furloughed on 80% salaries, and having to be supported by government finance and emergency loans. Wayne Johnson, CEO of Encompass Corporation explains to Finance Monthly why now is the time for banks to prove themselves.
Let us be quite clear - businesses and the general public need banks more than ever in this challenging time. It is certainly true that many of the major providers have already stepped up and emergency banking proposals have already been enacted to help businesses and individuals in these trying times. The Bank of England, for example, has already cut interest rates on their loans to 0.1%, and are working with HM Treasury to support large businesses by offering cash for their corporate debt. Elsewhere, many major consumer banks are offering mortgage, credit card and overdraft payment holidays for up to three months.
However, there is still a gulf of trust between businesses and banks, with many organisations still feeling that financial services firms do not always have their best interests at heart.
Today, the banks are in a much better position, with deeper capital buffers and better regulation. Thus, major financial service providers are in a unique position whereby they can potentially regain the trust of the British public with a strong stance, deep pockets, and generous investment in struggling businesses.
Let us be quite clear - businesses and the general public need banks more than ever in this challenging time.
Moving forward, banks should continue their dedication towards their customers and British business in general through swift action and financial support that proves ongoing, selfless commitment to the economy and its people.
This concerted effort requires adaptation from the financial services industry. The increased dependency on loans and support will inevitably have an overwhelming impact on the skeleton crew of bankers, who are themselves having to deal with the transition to remote working and unprecedented economic climate brought upon us by COVID-19.
Fortunately, there is an abundance of automation and regulatory technology (RegTech) at the banking sectors’ disposal. Recommendations from the Financial Action Task Force (FATF) and updated legislation from the Fifth Money Laundering Directive (5MLD), for example, has increasingly pushed banks towards using automation in recent years. While it is no secret that client onboarding and background checks are greatly improved with the assistance of the right RegTech, many financial services organisations can be somewhat hesitant when it comes to introducing new technology to their centuries old trade.
This has to change now. Automated customer onboarding is effective, efficient and empowers analysts at a time when human interaction is, in many cases, no longer an option during this unprecedented time.
Furthermore, the efficiency of proven RegTech software can ensure financial institutions are in a position to comfortably manage, and even accelerate, payment processes – a particularly useful function for SMEs, organisations and individuals at a time when they need access to finances and payment processes more than ever.
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Additionally, in today’s landscape, where consumers have come to expect instant services in all sectors of customer experience, automation is all the more crucial. Statistics from recent research that we published found that 38% of UK businesses have deliberately abandoned an application for banking services due to ‘slow due diligence processes’. Furthermore, nearly one third of businesses said they now trust challenger banking brands and fintech providers - known for their slick and fast digital onboarding - more than traditional banks.
COVID-19 has put consumers in an unprecedented position, as thousands are having to lean on traditional banks, modern fintechs and lenders. Thus, it’s a better time than ever to speed up and smooth out processes, if no less for the purpose of providing the best possible services for those who desperately require it.
Finally, there has been an increased trend in opportunistic cyber criminals looking to profit as a result of the current climate and, more specifically, from the influx of remote workers - many of whom have not been trained with even the most basic fraud detection or cyber security measures. Such criminals have been known to exploit the goodwill of remote workers through fake charities and financial fraud schemes, before laundering stolen money through overworked and under resourced financial services.
With the right technology in place, financial institutions can reduce the strain on their employees and resources, and flag criminal or suspicious activity at a rate never before possible. This will help combat the wave of online financial crime facing workers and businesses in lockdown, and ensure that accountants and banking services are not unknowingly contributing to money laundering during the crisis, which is set to afflict the nation for the foreseeable future.
Automation has played a critical role in the advancement of financial technology, with tried and tested processes being replaced with modern, more efficient software. With all this innovation breathing life into businesses of all sizes and industries, the question may be asked about what role an accountant plays in the age of automation. Let’s discuss what the changes are, who they impact, and what an accountant's role looks like in the modern era.
What financial automation have we seen in the last few years?
Not surprisingly, technology has had a significant impact on accounting businesses, departments and professionals, many of which implicate an accountants role as we know it. We have seen changes to employee tax and wages occurred globally, allowing employees to report on this data more easily and more frequently, with employees accessing their own earning statements centrally and independently. These changes have led to a need for more sophisticated software, many of which feature other functions that improve efficiencies through automation. Businesses can now comply with new legislation and complete payroll responsibilities without tasking a greater number of employees to that task. Australia has even coined this legislation change ‘single touch payroll software’, capturing the ease of the automation process. Accountants no longer need to conduct manual tasks, with automation offering expense tracking, payroll and invoicing.
Bots are another automation that is rolling out to industries beyond just eCommerce, with bots able to capture and respond to a range of enquiries, allowing accountants to not be hamstrung to administrative requests. This communication method can be built into a business’ website or social media pages, but won’t be relevant for all business sizes. Outsourced accounting and payroll services are another automation that allows businesses to hand their financial responsibilities to a third party, contracting rather than employing professionals.
Accountants no longer need to conduct manual tasks, with automation offering expense tracking, payroll and invoicing.
What are the benefits of automated accounting processes?
There is a misconception that enhanced accounting services will nullify the critical element an accountant plays within a business, but this is not the case at all. These automated processes simply make operations more efficient, often adding structure and simpler frameworks where there were none. Automation also assures a certain level of accuracy that can’t always be achieved manually, and this is a significant consideration when it’s concerning payroll and business revenue.
It’s not only accountants that stand to benefit from automation, business owners are also attracted to this option. Accounting automation can reduce or manage a department/business’ headcount, and taking these tasks offsite means that employers don’t need to factor in the physical space nor the employee benefits that come with employing another accountant. Less time in the details means your accountant can be more strategic with their time, which is why outsourced options have been wildly successful.
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What’s the future for accountants with automation continuing to innovate the industry?
Despite the automation that appears to be replacing certain accounting functions, the future is still bright for accounting professionals operating in organisations of all sizes. Automation innovations simply allow existing accountants to fine-tune their practice, implementing and optimising strategies with the mundane tasks taken care of. Whether accountants choose to implement software, outsource to a team or leverage reactive bots, one or all of these automation options can harness a greater output and overall performance of your business.
Automation is not something to be feared, as embracing its benefits can propel your business forward. Take a step back and assess what the growth plans are for your business, and explore what functions can be tightened in your financial sector. If there is an opportunity to enhance productivity and support your growth plans, trial some of these functions that are working effectively for those early adopters.
We saw the digital transformation of eCommerce with what 10 years ago was a complex process to open an online store that can now be accomplished in minutes. Gone are the expensive payment provider integrations with the rise of Shopify opening an online store is a streamlined and automatic process.
With the automation through machine learning and artificial intelligence of once complex lending processes, the same can now be said for how eLending is completely changing the banking and financial worlds.
Unified Lending Management - What It Is & How It Automates Lending
Unified Lending Management (ULM) is the concept that describes the complete complex of measures business undertakes to digitalize their crediting processes.
A solution that can automate all steps in the lending process from the loan origination approval through to the collections and reporting process is the way that lending processes can be automated to be as easy as the opening of a Shopify store.
One company leading the Unified Lending Management (ULM) industry in terms of innovation and reliability is TurnKey Lender. TurnKey Lender designs and develops end-to-end intelligent software products that automate the entire lending process.
TurnKey Lender offers software solutions that automate every part of the lending process for different types of creditors: money lenders, SME financing companies, grant management institutions, leasing, trade finance, in-house financing, and bank-grade lenders. Currently, TurnKey Lender serves customers in over 50 countries as the trend is developing. The functional modules, that come either fully integrated or as separate tools, cover application processing, loan origination, risk evaluation, underwriting and credit decisioning, loan servicing, collection, and reporting.
How Artificial Intelligence Drives Lending Automation
Led by Dmitry Voronenko, who holds a Ph.D. in Artificial Intelligence and has been creating banking solutions for decades, TurnKey Lender heavily invests in the idea of applying machine learning, deep neural networks, and other AI approaches to make the lending process more streamlined, intelligent, and secure.
This is an example of how technology and science can often take complex matters and make them simple and automated. Below is an overview of the thinking process that TurnKey Lender’s credit decisioning engine does. Additionally, it conducts the complete risk evaluation and credit decisioning process within a 30-second time frame. It would work even faster if requests for risk profiles came back from credit bureaus faster.
To deliver the most accurate and secure system for credit decisioning possible, TurnKey Lender developed sophisticated models powered by both deep neural networks and proven statistical techniques. The solution combines numerous evaluation approaches in the assessment of each borrower.
In order to build the process to be more potent than traditional scoring, the contributing parameters can include financials scoring, firmographics, credit bureau evaluations, loan application scoring, and bank account statement scoring with rules, decision trees, cross-checks, and calculations.
In the new digital reality, AI-powered credit decisioning allows lenders to:
- Build up a fast and secure loan origination process
- Automate every step of borrower`s digital journey
- Find and filter out potentially ineligible borrowers based on sophisticated proprietary models powered by deep neural networks
- Reduce the operational costs of origination
- Be prepared for an increase in loan application volumes and expansion into new markets
- Enable unhindered scalability of the lending business
Conclusion
Dmitry Voronenko, CEO and co-founder of TurnKey Lender
AI-powered credit scoring system is a part of TurnKey Lender’s Unified Lending Management solution and it can be delivered in tandem with many other pre-integrated systems or as a stand-alone tool. The system provides a choice between a fully automated borrower`s digital journey and a semi-automated creditworthiness analysis. This helps lenders combine the power of predictive models with the knowledge of in-house experts.
For more info about the company’s lending automation solutions or for a free personalized demo, contact the TurnKey Lender team at sales@turnkey-lender.com.
And to wrap up, here is a quote from Dmitry Voronenko, CEO and co-founder of TurnKey Lender: “The importance of this kind of proprietary technology is hard to put into words. This scoring has the potential to make business crediting across borders and industries safer, faster, and more lucrative for everyone involved.”
A former call center agent herself, Morales has benefited from her new job that is better paid and higher skilled than what she used to do. But will these chatbots end up replacing the livelihoods of millions of agents around the world? This is an episode of Next Jobs, a mini-documentary series hosted by Bloomberg Technology's Aki Ito.
