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The Bank of England (BoE) is postponing its climate stress tests, which have been previously well regarded as a ground-breaking initiative to enable in-depth analysis of the impact of global warming on business models and operations of both banks and insurers.

The bank’s Prudential Regulation Authority (PRA) and the Financial Policy Committee in a statement on priorities in light of the impact of the current global lockdown, has said it will delay the launch of its climate biennial exploratory scenario, which will test the resiliency of the largest financial firms’ business models to the physical and transition risks from climate change, until at least mid-2021.

The PRA also said it won’t publish information about its 2019 stress tests of insurers, which was to include calculations of climate risks for the first time.

Central banks worldwide have been increasingly involved in the debate over climate change and its impact on the financial system. The BoE has led the way to date in encouraging banks and insurers to assess exposures to global warming and new risks which can come with the move towards a low-carbon economy.

So what does this mean for banks & insurers, all of whom would have been making boardroom level plans for the impending stress tests?

Firstly, a short postponement of the Bank’s stress tests is completely understandable, given the realignment of central banks all over the world to refocus financial policies and double-down on help to try to manage the economic fall out of the current lockdown.

But – secondly, and just as importantly, the climate emergency is not going away, and will return to the top of the BoE’s agenda very soon, meaning vital plans at banks & insurers, must continue to be made.

Banks can’t afford to detract from planning for the key operational priorities now, as the importance of climate risk to banks and their clients will only continue to grow.

Many commentators are currently talking about a new normal, or as McKinsey call it - a next normal. The climate emergency and the transition to the low carbon economy will feature heavily in boardroom plans as banks plan for what this next normal will look like. Banks can’t afford to detract from planning for the key operational priorities now, as the importance of climate risk to banks and their clients will only continue to grow.

The impact of climate risk and the successful transition to a low carbon economy will be the next normal for how the global finance industry must be rewired to operate. BoE stress tests will be implemented – and this is going to mean people, processes and technology need to be recalibrated to ensure banks are resilient and can meet new key performance indicators.

The global transition to a low carbon economy means getting ahead of and planning for a moment in time, which will be crucial to how banks and insurers operate successfully in the future. The ability to plan for today’s challenges – and have one eye on what is coming down the road, means board-level leadership teams at banks needs to be all over the key data and metrics which will define future success.

The ability to pivot operations, plans, forecasts and teams in response to new stress test metrics will dictate the finance industry leaders who will thrive in the future and demonstrate real leadership.

A move to digital boardrooms will drive this new operational mindset. CXO leaders at forward-thinking banks will want the latest data-driven metrics in front of them in real-time, so they can see and report back on how their bank is progressing on the road to a transitioning and complying with new low carbon economy KPIs.

Executive leaders across the financial services industry will expect to be able to respond to the changing business agenda by accelerating their most important decision-making through genuine digital transformation.

Take, for example, a board meeting where a bank’s business strategy is being discussed and which direction the bank should take to respond to new legislation relating to the new low carbon economy. With multiple routes available, how should a decision be made? A digital boardroom will provide the answer.

Such a decision-making platform allows anyone in the room to perform complex scenario modelling and build strategic plans as they go and discuss potential outcomes with data. A bank or insurer considering the development of a new way of working to comply with new stress tests focused on their resilience, needs to answer a number of questions before moving forward – what and where are the resources needed to step-up? Will the new transition require investment in people? Would it be more economical to hire additional staff, upskill existing employees or outsource certain aspects completely? What is the impact of other potential shifts in the economy in future?

Today’s turbulent environment means executive leaders at finance organisations must be able to plan, adapt and react with speed. Data silos across the organisation must be broken down, to gain a holistic view of banks’ performance in line with the BoE’s new stress tests. Connecting banks’ operational planning activities, joining-up functional transparency, and enabling the accurate simulation and testing of scenarios in digital boardrooms has never been greater in order to comply with the new stress tests that we know will arrive at some point soon.

Here Craig Naylor-Smith, Managing Director of Parseq, explains why financial services businesses cannot afford to stay complacent with the prospect of GDPR fines lurking over their shoulder.

In July, the Information Commissioner’s Office (ICO) announced its intention to fine British Airways £183.39m following a cyber-attack that exposed the details of almost 500,000 customers – the first fine to be publicly announced under the GDPR. The very next day, the ICO announced a second prospective fine of £99.2m against Marriott International following its own hack.

For those in the financial services (FS) sector, the ICO’s actions will have been a reminder of the consequences GDPR non-compliance can bring. Under the legislation, businesses can be fined the equivalent of up to €20m, or four per cent of their global turnover, whichever is greater.

The wealth of personal data held by FS firms of course means that the sector will be under particular scrutiny from both the regulator and the wider public. Yet, our own research has shown that many in the sector have struggled to handle a rise in personal data access requests from their customers and employees in the year since GDPR came into force – a situation that could put them at risk of feeling the ICO’s sting.

Challenges ahead

Under the GDPR, individuals can submit data access requests to receive a copy of personal data organisations hold on them and information on factors such as why their data is being used. They can also request that their personal data be erased. In most cases, organisations must respond within just one month.

Our research – conducted just after the GDPR’s first anniversary – found that more than two thirds (68%) of UK FS companies have seen a rise in data access requests in the year since the GDPR’s introduction in May 2018.

Of these, almost nine in ten (85%) had faced challenges in effectively responding, citing cost (57%) and complexity (48%) as their primary barriers.

Alongside these factors, more than a third (35%) pointed to a reliance on paper documentation as an obstacle.

With this in mind, a potentially effective solution for the sector as it addresses its compliance challenges could be found in greater digitisation – ensuring that the paper documents they hold containing personal data are digitally accessible.

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The FS sector has always been quick to adapt to consumer demand for digital solutions and capitalise on the opportunities that digital technologies can offer.  

Steps for success

The FS sector has always been quick to adapt to consumer demand for digital solutions and capitalise on the opportunities that digital technologies can offer.

Despite this, we found that only five per cent of financial services businesses had digitised all of the paper documentation they held in the year after GDPR’s introduction – a situation that hasn’t improved from the 12 months before. When asked why not, our respondents most commonly cited complexity (39%) and a lack of time (37%).

While these issues are understandable, they should be carefully considered in relation to the benefits that digitisation could offer.

Digitisation can help firms more quickly access personal data as and when it’s needed, helping to boost overall response time – an important factor given the GDPR’s time constraints. Meanwhile, investing in technologies such as automated scanning and data capture systems can help reduce time spent on administration, freeing-up valuable staff resources for other tasks.

And there are options to sidestep the issue of complexity. At Parseq, we deploy cutting-edge technologies such as optical character recognition and Robotic Process Automation (RPA) to digitise 25 million paper documents every year for our clients. This can help them build secure, searchable online archives of their documentation, enabling them to be on the front foot when it comes to quickly accessing and managing their documentation while offloading complexity to us, and offering savings in terms of cost and time.

GDPR is now firmly bedded-in, and the UK’s FS businesses must act to ensure that they are fully able to comply. Reducing a reliance on paper documentation through digitisation can help them more effectively respond to data access requests, ultimately reducing the risk of incurring the ICO’s wrath and being slapped with a heavy fine.

In her current role, Alex works with BT’s customers within the insurance, wealth management and financial services sectors and looks after their technology needs, making sure that these firms are able to support their businesses today and guiding them into what their organisations might need for the future.

With a background of running trading floors in major investment banks, Alex has over 20 years of experience as a woman in finance. Below, she shares with us some of the challenges that she’s been faced with throughout her career and offers her advice on how to make the most of having a mentor.

Can you tell us a bit about your career?

Before joining BT, I worked at a number of investment banks, starting my career as a sales trader. As someone who studied Mathematics, Statistics and Computer Science at university, I’ve always been passionate about technology. I saw an opportunity to apply my interest in regulation and technology as the market evolved from being voice-led to electronic-led. I then transitioned into electronic trading and set up several electronic trading desks. The increasing scope of regulation and the rapid evolution of market structure led to an increase in competition and it also created new opportunities that helped facilitate the rise of FinTechs. I was fortunate to work alongside and help set up some of the very first FinTechs, which at that time weren’t even called FinTechs! I’ve participated in setting up Chi-X and Turquoise – two exchanges that were both subsequently bought by rival exchanges.

All of this early work was just an indication of what’s to come in the world of technology in finance with more and more firms coming up with inventive business solutions, working with organisations to respond to their specific needs and finding the best way to help them, whilst also enabling entrepreneurship.

I am proud to have been able to contribute to creating change in investment banking and evolving office culture, adding elements that didn’t exist before.

Have you ever faced any hurdles related to your gender, especially considering your work for major investment banks?

It is worth noting that back then, in the late 90s – early 2000s, there weren’t many women working in investment banking and because of the lack of female employees, there were a few situations that had simply never come up and management had never dealt with before.
I am proud to have been able to contribute to creating change in investment banking and evolving office culture, adding elements that didn’t exist before. Out of the women who worked on the trading floor alongside me, not many used to come back after maternity leave. I was one of the very few who returned to work after my daughter was born and naturally, I wanted to continue breastfeeding. I remember having to ask management if there was a designated place where I could do it because, at that stage, breastfeeding rooms in the workplace were not common. This was a new situation at the time that none of my managers had ever been faced with and I am proud that my experience inspired change.

Nowadays, numerous organisations provide appropriate space and facilities. In addition to this, generous maternity policies are now commonplace, enabling women to return to work after they’ve had children – for example, 87.9% of BT’s female employees return to work post-maternity leave, which is a very impressive rate. It is amazing to see how much has changed.

Furthermore, I was extremely fortunate to have great mentors and sponsors all along the way who really wanted to listen and help me forge my career. During my early days at a leading financial corporation, the organisation didn’t have much sponsorship and mentorship experience, but even then, the board was very determined to identify any issues that employees were struggling with and help find a solution.

All the companies I’ve worked for had carefully considered how they wanted to create and deliver change and thanks to my mentors, any issues and hurdles that I’ve encountered were resolved and dealt with very quickly.

BT is committed to encouraging and supporting more women into technical and leadership positions. Our Tech Women network is one of the company’s initiatives aimed at boosting gender equality.

How is BT driving up its diversity?

BT is committed to encouraging and supporting more women into technical and leadership positions. Our Tech Women network is one of the company’s initiatives aimed at boosting gender equality. A key part of the initiative is creating mentorship, sponsorship and networking opportunities for aspiring and ambitious women from different levels within the company who are looking to advance their careers. We’re very proud of the programme as it supports the acceleration of women’s careers in the organisation and offers something for everyone, helping women progress up the corporate ladder without getting stuck in middle management.

What's your advice for women in finance in regard to making the most of having a mentor or a sponsor?

I believe that it’s all about working out the type of conversation you want to have. Mentors and sponsors can help with an array of things and it’s best to sit down and think very carefully about the things you need guidance and assistance with and the benefits you can gain from this relationship. Ask yourself the question: How can they help me progress my career? Do I need someone that will challenge me in my thinking or am I interested in skill acquisition? At the end of the day, the relationship between a mentor and a mentee is a two-way street and it is vital to be clear about what your objectives are.

Once you’ve established this, it is also important to remember that although you have a mentor, they are not going to do your job for you – take as much advice as you can, but also remember that in order to succeed, you still need to do all the work yourself. So, schedule your meetings with your mentor, think about the agenda in advance and consider what you want to cover in each meeting, listen to their advice and work on improving yourself straight away so you can track your progress each month. Keep meetings regular and have a clear vision of the things you need help with and the things you want them to help you achieve.

As a woman with a career in the finance industry spanning over two decades, what would you say are the key challenges that you’ve been faced with?

A lot of people talk about the fact that the financial services industry is very male-dominated, but in my case, this hasn't been the main challenge that I've been faced with. I have found that as long as you’re good at your job, you're approachable and you work well in a team, then you can work well with both men and women.

The main thing that I've found challenging, however, has been the ability to put myself forward. Women, in general, tend to strive to achieve perfection a little bit more than men do, which results in insecurities and fear that we don’t know enough yet because we don’t feel like we’ve fully perfected our current role. In reality, having the right drive, determination to succeed and the confidence to put yourself forward is what matters more. When we, as women, look at a job description, we tend to focus on the things that we're not too sure whether we can do, rather than the things that we feel qualified enough for and are confident in. One of the main hurdles for me has been the fact that I've been too scared to say "Yes, I can do that" when there's been a specific question about a part of the role which I thought a man would be more suited for.

All in all, I think the challenges that I have faced in my career have been self-inflicted challenges and not challenges that have arisen from working in a male-dominated service industry.

Have there been any particular challenges connected to promotions and climbing up the corporate ladder?

I believe that technically, as long as you make it clear that you want a promotion and you work hard for one, then your gender shouldn't matter. However, from my experience, I’ve noticed that we, as women, don’t plan well in advance what role we want to take on next. Men, in contrast, tend to have a very specific vision for the progression of their careers. This unclarity or indecisiveness is something that can hold us back sometimes.

We should plan in advance what we want our next step in this organisation to be and we should also make it obvious to everyone in the company that this is the role we're striving for. Once this is achieved and we're clear about our goals, we can be very successful no matter what.

One of the main hurdles for me has been the fact that I've been too scared to say "Yes, I can do that" when there's been a specific question about a part of the role which I thought a man would be more suited for.

From your experience, what triggers gender discrimination and inequality in the finance industry?

When I started working within the financial services industry, which was a very long time ago now, most of the people at the top were male and I think this has changed dramatically over the past two decades. Now that we have many more female role models, there's much less gender discrimination and inequality in the industry.

Western Union is a very good example of that, as the organisation has a focus on ensuring that there are women at the top – our Executive team comprises of 40% women and we have three female board members. Moreover, 50% of Western Union’s employees on a global scale are women and we also have an all-female senior advisory group called Women@WU which has a big focus on driving an action plan to promote women's success throughout the company.

Nowadays, promoting gender balance in the workplace is something that many organisations are working towards – both through evaluating the current state of the workplace and through discussing ways to keep their organisation competitive. It has been proven that companies whose leadership team is gender-balanced have a higher return on equity when compared to organisations whose senior management team consists of men only. I think that having that balance is not just good from a commercial point of view, but also because it contributes to a much more interesting workplace where different views, experiences and ideas could be exchanged on a day-to-day basis.

Can you tell us a bit about Western Union’s Women@WU initiative you’ve just mentioned?

Western Union as an organisation sees diversity as a massive asset and does a lot to ensure that the company is gender-balanced. The Women@WU initiative started out in 2015 and since then there's been a lot of benchmarking work going on against other FTSE100 and Fortune 500 companies looking at gender balance and understanding the opportunities that come with it.

And while I think that WU is fairly balanced from a gender perspective, there's always more the organisation can do to support women throughout their careers. One of the things that I've been focused on since my arrival in June 2018 has been chairing a Women@WU group that consists of a number of women getting together once a month to discuss subjects like the unwritten rules in the industry in regards to the way you look, how you network or how you perform altogether. Being a part of the group is helpful to other women in the organisation because it creates a friendly peer network that women can use on an ongoing basis, where they can hear a senior woman such as myself lead the discussion and share the experiences I’ve had throughout my career.

It has been proven that companies whose leadership team is gender-balanced have a higher return on equity when compared to organisations whose senior management team consists of men only.

I was part of a similar group years ago and I found that the peer network that came out of it was extremely helpful. There's something so encouraging about being able to share some of the issues that you're struggling with with a group of people that you trust who are there to support you, come up with a solution or help you overcome the specific problem. Making friends that you can trust can sometimes be quite hard, especially when you're a very busy individual, but being part of such a group and being given the time to create these relationships is a very positive thing and I'm happy that Western Union's environment allows for such initiatives.

What can other organisations take from Western Union’s company culture and gender diversity initiatives?

I think first and foremost, what other organisations can take from us is the very fact that we have this initiative and that we take it very seriously - at Western Union, we aim to increase the number of women in senior leadership positions in the company by 10% by 2020. Calling that out and talking about diversity in the workplace openly is something that other companies could and should take from us.

Western Union has made a massive effort in the field and has had success in bringing senior women into the organisation who have really helped to drive the aforementioned initiatives. The fact that our board includes three women currently is a very positive thing and it was certainly something that I paid attention to before joining the organisation. It is a representation of women in leadership roles and the fact that we can actually quote it and benchmark ourselves against other organisations means that caring about the women who work for you and with you is a thing that other companies need to be doing too.

In what ways is digital transformation in finance impacting the industry’s diversity?

The industry is changing much faster than ever before - everything is now online and it's much easier to be nimble. I think this is opening up opportunities for women to take on different kind of roles, to have different learnings and to really put ourselves forward in a slightly different way. I attended the Women of the Square Mile conference in London in May and the one thing that came out really well from the discussions we had was that women are very good at being flexible. We tend to naturally be good at juggling multiple tasks, picking things up and running with them and as a result of that, there are a lot of new roles that can be very applicable to women and the kind of skills that we offer.

Obviously, there are a lot of women out there who have very relevant experience in the non-digital world but these abilities and skills related to flexibility and multitasking can help them become a translator between the old ways and the online ways of doing business, as well as the ways of bringing these two together.

For me, generally, digital brings a whole new world of exciting opportunities - both for men and women.

At Western Union, we aim to increase the number of women in senior leadership positions in the company by 10% by 2020.

What does the finance industry as a whole need to do to reduce gender discrimination in the workplace?

Tremendous effort has been made to move forward in recent years, and I think the main thing that the industry needs to work on is helping women to put themselves forward and find sponsors within the organisation who can help them prepare for their next roles. I think it is our duty, as senior women, to show junior women that we're giving them the opportunity to apply for roles and to show our organisations exactly what they're capable of. Sponsorship within an organisation is very important and I believe that it will help reduce gender discrimination in the sector as it will help women overcome the reluctance of putting themselves forward.

What is your piece of advice for women aiming for the top?

Be clear about what your career plan is, know what success looks like for you and make sure that you're articulating it correctly. Women should also build their own brand and be visible - with LinkedIn being one good example of the perfect platform where you can exhibit yourself and your achievements.

Another thing is to find yourself a sponsor – make sure they support you and if they end up moving to a different position, make sure they introduce you to someone else from their network who can guide you in the future. For me personally, having a sponsor made a massive difference to my career. During my time at American Express, there was a specific role that I really wanted to get - I was very clear that that's what I wanted and I worked with my sponsor towards this goal so that he can put my name forward for it and in the end, I got the promotion. If I hadn't been clear and if I hadn't had that sponsor, I'm not sure if I would have managed to succeed.

Last but not least, I think it's important to build your network. A lot of men tend to go for drinks after work, which is not necessarily the case for women. I think it's important to find your way of networking - be it at events and conferences or peer-mentoring groups. If other people are networking and you're not, then that's going to have an impact on your application for any future role.

 

About Karen Penney:

Karen has spent over 25 years in blue chip customer-facing service businesses, working in the UK and internationally. She is currently the Vice President of Payment Products for Western Union Business Solutions in the UK, where she leads a team focused on international payments, supporting companies across various industries including NGO, Education, Pensions and Payroll. Since taking up this position in the middle of 2018 Karen has established herself as a respected leader with a commercial and customer-centric approach and a desire to develop her people.

Karen was General Manager for the American Express UK Corporate business from 2012 to 2018 and was responsible for driving significant growth from a mature business through a focus on small businesses, international payments and working capital optimisation. Leading a team of 300, her key responsibilities covered all customer-facing activity including direct sales, engaging existing customers and developing new value propositions & revenue streams, alongside managing the P&L. She also sat on the European Risk committee and was a director of the American Express insurance subsidiary.

Karen previously held a number of increasingly senior roles within American Express including successfully growing and retaining the relationships with the top 150 clients globally; creating new integrated teams to drive an improved customer experience while ensuring full regulatory compliance; transforming mid-market account management from a servicing and retention culture to a successful sales culture; launching an offshore management information team to drive increased customer engagement and loyalty in a cost-effective way; and converting customers to a digital servicing experience.

Prior to joining American Express, Karen spent five years with AIR MILES, a subsidiary of British Airways in a variety of commercial roles, following a five-year stint with Citibank Diners Club in sales and account management positions in the UK. Karen began her career on the NatWest graduate training programme and honed her analytical skills at Bankers Trust.

Karen is very interested in the subject of mental health and well being at work and is a keen advocate for women in the workplace.

In an economy that produces somewhere in the region of $80 trillion of gross domestic product a year, oil and gas drilling make up somewhere between 2% and 3% of the global economy.

Technologies thought unthinkable only a few years ago have revolutionised the way business go about finding their resources and the attitudes to the future of the oil business.

Here, we look at some of the trends and challenges currently circulating in the industry.

The Trends

The ‘Smart-Oilfield’

The oil industry is currently enjoying significant investment to create digitalised oilfields that offer integrated data communication across wellheads, pipelines and mechanical systems.

This collective data produces real-time analytics for data centres that can regulate oil-flows to optimise production.

Experts believe this extra intelligence has the potential to increase the net value of oil and gas assets by an eye-watering 25%.

Technology Striking Rich

Within the last decade, worry around the quantity of oil left remaining dominated the industry. Thanks to the technological advances of the last five or so years, oil companies have discovered resources so significant that these once very real concerns are now a distant memory.

4D seismic technology has created huge benefits in reservoir monitoring and is now used universally to maximise return on investment.

The development of the Subsea oilfields has reduced both infrastructure and production costs, with deeper exploration providing greater profits and risks in equal measure.

While controversial in its application, fracking of shale basins has taken US crude oil output to its highest peak since 1989, and overseas developments are in process and set to have a significant impact on the industry.

Finally, advances in oil recovery technology offer the potential to make enormous efficiency improvements. As it stands, only around one third of oil is recovered in drilling processes, meaning there are huge financial gains to be had through improving the infrastructure.

Even with some of these processes still in their infancy, the tech-revolution is offering the potential for unfathomable gains.

The Challenges

The Competition for Talent

As with any industry, the competition for top talent is fierce, but with an aging and shrinking talent pool, the oil industry’s big guns are having to invest more than ever into attracting the best people to their business.

Adding to the above trends, this means the oil industry is a good one to be in, with notable increases in base salaries alongside additional incentives and perks in recent years.

However, with specialised experience lying predominantly with the older age groups, oil companies face a key challenge in recruiting and training the next generation, not to mention matching the staffing demands of a starved sector.

The Obituary of Oil?

Despite new found and untapped resources, there are several challenges facing the oil industry that collectively pose the question: is the end of the industry nigh?

With an ever-growing market in sustainable energy, continuing price volatility and inflationary costs on wages and raw materials, oil companies face serious challenges in remaining competitively priced and diversifying their services to keep going in fluctuating market.

Even with the rise of green technologies like the electric car market, fossil fuels still have a major part to play in the next few decades of global industry. It is, however, simply a case of proving that to investors who have an eye on the future.

Here, we will look at 3 challenges not for profit organisations are facing and how they can be overcome.

  1. Property challenges

Charities are allowed to own property, but it is important to realise that any trustees listed on the registry understand they cannot benefit personally from the property. There are challenges relating to buying and disposing of a charitable property. For example, when purchasing a premise, trustees need to be aware of any restrictions which might impact the non-profits use of the property.

To avoid falling into difficulties while acquiring property, it is recommended non profit organisations consult a professional real estate firm with experience in the sector, such as Avison Young. They will be able to advise you throughout every step of the process, as well as help the organisation to find the perfect premises.

  1. Lack of resources

Resources are another major challenge not for profit organisations face; particularly in today’s economic climate. However, many charities have discovered the benefits of connecting with similar organisations to pool their resources.

Finding key partnerships is key to running a successful not for profit business. Charities should ask themselves which types of partnerships they can make. Find similar organisations which share the same values and beliefs. The more not for profit organisations you can partner with, the more resources you will be able to pool.

Not for profit organisations can also reach out to local businesses. Today, businesses are focused on becoming greener and doing their part for the community. Therefore, they may be more open to partnering and contributing to local not for profit organisations.

  1. Funding

Finally, funding is another key challenge faced in the not for profit sector. As governments continue to seek ways to cut costs, funding has been held back for numerous not for profit organisations. There has also been a substantial increase in the number of not for profit organisations set up. The increased competition for funding has also presented problems, particularly when it comes to attracting new donors.

The above are 3 of the most common challenges faced by not for profit organisations today. In order to ensure they are running a sustainable charity, these organisations need to be aware of the challenges, and come up with an action plan to overcome them. Pooling resources is a great way for charities to reduce costs and continue operating even during the toughest of climates.

The merger and acquisition market is on track to hit record levels in 2018. According to Mergermarket, the first half of the year saw 8,560 deals recorded globally at a value of $1.94tn, with 26 deals falling into the megadeals category of over $10bn per deal.

While M&As present incredible value for businesses, many organisations don’t put much thought into what happens after the documents are signed, says Neerav Shah, General Manager EMEA at SnapLogic. As a result, he continues, many past M&A deals have failed to live up to their promise, with organisations struggling to manage the cultural and technological challenges associated with these deals.

The landscape is littered with unsuccessful mergers and acquisitions, companies that did not heed obvious risks that, in retrospect, were avoidable. Instead, dealmakers focused on the benefits of the transaction, such as prospects for a larger market share, competitive advantages, reduced costs, increased efficiencies, and more diversified products and services.

While the opportunities need to be at the forefront of any deal, organisations need to also address the potential risks and challenges if they want to realise these opportunities. This means integrating newly merged companies effectively, and quickly, should be of paramount importance once a deal is agreed in order to keep critical functions operating at full speed during the post-transaction integration period, realise operational synergies in the ongoing merged entity and to align all employees around a single, merged corporate identity.

As consulting firm McKinsey put it: “Integrating merging companies requires a daunting degree of effort and coordination from across the newly combined organisation… Those that do integration well, in our experience, deliver as much as 6 to 12 percentage points higher total returns to shareholders (TRS) than those that don’t.”

The considerations for integrating the companies typically fall into two main areas: cultural and technological. While the first is an obvious challenge, merging two completely different company cultures, consolidating technology and data often proves to be a more complex task, not least because of the increased level of vulnerability to cyber security incidents both organisations will have during this process.

The sheer number of IT systems and cloud applications in use by companies today, also makes the process of integration more complicated. These days it’s not uncommon for a company to have inked partnerships with more than a hundred different cloud providers. When two organisations combine, integrating all the applications, systems and other sources of data consumes an inordinate amount of time.

Obviously, there is a need for data integrations to occur quickly and seamlessly, minimising the time in which the oceans of data flow from one system to another, from one application to another. Many companies are still struggling to integrate the data they hold within various systems in one company, so when two are involved they need to take a very process-driven approach to not only ensure that security isn’t compromised but also that the most can be made from the data.

Best practices include identifying all the data assets that need to be transferred first, and then determining the specific data standards, policies and processes that will be used to conduct the transfer. Rather than transferring all the data at once, consider a piecemeal approach in which different data sets are prioritised for transfer at different times. Both the finance and HR departments are good areas to start due to the importance of the data they hold in relation to not only business performance but the deal itself. Data that is not destined for transfer should be immediately destroyed.

Lastly, invest in integration tools that make it fast and easy to connect applications and different sources of data. Legacy technology requiring teams of developers to handcraft integration software on an as-needed basis is no way to address today’s rapidly expanding universe of cloud applications.

Companies undergoing a merger or acquisition need to find a fast and easy way to integrate data and applications. They need a single platform that users can rapidly connect diverse systems and applications at their vulnerable intersection points, narrowing the window of opportunity for hackers to attack.

By ensuring data transfers are closely managed so they can flow at enterprise speed, the pace of post-transaction integrations is accelerated. In turn, this assists dealmakers to realise the perceived value of the merger or acquisition at a much quicker rate—adding up into a rare win, win, win.

The United Kingdom, specifically London, has built a position as Europe’s primary financial hub, bridging the gap between the European Union and Asia, the United States and other regions. After Brexit comes into effect in March 2019, this once unassailable position will no longer be certain if it becomes more difficult for banks and other financial enterprises to provide services to EU clients due to a loss of ‘passporting’ rights – if no contingency plans are made.

Many financial institutions are not waiting to see how Brexit plays out and are seriously considering – or already planning – to move at least part of their operations to remaining EU countries in order to be prepared for any fallout from Brexit. Hiring rates in London’s financial sector have already halved, according to LinkedIn – reportedly due to the uncertainty surrounding Brexit and how it will impact the industry. Research from EY shows almost a third of banks and asset managers in the City of London confirmed that they are looking at moving staff to locations such as Dublin, Amsterdam and Frankfurt.

As a result, teams will be scattered across numerous time-zones and locations, with more employees likely to be working from remote locations, including their homes. Connecting a relocated and dispersed workforce is no easy task, and if the process is not well managed, it can cause serious disruption to day-to-day activities. Banking and financial services organisations need to have the right tools in place to ensure far-flung teams can communicate effectively and implement a standardised and coordinated way of working so that employees do not have to flit between numerous applications to complete tasks, collaborate on projects, monitor progress, manage resourcing and track deadlines. Fortunately, disruption can be minimised by utilising tools that nurture joined working environments despite geographical barriers and offer structure that keeps employees at different locations on the same page – in real time.

 

The challenges of collaborating across borders

Remote working is not new phenomenon – it’s widespread and a hugely popular way of working –

But many businesses are still trying to overcome the barriers it presents to communication and collaboration. Clarizen’s own research has shown that some of the most prevalent issues workers struggle with when working remotely include:

 

 

The banking and finance industry needs to ensure that these issues are resolved before Brexit takes place. Otherwise, the serious and negative impact they have on effective collaboration, productivity and business profitability.  Having to relocate operations is just one area of business that organisations need to navigate as the UK continues its withdrawal from the EU.

Internal company restructuring, product and services analysis and engagement planning are also elements businesses have to plan and execute, which is why it’s so important that teams have tools that facilitate a coordinated work environment during this tumultuous period.

 

Equipping employees with the tools to succeed

During Brexit and beyond, banking and financial organisations need to ensure employees are equipped with tools that help promote coordination between dispersed teams, while maximizing efficiency. Recent research from Clarizen found that almost three quarters of respondents said that what they specifically need to boost communication and collaboration among employees is technology, structure and support that enables them to overcome geographical barriers and the gap between time zones to increase productivity, ensure management oversight and foster flexibility.

What can help achieve this is a cloud-based platform that enables real-time collaboration across locations and empowers teams to coordinate workflow, track progress, align goals, allocate budget and meet deadlines from any device and location.

 

Overcoming communication overload

Ahead of Brexit, businesses need to ensure that they pick the right tool to maximize productive interactions between employees. Some businesses have previously used social media apps to facilitate easy and frequent employee discussion – such as WhatsApp and Facebook – in the belief they would streamline communications between workers and reduce long email chains that cause frustration and confusion. Unfortunately, such applications have often only served to encourage non-work chat and oversharing of irrelevant information that doesn’t bring employees any closer to meeting business objectives.

In a bid to become more focused in their approach, businesses have been turning to business-focussed communication apps. A recent global survey showed that, in the past year, companies deployed one or more of the following apps to improve productivity: Skype (39%), Microsoft Teams (14%), Google Hangouts (8%) and Slack (7%). Yet, even then, efforts to boost productivity proved fruitless as they merely became a place for office banter and overloaded people with numerous notifications and interruptions, which negatively impacts productivity.

It’s a modern workplace malady that has been dubbed ‘communication overload’, which is symptomized by workers struggling under the weight of clusters of unfocused messages, meeting requests and unnecessary interruptions. Clarizen’s research indicates that, in the end, apps that fail to directly link communication to business activities, aims and status updates actually hamper collaboration, effectiveness and efficiency. The survey showed that 81% of respondents said that, despite taking steps to improve communication among employees, they still lack a way to keep projects on track and provide management oversight – and only 16% of the companies surveyed said productivity levels were ‘excellent’ – while a nearly quarter said they were ‘just OK’ or ‘we need help’.

 

Looking ahead to a post-Brexit world

Brexit presents the banking and finance industry with a number of challenges that could put successful collaboration – and ultimately revenues and profits – at risk. However, by employing tools and methods that encourage an environment that nurtures a truly collaborative environment – where communication is in a business context and reporting in real time – the sector can enhance productivity and business agility, taking some of the sting out of any staff redeployments necessitated by Brexit. Even though it’s not clear what shape Brexit will take, there is no reason businesses in the banking and finance sector cannot minimise disruption and its potential costs by providing their employees with an approach and the tools they need to succeed during Brexit and beyond.

 

Website: https://www.clarizen.com/

Almost a decade in the making since the inception of Bitcoin and with a current market-cap hovering around half a trillion dollars USD, Bitcoin, cryptocurrency and blockchain have become common to the tech savvy, but face several challenges in becoming mainstream processes in the payments sphere. Below Alex Mihaljcic, VP of Product Development for Eterbank.com, talks Finance Monthly through the challenges and solutions ahead.

While most people don’t understand how they work, Bitcoin and cryptocurrency are not only hot topic buzzwords, but they’ve created thousands of multi-millionaires. Even so, the vast majority of people in the mainstream have no interest or intent to embrace Bitcoin and, as such, it still has veritably no bearing on everyday life as one still can’t even pay for a cup of coffee with any cryptocurrency.

In the last year alone, the cryptocurrency market cap has grown over ten-fold, and even taking into consideration “bubble-effects” of hype speculation, the fact remains that, since the inception of Bitcoin, the cryptocurrency market cap is following an exponential growth curve. Today this amounts today to over $150Bn, and various expert opinions estimate its future growth in the next 5-10 years to be in the trillions of dollars. With these kinds of numbers, it begs the question: With over $150 billon of cryptocurrency already in circulation, why can’t we yet pay for coffee or a slice pizza with crypto?

Not only this, but why is cryptocurrency languishing in a tech world of its own, far removed from adoption by the regular consumer or average business? And why does it exist only in a digital space, largely accessible only to the tech-wise cryptocurrency investors? Perhaps the most fundamental question that everyone is asking—from economic pundits to families around the kitchen table—is will crypto will ever become common currency to be used by the average person to pay for their groceries, bills or the hair dresser? Or are Bitcoin and Altcoins just a fad, doomed to remain ensconced in a cult-like tech realm?

While it’s clear that the only way for cryptocurrency to avoid falling into oblivion is by enabling its widespread adoption and acceptance as a “real” payment method, the reality is that the infrastructure and protocols have not been in place to foster this. In fact, there have been seemingly insurmountable obstacles faced by merchants across the board preventing them from accepting cryptocurrency as a viable form of payment.

Four of those key reasons include the following:

1. High volatility promotes fiscal vulnerability
Businesses are not cryptocurrency investors and, as such, they cannot be expected to accept risky payments that may lead to serious financial losses. Every business operates with supply costs, margins, etc. Therefore it would make little business sense to take on a risk of such magnitude by accepting crypto as payment for their goods and services.  What if the local mechanic accepted Bitcoin for several large jobs and then Bitcoin value dropped 20%? This leaves these sort of business owners, whom have fixed overhead costs, in a vulnerable space where they take payments that fluctuate.

2. Technical know-how
Generally speaking, retail operators and cashiers cannot be expected to possess the technical expertise needed in order to safely process a cryptocurrency transaction. This is clearly one of the largest problems preventing mainstream adoption, since dealing with cryptocurrency transactions does require a determined level of technical expertise for which it would be absurd to expect a critical mass of front-line service staff to possess. The fact is that any new person coming across even a simple Bitcoin address can be overwhelmed by its perceived complexity.

3. Brand Confusion
The very word “crypto” suggests cryptic. Mix that in with all of the other various terms that are used including virtual currency, digital currency, alt coins, and Bitcoin, and it all creates confusion. It will be paramount for industry insiders to adopt consistent language to be consistently utilized in the mass market.

4. Uncertain regulatory environment
Regulations regarding cryptocurrencies are still not even close to being set in stone. As concerning, these same regulations actually discourage the use of such currencies in a B2C environment, regarding them as an “unnecessary risk” that may lead to legal problems for any business down the road.

Collectively, these four points above paint an ominous picture for the future of cryptocurrency. Not only relating to its progress and adoption, but also for its very survival in a very real scenario where an innovative payment technology fails to fulfil its potential. In fact, this isn’t the first technology to be introduced with the aim of creating a major cultural shift. Twenty-five years ago, fax communication was far more common and even preferred over email messages.

The Innovation Life Cycle Must Ensue
In all forms of innovation, there is always a lag between the advent of the actual innovation and the time that the average intended user starts to adopt and employ the technology. As the “technology adoption life cycle” has well established, in order for people to adopt and use a new innovation, technological abstraction layers are needed to hide all of the complexity of the core product and make it unequivocally user friendly. Of course, this takes time and innovation of its own until all the layers have been developed and refined around the core product, which is the main reason why there is always a lag between innovation and mass adoption.

The Game Changer: Crypto-to-Fiat Point-of Sale Solution
The tremendous amount of complexity associated with using Bitcoin and other cryptocurrencies in the real world financial marketplace, as exemplified by the four problems detailed above, has ushered in a new breed of leading-edge technology aimed at wholly solving the glut of mass market limitations. Emerging Point-of-Sale (POS) applications are finally permitting cryptocurrencies to be transacted as easy as a credit card payment, allowing small and large businesses alike to accept and instantly translate crypto into U.S. dollars, thus eradicating any risk and uncertainty. With this advancement, technical or crypto-specific know-how on the part of the consumer or the merchant is rendered unnecessary and businesses can readily convert crypto to real cash. Not only will this Point-of-Sale development quickly shift brand perceptions, but the regulatory environment will also eventually temper given the reduced volatility this POS technology proffers.

Once this business-friendly solution is adopted as a viable transaction method, enabling consumers to very easily spend their crypto currency and retailers to charge and settle crypto payments in the business’ preferred currency—whether dollars, euros or other, technical proficiency will no longer be barrier and volatility will subside since businesses will continue to deal strictly in Fiat currency (government-issued legal tender), resolving any possible crypto-specific regulatory issues that are rendered a non-concern.

Given its extrapolated impact, a POS innovation of this nature would be poised to unlock the full potential of the cryptocurrency industry and its utility in the real-world. A Crypto-to-Fiat business tailored POS solution will effectively allow for cryptocurrencies to penetrate the consumer market and truly disrupt day-to-day payments as we know them. The first business with a minimum viable product (MVP) will be to cryptocurrency transactions what AOL was to email.

Retailers today are accustomed to using Point-of-Sale terminals for processing credit card payments, and are increasingly adopting new solutions in the space such as Square’s retail POS smartphone app, replacing bulky hardware with Android and iOS devices. In order for merchants to accept and adopt a Crypto-to-Fiat POS solution, it must be tailored in a manner that seamlessly accommodates the retailers current understanding and knowledge base, with a near zero effort or learning curve required to adopt the new solution. At the same time, the innovation must demonstrate its ability to drive new value, new customers and, ultimately, new profits by expanding its ability to process transactions—and at a fraction of standard costs.

Such an end-to-end solution can truly catalyze cryptocurrency adoption, finally bringing Bitcoins and Altcoins to “Main Street” and crossing that crucial milestone for blockchain technology—and technology as a whole—to usher cryptocurrency into the modern world is a genuine, viable and enduring way.

In light of Donald Trump’s dramatic withdrawal from the Iran Nuclear Deal, Katina Hristova examines how the pullout can affect the global economy.

As with anything that he isn’t fond of, US President Donald Trump hasn’t been hiding his feelings towards the Joint Comprehensive Plan of Action between Iran and the five permanent members of The United Nations Security Council plus Germany. Pulling the US out of the agreement on the nuclear programme of Iran, which was signed during Obama's time in office, is something that Trump has been threatening to do since his 2016 election campaign. And he’s only gone and done it. Earlier this month, he announced America’s immediate withdrawal, saying that the US will reimpose sweeping sanctions on Iran’s oil sector and that “Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States”. And as if this isn’t alarming enough, President Trump has also said that the US will require companies to ‘wind down’ existing contracts with Iran, which currently ranks second in the world in natural gas reserves and fourth in proven crude oil reserve, in either 90 days or 180 days. This would hinder new contracts with Iran, as well as any business operations in the country.

Since Washington’s announcement, signatories of the Iran Nuclear Deal, still committed to the agreement, have embarked on a diplomatic marathon to keep the deal alive. On 25 May, Iran, France, Britain, Germany, China and Russia met in Vienna in a bid to save the agreement.

 

So how will this hurt the global economy?

Deals worth billions of dollars signed by international companies with Iran are currently hanging by a thread. The main concern on a global scale is that the US’ decision threatens to cut off a proportion of the world’s crude oil supply, which has already resulted in an increase in oil prices, with crude topping $70 a barrel for the first time in four years.

Additionally, European companies like Airbus, Total, Renault and Siemens could face fines if they continue doing business with Iran. Royal Dutch Shell, who is investing in the Iranian energy sector, is potentially one of the biggest companies to be affected by Trump’s withdrawal which could put billions of dollars’ worth of trade in jeopardy. As The Guardian points out: “In December 2016, Royal Dutch Shell signed a provisional agreement to develop the Iranian oil and gas fields in South Azadegan, Yadavaran and Kish. While drilling is still a long way off, sanctions are likely to put any preparations already being made on ice.”

French company Total, who’s involved in developing the South Pars field, the world’s largest gas field in Iran, is in a similar situation.

Airbus and Boeing, two of the key players in the international aviation industry, have signed contracts worth $39 billion to sell aircraft to Iran. As The Guardian reports, the most significant deal is an agreement by IranAir to buy 100 aircraft from Airbus.

A spokesman from Airbus said that jobs would not be affected. “Our [order] backlog stands at more than 7,100 aircraft, this translates into some nine years of production at current rates. We’re carefully analysing the announcement and will be evaluating next steps consistent with our internal policies and in full compliance with sanctions and export control regulations. This will take some time”. Rolls Royce is also expected to be indirectly affected if Airbus loses its IranAir order, as the company is the key engines provider to many of those aircraft models.

Another European company that will be hurt by the sanctions announcement is French Renault and PSA, who owns Peugeot, Citroën and Vauxhall. When sanctions were lifted back in 2016, Renault signed a joint venture agreement with the Industrial Development & Renovation Organization of Iran (IDRO) and local vehicle importer Parto Negin Naseh, worth $778 million, to make up to 150,000 cars in Iran every year. This is one of the largest non-oil deals in Iran since sanctions on the country were lifted. Last year, local firm Iran Khodro also signed a deal with the trucks division of Mercedes-Benz, with car production scheduled for this year.

Iranian firm HiWEB has been working alongside Vodafone to modernise the country’s internet infrastructure, but it looks like the partnership will have to be reconsidered.

The consequences

The White House and President Trump appear aware of the danger that a rise in oil prices on an international level pose to the economic growth of the Trump era, however, they also seem ready to embrace the economic and geopolitical challenges that are to follow. Although the consequences of US’ Iran Deal pullout are not perfectly clear in the short term, they will undoubtedly become more visible as sanctions take effect. The deal has its flaws, however, completely withdrawing from it and threatening the US’ closest allies can only compound those issues and create new ones. It is hard to predict what will unfold from here and where Trump’s strategy will take us. The one thing that is certain though is that the world doesn’t need more hostility.

A series of high-profile collapses and CVAs in recent months are clear signs of the challenging conditions currently facing the UK High Street. While many retailers are facing falling sales and increased overheads, it is the stores that fail to adapt to changing consumer habits, such as Toys R Us, which end up paying the price.

By putting a strong business strategy in place to harness the growth potential of e-commerce channels, retailers can mitigate the risks posed by their rising cost base and stay ahead of competitors in this fast-moving industry.

Increased consumer caution, food price inflation and wage stagnation have all contributed to High Street incomes being squeezed. Factors such as the increased National Living Wage and minimum pension contributions, when combined with the introduction of the apprenticeship levy and higher business and property rates mean that many retailers are facing higher overheads than ever before.

The growth of the ‘bricks-to-clicks’ phenomenon has been accelerated by the rise of the ‘on-demand economy’, with consumers less willing to wait to get their hands on goods and more online retailers offering same-day delivery. Developments in technology have also streamlined the online shopping experience, with processes such as returns now easier than ever before. As a result of these changes, it is no surprise that footfall on the High Street is falling, with many shoppers choosing to avoid the crowds and find products at a competitive price online.

With consumer habits changing rapidly, it is essential that retailers build their business models accordingly. Toys R Us is a prime example of a chain which failed to move with the times. As well as relying on large, highly-stocked warehouses, which proved costly to run, it failed to invest in the development of an effective online sales channel with expedited shipping options. Securing access to customer data, via methods such as targeted marketing, will allow retail businesses to adapt quickly to new trends before they are able to have a negative impact on sales.

A number of retailers, including Mothercare, have recently announced an intention to secure a company voluntary arrangement (CVA), which could allow them to restructure their finances and agree voluntary repayment schemes with creditors on a one-to-one basis. Helping the business to continue trading and the existing management team to retain control during negotiations with creditors, this route is often viewed as a more attractive option than pre-pack and other types of administration. However, large numbers of empty stores could have the effect of driving more consumers online, away from the High Street, as well as increasing the likelihood that local councils will try to raise business rates to account for the potential shortfall in payments.

Taking action at an early stage to negotiate shorter leases with landlords could enable retailers to cut costs. Additionally, allowing companies to take advantage of the most profitable times in the retail calendar and hire staff only when needed, pop-up stores could reduce costs and increase flexibility.

Consumers are increasingly treating bricks-and-mortar stores as ‘showrooms’, allowing products to be viewed first-hand before finding them online. With this in mind, retailers should employ a joined-up approach, with on and offline sales channels. If businesses are going to encourage repeat business and meet consumer expectations in the future, simply offering a website is no longer enough. It must complement or even enhance the in-store experience, whilst reflecting the brand identity and being quick and easy to navigate. For example, we may see more customers venturing into stores for product advice, supporting the overall decision-making process, before carrying out their transactions online.

As e-commerce delivery slots become shorter and shorter, it is increasingly important for High Street retailers to have a strong logistics network in place, especially around Christmas and other key times in the retail calendar. Locating reliable local suppliers could also help to ensure supply chain agility, facilitating short lead times whilst allowing stores to vary their purchases depending on what is selling well.

While there is no doubt that these are challenging times for retailers, physical stores will continue to play an important role as part of the consumer buying process. For this reason, the High Street is unlikely to disappear completely. By heeding shifting consumer habits and adapting their business model accordingly, retailers can stay ahead of the curve and secure their position in the High Street for many years to come.

 

Below Finance Monthly hears from Managing Director of Equiniti Credit Services, Richard Carter, who discusses the impact of digitalization on the lending market, rising interest rates and his predictions for the 2018 landscape.

Digital fluency and a thirst for convenience are making the UK’s borrowers more capricious and cost-sensitive than ever, says Richard Carter, Managing Director, Equiniti Credit Services, in this collection of predictions for 2018. Interest rate rises, and new regulations will add fuel to this fire next year, and lenders that can’t keep up will get burned.

1. Lowest price wins

In the digitised age of credit price comparison sites, brand loyalty equals bought loyalty. In 2018, lenders must earn their custom by delivering market-beating products. As interest rates continue to rise, the lenders that can drive down the cost of credit stand to prosper the most. Simply reducing margins, however, makes little business sense. But in a rising market there is a balance to be struck between protecting profit and increasing sales. Some may be willing to take a short term hit to capitalise on the rising market conditions, taking the view that volume sales justify smaller margins.

Adoption of automated and agile credit technologies will help lenders to drive down costs, reducing time-to-revenue for new products and enabling savings to be passed on to the customer in the form of more competitive rates.

2. Lenders adjust to curbing enthusiasm

The rise in interest rates are also likely to have a knock-on effect on what borrowers use credit for.

Recent research from Equiniti Credit Services[1] indicates that borrowers’ use of credit is split equally between funding aspirational items such as cars and holidays, and managing existing debt. To offset rising rates, 2018 will see lenders adjust their standard payment terms, allowing monthly repayments to remain consistent. It remains to be seen whether credit will continue to fund aspirational items at the same rate, especially since the falling pound has already driven up the cost of foreign travel and overseas goods considerably.

3. Application declines will no longer mean ‘no’

Regardless of whether lenders adjust their repayment terms, rate rises will still have an impact on affordability assessments, meaning borderline candidates will be excluded from products they once qualified for. This will trigger an increase in declined credit applications, before customer expectations have time to recalibrate.

In 2018, lenders will start to turn this to their advantage. Instead of abandoning the customer at the point of decline, they can automatically identify suitable alternatives, ideally from their own portfolio, or from other lenders. Doing so enables them to protect their relationship and ensures their customer doesn’t tarnish their credit score from repeated declined applications. Agile credit technologies hold the key to this win-win scenario, by providing a whole of market view and matching applicants to alternative loan products instantly, at the point of decline.

In a market where consumers can identify an alternative provider in a split second via a comparison site the ability of a lender to hold their attention throughout a decline and then convert them to an alternative product is a valuable coup.

4. Contact centres will need to be rethought

Equiniti’s 2014 research report revealed that 61% of consumers preferred a telephone call or face to face meeting to explore a loan application. In 2017, that figure has dropped to just 48%. We can expect this trend to continue next year, reflecting a growing desire for self-service applications. In response lenders should be rethinking their use of contact centre resources next year. As simple queries are increasingly resolved online, the role of contact centre staff will elevate to handle more complex queries, and lenders must prepare their resources accordingly. Outsourcing this function to a dedicated specialist partner is a cost effective and efficient way to manage both sporadic call volumes and complex queries, and ensures all calls are handled by skilled, FCA accredited individuals.

5. PSD2 will change everything

Driven by the advent of the Second Payment Services Directive (PSD2) in January, APIs are being opened up across the banking industry, enabling customer-permitted apps and services to access never-before-seen levels of transaction data. Lenders must embrace this new world. Here, data is the new currency, and the combination of customer-centricity and low cost is the key to attracting – and keeping - new customers. The regulation amounts to EU-sponsored digital transformation in financial services, and outsourcers will play a crucial role in helping lenders keep up, stay relevant and harness their use of new data sources to learn more about their customers and get ahead of the competition.

6. Social media data begins to play a part in credit decision making

Thanks to digitalization, the sharp decline in verbal and face-to-face communication means lenders must seek alternative ways to get a sense of who they are dealing with. Social media platforms provide a window into borrower’s lives and give lenders a data source that can be used to contribute to their assessment of an applicant. Sure, social media data will never determine whether to grant or decline a credit application, but as automation and AI technologies continue to be applied to this space in 2018, there is no reason why a lender shouldn’t include social media data in the mix.

[1] https://equiniti.com/news-and-views/eq-views/great-expectations-the-demanding-market-for-credit/

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