We gave our Software Engineers and Analysts a list of stereotypes around working in Finance. Here's how they reacted.
More information: http://www.ubs.com/careers
Kicking off July’s Game Changers section is an interview with David Taylor, the Founder, President and CEO of VersaBank. Here he tells us all about the exciting journey that building Canada’s first virtual, branchless bank has been thus far.
You founded VersaBank in 1993 – could you tell us a bit about this 24-year journey and what it has taught you?
It certainly has been an exciting journey, filled with challenges and lessons. I thought that by applying emerging digital technology to banking, I could create a bank without branches with low overheads that could economically serve small niche markets that were not well-served by Canada’s large full-service banks. Considering this ‘branchless model’ didn’t exist at the time, I expected that I would have to educate regulators, the banking industry, customers and partners about how it would work and what the benefits would be.
I think the most discouraging lesson I learned was that banking regulators like the status quo and do not welcome new ideas, even if it means that some Canadians in niche markets would continue to suffer with only limited access to economical banking.
On converse, I think one of the most encouraging lessons I learned was that some large Canadian full-service banks recognized the important role that VersaBank could play in serving niche markets, which are perhaps too small or obscure for them, and have aided VersaBank in fulfilling its mission to serve these markets.
Developing and improving the software and systems to deliver ideally suited products to our niche markets is always an ongoing challenge, but as Terence Mann said in ‘Field of Dreams’, “If you build it he will come”. I found to my great satisfaction that if you truly endeavor to deliver ideally suited products, you will never have to look for customers. They will ‘come’.
Our niche markets are diverse and include: financing hospitals and schools in the remote Canadian arctic, developing customized web-based banking packages for the insolvency industry, providing back-end funding for the Fintech industry and point-of-sale financiers so that people can lease their hot water heaters, have cosmetic surgery, or lease equipment for their retail or business operations.
In many respects, we are the original FinTech, continuing to leverage the power of new technologies to reach our customers and serve their needs, but unlike the FinTechs of today, we’re also a Schedule 1 chartered bank with access to a huge source of funds, through an expansive network of more than 120 financial advisory and brokerage firms who deliver deposits to us digitally.
Finally, we have proven that you don’t need lax credit standards to attract borrowers. Convenient access, reasonably pricing and flexible terms will attract good quality borrowers. VersaBank has had no need for a collections department and has established one of the lowest loan loss histories in the industry. My hope was that by applying new technologies to banking, we could really make a difference to our customers’ lives. I think we have been able to do this and I look forward to continuing to grow our bank and to finding more innovative ways to serve my fellow Canadians.
Could you tell us a bit about your background prior to founding VersaBank?
I was fortunate to be provided with a solid foundation in banking by working at two leading, but very different, banks. I started my banking career at a large full service Canadian bank, the Bank of Montreal, where I discovered a passion for the business. It was a terrific opportunity to learn the basics of banking and I spent eight years there, before moving to Barclays Bank of Canada. In Canada Barclays PLC employed a niche strategy. However, when, amidst a downturn Barclays decided that the country was a non-strategic market, I saw an opportunity to create a Canadian niche bank, which ultimately led to the formation of VersaBank.
What have been your biggest achievements to date?
A couple of things immediately come to mind, which are at opposite ends of the VersaBank journey. They being: getting the digital bank started back in 1993 and successfully completing a very complex amalgamation transaction earlier this year. Both of these achievements were ‘firsts’.
I soon discovered that the banking regulators had no appetite to grant a bank license for a brand new bank with an untested model. So I decided to acquire an existing financial institution and transform it into my new model. I looked for the smallest financial institution I could find and discovered Pacific & Western Trust in Saskatoon, Saskatchewan. I met with the owner - Bill MacNeill at a restaurant and sketched out a plan on how I could transform Pacific & Western Trust on a napkin. When he asked if I was there to buy his trust company, I surprised him by suggesting instead that he ‘buys’ me to run and transform his trust company. I had extensive experience in the industry and was a banker and he was, in fact, a miner. He agreed to my suggestion and that opened the door for me to build Canada’s first virtual, branchless bank.
I also believe that the completion of our amalgamation in January 2017 was a key accomplishment. It was the first successful merger under the Canadian Bank Act and enabled us to significantly simplify the structure of the bank, while also realizing some significant financial benefits. It was a very complex transaction that required approvals from the shareholders of VersaBank, PWC Capital, the regulators and even the Canadian Minister of Finance. We secured an overwhelming approval from shareholders of the two companies and the other required approvals. It was a great accomplishment and was vitally important to the positioning of VersaBank for the future. We’ve created a unique state-of-the-art bank that is profitably providing banking services in niche markets throughout Canada.
Could you please tell us a bit more about the merger with PWC Capital and what it means for the future of VersaBank?
This transaction was historic in the sense that it was the first merger to be successfully completed by a Schedule 1 bank (a domestic bank that accepts deposits) under the Canadian Bank Act. Previous attempts by other banks had been unsuccessful.
While that’s a fun fact, the merger for us was critical to our future success, as it ultimately was about creating a simplified structure for VersaBank and eliminating confusion that existed with its parent company, PWC Capital. Previously, there had been two publicly traded companies, VersaBank and its parent a financial holding company, PWC Capital. This created duplication and PWC Capital had been highly leveraged. In addition, potential investors often were confused about the differences between PWC Capital and the banking entity, Pacific & Western Bank of Canada (now VersaBank). This structure was inefficient and it impeded our ability to grow. We needed to change it.
What emerged out of this complex transaction is a growing, standalone, publicly traded, high-margin, branchless chartered bank that uses its software to reach key niche markets, traditionally underserved by the big Canadian banks. We have enormous growth potential.
You’ve also recently opened a new digital facility, which provides the infrastructure for VersaBank’s branchless model and complements Canada’s FinTech industry – how did the idea about the platform come about? What is your outlook for its future?
Right from the founding of VersaBank, we believed that we would have a significant competitive advantage by designing, developing and maintaining state-of-the-art, custom banking software that helps to address customers’ specific and unique needs, while also minimizing the required investment in physical infrastructure and human resources. We’ve tended to focus on niche markets that are traditionally underserved by Canada’s big banks.
By following this approach, for example, we’ve become the bank of choice for Canada’s national consumer insolvency firms, by creating a banking package ideally tailored specifically to the unique needs of insolvency professionals. It’s highly efficient and very economical both for us and for our clients and has become a win-win for ourselves and our customers.
We recognized that there could be tremendous synergies if we brought some of our in-house teams under one roof, which has led to the establishment of our new digital facility, the VersaBank Innovation Centre of Excellence – the modern, new home of our in-house software development division and its eCommerce division. By bringing them together, we have enabled these teams to work side-by-side to encourage collaboration to improve our existing banking solutions and create new solutions for tomorrow.
The team already is working on some innovative new solutions that likely will hit the market in the next couple of years.
Is there anything else you would like to add?
Arguably, when first conceived, VersaBank was a little ahead of the times, but the times have now caught up and VersaBank is finally able to take full advantage of its systems and model to serve people across Canada without branches. Its products are in high demand and its margins lead the industry without the usual loan losses. Twenty years ago this would have been a dream, but today, the dream has become a reality.
Website: http://www.versabank.com/
Below Finance Monthly hears from Peter Snelling, principal systems engineer at leader in analytics, SAS, who has various ideas on border management that the UK and EU should look to approach.
This, and the more outward looking post-Brexit era we're facing, are just two reasons why I believe a different approach to border management, and indeed many of the activities of the Home Office and Customs, would transform efficiency. With the following capabilities in place, we’ll create a future where the departments can rate and prioritise risks in real-time, as they change, and take pre-emptive action, rather than reactive. As an example, let's apply the following ideas to the challenges of smuggling and trafficking.
The answer’s in the data
One of the major improvements the border agencies can make is to apply advanced, predictive analytics and deploy real-time risk-scoring models. Building them on historical data allows strategists and front-line operatives to apply the models’ learnings to enhance their own experience and strategies.
The alerts raised by these models can then be visualised as networks, timelines and maps – and enhanced with contextual information and intelligence. Applied in this way resources can be better managed and frontline staff can interdict high risk goods or people promptly. As importantly, low-risk goods and people can be processed far more swiftly. To find the needle it's sometimes easiest to reduce the size of the haystack.
Support that capability with what-if scenario testing, and the border agencies within Home Office and HMRC – and indeed other central government organisations – will be able to model different decisions and predict their outcomes against their cost and relative merit.
A winning combination: efficiency, accuracy, affordability
However, with many millions of people and shipments moving in and out of the UK every year, some people will wonder how quickly all this analysis can happen. The answer: In a matter of minutes. Certainly, with SAS. That’s because our analytics engine is made for the big data age and can screen billions of rows of data per second.
If your next question is, "Can the analysis be thorough at speed?" the answer is a resounding yes. Take global banking giant HSBC as an example. You’ll see that SAS anti-fraud analytics screens millions of debit and credit card transactions around the world, every day. Consider the fallout you may have experienced from just one personal experience of card fraud, and you’ll know what an incredibly value-generating capability this is - both on a human level and a financial one.
For the Home Office and Customs to achieve their efficiency targets and improve operational effectiveness, advanced analytics and visualization solutions have become essential.
Sharing thoughts, ideas and opinions on how the Financial Sevices Sector can get bet better gender diversity.
As part of Finance Monthly’s brand new fortnightly economy and finance round-up analysis, Adam Chester, Head of Economics & Commercial Banking at Lloyds Bank, provides news and opinions on the rise in inflation, the UK’s weakness in productivity, and employment & GDP.
The anniversary of the UK’s decision to withdraw from the European Union has now passed, and who could have imagined the political fallout that would ensue?
One year on, the formal Brexit negotiations have only just begun, yet the nature of those negotiations and their ultimate destination remain unclear.
Despite all this uncertainty, it is remarkable how well business sentiment and the economy has held up.
The resilience of the UK economy however, and UK financial markets, has prompted a very different response from the Bank of England than the one that followed the EU Referendum.
While the bank came out ‘all guns blazing’ last summer, the focus now is on when it will start to take that stimulus away.
Doves taking flight?
Bank of England officials have signalled that above-target inflation may not be tolerated for much longer.
Even Governor Carney – one of the more dovish members of the UK rate-setting committee – has rowed back a little on his earlier stance, suggesting that if the balance between growth and inflation continues to shift, ‘some removal of monetary stimulus’ is likely to be necessary.
The markets now have the August MPC meeting in their sights. That is when the Bank of England takes another detailed look at its GDP and inflation forecasts.
By then, not only is inflation likely to be much higher that the bank was previously forecasting in May, but the committee may also have to factor in the risk of some loosening in fiscal policy.
The decision will come down to the MPC’s assessment of the trade-off between growth and inflation.
BoE Deputy Governor Broadbent noted in a recent interview that there were many ‘imponderables’ and that he was ‘not ready’ to support a rate hike.
Meanwhile, Ian McCafferty underscored his credentials as the most hawkish member of the BoE’s rate-setting committee, arguing not only for an immediate quarter-point rise in interest rates, but also for the BoE to consider reversing its money-printing programme earlier than planned.
The productivity problem
While all eyes are on Brexit, it is easy to miss what is arguably an even bigger challenge for the UK – the weakness of productivity.
UK productivity (as measured by output per hour) contracted by 0.5% in the first quarter of this year, leaving it at its lowest since before the 2008 financial crisis.
By any measure this is a shocking performance.
There are various explanations for the UK’s disappointing productivity, and some are more benign than others.
Part of the reason may be simple mismeasurement. Recording the productivity of economies such as the UK with large service-sector industries, particularly financial services, is inherently difficult.
As the UK’s official statistics indicate, productivity in some sectors, including financial services, has performed significantly worse than other non-financial service sectors over the past decade. But this does not tell the whole story.
Productivity may have also deteriorated due to changes in the composition of capital and labour.
Since the financial crisis, low wage growth and heightened economic uncertainty may have encouraged more companies to hire new workers to drive output growth rather than undertake productivity-enhancing capital investment.
Going for growth
The rise in the UK’s GDP over the past decade has been driven, almost exclusively, by increases in employment and hours worked.
The UK’s latest labour market data underscores this point. Total employment grew by a stronger-than-expected 175,000 in the three months to May, while the unemployment rate dropped to a new multi-decade low of just 4.5%.
At the same time, pay pressures remain benign, with annual growth in overall pay slipping from 2.1% to 1.8% - the first time it has been below 2% since February 2015.
Based on current data, GDP is likely to have expanded by 0.3% in the second quarter, while total employment is predicted to have risen by 0.3%. As a result, productivity growth is projected to be zero.
The combination of a tightening labour market, weak productivity growth and benign pay pressures pose a major dilemma for the Bank of England.
For now, we expect the Bank to keep its powder dry, but it won’t take much further sign of economic strength to persuade it to reverse last August’s quarter-point rate cut.
Oracle and the MIT Technology Review recently released a new study that highlights the importance of collaboration between finance and human resources (HR) teams with a unified cloud. The study, Finance and HR: The Cloud’s New Power Partnership, outlines how a holistic view into finance and HR information, delivered via cloud technology, empowers organizations to better manage continuous change.
Based on a global survey of 700 C-level executives and finance, HR, and IT managers, the study found that a shared finance and HR cloud system is a critical component of successful cloud transformation initiatives. Among the benefits of integrating enterprise resource planning (ERP) and human capital management (HCM) systems is easier tracking and forecasting of employee costs for budgeting purposes. Additionally, integrated HCM and ERP cloud systems improve collaboration between departments, with 37 percent of respondents noting that they use the cloud to improve the way data is shared.
The report also reveals the human factors behind a successful cloud implementation, with employees’ ability to adapt to change standing out as critical. Among organizations that have fully deployed the cloud, almost half (46 percent) say they have seen their ability to reshape or resize the organization improve significantly – as do 47 percent of C-level respondents.
The productivity benefits have also been significant. Nearly one-third of respondents (31 percent) say they spend less time doing manual work within their department as a result of moving to the cloud and that the automation of processes has freed up time to work toward larger strategic priorities.
“As finance and HR increasingly lead strategic organizational transformation, ROI comes not only with financial savings for the organization, but also from the new insights and visibility into the business HR and finance gain with the cloud. People are at the heart of any company’s success and this is why we are seeing finance and HR executives lead cloud transformation initiatives,” said Dee Houchen, Senior Director of ERP Solutions at Oracle. “In addition, improved collaboration between departments enables organizations to manage the changes ahead and sets the blueprint for the rest of the organization’s cloud shift.”
The survey also reveals there is a blurring of lines between functions and individual roles as the cloud increasingly ties back office systems together:
- Increased Collaboration: 46 percent of finance and HR professionals say a full cloud deployment has led to significantly improved collaboration between departments, and nearly half expect a significant improvement in the next two years.
- This extends to IT as well. 52 percent of C-level respondents said the relationship between IT, HR and finance is even better than expected following their cloud implementation
- Cross-Corporate Intermingling: With the new roles of HR and finance professionals requiring them to work more closely with data and the cloud, 43 percent of businesses plan to bring IT people into these departments to help employees take advantage of new technologies.
- New Skillsets: Desired skills respondents want to improve upon include:
- Time management, with 40 percent saying this is currently an issue
- Active learning
- Problem solving, mathematical reasoning and analytical skills
- The IT function also changes. Post-deployment, 56 percent of C-level respondents report that IT has significantly improved when it comes to producing innovations.
Andy Campbell, HCM Strategy Director at Oracle added: “As organizations navigate technological changes, it’s critical for the C-suite to empower its employees to evolve their individual business acumen. Many businesses understand this and it’s encouraging to see 42 percent planning to provide their teams with management skills training to help them break out of their traditional back-office roles. The learnings from the move of finance and HR to the cloud will ultimately spread across the organization as, together, they conceptualize the shape of the next disruption.”
(Source: Oracle)
As part of Finance Monthly’s brand new fortnightly economy and finance round-up analysis, Adam Chester, Head of Economics & Commercial Banking at Lloyds Bank, provides news and opinions on volatility in the uncertain market and the prospect of a hike in interest rates, both in the UK and the US.
Clearly, the last two weeks have seen political shocks with potentially far-reaching consequences for the UK’s economic outlook.
The aftermath of the General Election has introduced new uncertainty over the implications for Brexit though, so far, financial markets have taken it in their stride.
However, until there is a clearer sense of what the new minority government can achieve, UK financial markets and the pound are likely to be prone to sharp bouts of volatility.
Three wishes
The outlook for the UK’s Bank Rate seems to be changing by the moment.
The surprisingly close June vote on interest rates by Bank of England policymakers saw three of the rate-setting committee back a rise.
Governor Carney seemingly attempted to put a lid on the discussion by stating that now was not the time to raise rates. However, Andy Haldane, the Bank’s Chief Economist, subsequently said he was now close to voting for an interest rate hike.
This is particularly significant as, until now, Haldane was considered to be the arch dove amongst the Bank’s rate setters. Moreover, it is the first sign of a divergence in views between the current permanent Bank employees on the committee.
Up until now it’s only been the so called external members who have voted for a hike. Is that about to change?
Markets certainly think there is something new in the air, as can be seen by the implied probability now put on a 2017 interest rate hike. That has gone up from below 10% just over a week ago to about 50%.
What is most surprising about this sudden shift in expectations is that economic conditions are arguably little changed. Once you also factor in political uncertainty, including the unexpected result of the general election, then on the face of it, the case for staying put seems strong.
But the hawks amongst Bank rate setters had previously indicated that they have limited tolerance for above-target inflation.
Close to the limit
Two factors suggest that the limit may be close to being breached.
First, Kristin Forbes, one of the hawks, has noted in recent research that the effects of an exchange rate generated inflation shock can persist. This questions whether the Bank is right to prioritise domestic pressures.
Second, the eventual impact on wages of what looks to be an increasingly tight labour market remains a concern. The UK unemployment rate is now at its lowest level since the mid-1970s and there are signs that this is having an impact.
On balance, we expect the Bank to keep interest rates on hold for now. Nevertheless, this is a closer call than for some time.
Over the next few weeks, markets will be paying particular attention to any comments from those Bank policymakers who have yet to make their position clear.
It will be an interesting run up to the next policy announcement on 3rd August.
Fed up again
In the US, a quarter-point rise in interest rates was widely expected, and subsequently delivered.
The Federal Reserve also stuck to its previous ‘dot plot’ forecast to raise interest rates, anticipating another quarter-point rise this year, and three more in 2018, with the key policy rate expected to settle around 3.0% in 2019.
In pre-announced plans, the Fed intends to start unwinding its balance sheet. For the moment, it anticipates deflating its asset holdings by $10bn a month from later this year, rising in small increments every three months to $50bn
Despite this, US financial markets may have other ideas – as they continue to pretty much ignore the Fed’s guidance. The markets are only fully priced to one more quarter-point rise by the end of next year.
With signs of more mixed growth emerging recently and a weakening of core inflation, the markets clearly think the Fed has got it wrong.
This misalignment can only last so long. Either the Fed will have to eat humble pie, or the US, and by extension global, bond markets could be in for a much more testing second half.
WILLIAM ACKMAN, Activist Investor and Hedge-Fund Manager
We all want to be financially stable and enjoy a well-funded retirement, and we don't want to throw out our hard earned money on poor investments. But most of us don't know the first thing about finance and investing. Acclaimed value investor William Ackman teaches you what it takes to finance and grow a successful business and how to make sound investments that will grant you to a cash-comfy retirement.
The Floating University
Originally released September 2011.
By Sylvain Thieullent, CEO of Horizon Software
It feels like the financial services are in a constant state of rapid evolution as regulators, leaders, active participants and vendors strive to move the industry forward. For the FinTech sector, this could be a golden age, with every challenge creating an opportunity. If the current trajectory continues, it’s a golden age that could last for some time, says Sylvain Thieullent, CEO of Horizon Software.
The financial services thrive on change. Change drives innovation, and in turn, innovation finds faster, more efficient ways of doing things. Over the last decade, FinTech has become an independent sector in its own right, increasing the pace of innovation across the entire industry.
Competition, regulatory requirements and the calibre of the teams involved are three key elements in the industry’s constant state of flux. An array of secondary factors are also adding to the mix, combining to deliver an impressive level of innovation.
Three primary elements
At every level, the industry is driven by competition. Leadership teams recognise that if they don’t keep bringing prices down, their competitors will quickly find ways to undercut them. While loyalty and relationships will always be very important for the market, price is a major consideration. This creates a constant appetite for quicker, more efficient ways of doing things.
The second element is regulatory expectations. Just as technology is changing what we can do, it is also making it easier to regulate. Trades are being tracked with a level of granularity that would have been inconceivable a decade ago, and because regulations are coming from multiple jurisdictions, institutions are expected to report on different things in different ways (as well as the same things in different ways). Making sure that the regulators are satisfied is a major catalyst for change and innovation.
The third element is the calibre of the people involved in the financial services. The downsizing of the banking industry over the last ten years has meant that a number of highly-skilled and very experienced people have found themselves free to pursue some fascinating ideas. In some cases, they’ve joined FinTech ventures and turned their attention to some of the deeper structural issues in the sector that are perhaps too specialised for major institutions. This is leading to a string of innovative solutions to challenges.
As a result, financial centres around the world are buzzing with new ideas, some of which have the potential to coalesce into very interesting products and services over the next five years.
Changing emphasis
There are also a number of secondary factors in play.
The first of these is a move towards FinTech vendors as hubs of innovation. The rising importance of regulation and compliance has come at the same time as the downsizing of banks. A decade ago, banks could keep all the talent they needed and look in-house whenever they had a conundrum to solve. Now, all but the largest institutions need to look elsewhere.
Until recently one of the tried and tested routes for successful firms to grow was through leading institutions setting up a division, strategy or technology, nurturing it for a few years (while enjoying first-mover advantage) and then setting it free to operate independently, or selling the division for a decent return.
Coupled with the downsizing, this model is likely to become less common over the next few years as fewer financial institutions will have the depth of resource to support it. As a result, there will be more fledgling start-ups looking for support earlier in their development, which could encourage them to be nimbler and more innovative in responding to potentially more risk-averse clients.
Shifting politics
Another ingredient in FinTech’s cauldron of innovation is politics. Brexit could lead to major changes in the global financial markets, and even though London has long enjoyed an enviable position as the world’s centre for many aspects of financial services, the current level of uncertainty could see its primacy eroded. This could be another catalyst that helps some innovative initiatives move forward as businesses reassess their strategies.
Ultimately, irrespective of the choices of the British public and the subsequent political manoeuvring, uncertainty creates opportunity. London has a heritage of financial innovation that spans centuries, but other centres have been keen to challenge its preeminent position for almost as long.
At the same time as Britain enters a period of internal debate and financial institutions look at their positions to ensure that they are ready for a variety of outcomes, the French electorate, for example, has delivered a government with a modernising agenda. The interplay between London and Paris, those most traditional of frenemies, could be a source of innovation and new thinking over the next five years.
Other financial centres will also be clamouring for attention throughout this process. The growing importance and confidence of Australasia and Latin America, as well as the changing outlook in the US, could well create evolutionary pressure to innovate.
These changes are taking place as the importance of physical borders and location are coming to mean less. Financial services are exceptionally international, and regardless of the changes in individual countries, market participants will continue to focus on getting the quickest, most cost-effective solution that most closely matches their risk profile and meets the regulatory requirements of the countries where they are based and their clients are active.
Enhanced flexibility
But innovation means flexibility as institutions are less likely to fall into the trap of building a comprehensive in-house system that only a handful of people know how to keep working. This is not only a vast improvement from an operational perspective, it also means that regulation and compliance requests are far more easily met, and there is a far wider variety of environments in which to test models and strategies.
A further benefit of flexibility comes in the form of market participants and vendors understanding each other better, effectively reducing the risk that a system will be developed that doesn’t quite do what the traders want.
As ever, there’s risk. Some of the initiatives across the world are destined to wither and die because they are not built on sustainable business models. Businesses are going to need to evolve their strategies and possibly their focus to become sustainable. This is a route that many innovative industries follow as they grow to maturity, but institutions need to be aware of what they are exposed.
Incumbent bias
The barriers to entry as a nascent game-changer are very high, which poses yet another challenge. Incumbents have the advantage of existing relationships and proven track-records which will always weigh heavily in their favour.
Regulators are also rightly risk-averse, a stance which again favours market incumbents. With the current regulatory environment going through a process of rapid evolution, there are significant sanctions accompanying non-compliance which could make potential clients more reticent about embracing innovation.
That said, regulatory changes could help level the playing field from a data reporting perspective, again creating the conditions where innovation can thrive. The implementation process could be highly challenging for many organisations, but they could provide a shared foundation that supports innovation in the longer term.
Living in interesting times
The FinTech sector exists to help the financial services innovate and keep moving forward. Even though the last five years have been a golden age for FinTech, it is difficult to predict what the next five will bring.
The array of fascinating challenges ahead, the deep well of expertise, technology that keeps enhancing and regulators that keep changing what’s expected, all suggest that the outlook is positive.
Website: https://www.hsoftware.com/
By Bhupender Singh, CEO of Intelenet Global Services
hupender Singh, CEO of Intelenet Global Services, says AI and automation is already redefining the role of finance executives towards more strategic roles.
Digital technology is revamping business models to help organisations respond to rapidly changing market conditions. This has also impacted the finance and accounting function, where automation and AI is being used to transform business critical functions. The evolution of technology has redefined the role of finance executives from carrying out low-level tasks towards more strategic decision making. Many CFOs and financial executives are progressively turning to next generation tools to manage their workflow efficiency and encourage better governance when it comes to managing their finances.
These tools are designed to purposefully enhance business outcomes whilst meeting all operational business requirements. Bearing this in mind, a business’s accounting system is a vital component to ensuring profits are being maximised. Working from a system which encourages a more integrated and comprehensive overview of a business’s finance can help boost operational efficiency.
Businesses partner with multiple suppliers, vendors and companies to support them deliver their services to customers. Turning away from a culture of late payments and pushing towards invoices being processed on time, will ensure service is well-maintained with supporting partners. This is why, the finance function needs a robust system which bridges the gap across information from both internal and external stakeholders.
Working from a single interface with all the financial data in one place, will extend access to key information amongst finance teams to ensure a more collaborative approach when it comes to planning and forecasting. Consequently, finance executives will be able to map out a business’s strategic financial objectives to make the planning, forecasting and budget processes smoother. This will allow businesses to have a better understanding of their cash flow across different areas. Pushing for more financial transparency allows finance executives to have a more holistic overview of their expenditure.
Automation continues to displace manual work, eliminating the headache from finance executives to undertake repetitive and mundane tasks such as - contract rate disagreement, missing payments and remittance advice to improve productivity. Data-entry and coding are time intensive, and so automation can unlock value for businesses as finance executives are able to redirect their attention towards better insight and growth strategies. Rather than trawling through spreadsheets they are playing a pivotal role in steering the direction of the company.
Accounting errors that affect the balance sheet can also result in hefty fines and retail losses, making it vital to avoid financial and reputational risk. As a business grows and expands, working with multiple partners, it depends on their processers keeping pace with the financial management of ongoing operations. Automation can reduce retail losses by 40% and have in one case recovered £1.7 million as a result of missing/ incorrect documents.
Data Analytics has always been aligned with better understanding of customer needs, shopping habits, and preferences. However, there is also a lot to be said on how this hard data can be used to help executives gain valuable insight to improve performance, identify growth trends, and manage errors. An automated, real-time supply of financial data across different processers, such as invoicing & billing administration, tax filing and payroll processing endorse better governance and compliance across these areas.
There is a lot of emphasis on innovation in the area. However, in order to optimize the full potential of these technologies, requires a high level of digital expertise and skill to process the financial data and streamline the financial management process to enhance the service delivery.
Website: https://www.intelenetglobal.com/
Padmasree Warrior, CEO of electric car company NIO US and former Motorola and Cisco executive, is a force in the technology world. Warrior shares three traits she says are necessary to make it in the tech industry.
Earlier this month, Finance Monthly had the privilege of interviewing the CFO of IBM UK & Ireland (UKI) – Vineet Khurana. Here he discusses his role within the organisation, Brexit implications and offers piece of advice to fledging CFOs.
You have been the CFO of IBM UKI for nearly a year now - what is your favourite thing about your role?
My favourite thing about the role has to be the breadth, reach and influence it offers.
I get to work extremely closely with our Chief Executive and the rest of the leadership team (Sales, Operations, HR, IT, RESO, etc.) not only on all financial matters, but also across a spectrum of other business matters that impact our business - both in the short and long term. As an example, I recently led a piece of work, in partnership with the Corporate Strategy team based at the Headquarters in New York, to re-define our Client coverage strategy in the UK.
As a CFO, I am also presented with opportunities to engage externally with Clients and share with them IBM’s point of view and value proposition, as it relates to Enterprise IT. I personally find this aspect of my role very enjoyable.
What would you say have been IBM UK & Ireland's major achievements in the past twelve months? What has been your involvement, in relation to them?
Our key focus over the last year has been to align ourselves here in the UK & Ireland with IBM’s transformation as a Cloud Platform and a Cognitive Solutions company.
This is absolutely key for us in order to fully leverage and benefit from the breadth of the Cloud-based cognitive offerings that are available. Associated with this, my role as the Finance Leader for UK & Ireland has been to ensure that our resources and investments are (a) prioritized and (b) deployed appropriately in support of this initiative. Of course, we’ve also had to make sure that we have a revised set of operational/performance metrics and reporting capabilities in place.
Finally, as mentioned above, the work we led as a Finance team in regards to re-defining and making our Client Coverage strategy more effective is something I am particularly proud of.
What is the best advice you could share with Fledging CFOs and Finance Directors?
With the role of finance constantly expanding and finance increasingly needing to play a central part in all business decisions, I really don’t think there has been a more exciting time to be a finance professional.
Technological advances are disrupting the status-quo. Companies are utilising technology to transform their business and the way they interact with their clients and employees. This is being done while industry convergence is producing new agile rivals at breakneck speed. With all this change afoot, the role of the CFO needs to change as well.
CFOs need to embrace business strategy in addition to the financial strategy, understand the changing market/client needs in addition to regulatory changes, and deliver business insight in conjunction with data reporting and analysis.
Therefore, my advice is to embrace this change, as it is key to ensure your increased effectiveness in the role and your ability to deliver enhanced value at the leadership table.
In light of the recent triggering of Article 50 - what is your outlook for the future of IBM UK Ireland in next twelve months and beyond?
IBM has been operating in the UK for over 100 years and as such it is an important market in the context of our global business. We have always done and continue to make significant investments here in support of our business and economy. As an example, we recently announced the establishment of four new UK cloud data centres, tripling our UK cloud data centre capability.
In summary, we are making sure that we are well-placed to help our clients as they transform their businesses by improving their competitiveness, as they prepare to exploit new opportunities.
What are the implications and challenges of global Brexit uncertainties faced by CFOs?
I think we all recognise that we are facing an extended period of uncertainty during the exit negotiations. So at this early stage of Brexit, the approach of the CFO should be to understand the potential exposures their organisations could face.
I believe two significant uncertainties centre around import/export of goods and data and the free movement of resources across the continent. The magnitude of these uncertainties will obviously vary by sector and individual organisation. CFOs should look at mapping the relative exposure of their organisations to these elements by carrying out the data analytics work now. This analysis will then allow for quicker action and informed business decisions to be taken, once the negotiations are concluded and changes in regulations are clear.
