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The efficiency and smooth running of business operations can be strongly affected by the services and solutions you invest in, which is why you need to put plenty of thought into this, no matter what the size or nature of your business.

When it comes to digital solutions, one of the services that a lot of businesses have come to rely on is cloud storage. These services can improve security and protection, boost convenience and ease, provide flexibility, and improve efficiency. You can also get some great deals on them, which means that you can keep business costs and outgoings down while benefiting from a great solution. Of course, you need to make the right choices when it comes to these services, and you need to ask yourself a few questions before you commit.

What Should You Ask?

There are a few key questions that you should ask yourself before you commit to a cloud services solution or provider. Some of the main ones are:

What Can I Afford to Spend?

One of the key questions you need to ask yourself is how much you can afford to spend. Business budgets have to be properly controlled these days, so you need to look at factors such as cloud storage pricing to ensure that the solution you choose is affordable for you. You should take the time to compare pricing before you make any decision, but also, be sure to check what you get as part of the plan. This will make it easier to ensure you find a solution that is both suitable and affordable.

What Will I Get for My Money

Following on from the last point, it is important to check on the cost of the services, but you also need to look at what you get for your money. The features and benefits of cloud solutions can vary based on the specific one you choose, so take the time to look carefully at what is included. You must find cloud solutions that are perfectly suited to the needs of your business, and checking what each plan offers will make it easier for you to achieve this goal.

What Do Other Business Users Think?

One of the additional things that you should do is look at what other business users think of the plan and provider you are considering. This will enable you to use the experiences of others to help you to make up your mind. When you read online reviews from other business users, you can get a better idea of how reliable the service is, how reputable the provider is, and whether this is the right choice for your business.

Asking yourself these questions before you make any commitments will make it easier for you to make informed decisions. 

Ian Perry, Principal Solutions Architect at Zscaler, shares his thoughts on financial services modernisation with Finance Monthly.

This past year has seen the financial services industry speed up the implementation of many digital processes. Not only did the global pandemic force banks to shut, employees to work from home and consumers to use digital payments services both online and in-person, it has also raised questions around the brick-and-mortar heavy model of banking, with many pointing to a fully digital financial future.

Maximising digital investments

Despite the technical capabilities available to assist in such a move, no analysis of how the financial industry is attempting to modernise would be complete without a reference to the sector’s legacy infrastructures holding them back.

This isn’t because of a lack of desire to modernise. In fact, most financial firms are quite well advanced in their cloud journey. The financial services industry as a whole has already invested heavily in digital transformation and is well aware of the benefits of moving workloads to the cloud in the backend. However, many financial services CTOs have not necessarily been able to move the corresponding infrastructure and users along the same path. This means that unfortunately, many financial services firms have been unable to fully realise their investments in new applications and cloud platforms to the frustration of many financial services CTOs and CFOs alike.

Many financial services are unfortunately falling into the trap of developing hybrid infrastructures that are flexible enough to adapt to some new digital services and requirements yet are still based within old foundations. We often see core banking applications stay in mainframe on-premise networks, whilst more general apps and functions, such as office and admin related tools, are moved to the cloud. For example, there has been a huge uptake in banks migrating to the cloud-based Office 365, which promises the agility required to adapt to our new digital ways of working. However, all the benefits and functions of new digital tools like Office 365 are often at odds with legacy network set-ups, and this inability to harmonise new tools with old systems is holding banks back.

The financial services industry as a whole has already invested heavily in digital transformation and is well aware of the benefits of moving workloads to the cloud in the backend.

The pandemic has only led to further existential frustrations around the banking model itself. For example, is there really a need for massive HQ locations? Is there still a demand for individual branches, which require complex architectures to secure all traffic? There are many predictions as to what the branch of the future might look like, but ultimately, the industry must face the facts that there will be less reliance on branches and more pressure on digital services.

Staying ahead of the curve

As other industries continue to innovate at a quick pace by maximising their cloud deployments, consumers and employees alike will increasingly expect seamless experiences across all their touchpoints with a financial services organisation as well. Taking a page out of the digital transformation of other consumer services, the finance industry must assess the journey of banking from a user’s point of view, rather than driven by processes and necessity. “Digital transformation” for banks is no longer providing the capability of a digitally scanned cheque – the ecosystem is far more reactive and more user-focused as the market opens with more options available, many of which are geared to disrupting legacy organisations and processes.

As such, agility is more important than ever if the financial sector hopes to adapt to new business models, while managing and deploying products remotely worldwide in a consistent manner. For financial teams spread across the world especially, agility in the market is more important than ever to manage and deploy products worldwide in a consistent manner. Many banks own different brands to drive differentiation in regional markets, and this behaviour needs to be reflected in their operating model. Not only do regional compliance needs apply, but markets have very different demands based on their local consumer needs.

Adopting enablers

These growing pressures don’t necessarily mean that financial firms have to undergo complex and expensive overhauls of their existing legacy infrastructure to fully realise the promise of the cloud. A future-proof infrastructure that can support flexible requirements during the pandemic and beyond, while delivering a great user experience, increasing productivity, and supporting business continuity is possible to implement. Indeed, true network transformation drives beneficial outcomes from a risk and cost reduction perspective without requiring heavy technical lifting.

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For example, the growing popularity in the financial sector of the “Zero Trust” approach has been touted by many as a solid solution for financial services in particular. Many banks still rely on the legacy “perimeter” approach to securing their data – which focuses on stopping intrusions. However, the Zero Trust approach instead enables banks to “trust no one” as default, and requires further security before allowing access to secure assets.

This is every banking CTO’s dream as a Zero Trust model allows for traffic to run securely through the internet instead of having to run through corporate IT, which enables banks to have maintenance-free branches. Individual branches are not only more flexible and significantly easier to maintain – but costs are dramatically reduced. Furthermore, a Zero Trust model allows banks to fully realise the benefits of cloud-based tools like Office 365 as they can be deployed safely through the internet, rather than relying on legacy corporate IT systems. From this transition alone, it’s possible to see how financial services infrastructures can enable convenience and simplicity. A complicated refurbishment is no longer required to implement digital delivery of all the key requirements that customers expect from banking services, but with the same – if not more advanced - secure and frictionless experiences offered by other industries.

Looking ahead, it’s clear that financial services need to urgently assess their capabilities for keeping up customer demands and ability to innovate quickly, if they want to survive in our rapidly changing world. Only by truly realising the benefits that were promised by the cloud infrastructure financial services were so quick to adopt, can the industry shake off the curse of legacy infrastructure for good.

Jake Madders, Co-director of Hyve Managed Hosting, weighs the pros and cons of the two distinct types of crypto exchange hosting.

Cryptocurrency has boomed in recent years, helped by people like Elon Musk joining the conversation and increasing the trust in its value, helping it to reach the mainstream. As the number of investors placing their money in cryptocurrency continues to grow, finding a reliable trading platform has never been more important. Hence, the need for crypto exchanges.

The ongoing growth of interest in cryptocurrency and the demand for technological development and maintenance has generated the need for different exchanges. According to a recent study conducted by crypto market data provider cryptocompare.com, cryptocurrency exchanges have increased their market share by 13% since October 2020. Bitcoin gained 13% of the market share from October 2020 to January 2021, going from 61% (USD$347 billion) to 74% (USD$ 1.41 trillion). The study pointed to crypto exchanges increasing their transparency by providing data as well as improved security as reasons for this growth.

Whilst the world of digital currencies continues to bloom, the issue around crypto exchange hosting becomes a challenge. Choosing between cloud vs on-premise hosting might not be an easy decision to make as it depends on the investors' needs. Nevertheless, with exchanges sites having to be active 24/7 in order to offer optimal performance, the cloud could be the ideal option.

Cloud vs on-premise benefits

When it comes to crypto exchanges, performance has always been a key factor. However, there’s a bigger picture that individuals need to look at. With the industry always evolving and technology developing constantly, flexibility is crucial in order for crypto exchanges to adapt. Moving an exchange to another location can be a long and costly process but on the cloud, this process can be done in a matter of hours and at a much lower cost. Speed on the cloud is clearly a valuable benefit, allowing crypto exchanges to set up the infrastructure on a cloud system much faster than on-site hosting.

When it comes to crypto exchanges, performance has always been a key factor.

Customisation is essential in order to meet the requirements of the ever-changing marketplace. The cloud offers the option to scale and implement storage, security and developer tools when required to meet the demands of the market and investors quickly and efficiently. Another benefit that is important to keep in mind when choosing the right hosting is latency. Users using a cloud hosting provider can opt for a data centre near their end-users which will reduce the latency, allowing an exchange to provide instant information directly from the market or from a transaction.

There’s also the environmental aspect of the cloud, which is a benefit that is often overlooked. As the adoption of cryptocurrencies continues to expand, a sustainable and eco-friendly hosting choice feels like something important to consider.

Choosing on-premise hosting 

Whilst the cloud seems to tick all the boxes as the perfect space for crypto exchanges, many of these platforms still use on-premise hosting. A key aspect offered by on-premise is the option to have full control and responsibility. For some, this might sound like a great advantage and the reason why on-premise can be the right choice. Still, there are other points to consider. Having full responsibility means being accountable for managing and maintaining the software which can require a fair amount of knowledge and also time. Some users might not have the right level of expertise to manage their cryptocurrencies and might require a specialist to do it for them resulting in an extra cost. On-premise hosting also means that servers could be more vulnerable, whereas data centres are secure environments with 24/7 security and cooling and fire protection measures.

Security, the deciding factor

It is not surprising that, over the last few years, cybercriminals have developed an interest in cryptocurrency. With hundreds of billions of dollars being traded daily on crypto exchange platforms, they are the perfect target for hackers. Cryptocurrencies are not easy to hack, but crypto exchanges are. This is one of the reasons why cryptocurrency owners have worried about choosing the cloud over on-premise hosting. Nonetheless, the cloud has become a safer environment for crypto exchanges. Risks have been minimised thanks to security being increased and improved on the cloud, helping mitigate issues concerning the protection of cryptocurrencies.

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When deciding between cloud and on-premise hosting, there are numerous factors to examine. On top of that, individuals need to keep in mind their investment plan and take into consideration what the future of the market could look like. With technology evolving and cryptocurrencies gaining popularity, finding the right crypto exchange hosting option will continue to be a challenging yet very important decision.

Simon Pamplin, technical director at Silver Peak, explores what public cloud is and what its implications are for financial services firms.

Adoption of cloud by financial institutions has risen dramatically over the past five to ten years. Yet this has largely been private cloud rather than the more flexible and scalable public cloud.

In January, however, European financial institutions formed the European Cloud User Coalition (ECUC) to drive public cloud adoption and ensure consistency and enforcement of security standards of cloud’s use. Allied Irish Bank, BAWAG Group, Belfius Bank, Commerzbank, Deutsche Börse, EFG Bank, Erste Group Bank, Euroclear, ING, KBC Bank, Swedbank and UniCredit have all signed up to the ECUC and are participating in the initiative.

This widespread push displays the desire for public cloud in the finance industry, and there are persuasive arguments for the transition from private to public. Although the desire is clearly there for greater use of public cloud, there are key factors that will determine the speed and success of this transition.

Public versus private: an industry ready to shift

The difference between public and private cloud is that, as the name suggests, private cloud is managed internally by an organisation – all the dedicated infrastructure, including the data centre, is managed by a single, owning organisation. Conversely, public cloud is offered to multiple companies by a public cloud provider that runs and maintains the supporting shared infrastructure.

That the finance industry has been cautious in its uptake of public cloud highlights the essential need for top security for banks and other financial service organisations. The industry in particular is subject to strict compliance legislation across Europe, and organisations may choose private clouds as a means to ensure they are indeed complying.

Adoption of cloud by financial institutions has risen dramatically over the past five to ten years.

Another issue is that of vendor lock-in, as companies may worry of their complex cloud infrastructures being guaranteed by a single cloud provider – this reliance can hurt market competition, as it prevents companies easily switching between vendors.

It is these concerns that the ECUC seeks to address by defining and communicating what requirements have to be met in Europe for public cloud to become a feasible option for financial organisations. There are, after all, some clear benefits.

The first and foremost benefit of transitioning to public cloud is cost. Supporting cloud infrastructure is an expensive and labour-intensive process – smaller, newer organisations in the industry may find the possibility of private cloud beyond their resources, especially given the stringent cybersecurity standards that the financial world requires.

Adding to this, public cloud providers do offer a top rate service uniquely tailored for organisations – they are excellent at what they do, and a multitenancy business model allows them to allocate resources in a distilled and highly efficient manner. By delegating cloud to an expert third party, finance organisations free themselves from the operational headaches of enterprise IT administration.

The network must facilitate financial public cloud use

A key criterion for the use of public cloud is that when implemented, financial organisations can be sure their data is safe. However, the secure use of public cloud services lies in infrastructure and vitally the wide-area network (WAN).

Before the public cloud transformation in the industry can advance, organisations must transform their networking infrastructure. In essence, traditional WAN architectures have been obsoleted by the cloud, and private cloud security can only be guaranteed through advanced WAN solutions, such as an SD-WAN.

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The drive towards public cloud will enable the financial industry to enjoy its full benefits – greater accessibility, lower cost, and increased market competition. However, first, coordination with European public cloud providers and transformation of the organisational network must be accomplished to assure success.

It has caused a massive global economic shock that economists describe as three times worse than 2008’s financial crisis. Additionally, workforces are learning how to deliver services from outside their usual working environment. Andy Campbell, global solution evangelist at FinancialForce, shares his insight on the effect this is having and how firms can overcome their new difficulties.

Pre-pandemic, businesses were already facing external pressures to adapt. The transition to a services economy, and an increased expectation for high-quality customer experience moved the goal posts for many firms. This combination of external factors has necessitated companies to make changes on a scale and a rate never seen before. Those that fail to make the necessary changes run the risk of being left behind.

Many companies have started to adopt cloud-based systems to enhance specific business functions and processes, most notably in the front office. However, thus far they have been unable to combine all their activities in the cloud. While it is a step in the right direction to see this increased focus on process optimisation, organisations will keep suffering from inefficiencies until they unite around one overarching cloud strategy.

Broadly speaking, there are five key pain points that businesses must address in order to thrive in the future.

Antiquated and unreliable processes

There are many difficulties when it comes to operating a global enterprise. For instance, regional teams may have their own unique local capabilities and requirements. This results in individualised local tactical solutions being developed that run side-by-side with the systems that the company uses on a global scale.

Tensions often arise between the delivery level, where quick fixes take place, and the global level, where greater consistency is required. This disjointed approach to applications development results in inefficient business processes and centralised solutions that are antiquated, difficult to maintain and inflexible.

There are many difficulties when it comes to operating a global enterprise.

The speed of business change continues to increase and out-of-sync processes slow down a firm’s ability to respond. For example, a fragmented systems architecture usually compromises the quality and timeliness of data, causing decisions to be delayed as well as ill-informed. A united strategy is required to oversee the entire opportunity-through-delivery process.

Fragmented customer service

With businesses in all sectors becoming increasingly customer-focused, elevating customer experience should be central to decision making. Using spreadsheets and bolt-on custom-built software to oversee the delivery process is an inadequate approach. Such short-term solutions are limited in their effectiveness, and they also restrict an organisation’s ability to pivot when faced with changes to the needs of both the market and customers.

Nowadays, employees from across the business come together when working on projects, while instantaneous interactions with customers are required for success. By deploying a single system to oversee the whole opportunity-through-delivery process, an organisation can deliver cohesion and unity throughout the whole customer journey.

Separate data for front and back office

For many companies, the front and back office have not always seen eye-to-eye and when conflicts arise, it is often because of the different systems and processes they use. In an ideal world, the front and back office would combine their datasets, providing everyone with a consistent 360-degree view of the enterprise that includes customer, operational and financial data. However, the reality of the situation is that the front and back office are often siloed, meaning datasets are often nothing alike in terms of accuracy and detail. This has the potential to compromise decision making, hinder the growth of the business and limit the development of fresh new offerings.

By opening up the pathway for information to be shared between the front and back office, companies can align the data between the two and ensure that they are working in tandem, thus eliminating any obstacles to growth.

In an ideal world, the front and back office would combine their datasets, providing everyone with a consistent 360-degree view of the enterprise that includes customer, operational and financial data.

Lack of clarity in ongoing projects

Many organisations need to manage complex projects, with dispersed teams, and project managers who often have their own idiosyncratic means of monitoring progress. This results in employees completing their tasks ‘side systems’, which are invariably poorly integrated across the enterprise.

There are many problems associated with not having an organisation-wide view of ongoing activities, such as poor visibility of project progress, lack of clarity over resource availability and limited understanding of the true cost of project delivery.

Optimising the delivery of service projects, both internal and external, requires a robust platform for management and automation. The impact in terms of both resource utilisation and the effectiveness of project delivery are considerable and for any services business this can translate into significant competitive advantage.

Revenue leakage

Revenue leakage is a constant thorn in the side of many organisations and one of the major issues is that it can appear at so many points in the customer lifecycle. Additionally, if you’re not actively looking for revenue leakage it can go overlooked until it’s too late. Hence why it’s often referred to as a silent killer of businesses.

COVID-19 has exposed gaps in both existing systems and processes. Whilst individually these gaps may appear small, the combined effect in terms of lost revenue and reduced customer service can be considerable.

Issues with data entry and disconnected systems are just two of the many causes of revenue leakage and they typically result in process errors, duplications, reworks and delays. For those organisations that do not deploy a single integrated system to oversee business functions such as planning, producing, and selling, they run the risk of leaking revenue.

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However, by utilising the right cloud solution, companies can seamlessly tie the front and back office together, balance real-time resource demand against resource capacity, forecast more effectively into the future, and deliver more predictable business growth. The pace of change is quickening, and in this services economy even the largest firms need to start becoming more flexible and agile.

The present invoicing and billing technologies were developed to manage the payment processes for businesses. Paper invoicing remains a popular option for several companies in the United States. But the majority of them have shifted to electronic methods of billing and invoicing.

The country was lagging far behind to adopt the technological advancements in electronic invoicing compared to Europe and Latin America. However, the current trends have revolutionised electronic billing and invoicing for the past couple of years.

These advancements are responsible for the gaining popularity of the current invoicing and billing technologies. Let’s see how technology has shaped the way businesses in America send bills and invoices to their clients.

Automation of the Invoicing Process

The automation of the invoicing process has reduced the need for companies to track their financial transactions. Most companies in the United States have stopped using paper bills. Even those companies that have not automated their entire billing process prefer using blank invoice templates for service providers

Automation of the process enables organisations to get reminders for due dates and delays in receiving payment. It has also helped companies in the country stay on track with their billing and payment schedules.

Automating the manual responsibilities of creating and sending bills allows business owners and staff to focus on other essential tasks. Companies can also save money because they do not require additional staff to take care of these responsibilities.

Several companies have also adopted blockchain technology to streamline their billing and invoicing processes. It allows them to keep a record of all their financial transactions. It also eliminates the need for additional resources or third-party vendors.

Automating the manual responsibilities of creating and sending bills allows business owners and staff to focus on other essential tasks.

Blockchain technology has not only made financial management smoother but has also improvised the entire invoicing process. The technology prevents any manipulation or accidental deletion of invoices once they are recorded and sent to the client, thereby eliminating the risk of fraudulent activities.

With the gradual adoption of blockchain technology in American businesses, we have started noticing the decline in traditional invoicing systems.

AI and Machine Learning

The advancements in AI and machine learning technology have taken the automation of invoicing solutions up a notch. Most software providers can offer a holistic approach that features functionalities beyond the basic invoicing cycle.

The intervention of AI and machine learning unlocked humanly unimaginable software abilities. Companies can process hundreds of invoices in a short time while processing significant amounts of financial data.

It is also easier to identify or verify past transactions, which gives the business better control over their cost and supply chain. Using AI and machine learning technology can also spot anomalies and errors with the least amount of human intervention.

Cloud Invoicing

With the increase in the use of the Software as a Service (SaaS) model, most billing technologies have started operating from the cloud. They allow businesses to access financial records and data from a device connected to the Internet anywhere in the world.

Cloud-based invoicing also enables people to receive real-time business updates and take the required action. Business personnel can address any urgent issues with the payment in real-time to maintain their company’s reputation. Digital wallets have also become a part of cloud invoicing already.

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Most business owners and managers can access cloud invoicing through mobile apps these days, which has made the process extremely convenient. With the increase in remote working due to the COVID-19 pandemic, most companies have started relying on cloud-based software instead of traditional ones.

In the present times, any company that fails to provide mobile billing options is bound to lose valuable clients.

The Rise of Real-Time Global Payments

Gone are the days when companies had to wait for days or weeks to send invoices and receive payments. Every business expects real-time transactions these days. The COVID-19 pandemic affected the economy of the entire world, so businesses need their money in real-time.

That is why most companies rely on electronic billing and invoicing processes, as they tend to be faster and more accurate than the manual ways of raising a bill or sending an invoice.

Businesses of every size have started adopting electronic invoicing because they reduce the cost and increase efficiency. As we mentioned before, most countries in Europe and Latin America had already started using electronic invoicing before America. Therefore, to continue business relations with these countries, American companies have to adopt electronic billing and invoicing methods.

Modern billing and invoicing methods have enabled American companies to build better business relationships within the country and the world. With increased productivity, companies can save costs and time.

The present billing and invoicing technologies played a prime role in mitigating the challenges faced during the COVID-19 pandemic. We can expect the technology to progress further and increase productivity while reducing losses.

Kris Sharma, Finance Sector Lead at Canonical - the publisher of Ubuntu - offers Finance Monthly his thoughts on  APIs and how firms are already using them to enhance their services.

Cloud computing, big data analytics, artificial intelligence (AI), machine learning (ML), distributed ledger technology and process robotics are all playing a key role in reimagining financial services for a digital world. A growing number of financial institutions are drawing plans to adopt these technologies at scale as part of their digital transformation initiatives to accelerate financial data processing, deliver mass personalisation and increase operational efficiencies.

Most organisations currently deploy a complicated mix of technologies, legacy software platforms, applications, and processes to serve customers and business partners. On their digital journey, financial firms will have to integrate data, processes and business functionality from legacy systems of record to this set of new technologies. Many businesses have tried to adopt various transformation approaches such as re-platforming and re-hosting, direct integration between applications, rip and replace, and deploying middleware technology to deal with legacy systems and their integration with new technologies. But each of these approaches have their own drawbacks and can limit the adoption of new solutions within the constraints of legacy technology debt.

An evolutionary approach to digital finance, however, will unify information and data without the need to merge operational systems. Application programming interfaces, or APIs, can overcome the challenges involved with adopting new technologies and more innovative solutions while integrating with legacy run-the-business applications.

Where APIs become a core piece of the puzzle

APIs are increasingly playing a central role in digital finance. They essentially bind different parts of the financial value chain together, even though the underlying components may be based on different systems, technology, or supplied by different vendors. Using APIs, financial firms can securely share digital assets while masking backend complexity, integrating software applications and focusing on maximising their proprietary strengths by sharing data, systems, and functionality with customers, partners and developers. This in turn drives digital transformation without a complete overhaul of existing infrastructure.

Application programming interfaces, or APIs, can overcome the challenges involved with adopting new technologies and more innovative solutions while integrating with legacy run-the-business applications.

Since APIs are self-contained, they can be readily deployed and leveraged for innovation at speed, enabling financial institutions to introduce and integrate new features. When powered by the cloud, firms can develop, test and launch new services to customers quickly and cost-effectively, fuelling business growth. For example, insurance firms can make more timely offers by cross-selling home, auto and life policies. Financial institutions can leverage APIs to connect sources and use cloud computing to handle massive amounts of data, as well as AI and ML services live in the cloud, thereby analysing all this data faster and cheaper than they can on-premises.

Who is successfully using APIs?

Challenger bank Starling was designed and built completely on AWS cloud to deliver and scale infrastructure on demand. Additionally, by building a bank with open APIs from day one, Starling is natively compliant with the European Union’s Payment Services Directive (PSD2) directive.

According to ProgrammableWeb research, financial services is ranked highly in the fastest growing API categories, given the rise in digital forms of payment, an ever-increasing customer demand for connected solutions, and open banking initiatives. APIs are at the heart of the PSD2, the UK’s open banking mandate, as well as the Bank of Japan and the Monetary Authority of Singapore’s open banking initiatives.

Finastra’s Open Banking and collaboration: State of the nation survey 2020 finds that “86% of global banks surveyed are looking to use open APIs to enable Open Banking capabilities in the next 12 months”.

As APIs attract an ecosystem of developers, a financial API provider can encourage participation to fill go-to-market gaps and extend its services and data to new markets and use cases. Barclays is fostering collaboration and generation of new ideas through secure, innovative APIs. The Barclays API exchange has built an API library that is available for use by third parties to develop and test new products. Barclays and third-party developers work together to create, develop and test new product ideas before releasing them to the regular API catalogue. Similarly, Starling Bank provides a marketplace that enables developers to build their own products and integrations using its API.

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Unleashing the potential

There is an opportunity for financial firms to leverage the power of APIs by bringing them together with digital technologies to broaden the possibilities for innovation and expand customer experiences. Financial institutions need to reimagine APIs as product offerings that will drive business expansion and increase revenues.

The future of digital finance will be driven by organisations building digital business models, redefining their API strategies and bringing new customer propositions to life using modern web architectures, best-in-class technologies and new ecosystems.

Business software producer Salesforce.cmo agreed on Tuesday to purchase work-focused chat service Slack for $27.7 billion in one of the biggest tech mergers in recent years.

Marc Benioff, CEO of Salesforce, hailed the deal as a “match made in heaven.”

“Together, Salesforce and Slack will shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world,” he said in a statement. “I’m thrilled to welcome Slack to the Salesforce Ohana once the transaction closes.”

Stewart Butterfield, co-founder and CEO of Slack, also welcomed the acquisition: “Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going.”

News that a potential purchasing agreement could be struck between the two companies emerged days ago, though details of the deal were not known until this week.

Aside from being the largest purchase Salesforce has ever made, the deal also represents a significant merger in the tech field as a whole, comparable with Microsoft’s $27 billion purchase of LinkedIn in 2016 and exceeded only by IBM’s $34 billion acquisition of Red Hat in 2018. Further, it provides Salesforce with the ability to integrate Slack with its Customer 360 product, creating new avenues for sales and marketing with Slack’s expanding customer base.

It also marks a new development in an ongoing feud with Microsoft, which has been competing with Slack using the Teams app included in Office 365. Teams utilises a number of the same features as Slack’s six-year-old application, and in July Slack filed a complaint in the European Union accusing Microsoft of illegally bundling Teams with its Office 365 suite in order to block its removal by customers who may prefer using Slack.

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Microsoft’s software have also competed with several of Salesforce’s flagship products, having introduced a line of B2B tools aimed at helping other companies manage their relationships with customers.

Wedbush Securities analyst Dan Ives called the Slack acquisition a “now or never” purchase for the Salesforce CEO. “For Benioff, this is all about Microsoft,” he said.

Matthew Glickman, VP of Customer Product Strategy, Financial Services at Snowflake, examines the benefits that the data cloud can bring to financial services.

In the wake of COVID-19, financial services have had to adapt almost overnight to the economic challenges presented by the pandemic. With cities across the world going into lockdown, consumers expect banking to deliver digital-first experiences that match their usual expectations. Digital innovation is very much at the heart of this transition. To navigate and thrive in the current climate, capitalising on the data cloud will enable fintechs to respond nimbly to customer demands and remain competitive.

According to an Accenture survey, over half of respondents in the retail banking industry believe cloud technologies have the biggest impact on improving operational efficiency, and 40% believe that it can also generate business value for the industry. The data cloud can provide the foundation on which companies can build a technology stack that delivers business agility and growth. Here are three ways financial services companies can benefit from harnessing the data cloud.

Personalising Customer Experiences

The cloud offers companies the opportunity to house all their various types of data in one secure place, enabling them to personalise services for customers. By using the data cloud,  companies have a consolidated governed location for all types of data (for example, clickstream, transactional, and third-party) that can ingest data from new sources such as IoT devices. This enables organisations to gain a 360-degree view of customer behaviours and preferences from multiple inputs.

The cloud offers companies the opportunity to house all their various types of data in one secure place, enabling them to personalise services for customers.

A full customer view is fundamental for a successful personalisation strategy as it enables organisations to pinpoint high-value customers and ensure they have a good experience at every touchpoint. Without real-time visibility into customer interactions, providing the best possible customer experience just isn’t possible.

Over time, digital banking platforms will evolve to incorporate ML predictive models to drive even more personalised banking behaviours. This will only be achievable for organisations who successfully tap into the data cloud, as the success of ML models will require support from ever increasing volumes and access to datasets, both within and external to an organisation. The more an organisation can tap into customer personalisation, the better equipped they will be at customer retention and remaining competitive.

Boosting Data Visibility

To ensure fintechs can continue providing the best possible customer experiences, and adapt to any demands posed by the pandemic, having an acute awareness of all data available will be key for these insights. Adopting a cloud data platform that offers the direct and secure sharing of data without the complexity, cost, and risk associated with legacy data warehouses is one such solution. With simpler, enhanced data sharing, companies can quickly and easily add new data products, and get near real-time insights across the business ecosystem on how this is operating. Offering a standalone data product to data consumers can lead to substantial revenue. For example, financial companies that collect tick-by-tick stock market data can use a cloud data platform to create a data project that they can sell to hedge funds.

A cloud data platform can also reduce the manual effort and copying that is necessary with traditional data sharing tools. Instead of physically transferring data to external consumers, companies can provide read-only access to a segment of their information to any number of data consumers via SQL. By breaking through barriers between disparate data systems, companies will find new sources of revenue and opportunity.

Cross-Collaboration

The rise of digital-first banks, the increased availability of online services and the ongoing surge in mobile banking all represent the modern evolution of how customers now interact with their finances. To meet the demands of today’s customer, financial organisations will see big benefits in collaborating with other finservs through real-time access to data. For instance, if a customer is using a third party fintech to track their finances, a financial institution must share data with that fintech organisation so their customers can access their accounts.

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Last year, 65% of banks and 76% of credit unions said partnerships with fintech companies will be an important part of their business strategies in 2020. These numbers represent an increase from 49% and 60%, respectively, in 2019, showing a clear trend towards a more open banking landscape. Financial institutions that do not take steps to improve the accessibility of its data risk frustrating their customers or losing them to a more agile and collaborative financial institution.

Data collaboration can also help improve instances where investment banks may otherwise have been forced to hold excess capital. This is because aligning on risk exposures and liquidity is executed through nightly correspondances instead of what could be real-time data sharing through the cloud.

With fully governed, secure data sharing, companies can also easily determine who sees what and ensure all business units and business partners access a single and secure copy of their data. Not only does this enhance efficiency, but centralising data into a single source of truth, rather than in separate locations, will boost data security.

Data is the lifeblood of the financial services industry. By migrating to and capitalising on the data cloud, companies can build a future-proofed technology stack that delivers business agility, enhanced customer experiences and data sharing capabilities that ensure business continuity during this volatile economic period. Prioritising these digital-first experiences for customers will ensure financial organisations have the competitive edge that these times demand.

Ammar Akhtar, co-founder and CEO at Yobota, explores the steps necessary to the creation of successful fintech.

The first national lockdown in March highlighted the importance of the quality and functionality of digital banking solutions. Indeed, most of us quickly became accustomed to conducting our financial affairs entirely online.

Financial services providers have needed to adapt to this shift, if they were not already prepared, and consumers will continue to demand more. For instance, Yobota recently surveyed over 2,000 UK adults to explore how satisfied customers are with their recent banking experiences. The majority (58%) of banking customers said they want more power to renegotiate or change their accounts or products, with a third (33%) expressing frustrations at having to choose from generic, off-the-shelf financial products.

Consumers are increasingly demanding more responsive and personalised banking services, with the research highlighting that people are increasingly unlikely to tolerate being locked into unsuitable financial products. This is true across all sectors of the financial services landscape; from payment technologies (where cashless options have become a necessity as opposed to a trendy luxury) to insurance, the shift to “quality digital” poses challenges throughout the industry.

Providers and technology vendors must therefore respond accordingly and develop solutions that can meet such demands. Many financial institutions will be enlisting the help of a fintech partner that can help them build and deploy new technologies. Others may try to recruit the talent required to do so in-house.

The question, then, is this: how is financial technology actually created, and how complicated is the task of building a solution that is fit for purpose in today’s market?

Compliance and regulation

The finance sector is heavily regulated. As such, compliance and regulatory demands pose a central challenge to fintech development in any region. It is at the heart of winning public trust and the confidence of clients and partners.

Controls required to demonstrate compliance can amount to a significant volume of work, not just because the rules can change (even temporarily, as we have seen in some cases this year), but because often there is room for interpretation in principle-based regulatory approaches. It is therefore important for fintech creators to have compliance experts that can handle the regulatory demands. This is especially important as the business (or fintech product) scales, crosses borders, and onboards more users.

The finance sector is heavily regulated. As such, compliance and regulatory demands pose a central challenge to fintech development in any region.

Businesses must also be forthcoming and transparent about their approach towards protecting the customer, and by extension the reputation of their business partner. Europe’s fintech industry cannot afford another Wirecard scandal.

Compliance features do not have to impede innovation, though. Indeed, they may actually foster it. To ensure fintech businesses have the right processes in place to comply with legislation, there is huge scope to create and extend partnerships with the likes of cybersecurity experts and eCommerce businesses.

The size and growth of the regulation technology (regtech) sector is evidence of the opportunities for innovations that are actually born out of this challenge. The global regtech market is expected to grow from $6.3 billion in 2020 to $16.0 billion by 2025. Another great example would be the more supportive stance regulators have taken to cloud infrastructure, which has opened up a range of new options across the sector.

Addressing technical challenges 

It is the technical aspect of developing fintech products where most attention will be focused, however. There are a number of considerations businesses ought to keep in mind as they seek to utilise technology in the most effective way possible.

Understanding the breadth of the problem

The fintech sector is incredibly broad. Payment infrastructure, insurance, and investment management are among the many categories of financial services that fall under the umbrella.

A fintech company must be able to differentiate its product or services in order to create a valuable and defensible competitive advantage. So, businesses must pinpoint exactly which challenges they are going to solve first. Do they need to improve or replace something that already exists? Or do they want to bring something entirely new to the market?

The end product must solve a very specific problem; and do it well. A sharp assessment of the target market also includes considering the functionality that the technology must have; the level of customisation that will be required from a branding and business perspective; and what the acceptable price bracket is for the end product.

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Knowing your client

In the same vein, as a vendor it is important to be specific and strategic when it comes to pursuing the right clients. A fintech might consider itself to be well-positioned to cater to a vast selection of different businesses; however, it’s important to have a very clear target client in mind. This will ensure product and engineering teams have a clear focus for any end goal.

The value of a good cultural fit should also not be underestimated. The business-to-business relationship between a fintech and its client (a bank, for example), particularly at senior levels, is just as important as finding the right niche. There must be a mutual understanding of what the overall vision is and how it will be achieved, including the practical implementation, timeline and costs.

Balancing “best tech” with (perceived) “best practice”

Leveraging the newest technology is not always the best approach to developing a future-proof proposition. This has been learned the hard way by many businesses keen to jump on the latest trends.

Shiny new technology like particular architectures or programming languages can have an obvious appeal to businesses looking to create the “next big thing”. But in reality, the element of risk involved in jumping on relatively nascent innovations could set back progress significantly.

The best technology systems are those that have been created with longevity in mind, and which can grow sustainably to adapt to new circumstances. These systems need to run for many years to come, and eventually without their original engineers to support them, so they need to be created in modern ways, but using proven foundational principles that can stand the test of time.

Curating a positive user experience

To revert back to my original point, fintech businesses cannot forget about the needs of the end customer. There is no better proof point for a product than a happy user base, and ultimately the “voice of the customer” should drive development roadmaps.

The best technology systems are those that have been created with longevity in mind, and which can grow sustainably to adapt to new circumstances.

Customer experience is one of the most important success factors to any technology business. Fintechs must consider how they can deftly leverage new and advancing technology to make the customer experience even better, while also improving their underlying product, which users may not necessarily see, but will almost certainly feel.

Another important consideration is ease of integration with other providers. For example, identity verification, alternative credit scoring, AI assisted chatbots and recommendation algorithms, next generation core banking, transaction classification, and simplification of mortgage chains – these are all services which could be brought together in some product to improve the experience of buying a mortgage, or moving home.

Progressive fintech promotes partnerships and interoperability to reduce the roadblocks that customers encounter.

The human side of fintech

Powerful digital solutions cannot be created without the right people in place. There is fierce competition for talent in the fintech space, especially in key European centres like London and Berlin. Those who can build and nurture the right team will be in a strong position to solve today’s biggest challenges.

In all of these considerations, patience is key. It takes time to identify new growth opportunities; to build the right team that can see the vision through; and to adapt to the ever-changing financial landscape. Creating fintech is not easy, but it is certainly rewarding to see the immense progress being made and the inefficiencies that are being tackled.

Simon Shaw, Head of Financial Services and Insurance at Software AG, outlines three ways in which larger banks can – and must – make their business models more agile.

In the months since COVID-19 reared its ugly head and changed the way we live, there has been a noticeable uptick in conversations around digital transformation and embedding resilience. In the banking sector, the focus had been on the increased demand for online banking and questions around how banking monoliths will adapt.

The reality is that big banks can adapt – albeit slower than other industries. That’s not to say that change isn’t happening; banks have been transforming for years to align with changing customer needs. However, it’s a distinctly difficult and complex challenge. In fact, one of the primary challenges with digitalisation in banking is that moving quickly doesn’t happen easily. Of course, CFOs and financial leaders would love to quickly pivot their operations to meet changing needs and new requirements, but in their current state, most incumbent banks don’t yet have that capacity.

To achieve digitalisation, banks are grappling with many moving parts. From regulatory requirements, to safeguarding customer data, to overcoming silos – and that’s before we consider the sheer cost of it all. I have identified three ways for established banks to pivot more quickly and efficiently in today’s climate.

1. Go Hybrid or Go Home

A significant challenge in the digitalisation of big banks is that their ecosystems simply weren’t designed to enable quick transformation. Changes that may seem simple, or are simple in other sectors, can require full programme rewrites when applied in banking. The legacy systems on which most large banks are built are clunky and inflexible. Since these systems don’t run in real-time, they’ll never compete with the efficiency and analytic capabilities of challenger banks. Yet, despite that, these established systems actually hold the key to future success in banking – data.

The wealth of data contained within a heritage system has the potential to entirely transform the customer experience. However, to do so, banks must be able to access and integrate that data at speed.

A significant challenge in the digitalisation of big banks is that their ecosystems simply weren’t designed to enable quick transformation.

Hybrid cloud presents the best of both worlds; it combines the operational stability of on-premise solutions with the scalability, reduced cost and data accessibility of the cloud. Breaking up isn’t easy but, according to IBM, banks that are outperforming their competitors are 88% more likely to have incorporated hybrid cloud into their business model. For banks with decades of data in monolithic technology stacks, turning certain data and tasks over to the cloud can significantly lighten the load on their ecosystem to improve efficiencies.

2. Visualising Opportunities for Change

Digital transformation has changed banking expectations. Customers want speed and convenience and banks are competing to deliver. Excellence requires efficiency, but that can be difficult to achieve.

Process mining identifies optimisation opportunities and strives for excellence in process performance. As the name suggests, process mining delves into the detail of what occurs as a process is actioned, revealing patterns, anomalies and the root causes for inefficiencies. With greater insight into processes, banks are able to make informed decisions and tangible improvements to quality and performance. To compete with the challengers, established banks need to embed the ability to adapt to changing business requirements and make transformation routine. The first step to this is visualisation.

If hybrid cloud is the vehicle by which digitalisation is achieved, process mining is the check engine light.

3. The Building Blocks of Better Banking 

One of the biggest challenges to transformation lies in evolving away from heritage applications. Transitioning from old to new is daunting and can come with a hefty price tag. Microservices enable banks to transform piece by piece and scale at a controlled rate.

Transformation in data-reliant and regulation-heavy sectors will never be a walk in a park, however, microservices start small by design. This returns much needed control to banks and ensures complex changes are developed and tested independently before being integrated into the banking ecosystem.

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To fundamentally change business operations, the very foundations of that organisation need to be redesigned. This applies across industry, which is why, between 2018 and 2023, the microservices market is predicted to nearly triple as more organisations shift their transformation up a gear.

Microservices embed agility and efficiency from the outset, making digitalisation a cultural and technological change. By returning control and enabling a customer-centric and scalable design, transformation can add big value to big banks.

Agility is essential, but moving a monolith isn’t easy

In banking, where archaic systems and rigidity have been governing organisational change for years, digital transformation really means reinvention and growth. While the end-goal is easily defined – agility, resilience, scalability, digitalisation, etc. – it’s difficult to know what’s needed to achieve it. When the dependencies, regulatory requirements and price of change are thrown into the mix, it’s no wonder that change takes time in the financial sector.

Hybrid cloud, process mining and microservices create the foundations for development by embedding transformation capabilities into the very core of a banks system. While financial institutes will always be subject to a high level of scrutiny, strategic solutions that bring order, visibility and an ability to compete with smaller and more agile banks are truly transformative.

Karoline Gore explores some of the latest developments in fintech and what they mean for the security of online payments.

The current health crisis has ushered in a new era of digitalisation, with a recent McKinsey report showing that COVID-19 has sped up the adoption of digital technologies by several years. The share of digital or digitally enabled products, the report found, has been accelerated by an impressive seven years in a matter of months. This means that, for most companies, online security has become of the essence so as to avoid losses and maintain a sound reputation in their respective industries. These are just a few technologies that are enabling companies to breathe easier in the knowledge that neither their nor their customers’ sensitive data will be exposed.

Real Time Payments

Deloitte identifies ‘real-time payment’ as a key technology enabling consumers to enjoy faster settlement periods, notifications, and consolidated reporting. This technology is key in an era in which ubiquitous connectivity and the boom in the use of smart devices mean that many consumers are using their phones to pay merchants and friends. There are many ‘faster payment’ programs, reports Deloitte, including the Interbanking Electronic Payment System (SPEI), which clears low value transactions every 20 seconds throughout the working day, and ‘multiple batch’ clearing, which operates similarly to traditional systems but takes place various times a day. The ability of payers to receive quick notifications made quickly enables them to identify any fraudulent payments made.

Dynamic Security Codes for Credit Cards

Identity theft is something both sellers and buyers can experience during online transactions. However, there are key differences between gateways for payment and merchant accounts, along with the type of fraud experienced by each party in a sales transaction. Merchants can suffer cybersecurity issues when unwittingly contracting the services of fraudulent providers, while customers can experience identity theft if the payment gateway (the link between their bank and the merchant account) is weak. Dynamic security significantly boosts the safety of payment gateways through dynamic codes. The latter replaced static CVV2s on the back of cards via a tiny LCD that displays dCVVs changes periodically. App-based dCVV2s, meanwhile, remove the need for cards with batteries and LCD, which pose a greater cost for consumers.

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Cloud-Based Payment Systems

Research firm Technavio predicts that global payment gateway systems are predicted to grow by $23.45 billion between 2020 and 2024. This can be attributed to cloud computing technologies being adopted in SMEs and the growing demand for cloud-based solutions to collect online payments. The cloud enables merchant services providers to rely on platform-as-a-service models.

The latter enable them to design, host, and release applications speedily, without having to run a personal server. As such, buyers can make payments through convenient mobile banking apps or by scanning QR codes. Cloud services allow for seamless integration between services like Apple Pay with electronic funds transfer at point of sale.

The boom in digitalisation and online sales models mean that greater security is key. The latter is being delivered by fintech innovations such as real time payments, dynamic security codes, and cloud-based payment systems. These technologies are working together to ensure security is quick, efficient, and informative in terms of real-time movements.

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