Ebury provides corporate banking services to small businesses that trade worldwide. Operating in 119 countries, in 140 different currencies, it has processed over £16.7 billion in payments since its inception and helped over 43,000 clients trade internationally.

News has broken that Santander is buying its 50.1% stake in the fintech for £350 million, of which £70 million will help Ebury merge into new markets in Latina America and Asia.

This is a bold but expected move form Santander, as it manages accounts for more than four million SME customers around the globe, 200,000 of which operate on an international scale. The partnership between Santander and Ebury will also allow the fintech to make the most of the bank’s relationships, assets and brand to build new banking partnerships.

Ana Botín, group executive chairman of Banco Santander, said: “Small and medium-sized businesses are a major engine of growth around the world, creating new jobs and contributing up to 60% of total employment and up to 40% of national GDP in emerging economies. By partnering with Ebury, Santander will deliver faster and more efficient products and services for SMEs, previously only accessible to larger corporates.” 

Goode Intelligence predicts more than 1.9 billion bank customers worldwide will use biometrics by the end of 2020 as a means of making payment authentication more secure and convenient. They also predict that by 2023, there will be 579m biometric cards in circulation. The UK could have a significant role to play in this adoption, with Natwest announcing earlier this month its trial of a biometric fingerprint credit card, making it the first UK bank to do so.

There are some obvious, immediate benefits to biometric authentication. Consumers can authenticate purchases above the current £30 contactless limit without having to enter their PIN, using only their fingerprint instead. For retailers, not only would this reduce queue times but also help facilitate more secure transactions, technologically and visually, as merchants will be able to witness the cardholder authenticating the transaction, which is currently not the case with a stolen card.

Cost factor

When chip and PIN were first introduced back in 2000, a similar cost comparison was made between using a magstripe card and a chip card. In the industry at the time, the discussion about the difference in price revolved around the business case to include a lot of additional data stored on the chip cards, such as medical information and driver’s licence information. In the end, it was determined that the cost of that particular chip was too expensive. What we have now is the cheapest chip they could mass produce; a win-win in the eyes of issuers.

When it comes to adding biometric functionality to a card, the significant cost to produce is obvious to even those not privy to the intricacies of card issuance.

When it comes to adding biometric functionality to a card, the significant cost to produce is obvious to even those not privy to the intricacies of card issuance.

Some commentators on this have suggested that some costs could be borne by the cardholder in the form of an annual fee or a set-up fee for a biometric card. However, this could have a negative impact on getting consumers to use biometric authentication.

As is the way with any new technology, there is inevitably going to be initial resistance to cost. But this must be balanced with considerations for, say, the reduction in fraud.

Questions on security

In the case of Natwest’s biometric card, consumers have to go into a Natwest branch and register their thumbprint on a reader, which may seem like an innocuous part of the process but actually raises issues around mass adoption. You cannot have a solution where you’re asking individuals to go to a branch to register a thumbprint; it’s not inclusive to those without access to a branch, especially when bank branches are closing at a rate of knots. The alternative would be a mobile solution, but this again raises issues of accessibility.

The whole idea of using biometrics to authenticate payment raises questions around security, beyond the obvious ways it helps facilitate secure transactions. The human thumbprint is not a physical image. It’s encrypted. When you hear of a data compromise in the news, most cardholders are told to reset their password. But when you’re doing biometrics and you’re using something which is unique to you - like a fingerprint -- if that data is compromised, what’s the backup? You’ve ultimately only got 10 options unless you start using your toes!

Like any new tech, biometrics generates a lot of buzz and excitement. Whilst it is a fascinating new development in our industry, let’s take a steady approach that ensures we cover all eventualities. Once we open the pandora’s box of mass adoption, it will be very difficult to close it.

Authored by Nick Fisher, European Projects Manager at JCB International (Europe).

The protocol is designed to make sure that during a transfer, the name of the recipient exactly matches the name on the account receiving the funds. Intended to give greater assurance when it comes to transactions, CoP helps users to avoid directing payments to the wrong account.

It was then announced in 2019 that the name checking service would be delayed until March 2020 at the earliest. But given the security implications, Chris Stephens, Head of Banking Solutions at Callsign, asks: why has the deadline been pushed back?

After a consultation with groups in the industry, The Payment Systems Regulator (PSR) deemed the expected implementation deadlines “unachievable”. However, with the personal details of consumers at risk, banks are searching for various ways to address fraud to keep their customers secure. This is especially important given that in 2018, a total of £1.20 billion was stolen from the banking industry by those committing fraud. Justifiably, there has been a great deal of worry that this delay will leave consumers at risk of fraud. But many people are questioning whether its introduction will really help to reduce fraud levels, and if there are any other measures banks can be put in place to keep their customers money safe and secure?

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While it seems like a logical way of combating bank fraud, putting the CoP scheme into practice will probably only work to a certain degree. A fraudster’s natural reaction to any such regulation is to improve upon their current skillset and work out a means to bypass the new security infrastructure and regulations. In the context of CoP, all a fraudster would have to do is set up a new account in the victim’s name to give the victim further confidence that they are transferring money to a “secure account.”

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Another problem that can potentially arise is the idea that customers will become complacent when it comes to security due to the belief that CoP provides them with another layer of protection. Even though CoP will absolutely protect customers against crimes such as authorised push payment fraud, the scheme could leave them vulnerable to more advanced types fraud which are of far higher value.

In addition, almost every bank would have to implement CoP for it to be successful. While the decision to implement the scheme is down to each individual bank, The Payment Systems Regulator has said that Lloyds, Barclays, HSBC, Royal Bank of Scotland, Santander, and Nationwide Building Society, which together account for about 90% of bank transfers, must all have their CoP schemes up and running by March next year. Banks that don’t sign up to the scheme would automatically become targets in the eyes of fraudsters as they won’t need the details of the bank account to match the name of their intended target. Therefore, there would have to be a more collaborative approach from banks for the implementation of CoP to work.

While the decision to implement the scheme is down to each individual bank, The Payment Systems Regulator has said that Lloyds, Barclays, HSBC, Royal Bank of Scotland, Santander, and Nationwide Building Society, which together account for about 90% of bank transfers, must all have their CoP schemes up and running by March next year.

Regardless of when CoP will be introduced, there are other tools to help banking customers tackle fraud, such as dynamic authentication journeys, which requests that a user states why they are conducting a transaction and offer fraud warnings, that are very effective at preventing APP fraud. However, the logic behind these policies can be complex and they require constant monitoring in order to be kept up to date. Once the implementation of these dynamic user flows has been done, it also highlights the question about how the outcomes can be accessed by the third parties that leverage a bank’s Open Banking APIs.

To have any chance of reducing banking fraud, it’s crucial that financial organisations today use all the relevant information they have to generate a full picture of their customers. It is imperative that they utilise the data at their fingertips in order to safeguard their customers while still providing the seamless, friction-free service they demand. A customer’s digital presence will only be protected from fraudsters once banks look at all the elements of security as interconnected, rather than separate components.

By feeding data into a strong and dynamic policy manager that can be nimble and adaptive, banks will be better compliant and secure while at the same time provide robust user journeys that provide the right amount of friction when necessary. By having a more holistic approach to security, rather than focusing on single point elements, they have a far better chance of beating the fraudsters and allowing their customers to live their digital lives uninterrupted.

Channel director and finance expert at moneyguru.com, Deborah Vickers has the lowdown on a raft of innovative and exciting companies making their mark on the retail banking sector in 2019. So, if you’re thinking of making the switch, here are just some of the banks and their benefits.

1. N26

It’s surprising to think that N26 only launched in the US and UK last year, considering how popular they have become. Their three current account products appeal to customers looking for an equivalent to a standard or packaged current account, with easy options to save by creating ‘Spaces’ within the app.

Alongside their banking app, they also provide a desktop version called N26 Web, so customers can gain access to their account from practically any device. In addition, they’re working on an overdraft facility that should be available soon in the UK.

2. Revolut

Launched back in 2015, Revolut is one of the largest challenger banks in the market. In March 2019 they reported they had hit 4.5 million customers, with 1.6 million being UK-based.

They are one of the only challengers to allow customers to exchange money into cryptocurrencies and you can earn cashback with any purchase made on their Metal card. Their version of a savings account comes in the form of Vaults, which can be set up straight from the app.

3. Starling Bank

Having recently celebrated their two-year anniversary, Starling is a challenger bank going from strength-to-strength in the UK. They have recently developed Marketplace, making it easier for customers to access financial products from partner companies.

Despite not offering a premium current account, Starling offer an overdraft facility and a personal loan option, being one of the only challenger banks to do so. They became known for offering a portrait-style, teal debit card, but customers have flocked to the bank for other features such as saving money via Goals and analysing their accounts through Spending Insights.

4. Monese

Monese prides itself on being the simple alternative to high-street banks, built for customers who would like an easy route into managing their money. They have one free current account and two premium accounts that charge a monthly fee.

This hassle-free approach to banking appeals particularly to those who have emigrated from another country to the UK, as Monese doesn’t require proof of address or a credit history, making it much easier to apply and be accepted.

5. Cashplus

Cashplus are a challenger who have entered both the personal banking and business banking sectors, allowing those with a bad credit score to still benefit from a secure bank account that suits them.

Both of their current account offerings have a monthly fee, but don’t require a credit check, making it much easier to apply and keeping your credit score intact. Through the Creditbuilder feature, you can also start to make improvements to your credit score over 12 months, with no risk to yourself.

6. Monzo

Cited as one of the most popular challengers in the UK (according to the BACS switching statistics), Monzo Bank is now used by more than 2 million people, since their launch in early 2015. They pride themselves on being transparent with customers and have an active community forum with 40k users.

They have recently launched a premium account option called Monzo Plus, which is in early development but has started with a monthly fee of £3. You can then add on extras such as travel insurance, with many more options in the pipeline.

7. Tandem

Tandem focus on being a companion to your existing current account, helping you work in tandem with your finances. All you need to do is download their free app and start saving.

Unlike other major challengers, Tandem concentrates on offering savings accounts and credit cards to customers, alongside their money management app. Use of the app creates a seamless transition between your existing current account and a savings pot, which rounds up to the nearest pound using Autosavings and puts the change into a pot for later use. They are looking at implementing a full current account very soon, along with support for Apple Pay and Google Pay too.

8. Atom Bank

Atom Bank have entered the challenger space by providing savings accounts, mortgages and business loans to customers, all available by applying online and managing through their app. Like Tandem, Atom Bank are a challenger that you can use alongside your existing current account to help with saving for the future.

Along with providing competitive rates for their fixed savers accounts, they are also the only challenger in our list to provide mortgages, meaning potential homeowners can find an alternative to high-street banks when looking for funding.

According to  Simon Hill, Head of Legal & Compliance at Certes Networks, this is mostly due to the fact that financial institutions are not only heavily regulated by data privacy requirements, but they are also under mounting pressure to be open to consumers and businesses about how they are protecting their data from potential breaches. 

Additionally, no bank or financial services organisation wants to face the consequences of a data breach. This is demonstrated by the fallout of numerous data breaches in the industry over the years - from Capital One in 2019, to Equifax in 2016 and Tesco Bank in 2017. In the case of the Capital One data breach, a hacker was able to gain access to 100 million Capital One credit card applications and accounts. This included 140,000 Social Security numbers, 1 million Canadian Social Insurance numbers and 80,000 bank account numbers. Additionally, an undisclosed number of people's names, addresses, credit scores, credit limits, balances and other information dating back to 2015 was involved, according to the bank and the US Department of Justice.

What’s more, the damages of these data breaches are not only reputational, but also financial. As a result of Equifax’s data breach, the organisation reached an agreement to pay at least $575 million and up to $700 million to compensate those whose personal data was exposed. In 2016 Tesco Bank was fined £16.4 million by the Financial Conduct Authority (FCA) over its "largely avoidable" cyber-attack that saw criminals steal over £2 million from 34 accounts. This clearly shows that these consequences can arise no matter how ‘large’ or ‘small’ a data breach may seem; companies that do not encrypt their data adequately enough to safeguard it will be penalised.

On top of this, the increasing expectations of consumers means that banks and financial institutions are trying to achieve a balancing act: how can they protect data privacy, while at the same time remaining transparent about how data is being protected? However, it doesn’t have to be a trade-off between meeting customer expectations and meeting cyber security compliance requirements. Banks and financial services organisations can utilise technology to the fullest extent while still protecting data and avoiding the unthinkable repercussions of a data breach.

The balancing act 

To achieve this balance, banks and financial services organisations need to take greater measures to control their security posture and assume the entire network is vulnerable to the possibility of a cyber-attack. Robust encryption and controlled security policies should be a central part of an organisation’s cyber security strategy. When stringent policies are generated and deployed, it enables greater insight into applications communicating in and across the networks. New tools are now available to enforce these policies, not only impacting the application’s workload and behaviour, but the overall success of the system access.

Conclusion 

Banks and financial services organisations should not have to worry about keeping data secure and protected when it is entirely possible to do so. Adopting new ways to look at how organisations define policies through micro-segmentation and separating workloads by regulations, is one example of how to keep data more secure. Also, ensuring policies define only those users who have a critical need to see the data limits network vulnerabilities. And lastly, a robust key management system that is automated whereby keys are rotated frequently, can also help to safeguard system access and strengthen the organisation’s security posture.

Below Marcin Nadolny, Head of Regional Fraud & Security Practice at SAS, explains more on the date push back and what this will mean for banks moving forward.

UK companies must be able to demonstrate that they are moving towards compliance from September 2019, but no enforcement action will be taken for 18 months. For the rest of the EU in general, the timeline is unchanged. However, national competent authorities have the flexibility to provide limited additional time to become PSD2 compliant (see the recent EBA opinion).

The big picture

But whichever country you’re in, it’s essential that companies recognise the urgency at play. In the new digital world, payment security is absolutely essential. The question now is not whether PSD2 compliance should remain at the top of the priority list. It’s how quickly companies can realistically achieve it. In a nutshell, PSD2 simultaneously massively increases the amount of financial data moving into banks’ systems while also making it mandatory that they run fraud controls on that data in real time.

As PSD2 ushers in the age of open APIs in finance, the traffic volume that payment processors will have to handle will be enormous. Consumers’ personally identifiable data will be at heightened risk, and we will observe increased malware attacks and data breaches via the newly created attack vectors. If businesses aren’t prepared for the change, it’ll be a fraudster’s paradise.

Is your organisation ready to cope with this new heavy traffic and identify fraudulent activities? It might be like finding a needle in a haystack. Fortunately, AI is coming to the rescue. Emerging technologies, such as predictive models, network analytics and anomaly detection, all have the power to increase your efficiency in finding and fighting fraud.

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Real-time fraud detection

PSD2 is more than just a regulation. It’s the start of a major transformation for the payments industry. With the move to digital-first, open models, there’s an increased need to operate processes in real time – providing instant payments, for example – and that means that fraud prevention will need to move at the same speed.

Adequate anti-fraud protection is required by the regulation. Banks are expected to fill out certain tests as a fraud assessment, including reviewing behavioural profiles, checking known compromised devices and IDs, applying known fraud scenarios to transactions, and detecting malware signs. Analytics can help speed up detection, find suspicious behaviours and collate data points by ingesting new data sources. This builds a picture of "normal" behaviour against which banks can measure transactions.

At present, not all banks are applying all these anti-fraud measures. Some base their protection on simple rules and aren’t able to detect fraud in real time or stop transactions in progress. These abilities aren’t technically required by the regulator until PSD2 comes into effect. Real-time fraud prevention used to be a luxury – but now it’s a must-have. Banks must take the initiative to ensure they can detect fraud in process in incredibly short time frames.

Third parties enter the market

The other major change included in PSD2 is the arrival of third-party providers in the market. These nonfinancial companies, including GAFA (Google, Amazon, Facebook and Apple), e-tailers and fintechs, will be able to work as payment processors going between customers and banks. This means the banks have a much bigger traffic volume to handle and review for fraud. Legacy systems and processes simply can’t handle it.

In order to cope, banks need to have systems in place that are able to assess for fraud at huge volumes and in real time. Not only that, but transactions from third parties might come with limited contextual information. So, banks will have to enrich them with additional data on variables including digital identity, reputation and past behaviour.

AI applications will be essential to handle that ongoing enrichment at speed. Humans alone simply can’t process that level of information. So, it’s essential that banks invest in AI to augment the skills they have and lighten the load of compliance.

Managing the risk

The risk to banks posed by these growing data streams is not just in terms of payment fraud. There is also a heightened cybersecurity risk. New data flows and new payment systems present possible system back doors and new attack vectors that hackers will be quick to discover. By attacking third party infrastructure, malicious actors will be able to gain access to consumers’ personal data.

Addressing this problem is not the sole responsibility of the banks. But it highlights the level of risk associated with the increase in data volume and connectedness. Reputational damage and heavy fines are a very real possibility for institutions that don’t get their act together in time.

Compliance will require many changes to anti-fraud and customer identification processes. The technology required to handle this additional burden is out there. Banks must invest wisely and ensure they are fully equipped, whether next month or by 2021.

Nik Storonsky, the CEO and Founder of Revolut confirmed this during an exclusive interview with LearnBonds.com.

During the interview, Mr. Storonsky talked about the challenges that Revolut is currently facing. He explained that Revolut is working to find the best candidates to join the firm and meet the current growth needs.

“Each market that we enter also presents us with new and interesting hurdles, so expansion and adapting to new markets is another exciting challenge,” he said.

Revolut has been expanding since 2015 when it was released to the market. Since that time, the firm became a new competitor to banks and traditional financial institutions. As the demand for new financial products and services continues to grow, Revolut’s valuation follows the same path.

In just a few years, if the company maintains its growth rates, Revolut could surpass the $10 billion valuation.

“I think it will happen at some point, and we hope that in time we’ll exceed a $10 billion valuation. It would be hard to pinpoint when we might reach that number, but I expect that it may be within the next few years,” Mr. Storonsky told LearnBonds.

He went on saying that they are not focused on being the most valuable fintech firm, but they want to offer customers around the world, the best possible financial experience.

Nik explained Revolut is building robust governance procedures to cope with their growing customer demand. In the past few months, the firm appointed several experts in different areas to strengthen their management team.

Regarding the future of the company, Storonsky stated they will continue to hire great people around the world and expand to new regions and markets. Moreover, they are also working in order to ensure that customers receive the best financial services experience.

In addition to it, the challenger bank is working so as to maintain their exponential growth and move towards profitability.

The CEO and Founder of Revolut ended the conversation by talking about the interaction between traditional and challenger banks.

On this subject, he explained: “Many traditional banks around the world are failing by not offering effective technology platforms, not integrating customer data properly for better suggestions and failing to serve customers with enough machine-learning intelligence embedded in their process.”

According to LearnBonds, a $10 billion valuation could potentially place Revolut among the top 100 lists of banks by market capitalization.

Barclays Pcl, for example, is currently the 64th largest bank with $28 billion market cap. Meanwhile, the banking giant HSBC Holding is in the 7th position with a market valuation of $144 billion.

At the same time, Barclays was able to make $2.8 billion last year. If Revolut wants to have a $10 billion valuation it would have to make $1 billion per year. Currently, Revolut is still an unprofitable company.

From workforce expenses to high value transactions between buyers and suppliers, the market that supports the initiating and acceptance of card-based business payments is big and growing. Below Pat Bermingham, CEO of Adflex, asks whether fear of the unknown is holding firms back.

According to Mastercard, Visa and American Express, commercial card payments hit a five year high of US $2 trillion in 2018. Companies that cater to these types of transaction rightly see opportunity and are investing in new solutions, like virtual cards, which simplify the management of a company’s payments, increase usability through mobile apps and online portals and reduce operating costs, all through a range of powerful new digital features.

Yet some businesses remain hesitant to adopt virtual card technology. Why? It’s a problem of perception. Businesses - finance departments in particular - associate change with risk and, fearing technical complexity, often shy away from adopting new tech. This is a mistake; there are big value gains to be had with comparably little cost and disruption.

What are virtual cards and why are they cool?

Essentially, a virtual card functions in the same way as a normal credit or debit card, minus the plastic. Making this leap gives companies far more than a bit of extra space in their staff’s wallets. By going digital, the cards themselves can be endlessly reissued, and the rules that govern them quickly reprogrammed, giving a company almost limitless flexibility to shape its spending power to suit its goals.

This means that, unlike plastic cards, virtual cards can be single use. A new card, with a new card number, can be created for every transaction – and still each maintain a direct link back to a single, central bank account for easy and transparent accounting.

One key business advantage of using virtual cards lies in their ability to significantly reduce the risk of fraud. The creation of a new virtual card for each transaction means that, even if sensitive card data is intercepted, it cannot be used to make further payments. What’s more, when a virtual card is ‘spun up’, it is created for a specific payment – referencing the exact amount, merchant, and date range. Payments outside of these parameters simply won’t be authorised, seamlessly protecting buyers from fraudulent transactions without impacting the user experience.

Furthermore, the authorisation framework of the unique virtual card number (VCN) makes payments easily trackable and provides all of the data needed to help merchants reconcile payments with account receivables – increasing operational efficiency on the supplier side.

Virtual cards are uniquely valuable in B2B contexts. Although consumer products were brought to market, the inability to use them for in-store payments and ATM cash withdrawals limited their adoption, and most issuers eventually stopped offering them. As B2B payments are rarely made via a physical terminal (i.e. face to face), this adoption barrier doesn’t exist in the corporate world, prompting many industry experts to predict that virtual card volumes would snowball. Yet, years later, we’re still awaiting the watershed.

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So what’s holding the industry back?

The adoption of new financial processes is often a long-term goal. Not unreasonably, many companies, particularly enterprise-scale firms, perceive integration challenges and downtime as both likely and high-risk.

It’s certainly true that any downtime of internal payments systems would be damaging, but the use of dedicated, cloud-based APIs from specialist digital payment firms dramatically reduces these risks – such firms are solely dedicated to ensuring their digital payment systems seamlessly integrate with a business’s existing systems, and remain continuously available.

There is also a common misconception that while virtual cards benefit buyers, their impact on the suppliers is broadly negative. An often-cited issue is that of increased interchange fees borne by the company accepting payment, which can be up to 2.5% of each transaction. This perception deserves to be challenged, principally because it discounts the business opportunities that virtual cards bring to suppliers including dramatic process efficiencies and, perhaps most importantly, improved cash flow from instant settlement.

Virtual cards from issuers like Barclays enable buyers to pay suppliers upfront via a line of credit, without affecting their own cash flow – similar to the process of paying off a consumer credit card payment.

These strategic benefits to both buyers and suppliers, while nuanced, stack up to a compelling value proposition for even the most change-resistant of firms.

Are we nearly there yet?

The stars appear to be aligning for corporate virtual card adoption. The only real barrier remaining is that of supplier education. To ensure successful take up, issuers, digital payment integrators and buyers alike must share responsibility for communicating their value to merchants within B2B supply chains. Accomplish this and we will finally start to see the levels of adoption this terrific payment technology deserves.

This is why banks are lining up to convince business owners they are the right bank for them – however, according to Steve Morgan, Senior Director of Financial Services at Pega, there are several key factors to consider when choosing a bank for your business accounts.

In a recent Pega survey of 340 UK businesses who use credit and lending services, traditional banks continue to lead the way in terms of who organisations would choose if they were to switch providers. This is despite the rise of challenger banks like Tide, who have just recently announced that they have signed up 100,000 customers for its app-based business accounts.

However, there are businesses who are keen to switch, and the emergence of technology is making it easier. Two thirds of large organisations considered changing providers and nearly a quarter (22%) have changed their main bank in the last year. Over half of medium sized organisations are similarly placed for switching. The main reason why businesses find themselves changing providers is because of high charges, plus a requirement for better online banking facilities and improved service.

When asked about what technology innovations they would like to see from a bank, businesses said they would like to see greater use of AI for more personalised, tailored and timely offers. According to a report by Business Insider Intelligence, AI is being used by banks to improve customer identification and authentication, as well as providing personalised recommendations and insights, but there is clearly a way to go.

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Another concern that British businesses voiced when it came to choosing a bank was the idea of transparency; the extent to which a corporation’s actions are visible to the customer. During the onboarding processes businesses said they would prioritise transparency, consistency and automation when choosing a new banking partner. They also want to see improved speed of service, confirmation texts/e-mails, and a greater understanding of customer needs to deliver the right products and services.

The traditional larger banks might feel comfortable when hearing that they are still leading the way in terms of customer preference, but that would be a mistake. The Pegasystems study suggests business customers like the idea of improved use of technology and AI in their banking service. This is going to be a critical competitive comparison point for the future of business banking. Switching looks to be increasing in business banking and both the technology and options for clients are improving.

Clients expect AI to be used to help identify needs better, so that more personalised products and services can be offered, and so banks can predict the client needs when they switch or take out a new product. This is the time to make a great impression.

The banking provider that a business chooses will depend on the organisational structure of the business itself. An organisation is likely to form a partnership with a bank if that bank can demonstrate their exceptional capabilities and understanding of the business’ strategic goals. Customers tend to be loyal if they believe that their needs are being met by their financial services provider. Therefore, it is important for banks to make sure that their customers are satisfied by their services. This ultimately comes down to the banking provider being well informed about the business, as well as providing outstanding service through their channels.

More than half (58%) of UK banks are currently looking for greater in-house technology skills with 48% either recruiting extra skills or using partners to gain the skills they need, research commissioned by fintech provider Fraedom has found.

The report also revealed that more than one-third (38%) of banks say they are likely to invest in recruitment as a priority in order to find specific skills. Currently, banks most want to attract technology risk analysts (32%), data scientists (30%) and network specialists (24%) as they address their financial ecosystem.

Russell Bennett, CEO at Fraedom said: “We can see that there is a great opportunity for banks to partner with fintechs to uncover the skills they need and how best to attract them, whether that be by recruiting or upskilling existing employees. These partnerships would be particularly beneficial as, at present, 34% of banks feel they don’t have the expertise in-house to implement new technology. Fintechs can help banks gain a greater understanding of what technology they need which also will be instrumental in attracting new talent, especially as the younger generations progress in their careers and expect to have access to the latest technology.”

As banks have placed a greater emphasis on upskilling employees, Fraedom found that over the past five years, 60% of banks have improved in-house training courses, while 36% have implemented new external training schemes.

Looking to the future, to further develop skills in-house, 28% of banks are putting new internal training schemes in place and 20% plan to send staff on external training programmes.

“Banks are not just focusing on recruiting new talent to gain a broader range of skills but are also looking to retain their existing talent and provide the tools they need to grow with the pace of the technology. They can also partner with fintechs to harness the talent and experience they already have in the company to support their use of technology. To get the most from these activities, banks must prioritise creating the right culture which gives the freedom and flexibility that most employees in technical and development roles desire,” added Bennett. “Financial organisations across the sector are all competing to attract the best talent, so it’s vital they create points of differentiation within their culture so as to be the most attractive.”

(Source: Fraedom)

Yet, this is something many businesses, SMEs in particular, currently struggle with. Below David Duan, Data Science Stream Lead & Principal Data Scientist at Fraedom, explains why AI is key to the relationship between banks and business.

Research from Fraedom found that almost a third of UK SMEs claim to have a clear picture of business spend at the end of each month but little visibility on a day-to-day basis. As banks begin to remedy these issues, we are seeing the introduction of more technologies that make use of artificial intelligence (AI) and machine learning (ML). Consequently, businesses could soon benefit from a wider range of capabilities, tools and controls with AI having a major impact on the following areas:

Control over spend

Through the use of AI, banks will be able to more accurately forecast how much credit businesses require and limits on spending will be set automatically, enabling banks to gain a better understanding of their spending. This can also be implemented within the organisation as AI will allow for credit limit redistribution based on what different employees regularly spend. This means that credit will be allocated in an optimal way, ensuring the amount of credit employees are given reflects their spend history. This ensures that those employees who often make large transactions are given the credit to do so, while those who use their company accounts for lower-cost transactions don’t receive as much, so as to ensure credit is being used to the greatest effect.

Account protections

As banks make better use of AI for fraud detection, businesses will benefit from improved security features. In these scenarios, AI will help businesses keep their accounts safe by detecting any anomalies in their accounts and fraudulent activities much quicker than previously possible. This works by the model having an understanding of what is ‘normal’ for each account or card and recognising patterns based on past transactions and behaviours. For example, if 99% of the transactions for one account happen Monday to Friday, a transaction that occurs at the weekend will be seen as abnormal and flagged as such. Of course, anomalous transactions aren’t always fraud. Often they’re just out of the ordinary, requiring some more investigation – flagging them to the business would certainly allow for this. With companies currently losing an average of 7% of their annual expenditure to fraud, these technologies will help lower incidences of fraud as shown by Visa’s use of AI reducing global fraud rates to less than 0.1%. In the future, AI could be used to detect fraud in real-time, stopping fraudulent transactions from being processed altogether.

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Expense management

In addition to providing banks with a greater degree of control and understanding of their finances, banks are also beginning to use AI to offer businesses extra tools and services. A prime example of this is expense management systems which use AI to simplify the expense process and reduce the amount of time employees and finance departments spend on such tasks. As with fraud detection, the system would establish patterns based on the employees historic spending behaviour. For example, it may pick up that once a week the sum of £5 is spent in a coffee shop which the user then applies a particular expense code to. Once this behaviour has been demonstrated enough times, it becomes a pattern. So, the user will no longer have to code the transaction themselves, the system would automatically identify the type of expense it is and code it correctly.

As the system establishes more patterns and understands what the user or business is doing, smart coding could start to be applied to a greater number of transactions. This would significantly reduce the amount of time spent manually sorting through and coding expenses as the employee then only has to check that the correct codes have been applied.

Ultimately, the use of AI and ML will help banks build up a more accurate picture of their business customers and result in the ability to automate more processes. In turn, this will provide organisations with a greater level of control over their accounts, improved visibility and a better understanding of their finances. As this is realised, businesses will begin to reap the rewards of their employees spending less time manually interrogating accounts and instead being able to focus on more value-adding tasks.

You visit your local bank branch’s ATM to withdraw cash or to print out a mini statement and you are met with a message informing you that the ATM is out of service. That is frustrating at all times but can be especially aggravating when there is no other cash machine available nearby. On the theme of banking resilience, here Alan Stewart-Brown, VP EMEA at Opengear, discusses with Finance Monthly the network issues banks are currently dealing with.

For retail banks, the issues and challenges presented by ATM network downtime are likely to be high on the agenda. Financial institutions are reliant upon a resilient network to ensure unique compliance requirements are met, address customer needs and adapt to evolving industry trends. ATM resilience is an important element of this.

Many banks have extensive ATM networks across the UK and often further afield. They may have an ATM in every town or city across the country, and in some places, they may be running multiple ATMs. They are likely also to have machines in many other more remote sites.  If they have network issues or outages, a large number of ATMs could suddenly be out of commission and that presents a huge range of issues and challenges to the bank.

Whenever ATMs go down, it will inevitably result in a loss of revenue and customers for the bank, as they switch to other providers. It is likely to also have a negative impact on a bank’s reputation and brand image. Less well understood, but equally important, it presents a security issue, as the engineer will have to open the ATM up while on site.

In the past, when an ATM went down, an engineer would be scheduled. Depending on availability; how remote the ATM was geographically and the severity of the problem, that could mean at the least hours or even days of downtime.

Even when the engineer arrived on site after a potentially long journey, fixing the problem might not necessarily be straightforward. The ATM may be owned by a third party organisation, not necessarily the bank itself. It may therefore be difficult to access because it is located in a building or facility belonging to another organisation and/or because the engineer’s visit happens out of normal working hours.

Finding a Solution

Banks with ATM networks need something that allows them to get these remote units fixed without having to waste engineering time travelling to the site and dealing with the security issues of opening the box up and the logistical issues that may be involved in gaining access to the ATM itself. They need a solution that can give them remote access when the network is up and running and also when it is down. And they need one that can allow them to power cycle the equipment within the ATM when the router hangs - a common problem in these environments.

These networks also need a solution that is vendor neutral on the equipment it connects to but also on the power equipment it can manage. An out-of-band management unit can be added to each ATM to reduce downtime to just a few minutes and bring them back up very quickly. It also negates the need for someone to physically go to the site, and most importantly removes the necessity for the secure opening up of the ATM.

Keeping Branches Up and Running

ATM failures are of course one key aspect of a broader requirement facing banks to keep their retail branches up and running at all times. At Opengear, we are seeing a growing demand for solutions that deliver network resilience from core to edge in financial networks. One of the top performing banks in the US recently needed an out-of-band solution for its multiple locations across the country. With the challenge it faced highlighted by a recent outage at a remote location, the bank wanted to reduce the burden of travelling to geographically-distributed sites, decrease downtime and ensure compliance requirements were met. It chose to deploy ACM7000 Resilience Gateways from Opengear at each branch location, paired with the Lighthouse Central Management System (CMS), also from Opengear.

Failover to Cellular (F2C) and Smart Out-of-Band (OOB) technology ensure security requirements are met while also providing access to infrastructure during a disruption, with an alternate path to the primary network using 4G LTE. In addition, the bank is able to deploy and provision new sites remotely.  It is a great example of the benefits of resilient access to networks in financial services when an outage occurs.

In summary, outages are bad news for banks and other financial institutions. ATM outages are arguably especially bad because they are particularly visible to customers; cause immediate loss of revenue and customer churn; as well as negatively impacting reputation and presenting a security risk. But they are inevitable because of human error, cyberattack, and the ever-increasing complexity of network devices, modern software stacks, and hardware devices. To keep consumers happy and the institution’s reputation intact, financial services must be prepared for outages. Smart OOB with Failover to Cellular can keep services running even when part of the network is down.