Here Ramesh Ramani, Cognizant Head of Banking & Financial Services, argues that for banks to remain relevant in a context of regulatory pressure and intense competition, during an era when experience is overtaking trust as a key differentiator, they have three options: become a multiservice provider; go beyond banking to become part of people’s lives; or find a niche segment.

So what are the Steps to unlocking future banking growth?

Today, banks are no longer just competing with each other. The BigTech firms are nipping at their heels, trying to gain market share within the financial services industry. For example, both Google and Facebook have already secured e-money licences. And, according to Crunchbase, there are now over 12,000 fintechs operating globally, with new entrants such as N26, the branchless digital bank offering a paperless sign-up process that can be completed on a smartphone, with identification verified by a video or selfie, which is building a large customer base rapidly. As digital banks such as Monzo report less than one-tenth the cost of servicing a retail account compared to a large traditional bank, these fintechs, built on technology from the outset, are undoubtedly luring away previously loyal customers and revenue through their ability to offer a more digital customer experience.

Trust is no longer the holy grail and experience has taken over

Customer experience has now become the most important differentiator. Where trust was once hailed as the holy grail for banking institutions with customers sticking with their bank for long periods – indeed, sometimes their entire lives – this is no longer the case. Trust and legacy are diminishing over time as younger consumers, brought up in a world surrounded by the BigTechs, increasingly look for speed and convenience. There are, however, notable instances of big-name banks being early adopters, using technology to streamline their operations, improve customer experience and enhance their offering. For example, in Spain, BBVA has developed an app feature called Bconomy, which helps customers set goals, save money and track their progress. The app makes suggestions about how to save money and compares prices on things like utilities and groceries. Idea Bank in Poland makes its products available on the go with branches and co-working spaces on commuter trains. These Idea Bank cars feature desks and conference spaces, plus free office supplies, Wi-Fi and coffee.

It is clear that banks are aware they need to change their strategy to remain relevant. To survive in the evolving banking landscape, banking institutions have three options:

1. Become a “multiservice provider” – as profit margins decrease with new entrants coming into the market, banks must consider partnering with the new digital players to ensure they remain an important element of the banking ecosystem. If it is done right, an ecosystem with fintechs need not cause them to lose or dilute their relationships with customers – nor come at the expense of their bottom line. Many fintechs are now offering flexible partnership options that include white-labelling services. And, if done correctly, a partnership with a fintech can bring multiple benefits. For example, ING and Santander have white-labelled Kabbage’s automated SME lending platform and integrated it into their product portfolios.
2. Go beyond banking to become part of people’s lives – banks should transform their customer experience, and one way is to make themselves integral to their customer’s lives. For example, besides supplying a mortgage to a family that has just moved into the area, a bank could become their hub for the move, offering them advice on the best schools for their children as well as providing information on local amenities.
3. Find a niche segment – banks today are trying to be everything to everyone, which is causing their innovation to stall. Those identifying a market niche will have the best chance of survival in the digital era. We are already seeing examples of household names in the banking world, such as Credit Suisse and Barclays becoming more selective about areas they want to be in to differentiate themselves.

New regulations continue to shake up the landscape

Even as little as three years ago, one could argue that banks still held some form of advantage over new players due to the vast amounts of customer data they held, giving them unrivalled access to consumer spending patterns. However, with new regulations, such as Open Banking, forcing financial institutions to make their data available, this data ceases to give them the competitive advantage it once did.

However, these regulations are certainly improving the landscape. For consumers, it means they can more easily pick and choose banks for different purposes by managing all accounts and payments in one centralised place. For example, taking advantage of the UK's new Open Banking environment, ING Bank has developed Yolt, a free mobile app which allows users to centralise their finances and manage their money with different banks for different financial services in one place. And, in theory, this improved access to payment information and spending data will lead to better banking products that offer more efficient service to consumers.

As the use and implementation of technology continues to change the banking landscape, we can expect a dramatic change in the sector within the next five years. A decade ago, many investment banking leaders thought it was ridiculous to suggest that software would run and complete their research analysis whilst today, many are almost entirely reliant on automation and AI to provide thorough and fast analysis. The question is, which banks will recognise and take advantage of the market changes ahead? Only time will tell.

Contactless, or “tap and go,” is an increasingly popular way to pay around the world. But in the U.S., only 3 percent of cards are contactless. Why?

Automated fund management is becoming a daily reality for many retail investors as advanced financial technology becomes miniaturised - companies like Nutmeg have built their business model on mobile-based automatic investment. Here, Adam Vincent, CEO at ThreatConnect, answers the question: brave new world or house of cards?

Even for larger, more traditional investment houses, essential market and risk analysis is shifting towards digital - as machine learning becomes more advanced, software is increasingly able to perform critical judgements that were previously the preserve of humans.

With that shift comes a heavy reliance on technology in frontline business as well as back-end processes. As such, the security of these applications is paramount. Banks and other financial institutions need to ensure they have full visibility of their systems and are able to detect potential threats to their customer-facing systems. A compromised investment app could lead to serious losses and, if the firm in question is influential enough, have a significant impact on wider markets.

Security’s weight problem

To add to that problem, the cyber security that guards those banks is often huge, unwieldy and poorly linked up. For decades, the young cybersecurity market has been about specialism: laser-focus companies designing highly-adapted solutions to solve a particular problem – malware, say, or phishing – as well as possible. That’s all well and good in the sense that each platform does the best job for its users, but over time it’s led to a highly expensive and unwieldy situation for buyers and security analysts who have to assemble a defence from multiple vendors.

Think of it this way: imagine you need a new car. But instead of going to the local dealership and buying a shiny Ford, you have to ring up the door manufacturer and ask them to bring you four doors. Then you call the seat company, and they deliver five seats. The engine makers, the boot shapers, the hubcap painters. All of them craft a quality product, but you’re left with an enormous bill and you still have to put the thing together and make sure it actually works.

That’s essentially the problem facing large banks in the current culture. They purchase a firewall, an email filter, a threat intelligence database, an antivirus software, and whatever else they need, and each of them does a great job – but overall, they’re a burden to run. They don’t talk to each other, and each has its own dashboard. Security analysts have to spend hours sifting through alerts to find the truly crucial issues, and valuable time is lost tending to individual systems.

That’s the CISO’s problem. But for the CEO, there’s a bigger issue – running multiple security systems is expensive. Really expensive. The more systems you have, the more highly-skilled staff you need, and they’re few and far between. Where cybersecurity used to be a classic back-office concern, like air conditioning or heating, it’s now a central part of strategy and a key pillar of both reputation and customer retention - financial legislation leaves no room for failure. Above all, though, at present, it’s a cost centre.

Send an algorithm to do a human’s job

So how do financial institutions maintain the benefits of digitisation whilst reducing the weight of security? In a word: orchestration. As cybersecurity has grown and developed, so has computer automation. Companies can now link their key systems together under a single automated management tool (often referred to as a security orchestration, automation and response or SOAR platform) to reduce the weight on their staff. Orchestrating your security landscape essentially means integrating systems so that their alerts and data flows are monitored by the SOAR, which then automatically resolves low-level alerts and flags up high-priority issues that need human review.

The upshot of that is that security resources can then be spent more profitably on strategic initiatives like system reviews and regulatory compliance. The CISO is happy because their security systems are preventing attacks and the team is more available for new projects, and the CEO is happy because costs can be streamlined by removing unnecessary admin tasks and slimming down software spend.

More importantly, an effectively orchestrated security system can be easily amended to accommodate new elements of the organisation’s digital landscape – meaning that financial organisations are freed up to innovate in the age of PSD2 and open banking without fear that every new application will come with a six-figure security cost.

Digital banking is the future – there’s no question about that. But financial organisations will have to change the way they approach security system management if they’re to keep up with and support innovation. Orchestration is one way to lighten the load – without compromising on quality.

There are growing calls for a national digital ID scheme. The Bank of England’s Mark Carney is one of the latest to back such a move, reasoning it will better protect people’s finances. A new techUK white paper makes the case that digital identities are essential to unlocking the value of the digital economy. With many advantages being championed, Chris Lewis from financial security software developers, Synectics Solutions, looks at how a scheme could work to benefit financial organisations and consumers.

A national digital identity scheme has significant potential to deliver in two key areas; security and simplicity. Both of these factors are of increasing importance to consumers and businesses.

Data released last year by fraud prevention service, Cifas, showed identity fraud hit an all-time high in 2017. Levels of this type of crime have increased 125% in a decade and it’s a problem affecting consumers of all ages. It costs financial organisations billions of pounds, while proving stressful and time-consuming for consumers.

Increasing regulation to better identify and verify customers has been designed partly to tackle the growing threat of ID fraud. This has been met by a willingness among financial organisations, and an understanding by consumers, but is far from the perfect solution. Both parties appreciate the fundamental sentiment of Know Your Customer and Anti-Money Laundering regulations and checks, and likewise, both share the frustrations of how these, inadvertently, compromise customer experiences.

It is cumbersome and tiresome for consumers to have to produce various forms of identification and verification, remember several passwords and go through multiple authentication checks – which will only increase following PSD2. People want their money to be safe and to complete secure transactions, but also want applications and interactions with service providers to be simple and straightforward. A national digital ID scheme could realise this.

Potentially, such a scheme would involve two levels of ID profile for each individual. These would include a private profile that consumers manage using a combination of soft and hard verification. This profile is then cross-checked against an individual’s public profile, which is verified according to a wide-variety of data sources. For example, this may include information from credit reference agencies, banks, insurers, employers and public sector unique identifiers such as National Insurance numbers. The two levels are validated to create one unique digital ID for each person.

The digital ID would then be stored in a secure ‘wallet’ type application on a smart phone. Consumers would be able to access this via a passcode or potentially through facial recognition or fingerprint scan, depending on the type of phone. The ID could be instantly presented to a financial organisation, either in person by showing the mobile device or electronically by sharing the profile through a secure transfer mechanism. Both means of presentation would also be backed-up with other levels of customer authentication but would be less time-consuming and significantly more secure.

A self-served, singular ID of this type would mean each customer verification is based on reams and reams of data and extensive validation, which is constantly updated and accurate. This will make it increasingly difficult for fraudsters to impersonate other people and create synthetic identities. It would also make it harder for criminals to set-up mule accounts for laundering money.

Needless to say, technology will be crucial to the infrastructure and practicalities of realising these benefits. The digital IDs need to be securely stored, accessed, shared and recovered. However, equally as important as technology, is the need for collaboration.

Public and private sector organisations need to come together to share data. This will ensure IDs are kept ‘real-time’ and accurate. It means any fraudulent attempts to impersonate and manipulate IDs are quickly determined and analysed, reducing the ability for criminals to try and use an identity across different sectors and for different reasons. It will also help ‘thin-file’ individuals without a substantial credit footprint through utilising alternative data sources.

Collaboration will also ensure there’s national agreement on one type of digital ID scheme, avoiding the potential for multiple different options. This will fulfil the time-saving and simplicity benefits consumers crave, and which businesses know are important to customer satisfaction. A singular scheme will free-up the capital and resource currently invested in multiple levels of customer verification. This could be invested in other areas to tackle financial crime.

Finally, collaboration could overcome any ‘big brother’ concerns consumers have about sharing their data and it being captured in one place. Big businesses already have lots of data about customers and consumers know this. Feeding this into a central scheme managed by the data subject gives power back to consumers and promotes transparency and trust. Similarly, organisations working together to share customer data presents the opportunity to better reward and incentivise people. The “carrot on stick” approach would help drive public acceptance and adoption of the ID and has already been demonstrated recently across Scandinavia.

Society is not that far away from a national ID scheme. People are already using application processes like ‘sign-in with Facebook or Google’ and using technology to remember log-in details. To take the next step to making a national ID scheme a reality, consumers and suppliers need to be engaged early and be part of the development process.

OneSpan (NASDAQ: OSPN), recently released The Future of Adaptive Authentication in the Financial Industry, a report prepared by the Information Security Media Group. Based on a broad survey of US financial institutions, the report reveals the sector’s challenges in authentication practices and strategies, and highlights the growing tension between improving security, reducing fraud and enhancing the digital customer experience.

The survey results reveal the biggest challenges stopping banks and financial institutions from being able to confidently authenticate customers and step up security include:

• 96% of organisations still rely on legacy processes tied to username and passwords for authentication;
• 44% have too many disparate tools, which are challenging to coordinate effectively;
• 44% are challenged by the use of legitimate credentials exposed in data breaches and social engineering schemes in account takeover attempts.

As a result of these challenges, more than 60% of respondents plan to invest in new multifactor authentication technologies in 2019, including those that rely on biometrics and AI/machine learning.

“The report’s findings echo what we are seeing with our customers,” said OneSpan CEO, Scott Clements. “Financial institutions are under pressure to improve their defenses against continuing and evolving threat vectors. Many are now choosing innovative technologies that dynamically respond to attacks as part of a layered security approach that stops fraud while improving the customer experience.”

The report features Aite Group’s Retail Banking and Payments Research Director, Julie Conroy, on the need for financial institutions to improve authentication methods using the latest authentication methods and technologies, including artificial intelligence, machine learning and behavioral biometrics. These emerging technologies, paired with digital identity technologies, provide a better customer experience and help financial institutions remain competitive.

The SME market is becoming a key target sector for most banks, but these often more agile organisations demand a better digital approach, and according to Kyle Ferguson, CEO of Fraedom, a personal touch is what’s needed.

Thanks to technological advances within retail banking, the way we bank in our personal lives has changed dramatically. No longer do we wait for bank statements to arrive at the end of each month to get an idea of our spending; instead, we are able to do this whenever we want, and often in real-time, via an app on our phone. This evolution of banking in our personal lives has fuelled a change in expectation among SMEs who are demanding the same experiences and offerings within the world of business banking. As a result of this change in expectations, SMEs are demanding a better digital approach as reflected by 57% of SMEs that now want to move to an online/mobile banking business environment.

However, banks are currently struggling to meet the demands of SMEs and deliver the more personalised service and consumer-focused offering the majority desire. Yet, with a combined annual turnover of £2.0 trillion and accounting for 52% of all private sector turnover in the UK in 2018, SMEs are a highly lucrative market that banks can’t afford to ignore. So, where should banks start and how can they begin to attract SMEs?

Developing a digital offering

According to a survey conducted by Fraedom, 95% of commercial clients who bank digitally in their personal lives, expect to do so at work as well. Ultimately, SMEs want the same digital capabilities, such as apps and online platforms, they get as personal customers. Yet, just 43% of SMEs claim to have near real-time control over business spend. Similarly, almost a third of respondents feel they have very little visibility on a day-to-day basis and nearly a quarter confessing to having to regularly spend significant time and money investigating who spent what. Furthermore, over half of UK respondents said that on average they were personally spending more than two hours a week on expense or financial management tasks. The need to regularly go back and interrogate audit trails can be a further drag on a business’ efficiency and productivity.

Just 43% of SMEs claim to have near real-time control over business spend.

In our personal lives, we now have seamless mobile transactions, highly responsive customer service and fast transaction times. Yet, although personal bank statements typically update in real time and can be viewed on a mobile device, reconciliation of work-based expenditures can take days, if not weeks to process. It is therefore unsurprising that SMEs are left frustrated by the lack of innovation offered by banks and are demanding banks provide the same tools, level of service and personalised experience we have become so used to in our personal lives.

Gaining an understanding of SMEs

Banks’ engagement levels with SME customers have also been revealed by Fraedom to leave a lot to be desired with just 12% of UK SMEs saying they thought that banks their organisation had dealt with over the past year fully understood their needs as a business. It is therefore vital that banks work to understand the needs of SMEs and also learn to speak the same language.

This understanding of SMEs also extends to ways in which they want to interact with banks. For instance, the 2018 FIS Performance Against Customer Expectations (PACE) found that almost half of UK SMEs prefer to contact their bank through digital methods via a tablet or mobile, for example. Banks need to keep this in mind and offer preferred methods of communication if they are to really tap into this lucrative market.

The SME sector is a truly lucrative market for banks, and ignoring their pleas for a more digital, personalised approach would be a mistake.

Moving forward together

The SME sector is a truly lucrative market for banks, and ignoring their pleas for a more digital, personalised approach would be a mistake. It is vital that banks begin to innovate to answer this demand with partnering with fintechs often being the most effective way of doing this. Through fintech partnerships, banks will be able to not only implement the right technology but also to get a better understanding of their SME client-base. As a result, banks will be better able to understand the consumerisation of business processes and technologies; the eagerness of SMEs to adopt these to achieve enhanced agility; and the frustration they feel if they sense that banks are effectively not speaking their language.

This tailored service will allow banks to build lasting, more trust-based relationships with SME customers, while SMEs will gain greater business agility, streamlined efficiencies and increased visibility of expenditure.

Blow by blow, a wave of claims has hit an increasing number of European banks who are alleged to have handled suspicious transactions involving Russian money. European banks such as Raiffeisen Bank, Sweden’s Swedbank AB and Finnish financial services group Nordea are some of the latest firms that have been drawn into Europe’s expanding money-laundering activities. The scandal first came to light when US authorities led an investigation into Latvia’s ABLV bank, accusing it of institutionalised money laundering, but the first major bank who was questioned over illegal activities back in 2017 was Danske Bank A/S after a whistleblower raised suspicions over the origins of billions of euros that had flowed through the Danish bank.

Investigations are currently underway after the most recent claims and the constantly increasing number of revelations suggests that the surprises won’t stop here. And although it may take months for regulators and enforcers to determine if any of the allegations from the past few months are substantiated by fact, the question on everyone’s lips is: if the claims are true, why do European banks continuously fail to detect the movement of illicit funds? What is wrong with the European banking system?

The how and the why

 As Gregory White explains for Bloomberg, the transition to capitalism in Russia and its neighbouring countries set off a wave of hundreds of billions of dollars flooding out of the ex-Soviet Union. In most cases, the money was routed through offshore zones with restricted controls which predisposes for difficulties in telling the difference between legitimate business and illicit flows from criminal activity. This, in turn, led to some of this cash being moved to prominent international banks. What is interesting is that most of the banks accused of laundering Russia’s dirty money are either Baltic banks or Nordic banks that have Baltic units; in the case of Danske Bank, for example, $230 billion of suspicious transactions were allegedly handled by the bank’s branch in Tallinn, Estonia.  On the one hand, financial institutions that operate across border tend to find themselves linked to suspicious activity oftentimes due to the difficulties they face when creating platforms and handling funds in foreign countries where a number of issues such as language differences could result in various complications. However, why is the wrongdoing so heavily focused on the Baltics?

A team of researchers estimated in 2017 that Russians’ offshore wealth is about $1 trillion, or the equivalent to three-quarters of the country’s GDP in 2015.

After the dissolution of the Soviet Union in 1991, the banking industries in all Baltic nations were thriving, partially because they began servicing flows of Russia and the rest of the former Soviet Union nations. According to regulators, a lot of banks started opening accounts for individuals and companies based in other countries (called ‘non-residential portfolios’), not questioning who the individuals were or where the cash came from. Due to tighter regulations, over the past decade banks have ceased doing business with clients who are believed to be dodgy, but past practices have left their mark on the Baltics’ banking industry.

Estimating the scale of the criminal activity is a difficult task due to launderers’ hard work to disguise the origin of their money and the fact that not every transaction that looks questionable is actually illegal. A team of researchers estimated in 2017 that Russians’ offshore wealth is about $1 trillion, or the equivalent to three-quarters of the country’s GDP in 2015.

Where are the regulators?

The key paradox in all of this is the lack of a centralised European authority tasked with investigating and prosecuting money laundering cases. To this day, the authorities that have been expected to investigate financial crime allegations have been local police and national regulators, which naturally leads to a mishmash of different laws and practices.

The key paradox in all of this is the lack of a centralised European authority tasked with investigating and prosecuting money laundering cases.

In September last year, in an attempt to tackle money laundering, the European Commission proposed tightening regulations and changing banking supervision, however, the introduction of a centralised agency is not on the agenda. For a long time, the European Banking Authority (EBA) has mentioned its physical inabilities to combat financial crime in the EU’s 28 states, due to being understaffed and not having enough power. At present, only two out of EBA’s 170 staff members work on money laundering cases.

The one thing that is perfectly clear is that the existing gaps need to be filled – exploiting the European banking system shouldn't be as easy as it seems to be. Relying on two people to monitor and investigate financial crime across all EU member states and all of their banks is unacceptable. Harmonising existing rules in the EU to investigate and punish money laundering would be a good place to start, but ultimately, the European Commission needs to increase its efforts in the fight against money laundering and introduce a centralised authority to crack down on flows of dirty money.

While most are aware of the upcoming September 14^th deadline, which requires banks to have implemented dedicated APIs for third-party providers, the March deadline was much less well known, and many of the thousands of eligible banks in Europe will not have been compliant in time. Nick Caley, VP of Financial Services and Regulatory at ForgeRock says that while there are no formal penalties for those that did not meet the deadline, there will certainly be consequences that could have long-lasting commercial, technical and reputational effects. Read on to find out more about what to do if you’ve missed the deadline.

Consequences of non-compliance

Banks who have failed to meet the March deadline will now need to implement fallback ‘screen-scraping’ as a contingency mechanism ahead of the 14^th September deadline, at the same time as implementing their PSD2 API. With screen-scraping, customers essentially share their security credentials so third parties can access their banking information via the customer interface and collect the data for their own services. This is something that’s absolutely not in the interests of banks, or their customers, and could lead to problems in the future.

There are multiple problems with screen-scraping. Firstly, there are the significant security risks it poses. Screen-scraping involves customers sharing their banking security credentials with third parties, which is an outright bad security practice. No-one should ever feel comfortable sharing a password to a system, let alone one that provides access to a bank account. Such credentials, as well as providing access to banking data, can be used to unlock numerous other account functionalities that should only ever be available to the account owner. Any increase in the risk that banking credentials could be compromised will undermine the confidence consumers place in financial institutions.

No-one should ever feel comfortable sharing a password to a system, let alone one that provides access to a bank account.

Beyond these security considerations, there are also cost implications as banks will need to find the resources necessary to maintain more than one interface, and each interface will require strict and ongoing monitoring and reporting to the National Competent Authority. While larger tier one banks might be able to absorb this extra cost, this will further compound the already serious burden of compliance with the regulatory technical standard (RTS) for smaller banks.

Beyond these practical concerns, failing to comply with the March deadline means many banks will now be left playing catch up on the developments set to be made as PSD2 comes into effect. This could seriously hinder banks’ long-term prospects, preventing them from giving themselves a strong foundation to stay on top of PSD2 and severely limiting their ability to compete in the new era of customer-centric financial services.

What can banks do now if they’ve missed the deadline?

The best advice for a bank that hasn’t met the deadline for a testing facility is to contact the relevant regulator (National Competent Authority) regarding the steps they could take to achieve an exemption. They will need to submit a description of what has been implemented so far, and their plan to complete the delivery of items that fulfil the requirements of PSD2.

The NCA will accept exemption requests up to June 14^th 2019, after which date it is deemed that any banks with failed applications will have just enough time to apply the contingency measures before the September deadline. If a bank demonstrates ‘clear and credible plans’ for the required compliance by September then the NCA may confirm the exemption once it’s received evidence of the implementation.

Of course, the easiest way for banks to demonstrate credibility and get an exemption is to implement testing facilities as soon as possible. For those banks who haven’t yet found a solution, there are ready-made developer sandboxes that they can deploy in a short space of time. These sandboxes are essentially turnkey solutions that are fully compliant with the defined API standards, making the whole process far simpler and quicker.

The NCA will accept exemption requests up to June 14^th 2019, after which date it is deemed that any banks with failed applications will have just enough time to apply the contingency measures before the September deadline. If

Whether or not banks are allowed an exemption, it is still worthwhile for them to continue with plans for a developer sandbox. This is because it will still enable third-party providers to test their functionality and make sure the bank is best prepared when September 14^th comes around.

Looking further ahead

As the trusted holders of customer banking information, PSD2 gives banks an unrivalled opportunity to add value for their customers. Through the development of new interfaces, modernisation of authentication methods and the redesign of customer journeys, banks can achieve the new Holy Grail for any business; delivering intuitive, secure digital services and experiences that are personalised to the customer and offer far greater insights and advice.

At the same time, it’s important for banks to keep an eye on the competition. The promise of PSD2 is to provide a level playing field to encourage competition and innovation. Account Info Service Providers (AISPs), and Payment Initiation Service Providers (PISPs), retailers and internet giants, all have the opportunity to introduce their own payment and financial management products and services that integrate directly with the established banks.

At the same time, the challenger banks built from the very beginning to be ‘digital natives’ have been leading the way with innovative customer-first experiences and third-party marketplaces that go beyond what is currently on offer from traditional players. This means banks will need to provide better digital services to stay competitive, giving people more freedom and choice in the way they interact with financial services.

The March deadline was the first real test for which banks are keeping up with PSD2, and which are falling behind. However, these compliance deadlines are not just a test of a bank’s ability to meet technical regulations - they are also strong indications as to how well each bank will be prepared to stay competitive in the race for our increasingly digital future.

Website: https://www.forgerock.com/

One77 looked at the average cash and mortgage buyer house prices from the Land Registry and how much higher or lower the average mortgage house prices was, compared to those funded by a cash purchase.

With interest rates remaining at affordable levels and house prices at not so affordable levels, it’s no surprise that mortgage sales volumes across the nation are 138% higher than cash sales volumes. However, despite slower market conditions and the ease of dealing with cash buyers over those with a mortgage, the average house price for cash buyers is still 9% lower than mortgaged average house price levels.

By Region

In fact, there is just one region where cash buyers pay a higher property premium and that’s in London.

The gap is highest in the North East where mortgage funded house prices are 14% higher than those purchased with cash.

Great Britain

Some of the highest gaps in Great Britain are in Scotland with the highest being Falkirk, where house prices fuelled by mortgaged buyers are 32% higher than cash buyers. North Lanarkshire (26%) and Renfrewshire (25%) are also amongst the highest.

Hartlepool is the largest gap in England at 25%, East Renfrewshire, East Dunbartonshire, Preston, Middlesbrough, Burnley and St Helens also make the top 10.

Although placing 18^th in Great Britain, Newport is home to the highest Welsh gap in mortgage and cash buyer house prices at 16%.

Although only the 83^rd largest gap overall, Sutton is home to London’s largest gap with mortgaged fuelled house prices sitting 10% higher than those purchased with cash in the borough.

On the flip side, there are a couple of factors that can see the average cash sold price exceed that of mortgage sold prices in an area. Property prices could be more realistic, or buyers could have pockets deep enough to front the cash as is the case in some areas of prime central London (Westminster in particular). There’s also the chance that more properties in that area are unmortgageable and therefore competition from cash-only buyers will push up the cash sold prices statistics. This is often the case in the remote and sparsely populated Scottish islands, where lenders won’t go due to the tricky geographical factors and lower demand for property.

Managing Director of One77 Mortgages, Alastair McKee, commented: “Many home sellers will be drawn to a cash buyer as it can often mean a quicker, smoother selling process with less paperwork and no onward chain, which can be hugely appealing to someone that needs a quick sale in particular.

However, savvy buyers will know that they are in this stronger position and as a result they will often negotiate more off the asking price than they otherwise would, with the seller tending to accept it, resulting in a lower sold price achieved. I myself sold my last property at £100,000 below asking price to a cash buyer due to the greater convenience of doing so as I was lucky enough to be in a strong position due to my onward purchase, so I can certainly understand the appeal.

When considering which works best for you it’s really down to priorities. If you need to sell quickly then a cash buyer is the way to go, but if the sold price is more important, it’s worth holding out for an offer at full asking price.”

Martin Lewis, founder of moneysavingexpert.com says: “Everyone should take time to manage and boost their credit score. It's no longer just about whether you can get mortgages, credit cards and loans, it can also affect mobile phone contracts, monthly car insurance, bank accounts and more.”

However, what happens when applicants realise that their credit score is at the lower end of the rating scale?

How do you improve it and how long will this take?

First, what could be impacting your credit score?

Several factors impact credit scores, each contributing to the score credit reference agencies provide applicants.

Not being on the electoral roll

It's pretty easy to rectify if you are not on the electoral register - all you have to do is register with your local council. Lenders like when applicants have an address that confirms where they are. So if you are not on the register, do so as soon as possible.

Taking out too much credit at once

If applicants make several credit applications simultaneously, this does not look great to credit lenders, almost appearing as desperate, suggesting to lenders that you’re relying heavily on credit to manage your finances.

Using too much of your available credit

For some credit lenders, their preference is for borrowers to not use more than 25% of their total credit limit at any one time. For example, if an existing borrower has a credit limit of £2,000, they should not have more than a £500 spend on the account.

Borrowers who wish to improve their credit scores will need to repay some of the used credit limits to sit under the 25% spend. This is not an exact science as other factors still come in to play yet those who adopt this approach, will see their credit score rise.

Having too much available credit

This may sound weird, yet having lots of empty credit cards can adversely impact a score. Newer lenders worry that if they lend to you, you could still take on more credit with your other empty credit cards, thus making it riskier for you to repay them.

The point here is, do you need all that available credit? Keep the ones you use to spend and repay on time regularly, and ditch the ones you no longer use at all. Old balance transfer credit cards are an obvious target for closure.

Having the ‘wrong’ credit

Whilst this may be controversial, those with loans and credit from high-interest payday loan lenders like Wonga, or whopping interest-rate APRs on so-called credit builder credit cards could see their credit scores take a plummet. Lenders see these as the only credit you can receive rather than traditional borrowing like from a bank.

No or little credit history

Again, this may sound counter-productive, yet those who have lower scores are also those that have never used or only borrowed a long time ago. For lenders, this means that they have little credit history of you as a borrower - and thus whether you are actually able to repay in the present.

You will need to demonstrate that you can manage credit over a few months before seeing any improvement. A tip is to get a small balance credit card and pay it off each month.

Debt, Bankruptcy's & County Court Judgements

Debt, bankruptcy's and CCJs will linger on your credit report for six years. There is definitely no short-term fix here - the only option is to ensure that in these six years you remain debt-free and maintain an excellent financial position. Finally, this will be reflected in your credit score, yet it won't happen until the six years are up.

Being financially linked to another person

Being financially tied to someone – something that usually occurs when you share a financial account, like a joint saving or current account, or even a mortgage; will impact your credit score.

Sadly it is a fact, many couples separate or divorce, and if their score is terrible, this will still impact yours. The tip here is to contact each credit reference agency and ask for this link to be removed. Next time your credit report is refreshed - the link should be removed.

How long will my credit score take to improve?

Each bank, building society, online lender, local authority and other relevant organisations have their own timescales for updating credit reference agencies with the latest information. It could be several weeks before applicants notice any changes in their credit report.

Improving credit scores is about ensuring that you make smart choices about your financial situation, and having the determination to see it through.

So, first, check what is impacting your score, and then ensure that you update every credit reference agency. Sadly, there’s no overnight fix but having a good credit score is worth the effort and will set you up for a stable financial future.

Less well known, however, is another more imminent deadline. The PSD2 regulation requires banks to implement facilities for these third parties to test their functionality against a simulated bank environment six months prior to the September deadline, which means that these environments must be in place by 14th March. Below Nick Caley, VP of Financial Services and Regulatory at ForgeRock,  explains that despite the importance of this fast-approaching deadline, many of the thousands of eligible banks are significantly challenged in meeting either deadline. And, while there are no formal penalties for not complying with it, there will certainly be consequences that could have long lasting commercial, technical and reputational effects.

Consequences of non-compliance

Banks which fail to meet the March deadline will need to implement fallback ‘screen-scraping’ - where customers essentially share their security credentials so third parties can access their banking information via the customer interface and collect the data for their own services - as a contingency mechanism at the same time as implementing their PSD2 API by the September deadline, something that would not be in the interests of banks, or their customers, and could lead to graver problems further down the line.

There are multiple problems associated with screen-scraping. Firstly, there are the significant security risks it poses. Screen-scraping involves customers sharing their banking security credentials with third parties, which is an outright, bad security practice. No-one should ever feel comfortable sharing a password to a system, let alone one that provides access to a bank account. Such credentials, whilst clearly able to provide access to banking data, also unlock numerous other account functionalities that should only be available to the account owner. Any increase in the risk that banking credentials could be compromised will not build the confidence of consumers.

Alongside security considerations, there are also cost implications since maintaining more than one interface increases the resources required. Each interface will require strict and ongoing monitoring and reporting to the National Competent Authority. While larger tier one banks might be able to absorb this extra cost, for smaller banks this will further compound the already serious burden of compliance with the regulatory technical standard (RTS).

Beyond these very practical concerns, failing to comply with the March deadline will mean banks are left playing catch up on the developments set to be made as PSD2 comes into effect. Avoiding such pitfalls would mean banks can significantly boost their long-term prospects, giving themselves a strong foundation to stay on top of PSD2, meeting regulatory deadlines whilst crucially increasing their ability to compete in the new era of customer-centric financial services.

Despite the clear importance of the March deadline, many banks are still largely focused on developing their production APIs ahead of the September deadline, rather than their testing facilities. For those banks who haven’t yet found a solution, having development teams put a testing facility live in such a short space of time might seem like an impossible task. The good news is that there are ready-made developer sandboxes that banks can deploy in a short space of time to stay on top of the requirement for a testing facility. These sandboxes are essentially turnkey solutions that are fully compliant with the defined API standards, making the March 14th deadline much easier to digest. Banks should look to these ready-made sandboxes if they haven’t already found a solution.

Looking further ahead

As the trusted holders of customer banking information, PSD2 gives banks an unrivalled opportunity to add value for their customers. Through development of new interfaces, modernization of authentication methods and the redesign of customer journeys, banks can achieve the new holy grail for any business; delivering intuitive, secure digital services and experiences that are personalised to the customer offering far greater insights and advice.

With the focus on complying with deadlines, it’s also important for banks to keep an eye on the competition. The promise of PSD2 is to provide a level playing field to encourage competition and innovation. There are certainly plenty of new competitors: Account Info Service Providers (AISPs), and Payment Initiation Service Providers (PISPs), retailers and internet giants, all have the opportunity to introduce their own payment and financial management products and services that integrate directly with the established banks.

At the same time, the challenger banks built from the very beginning to be ‘digital natives’ have been leading the way with innovative customer-first experiences and third-party marketplaces that go beyond what is currently on offer from traditional players. This means banks will need to provide better digital services to stay competitive, giving people more freedom and choice in the way they interact with financial services.

The March deadline is the first litmus test for which banks are keeping up with PSD2, and which are falling behind. However, as we have seen, the far-reaching changes that PSD2 heralds means this upcoming deadline won’t just be a test of a bank’s ability to meet technical regulations - it will be a strong indication as to how well each bank will be prepared to stay competitive in our increasingly digital future.

The research found that 1 in 10 would be “extremely likely” to switch.

28% would be unlikely to switch if bad behaviour was found at their bank, while 24% would be neither likely nor unlikely to switch.

Although half of those surveyed would consider switching because of non-financial misconduct, only 4% of respondents have actually done so.

For customers who would consider switching because of non-financial misconduct, the main barrier to switching is the perceived hassle of doing so. 37% of respondents cite “excessive hassle” as the reason they haven’t already switched. 23% of consumers view all banks as equally bad, and 20% don’t know enough about alternative options to switch.

The main barriers to switching are:

• 37%: "excessive hassle”
• 23%: “all banks are equally bad”
• 20%: “don’t know about the other options”
• 10%: “loyalty to bank”
• 4%: “the products of ethical providers aren’t good enough”

Racial discrimination against employees is seen as the most intolerable example of non-financial misconduct, with 58% saying they would be likely to switch banks if it was going on, and 21% saying they would be “extremely likely”.

When it comes to the gender pay gap, just over one-third (38%) would consider switching bank because of a significant gender pay gap. 9% of women and 5% of men would be “extremely likely” to switch banks because of this. Respondents were also asked if they believed banking was more likely to have a culture of gender inequality than other industries. 36% said that they believed this to be true.

The factors that would make customers most likely to switch banks:

• 58%: discrimination based on race
• 54%: discrimination based on sexuality
• 52%: poor environmental practices
• 52%: sexual harassment
• 38%: significant gender pay gap

Mike Fotis, founder of Smart Money People, said: “The financial services industry has come under increased scrutiny in recent years for its track record on non-financial misconduct, with the FCA signalling that how firms handle non-financial misconduct is potentially relevant to their assessment of firms. Our survey shows that these issues matter to around half of banking customers.

“We were particularly interested by the barriers to switching. Despite the high profile promotion of the Current Account Switch Service, the hassle factor remains the key reason why customers don’t switch. And while new banks continue to emerge, 20% cite a lack of knowledge about alternative options as the reason why they wouldn’t switch.”

(Source: Smart Money People)