Personal Finance. Money. Investing.

These important developments in IT infrastructure will significantly shape the fortunes of financial institutions over the next decade.

Investment in cloud infrastructure must increase because banks will need to create new products, services and experiences to meet expectations from consumers and commercial customers. Intense fintech activity, either by partners or competitors, is also pushing banks into the cloud as the necessity increases for infrastructure that generates greater organisational flexibility. Market research company IDC estimates that to meet new demands and provide new services, banks’ global cloud spending will rise by more than 16% each year up to 2024, hitting $77 billion annually.

Soon, however., banks’ attention will be on the edge, moving processing power closer to the end-user or customer. We have entered the new age of open banking, app-based financial management and the steady expansion of 5G mobile connectivity. The banking world, like almost every other field of business, will become data-driven. Financial organisations will use the edge to create new models of service and hyper-personalised experiences using big data and artificial intelligence (AI) in combination with 5G and highly advanced application design.

The edge will enable banks to easily expand into products based on crypto-currency, non-fungible tokens (NFTs) or stable coins. Custody and trading solutions, prime brokerage services and blockchain-based compliance solutions will be part of this evolution. 

Organisations will transform all their processes, enabling near-instantaneous completion of transactions, settlements and decisions on loans, credit, or insurance. And to compete with global app-based lenders and service providers, banks will have to provide the slick interfaces and ease of use that increasing numbers of consumers take for granted. Competitiveness in consumer and business banking will be about providing a great experience. The dynamism and fast reactions that are essential for these key developments are only available from cloud and edge computing, delivering the necessary speed, low latency, flexibility, and scalability.

Hybrid infrastructure with edge

Yet just as UK financial institutions move into the cloud, the Bank of England’s Prudential Regulation Authority warns against the dangers of vendor lock-in and reliance on individual providers. Data sovereignty laws also continue to make relationships with US hyperscalers potentially dangerous.

Given these constraints, it is obvious we will see banks adopt hybrid infrastructure, combining public cloud and on-premise data centres. This will strike the balance between flexibility and security, so banks locate data workloads where they work best or are best protected. Edge computing will grow in tandem as financial organisations deploy artificial intelligence-based solutions and sophisticated mobile applications.

Using 5G mobile connectivity rolled out by the telecoms companies, edge computing removes the disadvantages of location, shifting data and workloads to regional data centres to deliver faster, low latency responses for end-users. This has clear benefits for financial institutions seeking to offer highly personalised and responsive payment platforms, for example. Any solution depending on location as part of its decision-making needs to process data in an edge computing environment.

Aside from consumer and commercial applications, the edge also has significant potential for investments and markets, delivering high-speed trading capacity anywhere in the country.

Accelerating adoption

The adoption of hybrid cloud infrastructure that includes edge computing will accelerate over the decade, thanks to the creation of nationwide edge computing platforms and the development of effective implementation methodologies. Banks can prioritise data and applications for deployment, whether on-premise, in private clouds, colocation data centres, public cloud or with the providers of national edge platforms.

Colocation can be highly attractive because a bank locates its own IT in a secure and efficient data centre run by specialists. The more advanced colocation and cloud providers are compliant with PCI (Payment Card Industry) data standards, enabling secure use of the full range of card payment technologies. Some providers may also comply with the US’s SOC 2 requirements governing customer data.

New applications and revenues with greater freedom

This is all about flexibility and making advanced, revenue-generating AI applications available almost anywhere. At the same time, business-critical applications that are not cloud-compatible remain on-premise. Banks gain the remarkable computing and data management capabilities of individual public cloud vendors without fear of lock-in or being constrained by providers’ operational practices.

New-generation management tools designed for hybrid infrastructure enable financial organisations to monitor all their data and applications and to optimise all their deployments in the cloud and at the edge. Banks can generate workloads to meet peaks in demand, avoiding excessive expenditure without the risk of missing new business opportunities.

Hybrid cloud and edge computing are inexorably part of the future of banking, given the arrival of these new cloud management platforms. The next ten years should see the most forward-looking financial institutions gain the flexibility and innovation of the cloud and the devolved power of edge computing. Maintaining sensitive data and workloads in secure locations, these organisations will develop highly advanced, hyper-personalised applications and new business models throughout the decade, confident they can flex, re-evolve or scale whenever need be. They will become fully data-driven and dynamic, realising the vast potential of hybrid infrastructure and edge computing

About the author: Simon Michie is CTO at Pulsant.


Despite the high cost and high maintenance traditionally associated with corporate portals, banks have been slow to adopt SaaS technology for helping them better manage their budgets. Leading banks are spearheading the way in facilitating digital trade services for their trade clients and prioritising the support of digital trade by relying on innovative Fintechs to build fast, future-proof solutions that can even support multi-banking capabilities.

To future-proof trade finance communications, these are the top priorities large banks are considering and some of the factors that have nudged financial institutions to pursue solutions from external vendors.

The ability to deliver a quick digital trade experience to customers

 Through trade portal as-a-service solutions, banks are now able to allow their trade customers to not only conduct transactions but over time be able to fully handle directly from a single portal application, advising as well as utilisation of electronic documents

 Many of the world’s largest financial institutions are not able to offer a fully digitised service to their trade customers due to the immense cost, time and complex implementation processes required to offer a fully digitised user journey. But with advancements in recent technologies like Bolero’s Galileo, banks are well placed to offer truly digitised experiences to their customers to conduct their business at speed and with great efficiency.

The pandemic has highlighted the inherent inefficiencies within trade finance operations and as a result, the demand for digital trade services is at its peak. Trade customers today want to conduct their business online therefore it becomes vital for banks to digitise the customer experience as quickly as possible or risk losing that customer.

Dissatisfaction with their current portal solution

As a result of corporates' digitisation of their trade finance processes, banks have been under significant pressure to provide new and improved digital services to their corporate customers who are pushing for a fully digital experience.

Some of the banks we have spoken to tell us that their existing portal solutions do not meet the requirements of their clients anymore. Corporates today are looking for solutions that could adapt quickly and flexibly to new requirements so that they could offer their corporate clients a quick and smooth transition from the old to the newer more innovative systems. They can handle their trade finance transactions as well as having all correspondence between their trade clients and the banks electronically.

Exorbitant ownership costs

For many banks, the total cost of ownership for a trade portal is prohibitive. As a result, banks are reluctant to offer their trade improved customer experiences because the setup costs are too high which in turn slows down the adoption of these services despite the incredible appetite from trade customers.

Subscription-based, turnkey solution cuts the cost of acquisition from millions to a fraction of the cost whilst also reducing the need to hire teams to build solutions and to support clients by developing new upgrades and by providing regulatory-change compliance. By replacing their legacy systems with a state-of-the-art technology platform, banks are able to deliver a more sophisticated digital experience to their customers at a lower cost than they would have paid before.

That’s not all, for smaller more regional banks that do not have many trade clients, the efforts and resources associated with installing a portal solution for their clients often are not worth it. A plug and play solution opens the market up for financial institutions of all sizes.

Freedom from technical debt

Technical debt often becomes a major factor that deters banks in their pursuit of building bespoke solutions as they do not want to deal with the expensive upkeep of their trade portals.

 We are seeing many banks that have changed course as they adopt white-labelled solutions that not only cut costs but free them from the shackles of constant updates for their trade customers. In turn, they are providing upgrades to their online banking platforms and making a positive change to the customer experience and channelling innovation into a booming industry, all without the technical burden caused by in-house solutions.

Ability to support digital trade with e-presentations

Many of the existing legacy portals we see banks use today do not allow for corporate clients to manage their own trade transactions and products like Letters of credit, guarantees, electronic bills of lading and standby letters of credit.

As corporate clients become more demanding of their trade partners to embrace digitisation and increasingly rely on technology to conduct business, banks are stepping up to the challenge by delivering enhanced user experience, improved functionality, and a broad suite of connectivity options.

Importance of structured bank communications and audit trails

Structured bank communications and audit trails between banks and clients are very important. Banks have the responsibility of ensuring that their communications with clients are structured and clearly defined to avoid any ambiguity or uncertainty. It is also important that the correct parties respond to the communication in a timely manner, such that there is an appropriate audit trail for all individuals involved.

For example: On many occasions, we have seen cases where a client receives a notice from the bank but does not respond to it immediately. In some instances, the client may not be aware of the deadline or may be unaware of what actions need to be taken as a result of receiving this notice. The lack of proper structure and clear messaging can often lead to delays in responding to requests from banks.

Lack of connectivity for corporate clients and reduced customer stickiness

As demand for multi-bank trade finance solutions has more than doubled over the last few years, an increasing number of corporates that use the services of multiple banks are finding it inefficient to work with every bank on an individual basis.

Larger corporates have the bargaining power to dictate to their banks the formats they should use, however for smaller corporates, buying or building a multi-bank solution can prove to be expensive – and then they convince their banks to work with it. The growing demand for multi-bank solutions presents a difficult hurdle for many banks that must focus on client needs.

To end; a black swan event has created chaos and new opportunities for businesses, forcing them to adapt to a new technological status quo. To navigate successfully through the technological advancements being made, corporations are undergoing a rebirth and embracing new-age technologies. Banks must do the same to keep up.

About the author: Jacco De Jong is Global Head at Bolero.

The Financial Institutions Sentiment Survey, now in its fourth year, canvassed the views of more than 100 senior decision makers at a broad range of organisations – from global banks and insurers to intermediaries, investors and asset managers – to explore the key themes shaping their sector.

The report found that more than half of firms (58%) are expecting growth in the UK economy to slow down in the next 12 months – twice as many as held that view in 2018 (29%). Two-thirds of them (67%) expect domestic growth in the coming year to be weaker than G7 peers.

These views were broadly mirrored in respondents’ expectations for the UK financial services sector with 55% forecasting that growth would deteriorate during the year ahead, up from 27% in 2018.

Similarly, most senior executives (54%) said they have become less optimistic about the future of their industry in the past 12 months, up from 40% in 2018.

Meanwhile, two-fifths of firms (40%) expect their own revenues to increase – albeit down from 64% last year – with only 17% seeing income falling next year.

More than half of firms feel they are prepared for the UK’s departure from the EU, with 59% stating they are ready for a ‘no deal’ Brexit with little or no dependency on a transition period and no further extension.

The remainder of firms surveyed are dependent to some extent on a transition period to complete their contingency planning, with almost a third (29%) saying that they have a limited dependency and 12% saying that they have a significant dependency.

Despite the focus these preparations require, the sector continues to invest in the UK, with a third (31%) expecting investment to increase during the year ahead (compared to 24% in 2018). Only 10% of respondents forecast a reduction in investment in their UK business over the next 12 months.

Top risks identified

The three most significant risks cited by survey respondents remained unchanged on last year, with the UK’s departure from the EU top (58%), followed by economic uncertainty (36%), and new regulation (31%).

Significantly, the risk posed by cybercrime (29%) has leapt from eighth place to fourth since 2018.

Last year 46% of respondents said one of their firm’s top three technology investment strategies for 2018 was to improve cybersecurity, behind improving customer satisfaction (49%) and reducing operating costs (48%). In 2019, cybersecurity moves to top of the tech agenda and with greater prominence – 70% are now prioritising it as an area for investment.

Robina Barker Bennett, Managing Director, Head of Financial Institutions, Lloyds Bank Commercial Banking, said: “The past year has presented many challenges for businesses. Against a backdrop of on-going global economic turbulence, it is unsurprising that sentiment among financial institutions towards the sector and the wider economy is lower than in previous years.

“That said, the responses to this survey show the sector’s resilience during difficult times and it is especially encouraging to see that firms plan to continue investing in the UK.

“In 2019, firms are arguably more dependent than ever on technology. With this rapid advancement, the risks from cybercrime are increasing, placing extra pressure on financial institutions to change the way they operate.”

Below, Peter Wallqvist, Vice President of Strategy at iManage RAVN, explores why a human-supported adoption of AI technology offers the safest and soundest solution to amending LIBOR contracts.

 Unstructured information

 Perhaps the biggest challenge lies in financial institutions’ ability to identify and quantify the contracts that need to be transitioned from LIBOR to alternative reference rates – within the existing remit of these documents. Despite financial institutions using reporting tools to capture contract-related data, typically nearly 80% of information is unstructured and locked up in documents. There is no searchable metadata for easy extraction. So, in the absence of visibility of the contract landscape, determining the volume of contracts that require repapering across the portfolio for LIBOR is an enormous undertaking.

With the problem quantified, financial institutions then must identify the relationships that are impacted. For instance, which of those contracts have fall-back provisions, which agreements will require renegotiations and, if so, what the amendment process will be, and so on. There are substantial financial risks to institutions if contracts are not accurately amended.

Staggering legal cost

A manual approach to such as a project is realistically not an option. Not only will the legal fees be exorbitant, but completing the transition in time is almost impossible given the vast expanse of the contracts landscape in financial institutions.

Even conservatively, financial institutions are looking at legal costs in the region of millions of Pounds for a LIBOR repapering undertaking.

The traditional approach towards this repapering project is to ask the financial institutions’ panel law firms to undertake the entire exercise – from identifying the contracts that need repapering through to undertaking the individual tasks for successful completion. Even conservatively, financial institutions are looking at legal costs in the region of millions of Pounds for a LIBOR repapering undertaking.

The human-machine partnership offers a solution

With the aid of technology, the LIBOR contracts repapering exercise is achievable. By adopting practical Artificial Intelligence (AI) techniques, financial institutions can undertake this project safely, accurately, cost-effectively and in a timely manner.

Foremost, the key to any AI project is the digitisation of contracts. Making the data machine-readable, means that important information becomes searchable and ready for the application of machine learning techniques, to automate the identification and extraction of key data to be triaged and interpreted, as necessary.

AI can deliver a structured methodology to manage the process, end to end. Institutions can then train their application to extract the contractual information in a format that is machine-readable and easily consumable through existing reporting tools.

This scenario represents the ideal human-machine partnership. The technology will automate the tedious and time-consuming manual cognitive processes that are economically unfeasible or even impossible to complete in the current timescale – all the while supported and guided via human intervention and oversight.

To elaborate, financial institutions can use different data points to determine the scope of their repapering exercise. A search for contracts using the ‘termination date’ data point, within minutes, lists all the contracts expiring before 2021, which the institution can disregard, and focus on the remaining contracts that require attention.

Making the data machine-readable, means that important information becomes searchable and ready for the application of machine learning techniques, to automate the identification and extraction of key data to be triaged and interpreted, as necessary.

For the contracts continuing past 2021, AI technology can be taught by humans to read, extract and interpret other critical business information and apply ‘decision tree’ logic to support the repapering effort. This will result in automation where needed.

To illustrate, an AI system can be taught to identify whether the contract contains a reference to LIBOR. For the contracts where the interest rate is based on LIBOR, the AI application will automatically ask if there is a fall-back provision in the contract for situations where LIBOR is unavailable. For contracts where a fall-back provision exists, the application will interrogate the relevant documents to see if the stipulation is broad enough to deal with the permanent discontinuation of LIBOR as an industry standard or limited to something temporary – such as a computer glitch rendering unavailable the Reuters screens on which the rates are displayed.  Assuming at that point, the fall-backs are neither sufficiently broad nor specific to cater for LIBOR replacement, then clearly an amendment is required. In such instances, the system will mechanically highlight and classify the change process that is needed to be followed – i.e. the need for unilateral or multi-lateral renegotiation, voting processes (e.g. for syndicated lending where decisions are made pursuant to different voting thresholds being met), in what timeframe, whether there is a ‘snooze you lose’ period after which the contract parties’ agreed benchmark position will automatically apply, and so on.

It’s worth highlighting that digitising and teaching a machine learning system to extract many of these data points for LIBOR will also prepare financial institutions to efficiently manage similar projects in the future too. They will be able to re-use the same machine learning models for new purposes – for example, to extract covenants for commercial comparison to expedite drafting and negotiation or better understand ‘what’s market’ down to the wording of a provision.

A human-supported adoption of AI technology, by far offers the safest and soundest solution to amending the LIBOR contracts to meet the 2021 deadline.


Given the long list of regulations that organisations need to comply with – CECL, IFRS9, MiFID II, SOX, CCPA, BCBS 239, SR 11-7, Solvency II, GDPR, CCPA, among others – investment by organisations in Regulatory Technology (RegTech) is estimated to grow by a whopping 45% annually on average over the next five years. This represents a six-fold increase by 2023. The risk of hefty financial penalties because of non-compliance looms and so, clearly, institutions are wisely resorting to technology to meet regulatory demands efficiently and cost-effectively. At the same time, they are mitigating any reputational risk that accompanies non-compliance, the effects of which are potentially longer lasting than any monetary fine, says Henry Umney, CEO of ClusterSeven.

RegTech can be quickly deployed, replaces expensive manual processes, delivers flexibility and facilitates dynamism to enable financial institutions to deliver against the evolving compliance requirements. When used concurrently with existing legacy systems, such platforms can help drive innovation too.

As financial institutions make investments in RegTech capabilities – typically considered to be big data analysis, artificial intelligence, biometrics, blockchain and chatbots – the widespread use of spreadsheets in core business processes means that spreadsheet risk management must be a major consideration in these efforts. If overlooked, these risks could well be the ‘chink in the armour’ that leads to accidental non-compliance, as well as potential business impact and reputational harm.

Spreadsheet risk is genuinely a risk to the business

A large portion of regulatory compliance requirements involve complex data processing and spreadsheets often serve as the ‘go to’ tool for managing several vital business processes. For instance, spreadsheets are widely used for final mile reporting, pricing models, economic/financial models, or data manipulation. With spreadsheets feeding information to many core enterprise systems and RegTech platforms, accuracy of the data inputs in many instances is dependent on the integrity of the spreadsheet applications that store the material. Hence, incorrect inputs into any system will skew the outcome, to either cause compliance breaches or indeed impact decision-making, completely negating the value of these latest technologies to the business.

With spreadsheets feeding information to many core enterprise systems and RegTech platforms, accuracy of the data inputs in many instances is dependent on the integrity of the spreadsheet applications that store the material.

Spreadsheet risk is genuinely a risk to the business for several reasons. Not only is it easily accessible (it’s available on every desktop), it is easy to use and so, used without training and often in the absence of formal usage policies. All this combined means that there are little or no checks on data sources used to populate business critical spreadsheet-based processes.

Automation of spreadsheet risk management key to RegTech success

Spreadsheet risk can be overcome with the adoption of a best practice approach to this function. Like RegTech solutions, spreadsheet risk management is underpinned by automation.

Automated spreadsheet management enables financial institutions to have complete visibility and an understanding of the organisation’s spreadsheet environment. The technology exposes the data lineages of individual files across the spreadsheet environment to accurately reveal the data sources and relationships between the applications. Every identified critical spreadsheet can be tiered based on the risk it poses to the business. Today, spreadsheet risk management solutions facilitate an enterprise-strength model that dovetails with the larger RegTech environment to establish a seamless process that supports everything from creation of new spreadsheets through to their adoption into the relevant corporate applications and ultimate retirement from the business’ application landscape.

A considered approach to spreadsheet risk management must be an integral part of any RegTech initiative.

Spreadsheet risk management minimises compliance execution risk. Fundamentally, one of the objectives of the various regulatory regimes collectively is that they want organisations to build in operational resilience into their business to ensure commercial flexibility and strength in tougher economic times. This kind of approach helps design-in operational resilience by providing intrinsic safeguards for things like attestation management. It provides automated processes for attestation by employees for the most critical spreadsheets, ensuring that changes are made in line with the company policy – critical for regulations such as the Senior Managers and Certification Regime, where the onus of good business practices and accountability rests with the senior executives themselves.

Good data underpins business operation, decision-making and commercial success, and compliance. Stringent and ‘business as usual’ style management of these end-user computing tools where unstructured, yet business-critical data resides, is essential not merely for compliance, but for efficient running of an organisation. A considered approach to spreadsheet risk management must be an integral part of any RegTech initiative. It will ensure that financial institutions fully maximise the value of their investments in the associated technology platforms.


About the author

Henry Umney is CEO of ClusterSeven. He joined the company in 2006 and for over 10 years was responsible for the commercial operations of ClusterSeven, overseeing globally all sales and client activity, as well as partner engagements. In July 2017, he was appointed CEO and is strongly positioned to take the business forward. He brings over 20 years’ experience and expertise from the financial services and technology sectors. Prior to ClusterSeven, he held the position of Sales Director in Microgen, London and various sales management positions in AFA Systems and ICAP, both in the UK and Asia.



The blunt truth is, insiders who are close to critical systems—or outsiders who are skilled enough to exploit vulnerabilities in anti-fraud and other security controls—will steal. They may target assets they’re entrusted to protect or cook the books to hide their tracks; in the end both types of fraudsters aim to make off with significant money. Here Chris Camacho, Chief Strategy Officer at Flashpoint, offers expert insight into fighting fraud right on your business’ doorstep.

Fraud persists, and frankly, it’s not realistic to believe businesses can take measures that will permanently eradicate it. Fighting fraud, however, doesn’t have to be in vain.

Get inside the adversary’s head

Anti-fraud systems may be effective and getting better, but they’re not going to deter a profit-motivated criminal. The challenge then becomes an exercise in anticipating the fraudster’s next move. In order to get inside an adversary’s head, anti-fraud professionals must consider what incentivises a fraudster and what their targets could be. In most cases, this is a simple exercise: credit card data, personally identifiable information (PII), user account login credentials, and other types of proprietary data and information are common targets.

It’s also imperative to consider how fraudsters might attempt to hurdle existing controls in order to access your business’ assets. Multi-factor authentication may protect some payment card transactions, but what about gift cards, for example. Unlike bank-issued credit and debit cards, gift cards are generally not held to strict anti-fraud standards, which is largely why they are a desirable asset among many fraudsters. Illicit vendors selling stolen gift cards have become commonplace on the Deep & Dark Web (DDW) in recent years, leading to an uptick in instances of gift card fraud.

Thinking like a fraudster means considering all of the options available to an attacker and admitting that certain systems or processes may be flawed. Proactively identifying and addressing any weaknesses in existing anti-fraud programs—such as what fraudsters determined are often present within gift card security controls—can help businesses better anticipate and prepare for fraud.

Thinking like a fraudster means considering all of the options available to an attacker and admitting that certain systems or processes may be flawed.

Have eyes and ears on DDW fraud forums

Thinking like a criminal is only one part of this strategy. To accurately anticipate how your company, your peers, or your industry is being targeted, it’s important to have insight into the conversations and behaviours of those perpetuating fraud. Not all organisations are going to have proper visibility into these realms, therefore it’s important to have a trusted partner with eyes and ears on the DDW, for example.

Certain DDW forums focus on fraud, and on these forums, certain trends emerge. For example, discussions related to the lax anti-fraud controls of gift cards eventually manifested in a spike in gift card fraud.

Many fraudsters’ ever-evolving tactics bear little resemblance to the tried-and-true fraud schemes with which most businesses are familiar. Although countless variations of credit card fraud, for example, are generally well-known and well-mitigated in the financial services and retail industries, many businesses continue to incur substantial losses from lesser-known types of fraud. In addition to gift card fraud, refund fraud, health savings account fraud, and rewards point fraud are only a few of many such examples that were initially conceived within the cybercriminal underground before posing a threat to businesses.

The DDW can be a rich source of insight into emerging fraud tactics and schemes. But because accessing and engaging within these online communities can be challenging and risky without the proper expertise and protections, businesses are encouraged to work with reputable intelligence vendors to more effectively, easily, and safely gain visibility into the cybercriminal underground.

Just as fraudsters are extremely resilient, persistent, and resourceful, businesses, too, should seek to emulate these characteristics when fighting fraud. This means approaching fraud from new perspectives, learning about emerging schemes and tactics proactively.

Keep track of regional ties and variations

Analysts have tied different types of fraud certain regions such as Eastern Europe, forcing businesses go to great lengths to gain insight into new schemes and tactics. These types of insights are critical for establishing countermeasures, the most effective of which typically account for the social, cultural, and linguistic nuances known to characterise fraudulent activity originating in certain regions.

But in recent years, new cybercriminal communities and, as a result—new tactics and types of fraud—have quickly emerged in many more regions. Latin America is one such example. While fraudsters in Latin America have long been considered unsophisticated, unorganised, and unlikely to pose any substantial threats to businesses, this community has since evolved substantially. Many businesses that previously had no reason to monitor the Spanish-language cybercriminal underground are now striving to understand and combat threats originating from fraudsters in Latin America. And given that threats and indicators can vary substantially across different regions and communities, keeping track of these variations and new developments is a must for businesses and anti-fraud teams.


Just as fraudsters are extremely resilient, persistent, and resourceful, businesses, too, should seek to emulate these characteristics when fighting fraud. This means approaching fraud from new perspectives, learning about emerging schemes and tactics proactively, and seeking third-party services and expertise when necessary. While businesses have little control over the existence of fraud, they can control the extent to which they prepare for and mitigate this ever-evolving threat.

For an insight into Banking-as-a-Service (BaaS), Finance Monthly connected with the Managing Partner of zeb - Bertrand Lavayssiere.

The rise of service-based platforms

Improving cost-income ratios by 15% or more is becoming a necessity for most financial institutions looking to win through in the new age of banking. Moving operations to a service-based model such as software-as-a-service (SaaS) and business-process-as-a-service (BPaaS) can help achieve this goal and free up the business to focus on its customers. Platform banking or as it is otherwise known as Appisation of banking IT systems, combine the advantages of outsourcing with the power of automation, ubiquitous access and virtually unlimited scalability. Yet the answer lies not just with technology, but with the business strategy. To achieve true simplification, banks must be prepared to critically rethink their business models and seek close alignment with the capabilities of these new platforms. Is now the right moment to move your business to the cloud?

Most banks are ill-prepared for the transformation ahead. Their bespoke structures, having developed gradually over time, are dogged by complexity. Bloated product portfolios, error-prone manual processes and antiquated IT architecture not only drive up the cost of operations, they severely limit agility. Consequently, implementing complex regulatory requirements such as BCBS 239 or GDPR, building fully automated end-to-end digital processes and integrating the latest products offered by FinTechs, is both cumbersome and costly.The effort required ties up banks’ capacities and prevents their top management from focusing on truly value-generating business issues.

Revolution not evolution needed

Doing away with this complexity that has developed over decades is not easy through a process of gradual evolution. More often, banks need to make a clean start. They need to critically reappraise their business and operating models, focusing on the parts that truly matter and radically simplifying the rest – streamlining product portfolios and outsourcing or standardising processes and IT systems.

This radical step involves a substantial revamping of existing process and IT structures. Here, we find that banks increasingly rely on the ready-made, standardised software and process solutions offered by external providers. Banks see these solutions as a fast-track to cutting complexity in terms of reduced resource consumption and shorter implementation times. They hope to benefit from reduced costs due to economies of scale in development and operations. Often, they also see these external solutions as a gateway to standards and market innovation.

Banks have several options open to them for integrating external solutions into their operating models. In practice however, banks often adopt a variety of approaches in different parts of their process and IT landscape.

One option is to adopt cloud-based service models such as ‘software-as-a-service’ (SaaS) and ‘business-process-as-a-service’ (BPaaS). This option has become popular thanks to a wave of technological innovations collectively known as ‘cloud computing’. But it is also the notion of ‘service’ – in the sense of a highly automated bundle of software programs and/or process functionalities – which makes this concept particularly interesting for banks striving for simplification. We believe that this option is of overriding importance for the future of banking. In other words, we have entered the world of ‘banking-as-a-service’.

How does the notion of ‘banking-as-a-service’ compare to traditional forms of outsourcing? The key distinction is the degree of standardisation and automation. Typical traditional outsourcing arrangements are highly customised to the needs of the client. Moreover, they are usually characterised by transfers of staff and technology infrastructure from the client to the provider, who may provide their services from a low-wage country, while the existing processes and technology structures are often retained.

By contrast, service-based models are built from the outset with standardisation and automation in mind. They are characterised by modular building blocks containing standardised pieces of business logic, for the most part executed by software with only limited human intervention. The result is straight-through processing (STP) rates of 90% or more for processes that are amenable to standardisation.

In the past, this type of standardisation would typically lead to unacceptable limitations with respect to business requirements for all but the simplest scenarios. But modern software architectures increasingly allow for ‘long-tail’ customisation – producing an additional variant of a banking product, service or business process, at virtually no extra cost. What used to be an exception, handled by a human agent, can simply be implemented as yet another process variation, handled autonomously by the software. In the world of banking-as-a-service, software no longer merely supports the business processes executed by humans: It becomes the process itself. We are witnessing the gradual transformation from software-leveraged processes to process-leveraged software.

Smart alignment

Reaping the full benefits of service models such as SaaS and BPaaS is a question of smart alignment to the capabilities and standards of the underlying platforms. Banks will inevitably discover some downsides to banking-as-a-service after they make the shift – some limitations and ‘gaps’ compared to traditional models. But the key questions are: Are those limitations relevant from the point of view of customers? And are they significant in terms of their impact on the bottom line or regulatory compliance?

These questions transform the topic of banking-as-a-service from a purely technological issue to a strategic issue. At the end of the day, it comes down to business strategy: Which products and services contribute to the bottom line? Which processes promote the overall excellence of the organisation? Do customers really value hand-tailored offerings? And are they willing to pay the required premium?

Far reaching decisions

Understanding which aspects of your business are truly differentiating and which can be standardised is a good foundation for throwing excessive luggage overboard before engaging in a large-scale transformation exercise. Ideally, the examination of technological options should already be part of the strategic discussion taking place at CEO level. Its consequences will likely require some far-reaching decisions.

With Governments increasingly aware of the moral and fiscal costs of white-collar crime, the Dutch crime authority’s decision to hit ING, the Netherlands largest financial services provider, with fines totalling €775 million is of little surprise.

Tackling money laundering is currently high on the national and international agenda of many countries; the EU recently proposed providing the European Banking Authority with greater powers to sanction banks of member states that may be implicated in such activity.

In the case of ING, the bank has been forced to pay out the substantial fine for failing to flag abnormal transactions, and financing terrorism “structurally” by not verifying the beneficiaries of client accounts. The Dutch public prosecution service said that it found “clients were able to use accounts held with ING for criminal activities for many years, virtually undisturbed” from 2010 to 2016. The settlement, which is the largest ever imposed on a company by the Dutch prosecution service, is made up of €675 million in fines, and €100 million as the return of illicit gains intended to deter future violations.

The bank’s CFO has since announced his decision to step down following growing backlash. In addition, measures against ten employees were taken, ranging from dismissals to clawing back bonuses, with the prosecutor accusing the bank of “culpable money laundering”.

This is not a stand-alone case either; watchdogs have clamped down on Credit Suisse and Danske Bank this month over similar money laundering concerns. With authorities prepared to take a hard-line stance against money laundering, there will be severe reputational and financial consequences for organisations which – however unintentionally – enable this offence.

The focus is not simply on the culprits of money laundering, but on ensuring perpetrators have fewer tools to commit such crimes. The relevant authorities will increasingly take a punitive approach to financial institutions with lax crime prevention strategies. Financial institutions, whatever their size, must ensure their tools are inaccessible to those seeking to commit financial crime, or otherwise face extensive fines comparable to ING’s.

This is no easy task and requires a significant investment of time and resource. Banks must ensure they have robust financial crime compliance strategies and programmes in place with appropriate training to reduce risk and mitigate the consequences. This was a point that was not lost on Ralph Hamers, ING’s CEO, who stated that “although [ING’s] investment … [has] been increasing since 2013, they have clearly not been to a sufficient level”.

However, matters should not stop there; processes require frequent review given that criminals adopt increasingly sophisticated strategies to commit offences. Banks, therefore, must remain proactive and vigilant. To this end, the Dutch prosecutor noted that ING’s compliance department “was understaffed and inadequately trained”. In the case of ING, compliance failures were exploited by clients for years for money laundering practices before it was detected.

Effective streamlined processes, such as customer screening and alert processing, informed by risk assessments and financial crime regulations should leave little room for error during due diligence activities.


Iskander Fernandez, White Collar Crime Expert and Partner at commercial law firm BLM

Louise Green is the Chief Marketing Officer at Bureau van Dijk, a Moody's Analytics company. It is committed to empowering customers to make better, faster decisions, by providing the most reliable private company information in the market. Below, Louise tells us about Bureau van Dijk’s Corporate and Financial Solutions and the importance of comparability and efficiency when it comes to data and company information.


Tell us about the key corporate and financial solutions that Bureau van Dijk offers

We aim to make our customers more successful by providing company information solutions that help improve efficiency, grow revenue and mitigate risk.

How much do you know about who you are doing business with?

Whether it’s the financial strength and longevity of your suppliers, your clients’ ability to pay, complying with regulations, protecting your reputation or understanding new and existing markets, more certainty is always welcome.

We capture a wide variety of data, then we treat, append and standardise it to make it richer, more powerful and easier to interrogate. In fact, we capture and treat data from more than 160 separate providers, and hundreds of our own sources, to create Orbis, the world’s most powerful comparable data resource on private companies.

Orbis has information on around 300 million companies in all countries. It’s the resource for company data.

The company reports are detailed and comparable, and comprise:

Our customers, including financial institutions, corporates, governments and academia, use our products for a variety of purposes.


Compliance and reputation management

With comprehensive global coverage, the richest source of corporate structures and beneficial ownership data available, plus information on PEPs and Sanctions, we are the resource for compliance and onboarding.

Financial risk

Our standardised financials help to assess and benchmark companies globally. We offer financial strength metrics using a range of models and include a qualitative score when detailed financials are not available.

Tax and transfer pricing strategies

We combine our comprehensive company information with transfer pricing functionality, so customers can plan, set policies, manage risk and document compliance processes.

Customers can also fine-tune policies, create robust audit-defence analysis and prepare TP documentation. We’ve created a full document management system to help with BEPS and country-by-country reporting requirements that helps customers become more efficient.

Business growth and strategy

Research new markets and industries, understand the M&A landscape and foreign and direct investment.

Orbis includes information on:


Data is getting bigger all the time, which makes extracting value from the numbers more difficult and time consuming. One of the ways that we increase efficiency is by making it simple to compare companies internationally.

Using our solutions, customers can interpret data quickly, and automate and centralise much of their research.


In what ways have Bureau van Dijk’s offering evolved over the years?

Bureau van Dijk has been an innovator in private company information since its beginning. We first delivered company information to clients on CD - then DVD-ROMs. This was a ground breaking way for companies to quickly research other companies. While we still offer on-premise solutions, our data and analysis resources today are accessible in the cloud, in third-party platforms and through integration into systems and workflows.

Our products are just as innovative today. For example, it’s not just that we offer the world’s most powerful comparable data resource on private companies, or the extensive corporate ownership structures included within it, it’s often how you can combine datasets in new and innovative ways to create better solutions for customers. For example:

Customers can blend our data with internal data to refresh and enrich CRMs and other internal databases. Our unique company identifiers and bespoke matching services help to create links between disparate datasets across organisations and create single views from data silos.

We recently updated the interface for Orbis and several other products to make them even easier to search for and visualise data with pivot analyses, heat maps, dynamic company structures and more. These and other changes were made based on interactive feedback from our customers. We bring data to life in new ways with reports and dashboards that give a clear, intuitive view into the information that matters most.


How important is it for businesses to trust a data specialist like Bureau van Dijk when it comes to data and company information?

At Bureau van Dijk, we’re in the business of certainty. It’s vital that companies know who they are dealing with. Before embarking on a major investment, a new third-party relationship or procurement decision, companies need to have confidence that the information they base their decisions on is accurate and comprehensive.

As businesses can be global and often complex, it's harder to get a clear view of all entities involved and who holds control. We make it easy to analyse management and ownership structures. Orbis includes extensive corporate structures so you can assess the complete group or take the financial stability of the parent into account.

Having a clear view of ownership also helps our users comply with sanctions lists, anti-money laundering legislation and to perform the other crucial due diligence checks that are intrinsic to global business.


What are Bureau van Dijk’s goals for the future?

Our mission has always been to provide the most reliable private company data on the market. We will continue to enrich and expand our private company information database. This means identifying and integrating new, reliable information sources and standardising data to make it more comparable and useful for our customers’ decision-making processes.


 Contact details:

To find out about our free trial scheme, please visit or email

Telephone (London): +44 207549 5000

With a rise in workplace-related stress, illnesses and mental health issues, half (50%) of working adults in the banking and financial services industries believe that businesses are not doing enough to support the physical and mental wellbeing of their employees, according to a new study.

Current treatments such as health check-ups, cognitive behavioural therapy and chiropractic treatment are provided by the NHS, through National Insurance contributions, but 70% of those surveyed by Westfield Health stated that the NHS does not have the budget to provide wellbeing services like these.

So is National Insurance becoming unfit for purpose? Employees in the banking and financial industries don’t seem to know, with 17% of employees knowing how much National Insurance they pay and 35% saying they do not know how much of the contribution goes where, be it the NHS, social security or their state pension.

With an ageing workforce and more hours spent in the office than ever, should the NHS’s frontline resources continue to be used for wellbeing services? The research found that over half (59%) of workers in the banking and financial services industries would like to see the Government do more to promote their physical and mental wellbeing. And the vast majority (74%) believe their employer is specifically not doing enough to help employees deal with work-related stress, anxiety and other mental health issues.

Similar to the recent rollout of the workplace pension opt-out, could a government-backed auto-enrolment scheme for wellbeing programmes - funded by employers and by a portion of employees’ National Insurance contributions – be one of the solutions to address the NHS’s long-term financial needs?

Certainly the appetite is there in the banking and financial services industries with employees particularly prone to sedentary behaviour, poor nutrition and sleep deprivation, impacting on their overall health and productivity. As a result, over two thirds (68%) of employees stated they’d use wellbeing services if their employer provided them.

The top things they would like to be offered are:

  1. Health check-ups (45%)
  2. Emotional wellness (42%)
  3. Exercise (35%)

David Capper, Commercial Director of Westfield Health, said: “The total number of UK working days lost to stress, anxiety and depression resulting from long working hours is 12.5million days. Therefore, it makes sense for employers to relieve some of the pressure through wellbeing initiatives. Not only would they be supporting our economy, they’ll make huge cost savings by looking after their staff’s health, with presenteeism now costing businesses up to three times more than absenteeism**.

“From sleep to nutrition and mental health to physical fitness, there are so many elements that contribute to your overall wellness, happiness and healthiness. In the banking and financial services industries, staff are particularly prone to being sedentary for long periods of time without a break at work, which puts them at serious risk of developing health problems such as heart problems, diabetes, cancer and weight gain.

“It’s more than free fruit in the office and discounted gym memberships. As business leaders, we need to create a culture where our people’s health and wellbeing is prioritised to drive confidence, capability, inspiration and ultimately prosperity.”

(Source: Westfield Health)

For our May edition, Finance Monthly has the pleasure to connect with Salvatore LaScala. With over 20 years of  hands-on  experience  to  conduct investigations  and  compliance  reviews  on  behalf  of  financial  institution  clients  responding  to regulatory or law enforcement matters concerning anti-money laundering, Bank Secrecy Act, USA PATRIOT Act and Office of Foreign Assets Control, he now co-leads Navigant Consulting’s Global Investigations and Anti-Money Laundering Practice in New York. His company serves financial institutions of all kinds by providing assistance with responding to Regulatory Actions in addition to more proactive services. This work includes AML/Sanction Program compliance projects such as including Look-backs, CDD remediations, Monitorships, Investigations, Risk Assessments, Compliance Gap Analyses, Model Validations, NYSDFS Part 504 work and AML/Sanctions Compliance technology enhancement, implementation and optimization. Navigant also provides investigators to clear FIU surge activity, outsourced FIU services, and embedded compliance officers.


In your opinion, how robust is the current anti money laundering (AML) regulation?

It is appropriately robust and evolving in a manner consistent with changes in banking, securities and payment systems.


Typically how do financial institutions manage their money laundering compliance obligations? How can they remain up-to-date and compliant?

Financial institutions face numerous compliance challenges from different areas, including AML and Sanctions. Considering the complexity of these regulations, the rigor of examination and competitive business landscape, these financial institutions typically do very well. We are, however, more frequently reminded of examinations that result in an action, whereas successful exams get no mention. Good risk assessments, independent reviews and Governance, in particular, accountability, oversight and training, go a long way towards keeping AML and Sanction programs up-to-date.


Tell us a bit about your work in the field.

I lead large teams that regularly perform historical transaction reviews (Lookbacks) and KYC/CDD/EDD file remediation work. I also help clients overcome AML and OFAC backlogs by deploying teams embedded at our clients’ work sites to that disposition alerts.

My expertise includes assisting clients with the selection, implementation, optimisation and validation of AML and OFAC compliance technology and enhancing AML transaction monitoring detection scenarios and sanctions filter interdiction logic.

My work is exciting. I am able to market our great services to client, deliver those services, lead teams of highly talented people and enjoy the satisfaction of jobs well done. Moreover, as someone who needs to constantly learn and evolve, the introduction of Artificial Intelligence, Machine Learning and Robotics Process Automation lets us provide more effective compliance and investigative solutions than ever before.


Contact details:


Phone: +1 212.554.2611


FinTech companies have been the foundation of innovation in the payments and financial services sphere over the past decade, whilst legacy financial institutions, such as banks, have struggled to keep up. Generally considered in competition with one another, what would happen if FinTechs and Banks joined forces? Prabhat Vira, President of Tungsten Network Finance, explains.

Recent research shows that financial institutions are increasingly forming partnerships with fintechs to create products that streamline and improve the customer experience and eliminate inefficiencies. In fact, when questioned by PwC, 82% of banks, insurers and asset managers said they expected to increase the number of fintech providers they work with over the next 3-5 years. So what is driving this trend and how can commercial banks follow the lead of their retail counterparts?

A symbiotic relationship

Over the last few years, fintechs have evolved the customer experience – prioritising the user experience to connect with and empower customers with alternative finance. Many banks are coming to the realisation that if there is a great opportunity to participate in fintech developments.

In light of this, instead of competing with fintechs, some banks are seeing the wisdom of embracing the dynamic nature of fintechs and are actively collaborating with them. It is a very positive step forward as each party has something significant to offer the other. Fintechs require access to capital, and Banks in contras, are looking for ways to innovate more quickly, provide a slicker customer experience and leverage data to mitigate risk. Collaboration with fintechs enables banks to outsource their R&D to them and bring new products to the market much more quickly and for less cost. Ultimately, the partnerships between banks and fintechs are creating a unique opportunity for the expansion of finance solutions, and thereby adding real value for customers.

Commercial banks following retail counterparts

However, this subject is not purely theoretical for us – we have recently teamed up with BNP Paribas, a leading international bank, to offer e-invoicing linked Receivables Purchase and e-invoicing linked Supply Chain Finance (e-SCF) to large corporates in the USA and Canada. Our customers can now obtain an attractive working capital solution through the same technology provider they use for e-invoicing and procurement activities. It is the first partnership of its type and a sign that commercial banks are following the lead of their retail counterparts in collaborating with fintechs.

By linking e-invoicing with supply chain and receivables purchase, customers are offered a one-stop solution that brings together process efficiency and working capital optimisation in a single portal. They are offered attractive rates in a straight-forward, hassle-free way. From the bank’s perspective, a lot of energy can be spent connecting clients and on the payables side, on-boarding suppliers onto the system. This creates friction in the relationship, and inhibits the supply chain. The advantage for a bank and for the customer is that by partnering with a fintech like us, these trade flows are already on our platform. Therefore, both do not have to onboard suppliers twice and deal with complex technology integrations. Ultimately, the partnership helps to make the supply chain process smoother for all.

We believe partnerships such as this are shaping the future for businesses and financial institutions alike. They are enabling us to work more smartly and offer added value to customers. Speed to market is of the essence in our fast-paced, consumer-centric world and fintech providers are agile by nature and best placed to bring innovations to the masses. As retail and commercial banks realise the mutual benefits of partnering with fintechs, we are certain we will see more and more collaborations that will delight customers around the world.

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