For the past 16 years, Melanie White Terry has been working through her financial advisory firm, Harbor Financial Group. Her clients are primarily busy and highly successful professionals or entrepreneurs that have comfortably broken the six-figure barrier and want to secure their legacy.
Harbor Financial Group helps clients crystalise their objectives and take the time to understand what they want to accomplish from a business and personal perspective; giving them piece of mind.
What are the typical challenges that clients approach you with in relation to the management of their finances?
Most people don’t have the time, knowledge or inclination to implement all of the ideas and opportunities they want to pursue. Many have done some good planning. They have existing relationships with very good advisers. They have spent a lot of time talking about these things but, for some reason, the job never gets done. We will never undo any of the good work that they may already have in place, we tend to focus on their areas of vulnerability. We take responsibility for seeing their plan to fruition.
We typically explore some or all of the following seven areas:
- Family income and security
- Asset Shifting
- Asset Distribution
- Estate Equalisation
- Business Succession
- Asset Protection and Estate Depletion
- Charitable opportunities
What are the most important aspects that need to be ironed out in order to achieve satisfactory result and a well-organised retirement plan for your clients?
Understanding my clients’ objectives is paramount. I want to know how they feel about the areas they would like for us to consider: security for themselves and their spouse, estate distribution, general terms of their will or plan, succession plan, key employees, and tax issues.
It is also important to gather information about their family, business, real estate, liquid assets, qualified plans, life, disability and long-term care insurance, liabilities, charitable giving, and advisers.
Identifying issues and gaps in their planning and how they feel about them is critical.
Lastly, our clients should have enough discretionary income and/or sufficient assets to be able to either execute or at least begin the plan and the willingness to learn about what might be non-traditional planning opportunities.
How do you assist clients with finding out if they are compliant with federal requirements applicable to retirement? What are the key issues that they face in relation to compliance?
We collect statements to support all of the information that we gather and keep up with the changing laws and regulations by taking applicable continuing education courses and leaning on the consultants on our team that have a wealth of expertise in tax law as attorneys and CPAs.
Additionally, we do a proper fact-finding analysis to determine their time horizon, investment risk tolerance and ensure that they are in plans for which they qualify, based upon their income, employer plan offerings, business structure, employee information etc.
How can your clients ensure that as much of their estate goes to their family on their death?
Insurance is one of the foundations in a comprehensive planning strategy. We assess the amount and type of coverage they have already relative to their objectives and determine if there is a gap to fill.
We tend to recommend that our clients have enough life insurance to replace their income and pay off liabilities to creditors and Uncle Sam. When appropriate, we may recommend establishing appropriate trust documents.
Disability income insurance is recommended to protect what could be their greatest asset; their ability to earn an income.
Long-term care planning is recommended to protect assets because most of our clients did not budget for an additional $7,000-10,000 per month of expenses to self -insure above their retirement expenses.
Does Harbor Financial Group offer any solutions in respect of maintaining and growing wealth for future generations of the same family?
We make it a common practice to reach out to beneficiaries and other family members of our clients to address their planning needs as well.
Contact details:
9861 Broken Land Parkway, #150
Columbia, MD 21046
Telephone: 410-740-4719
Website: harborfinancialgrp.com
Email: mwhite@ft.newyorklife.com
Austin Newkirk began his insurance career at a local agency in his hometown of Toccoa, GA and later on transitioned to Country Financial for an expansion of opportunities. Currently a sales leader for the firm’s local office in Toccoa, his role involves finding new ways to market Country Financial’s products and recruiting new businesses and individuals. Below Austin tells us about his passion for insurance and how this passion changed his life!
What are the typical insurance matters that you assist clients with?
Each day I assist our customers with typical insurance matters such as servicing current policies and making sure that they are taken care of properly. I process payments daily, work on claims and make any policy changes that a client may request - these are just a few of the many things I do for my customers.
What drew you to this field?
Insurance was not my first choice as a career. I am an extrovert and I love to socialise. As I grew older and began college, I started thinking about different career paths that interested me. At that time I had no idea what I wanted to do. While in college, I served as a parts sales manager at AutoZone. I loved the job and the socialising, but there was no opportunity for advancement within that company. I started reading online and the idea about a career in insurance hit me like lightening! I love the customer service side of this job and being able to help people with something that truly makes a difference in their lives is a phenomenal feeling.
What are some of the complexities of working within insurance?
Insurance is very complex and helping people understand it can be just as challenging. When working within insurance, there are so many different aspects to focus upon, but at the same time, so many resources to help you learn. Insurance is constantly changing and there is always something new to learn.
What are the challenges that you’ve been facing recently in relation to changes in what customers expect in terms of insurance products and services?
In the insurance industry, one challenge you will always face in relation to changes in what customers expect are rates – they are constantly fluctuating. It is a battle that all agencies fight. It is especially difficult when a long-term customer with a clean record comes in and we have to tell them that the state has raised the rates. At this point, we, as professionals, have to show these customers value in what we do to keep their business.
Technology and systems are always changing and this can cause customers to be uneasy toward any change - especially when trying to show customers new products and services. Sometimes change must happen due to ever-changing factors in the insurance business and customers’ lives. With these changes, we must prepare to assist our customers with any new updates that are happening frequently. Programs are added and removed, making everything change which, in turn, can upset our customers and sometimes, the agent too. Due to mandated insurance laws, every company and its agents should always be prepared to adapt to new changes in the insurance industry.
What do you hope to accomplish in the future?
Working in insurance has changed my life. My goal is to open my own office in just a few short years and run a successful insurance business of my own. I’m going to continue to love the career path I have chosen and continue to help service my clients to the best of my abilities.
I encourage any person who’s not sure what career path to take to look into the insurance industry. It is a sector that will always be around and there is always opportunity for advancement. The satisfaction of helping a person identify their needs and providing them with a solutions is very satisfying and it makes me feel like I have helped someone in need.
Few would argue that artificial intelligence (AI) is making a considerable impact on many elements of Financial Services (FS), it’s computing power and automation helping to improve the overall customer experience and to extract incredible insight from big data held by FS companies. Below Dr. Dorian Selz, Co-Founder and CEO of Squirro, delves into a discussion about the keys augmented intelligence may carry in driving the future of FS.
As with many emerging technologies it was slow to hit the business mainstream, but that too is changing. Squirro recently conducted research into tier one banks’ use of AI, and it revealed that 83% have evaluated AI and more than two-thirds are already using it.
But for some people in finance, the words ‘artificial intelligence’ can signify fear just as much as they can opportunity. For all the potential of AI, there is a perception that jobs might be threatened as machines take over roles previously carried out by humans.
The idea that AI might facilitate a wholesale replacement of humans is fanciful at best. But perhaps it is time to talk about augmented intelligence instead, a technology intended to enhance human intelligence and one that is central to the future success of the financial services sector.
A human / machine collaboration
If artificial intelligence is the creation of intelligent machines that work and react like humans, augmented intelligence is essentially people and machines working together. This is a partnership that will see the augmentation and extension of human decision making, addressing specific challenges within FS and helping to deliver new and smarter services to customers that will encourage loyalty and improve the bottom line.
Improving the personal touch – much of FS – particularly corporate FS such as investment banking and real estate - is still heavily based on personal relationships. Account handlers speak to their clients and are expected to know about that client’s industry and be able to present them with strong opportunities for investment and growth.
That’s no a small undertaking, but augmented intelligence makes it much more straight forward. Augmented intelligence-based platforms are powerful at gathering data (both structured and unstructured) from across disparate and siloed systems and presenting that data in a form that gives account handlers a complete 360-degree view of each and every customer.
Because it can factor it so many disparate sources of data, users are then incredibly well-informed on what is happening in an industry that will affect that client, and what the opportunities are. They can retain the personal touch that is still so important in FS, but can now do so more informed than ever when speaking to clients
Deeper insight – the insight delivered by augmented intelligence is far deeper than what has previously been available to FS organisations. Because it is capable of managing and analysing so much data, the insight extracted from that data and then presented to the user is deeper and greater than anything previously possible.
Impact on the bottom line – the data insight generated by augmented intelligence can help FS firms greatly with their lead generation, not only identifying opportunities for clients but recommending the best product or solution for them.
Augmented intelligence solutions will look at data on competitors, partners and markets and identify catalysts that provide additional upsell or cross-sell opportunities to existing clients, and fresh approaches to prospective clients. In a competitive FS world, this is of the highest value.
The past decade has been a challenging one for FS organisations, with stiff competition from agile startups offering new and more effective services and a superior overall experience. Yet the emergence of augmented intelligence is a lifeline for the industry. It enables greater customer understanding and means FS providers can re-establish their market position, and augmented intelligence will be a key technology in FS for years to come.
More than a third (38%) of IT decision-makers across the UK financial sector believe it has become more difficult over the past five years to find staff with the right skills and experience. Over a third (34%) believe the problem is going to worsen in the coming five years. This is according to a survey across a range of financial and banking sector organisations, including retail and investment banking, asset management, hedge funds and clearing houses.
The survey, commissioned by software vendor InterSystems found a shortage across a variety of roles. Almost a fifth (18%) of respondents cited a lack of data scientists followed by 17% who revealed a shortage in security consultant/specialists, while 16% referenced application developers and 12% mentioned financial analysts.
“IT skills shortages are clearly a major concern for banking and financial services firms across the UK and this is only likely to escalate in the future,” says Graeme Dillane, financial services manager, InterSystems. “Skills shortages are a barrier to innovation in the banking and financial services sector. And as firms upgrade their legacy systems and look to innovate to meet the latest wave of regulations, that represents an increasingly serious concern.”
When survey recipients were asked to name the key qualities that technology can bring to help mitigate the negative affect of skills shortages within businesses today, 44% of respondents said: ‘simplicity of use’, 42% cited ‘ease of implementation’ and 36% ‘high-performance’.
The study also found that skills shortages are one of the biggest barriers preventing innovation as cited by 35% of the study, behind only cost (41%) while compliance was referenced by 31%.
“These findings match with our experience in talking to customers and prospects across the sector,” added Dillane. “IT employees with the skills that banks and financial services companies are looking for are in short supply. Knowledge transfer is therefore increasingly key alongside solutions which combine ease of development; simplicity of use; high-performance and intuitive workflow transfer.”
(Source: InterSystems)
With the future looking more cashless by the day, the future of cybersecurity looks even more risk heavy. Below Nick Hammond, Lead Advisor for Financial Services at World Wide Technology, discusses with Finance Monthly how banks/financial services firms can ensure a high level of cyber security as we move towards a cashless society.
Debit card payments have overtaken cash use for the first time in the UK. A total of 13.2 billion debit card payments were made in the last year and an estimated 3.4 million people hardly use cash at all, according to banking trade body UK Finance.[1] But with more people in the UK shunning cash in favour of new payments technology, including wearable devices and payment apps as well as debit and credit cards, the effects of IT outages could be more crippling than ever.
Take Visa’s recent crash, for example, which left people unable to buy things or complete transactions. Ultimately, payment providers were unable to receive or send money, causing serious disruption for users. And all because of one hardware issue. Finding new ways to mitigate the risk of system outages is a growing area of focus for financial services firms.
Application Assurance
At a typical bank, there will be around 3,500 software applications which help the bank to deliver all of its services. Of these, about 50-60 are absolutely mission critical. If any of these critical applications goes down, it could result in serious financial, commercial and often regulatory impact.
If the payments processing system goes down, for instance, even for as little as two hours in a whole year, there will be serious impact on the organisation and its customers. The more payments systems change to adapt to new payments technology, the more firms focus their efforts on ensuring that their applications are healthy and functioning properly. As Visa’s recent hardware problems show, much of this work to assure critical applications must lead firms back to the infrastructure that their software runs on.
Having a high level of assurance requires financial services firms to ensure that applications, such as credit card payment systems, are in good health and platformed on modern, standardised infrastructure. Things become tricky when shiny new applications are still tied into creaking legacy systems. For example, if a firm has an application which is running on Windows 2000, or is taking data from an old database elsewhere within the system, it can be difficult for banks to map how they interweave. Consequently, it then becomes difficult to confidently and accurately map all of the system interdependencies which must be understood before attempting to move or upgrade applications.
Protecting the Crown Jewels
Changes to the way financial services firms use technology means that information cannot simply be kept on a closed system and protected from external threats by a firewall. Following the enforcement of Open Banking in January 2018, financial services firms are now required to facilitate third party access to their customers’ accounts via an open Application Programming Interface (API). The software intermediary provides a standardised platform and acts as a gateway to the data, making it essential that banks, financial institutions, and fintechs have the appropriate technology in place.
In addition, data gets stored on employee and customer devices due to the rise of online banking and bring-your- own- device schemes. The proliferation of online and mobile banking, cloud computing, third-party data storage and apps is a double edged sword: while enabling innovative advances, they have also blurred the perimeter around which firms used to be able to build a firewall. is no longer possible to draw a perimeter around the whole system, so firms are now taking the approach of protecting each application individually, ensuring that they are only allowed to share data with other applications that need it.
Financial services firms are increasingly moving away from a product-centric approach to cyber-security. In order to protect their crown jewels, they are focusing on compartmentalising and individually securing their critical applications, such as credit card payment systems, in order to prevent a domino effect if one area comes under attack. But due to archaic legacy infrastructure, it can be difficult for financial institutions to gauge how applications are built into the network and communicating with each other in real-time.
To make matters more difficult, documentation about how pieces of the architecture have been built over the years often no longer exists within the organisation. What began as relatively simple structures twenty years ago have been patched and re-patched in various ways and stitched together. The teams who setup the original systems have often moved on from the firm, and their knowledge of the original body has gone with them.
The Next Steps
So how can this problem be overcome? Understanding how applications are built into the system and how they speak to one another is a crucial first step when it comes to writing security policies for individual applications. Companies are trying to gain a clear insight into infrastructure, and to create a real-time picture of the entire network.
As our society moves further away from cash payments and more towards payments technology , banks need the confidence to know that their payments systems are running, available and secure at all times. In order to ensure this, companies can install applications on a production network before installation on the real system. This involves creating a test environment that emulates the “real” network as closely as possible. Financial players can create a software testing environment that is cost-effective and scalable by using virtualisation software to install multiple instances of the same or different operating systems on the same physical machine.
As their network grows, additional physical machines can be added to grow the test environment. This will continue to simulate the production network and allow for the avoidance of costly mistakes in deploying new operating systems and applications, or making big configuration changes to the software or network infrastructure.
Due to the growth in payments data, application owners and compliance officers need to be open to talking about infrastructure, and get a clear sense of whether their critical applications are healthy, so that they can assure them and wrap security policies around them. An in-depth understanding of the existing systems will enable financial services firms to then upgrade current processes, complete documentation and implement standards to mitigate risk.
[1] http://uk.businessinsider.com/card-payments-overtake-cash-in-uk-first-time-2018-6
Given how new technologies have been revolutionising customer experience across a variety of sectors, proclaiming the importance for banks to embrace digital transformation may sound like old news. Haven’t all banks already created compelling online banking services by now, to satisfy the tech-savvy consumer’s demand for anytime, anywhere banking?
Well, no. The banking and financial services industries have traditionally been digital laggards, partly as a result of the highly regulated industry in which they operate and partly because senior decision makers have been slow to recognise the potential ROI. We are now entering a critical new phase in which intelligent machines are enabling – indeed, compelling – banks to fundamentally see and do everything differently. With the growing threat of FinTech firms increasingly gaining traction with consumers due to the accessibility, flexibility and availability of the financial products which they provide, banks now have a significant incentive to accelerate the move into the digital age.
Embracing the digital age
Digital transformation will affect all working practices and the way banking organisations are structured. New intelligent technologies for augmenting human performance will make it easy to achieve things that seemed impossible before.
Employees will become more speedy and productive – as well as happier and more fulfilled.
Banks will be able to reach incredible new levels of efficiency, accuracy, safety and security, and adopt radical new approaches to the way products and services are constructed.
Banks will soon be able to digitise every conversation they have with customers and then use algorithms to anticipate problems – for example, with contactless cards or credit card misuse. Based on these predictions, glitches can be prevented before they even arise.
Another way that intelligent technology can create a win-win for banks, staff and customers alike is with Robotics Process Automation. Machines can be programmed to do mundane, repetitive tasks, thousands of times faster and more accurately than humans. This frees up employees to do more fulfilling work that needs a personal touch – significantly improving customers’ experience all round.
Reaping the benefits of early adoption
Not all banks have been slow to embrace digital transformation. Here are some examples of how digital innovation is already benefiting organisations whose technology-embracing boldness is paying off:
JPMorgan Chase
The global financial services firm recently introduced a Contract Intelligence (COiN) platform to analyse legal documents and extract relevant insights and data. If their staff manually revised 12,000 annual sales contracts, it would take around 360,000 hours. With Machine Learning technologies, the same task can be done in minutes.
The Bank of America
Meet ERICA, who works for The Bank of America. You can’t shake hands (she doesn’t have any). This is the first time Artificial Intelligence has been used to help customers manage their savings. ERICA does this using AI, Predictive Analytics and Conversational Interfaces.
N26
N26 describes itself as ‘a bank account for your phone’. Using an International Bank Account Number, customers can do everything they could with a traditional bank, except faster and from anywhere. The app is integrated with Pulse26, an analytical virtual assistant that provides personal insights based on each individual consumer’s needs.
CapitalOne
CapitalOne was the first bank to offer a new way for customers to interact through a completely different channel. It integrates online banking with Amazon Echo so that customers can ask Alexa (the virtual assistant in the device) real-time information about their bank account, and perform transactions just by using their voices.
Citibank
Citibank has recently acquired Feedzai, a Data Science company that works in real time to identify and eliminate fraud. By constantly and rapidly evaluating vast amounts of data, Feedzai identifies suspect activity and alerts customers immediately.
Act now or be left behind
As the above examples show, this technology is already revealing some astonishing benefits for financial institutions. And yet, many established banking organisations are still a long way from embracing this next stage of digital transformation. According to a recent PwC study, two banks out of three in the US have not yet adopted any meaningful application of these powerful new tools.
There are various reasons for this, such as operational, regulatory, budgetary and resource constraints. But the fact is, we are at a once-in-a-decade, pivotal moment – similar to the dawning of the internet age, back in the nineties. Leaders must transform how they run their banking organisations and embed these new technologies in their business or risk being left behind by the competition.
For those banking organisations looking to press ahead with their digital transformation journey, here are some important considerations:
Recognise the importance of agility
With the maturing world of powerful intelligent technologies such as AI, organisational agility is more essential than ever before, and many established financial institutions still lack this key requirement to digitally transform their businesses.
Engage the entire organisation
It’s imperative to have engagement from all levels of the organisation, from board level downwards. This is a fundamental transformation programme that will touch every aspect of the business. To truly benefit from these innovations, an entire organisation will need to be engaged in the journey and adopt the mind-set necessary to embrace the new technologies.
Be measured about the potential results
The potential benefits of the new technology are enormous, but it’s safer to be conservative with estimates – they will still be impressive. Organisations should exercise some healthy caution, perhaps born out of previous investments in technology that only delivered marginal improvements.
Demystify the terminology
Machine Learning, Intelligent Machines, Cognitive Platforms, Deep Learning, Intelligent Technology, Artificial Intelligence, Robotics, Robotic Process Automation, Intelligent Products, Virtual Assistants, APIs…. the list goes on and on. These new capabilities are wrapped in a language that to many is impenetrable. Find ways to simplify it. Compile a glossary. Educate everyone so you’re all speaking the same language.
Create powerful practical examples
It’s important to communicate effectively at board level, in a way that demystifies the potential of the technology. The best way to do this is by creating powerful examples that show this intelligent technology in action. Take a look at how IBM is demonstrating what these technologies can do: https://www.ibm.com/thought-leadership/you/uk-en/.
Bring in business areas early
Reinforce the idea that digital transformation is much more than a big IT initiative. Bring in other business areas early to work on proof of concepts.
For the first time, the technologies now exist to radically transform all aspects of a banking organisation. The potential of digital transformation is yet to be fully realised but the warning signs for banks are clear – those that don’t act now to embrace the future will rapidly be left behind.
The Bank of England and the Financial Conduct Authority have informed the financial services sector that they must meet new standards in operational resilience and cybersecurity in the face of a state of near constant cyberattack.
Reflecting on the ‘attack surface’ of the typical financial sector organisation, Dr Simon Wiseman, CTO with UK Cybersecurity firm Deep Secure, looks at the potentially vulnerable areas and suggests ways to mitigate the risks.
Guarding the Gateway
Many of the cybersecurity attacks initiated against organisations in the financial services sector start with an exploit or threat concealed in seemingly innocent business content arriving into the corporate network via the email or Web gateway. Whatever the vector and whatever the precise nature of the threat, time and again it is business content – documents, spreadsheets, presentations and images - that are used to conceal the attacker’s intent.
Traditionally, the job of combatting threats concealed in business content arriving at the email and Web gateways have been given to detection-based cybersecurity defences, as typified by anti-virus and anti-malware products. The problem now is that these defences are proving wholly inadequate in the face of increasingly sophisticated cybercriminals. Attackers are now employing against commercial targets the kind of sophisticated zero-day, stealthy exploits that were hitherto the province of nation-state intelligence entities.
Fortunately, new ways of combatting this type of threat are emerging, and one of the most effective is called Content Threat Removal. Content Threat Removal doesn’t attempt to detect the presence of a threat in business content arriving at the gateway. Instead, it assumes that all content is potentially bad. Using a process called content transformation, it intercepts every document and image, extracts only the valid business information from it, discards the original and creates a brand new, threat-free copy to deliver to the intended recipient. The content transformation process can’t be circumvented or evaded because it is not interested in trying to detect anything untoward that the bad guy has hidden in the content. It simply eliminates the risk, even when new forms of attack are devised.
Portal Problems
We’re in the age of the self-service portal. Prospects and customers alike are encouraged to upload documents (often in the Adobe Portable Document Format or PDF) in support of everything from personal loans and mortgages to motor insurance applications. The problem is that while the PDF is a versatile and incredibly useful file format, it is also highly complex, easy to subvert and is regularly used by cybercriminals to carry malicious payloads.
A typical response to the threat posed by PDFs uploaded from the Internet or other untrusted sources has been to try and mitigate the risk by scanning them with multiple detection-based anti-virus scanners. The problem as we’ve already noted is that detection-based defences like anti-virus routinely fail to pick up the latest threats and zero-day exploits. Here again, the best way to mitigate this risk is to re-evaluate the security and deploy a technology that doesn’t rely on detection but uses content transformation at the portal boundary to ensure that only PDFs that are completely threat-free are delivered into the network.
The demand for customers to interact with financial service providers by uploading documents via portals is only going to increase, and so is the danger of compromise from malware concealed within those documents. Mitigating this risk to an acceptable level necessitates a rethink of the defences and a willingness to move away from a dependence on detection and towards complete elimination.
Combatting the Undetectable Exploit
When is an exploit undetectable? Well, one answer is when there is no evidence of how the valuables were taken - only the certainty that they’ve gone! For all the millions spent on highly sophisticated cybersecurity products, the fact is that undetectable exploits keep on occurring. Although there is little certainty over how this is being achieved, what evidence has been uncovered points to the use of exploits that conceal information in images using a technique called steganography.
Image steganography is the attacker’s dream tool. It can be used to infiltrate malware, exfiltrate large amounts of value and maintain secret command and control (CnC) channels, all concealed in seemingly innocuous images. Images, of course, are everywhere, and from a simple tweet to the corporate logo in an email signature, each one can be subverted using image steganography. No data loss protection tool can detect whether an image is harmless or dangerous because image steganography is undetectable.
In the face of the threat posed by image steganography, organisations can either decide to ignore the risk (many still do) or address it using a transformative approach whereby every image is intercepted at the boundary and re-created anew before being passed to the intended recipient. This approach doesn’t try to detect the exploit; it assumes every image could be compromised and renders them all safe, preventing hidden malware getting in, stopping covert information leaks and blocking stealthy command and control channels.
A Stronger Screen for SWIFT
Thefts via SWIFT have been under the spotlight. SWIFT, the global provider of secure financial messaging services, is the mechanism by which financial organisations exchange financial messages relating to payments, securities, treasury and trade. Since at least 2013, those that use SWIFT within financial organisations have been targets of concerted attack with many banks across world falling victim and incurring sometimes heavy losses. Many of these exploits have involved gaining access to credentials or exploiting vulnerabilities in ageing network equipment. Addressing these issues is obviously good practice, but there are further steps the organisation can take to build a stronger screen for SWIFT users.
There is some evidence that attempts to target SWIFT users may take the form of so-called ‘sideways attacks’. To elaborate, the initial penetration takes place via email or Web at the boundary into the corporate network. With a beachhead established the criminals can orchestrate a multi-part attack, whereby malware is triggered on the corporate network to distract the security team while the real target, users with access to SWIFT, is hit ‘sideways’ from already compromised workstations internally on the network.
As stated earlier, best practice in combatting this type of activity has to be reviewing the boundary defence (email and Web) and deploying cybersecurity technologies that don’t rely on detection to identify malware carried in documents but instead transform the content. While not the only answer to a stronger screen for SWIFT adopting this approach will ensure that the incoming business content is rendered 100% threat free.
Building a Crypto Currency Fortress
It’s really something of a mistake to think that cryptocurrency security is all down to the cryptography. The real security risk you have to consider is how to keep the coins safe when they are in storage. So you have to think about where the coins are held in the same way as you need to think about where conventional cash is kept.
Ultimately, keeping cryptocurrency coins in a properly designed hardware ‘wallet’ that is not connected to the Internet, ensures you have full control over them, but it’s a manual process and not scalable. Allowing the coins to be controlled by a connected system, means that system has to able to repel all current and future cyberattacks. This kind of ‘failure is unthinkable’ protection has previously only been associated with defence and intelligence systems but is becoming increasingly important to online cryptocurrency systems. The providers of these systems are going to have to deploy the latest security mechanisms, guarding the system that hosts the keys to ensure they are not compromised, and trust in the entire eco-system is not undermined.
Organisations in the financial services sector are rightly concerned about the attack surface they present to the attacker. Going forward, they must be prepared to reduce their reliance on detection based cybersecurity defences and adopt new technologies such as content transformation if they are to improve their overall security posture.
This month, Finance Monthly caught up with Aubrey Mills – a mother, Ms. California Woman of Achievement 2018 and a Business Development Leader at World Financial Group. Below, Aubrey tells us about her passion for educating families, individuals and businesses in ways to make money, save money, and stay out of debt.
What does your daily work consist of and what do you believe you bring to your clients?
Most of my time is spent building relationships with clients and associates. I don’t want to just hire people and have them work for me; I want them to build careers and lives they are proud of. I want to get to know my clients so that I can best guide them on financial decisions. Learning how people work or what makes us think differently was important, not just so I could be a better saleswoman, but so I could better serve my clients. I studied Human Nature and Communication, so I could better understand people. I’m currently learning to better understand other cultures because I believe that everyone deserves the opportunity to be educated financially. I teach free classes to the community and I want to be as effective as possible.
What attracted you to the insurance field and what drives you to push further the boundaries of your work?
I never wanted to work in finance. I came from a low-middle income family and had always assumed that finance people were older men. I once heard a woman speak about finances and I remember two things about what she said: she was raised by a single mom (I’m a single mom) and how hard it was for her growing up that way, and the Rule of 72. It was one of those awakening moments. I didn’t want my children to feel deprived growing up. The Rule of 72, or compound interest, showed me how little I needed to save for retirement and my children’s college fund and how fast my debt was doubling. I have had friends whose spouses didn’t have life insurance and they suddenly passed away. I couldn’t stand to just sit by and continue to watch that happen. Money doesn’t bring a spouse back, but it allows the family to properly grieve.
You commonly work with military families; what challenges are presented for these clients, particularly in the insurance sphere, and how do you help them overcome these?
My biggest obstacle is conveying to them that the insurance they have will not necessarily remain the same when they exit the military. Most of our service members are young and they get a basic ‘money talk’ when they enter, but this is not sufficient. I believe strongly in doing whatever we can for our service members, not just to equip them for keeping us safe and free, but to have a rich and full life after they leave the military. I don’t feel like we are doing enough - not even close. Many of our service members join right out of high school and they now have an income they didn’t have before, so of course they want to spend it. I know when I was aged 18-20, all I did was work, so I can then shop. But this wouldn’t have been the case if I had known what I know now, 13 years later.
Education and getting young people to see the value in saving are two of the most important things I can provide them with.
What have been some of the most difficult issues you have dealt with alongside clients?
Anytime I have an older client with multiple investments, it gets tricky. They have a fear of losing money and a fear of change. Even if they aren’t in guaranteed accounts, they have a hard time switching. That’s where the friendship and rapport that was built comes in. You really must know who they are and how they communicate. You want to build trust, so you can have those hard conversations.
As a thought leader in this field, what would you say must change to ensure a fair and just future for your clients when it comes to insurance?
First of all - be you. Whatever that means. People like you need help from you. When I first started in the industry, I thought I had to fit a mold. It wasn’t until I allowed myself to be unapologetically me that things changed. I love to laugh. I use humour to ease tension and those hard conversations. I’m a bit goofy and I’ve learned that it makes it easier to help others learn as opposed to being uptight and rigid. So just be you.
Secondly - integrity, 100% of the time. I see people come into the industry and they get so blinded by the amount of income you can make, and they chase it. The business that pays is the business that stays. You can’t keep clients and agents if you don’t have integrity and heart.
Website: http://www.worldfinancialgroup.com
The financial services industry must “unite and fight” against a no-deal Brexit that potentially erodes clients’ rights and damages the financial sector itself.
This warning from deVere Group founder and CEO, Nigel Green, comes as the UK's International Trade Secretary, Liam Fox, said that Britain should accept a ‘no-deal’ scenario, instead of requesting more negotiating time.
It also follows MPs being told earlier this week by the Association of British Insurers that it could be “illegal” to pay private pensions to British expats if the UK crashes out of the EU with no deal.
In addition, the City of London is claiming that Brexit will cost Britain up to 12,000 financial services jobs in the short-term, with many more potentially disappearing in the longer term.
Mr Green says: “Now is the time for the financial services industry to unite and fight against a no-deal Brexit that potentially erodes clients’ rights, protections and freedoms. It must also stand against it potentially damaging the financial sector itself.”
He continues: “It is an outrage that if the UK crashes out of the EU, and free movement of capital stops because there is no agreement in place, people could stop receiving their hard-earned retirement income, saved over many years, simply because they have chosen to live outside the UK, which they are perfectly entitled to do.
“As an industry we need to step up, lobby the policymakers, and ensure clients are secure on this issue, amongst others. We need politicians to guarantee their rights, choices and safeguards as a matter of urgency.”
Mr Green goes on to say: “This latest warning, and the ongoing uncertainty, is likely to trigger even more people who are eligible to do so to consider moving their British pensions out of the UK into HMRC-recognised pensions while they still can.
“Many will be seeking to safeguard their retirement funds by transferring them into a secure, regulated, English-speaking jurisdiction outside the UK.”
The deVere CEO adds: “The financial sector also needs to make its own voice heard.
“The industry needs continuity and certainty. What it does not need is the chaos and the expense of a no-deal Brexit.
“A no-deal scenario will likely mean a reduction of the services and products that we are able to offer clients, as well as increased costs for businesses and, ultimately, the client.
“Therefore, we must actively engage with politicians – who largely seem only to have their own political agenda at heart - to prevent this from happening.”
(Source: deVere Group)
Below Graeme Dillane, manager, financial services, InterSystems, offers insight into best practices in the financial services industry, highlighting where current weaknesses lie and how they can overcome.
Increasing trade volumes and periods of high market volatility create technology challenges for financial services firms. This is especially true for sell-side firms, which can experience extremely high transaction volumes, since they partition already high volumes of incoming orders into an even greater number of smaller orders for execution. At the same time, they must support a high number of concurrent analytic queries to provide order status, risk management, surveillance and other information for clients.
This requirement for multi-workload processing at high scale, coupled with the highest levels of performance and reliability, has historically been difficult to satisfy. Compounding the challenge, transaction volumes grow not only incrementally and within expectations, but can also spike due to unexpected world events.
A critical component of a sell-side firm’s technology infrastructure is its transaction management and analytics platform. The platform must be reliable and highly available. A failure, or even a slowdown of the platform, can have severe consequences as it can take many hours to rebuild order state and resume normal operations after a failure. In the meantime, the firm’s ability to process additional trades and provide order status is compromised and financial losses mount.
To successfully handle growth and volatility without performance or availability issues, the platform must balance transactional workloads with the concurrent analytic demands of downstream applications at scale. Financial services organisations, particularly sell-side firms, must process millions of messages per second, while simultaneously supporting thousands of analytic queries from hundreds of systems that must report on the state of orders while performing other queries.
Currently, in-memory databases are widely used, primarily due to their ability to support high-performance data-insert operations and analytic workload processing. However, in-memory databases alone are not an ideal platform for transaction management and analytics for several reasons:
- Limited ability to concurrently process transactional and analytic workloads at scale. In-memory databases are not designed to support multi-workload processing at high scale. As a result, as volumes increase, at some point both the transaction processing and the analytic queries will slow or stall.
- Scale limitations - Since the data in an in-memory database is stored in main memory, the working data set is limited by the available amount of memory. This creates risk when transaction volumes spike, compromising the ability to process new orders once the available RAM is filled.
- High costs - Since servers have hard memory limits, scaling in-memory databases beyond these limits requires purchasing and procuring additional nodes – to sustain normal operations plus headroom for unexpected volatility - increasing overall costs.
- System downtime - Since the data is stored in-memory, if the database server fails, the data that is resident in-memory on that server is lost.
Finding a Solution
So, given these challenges, how can financial services organisations find a solution that enables them to simultaneously process transactional and analytic workloads at high scale?
The answer comes in the form of the Hybrid Transaction/Analytical Processing (HTAP) database.
Traditionally, online transaction processing (OLTP) and online analytical processing (OLAP) workloads have been handled independently, by separate databases. However, operating separate databases creates complexity and latency because data must be moved from the OLTP environment to the OLAP environment for analysis. This has led to the development of a new kind of database which can process both OLTP and OLAP workloads in a single environment without having to copy the transactional data for analysis. HTAP databases are being used in multiple industries for their ability to uncover new insights, create new revenue opportunities and improve situational awareness and overall business agility for organisations.
The best HTAP database platforms deliver the performance of an in-memory database with the persistence and reliability of a traditional operational database. They are optimised to accommodate high transactional workloads and a high volume of analytic queries on the transactional data concurrently, without incident or performance degradation, even during periods of market volatility.
They have a comprehensive, multi-model database management system (DBMS) that delivers fast transactional and analytic performance without sacrificing scalability, reliability or security. They can handle relational, object-oriented, document, key-value, hierarchical, and multi-dimensional data objects in a common, persistent storage tier.
Moreover, the best of these embody features that make them attractive for mission-critical, high-performance transaction management and analytics applications. These include:
High-performance for transactional workloads with built-in persistence – The ideal scenario is to find a data platform that includes a high-performance database that provides transactional performance equal to, or greater than, in-memory databases along with built-in persistence at scale.
Data is not lost when a machine is turned off, eliminating the need for database recovery or re-building efforts. By using an efficient, multi-dimensional data model with sparse storage techniques, data access and updates are accomplished faster, using fewer resources and less disk capacity.
High-performance for analytic workloads – Seek out solutions that provide a range of analytic capabilities, including full SQL support, enabling you to use their existing SQL-based applications with few or no changes. Since the database stores data in efficient multidimensional structures, SQL applications achieve better performance than traditional relational databases.
Consistent high-performance for concurrent transactional and analytic workloads at scale - Ideally, solutions should provide the highest levels of performance for both transactional and analytic workloads concurrently, at high scale, without compromising performance for either type of workload. Since rising order volumes increase both the transactional and analytic workloads on the system, a data platform must scale to handle such workloads without experiencing performance or availability issues.
Positive Prospects
This article has highlighted that many financial services organisations are, for a variety of reasons, currently crying out for ways in which they can simultaneously process transactional and analytic workloads at high scale. Fortunately, help is now at hand. Thanks to the latest breed of data platforms for high-performance transaction management and analytics applications, both transaction processing and analytic queries are supported concurrently, at very high scale, with built-in durability and with the highest levels of reliability – and at a low total cost of ownership.
In the past year MIFID II has enticed change and development across the financial markets and research sector. Here Fabrice Bouland, CEO of Alphametry, analyses said change and the impact it has had on innovation.
Six months in and MiFID II research unbundling regulation has appeared to create an even worse market for investment research than we had previously. With many commentators decrying the ‘unintended consequences’ of the new legislation – namely bringing the research market to a grinding halt as asset managers assess their needs and sparking a price war which has all but crippled smaller, niche research houses – one might wonder if there is anything positive to say about the impact of MiFID II on the research market and whether anything which can be done to revive it?
In truth, MiFID II has ultimately shown us the historical ambiguity investment managers have always had with research. There has never been an easy way to answer fundamental questions like ‘what research is needed’, ‘how much should we pay for it’ and ‘how do we measure the value’. This lack of structure has been pulled well and truly into the spotlight under the new EU regulation, as well as the financial services sector’s slow take-up of new technology to answer these questions.
Thanks in some part to the new regulation, active management might be at a historic turning point. The progress in investment technologies is about to experience a quantum leap forward plus the expected deluge of new alternative data will unleash an unprecedented potential. R&D and new technology must play a leading role in this and MiFID II can claim credit for creating this opportunity to innovate.
Time to innovate
From a buy-side perspective, research providers need to adopt entirely new strategies to survive.
In the past six months, we have seen two developments. Firstly, Tier-1 providers are pushing content exclusively on their websites. This is a step back from a user experience perspective as remembering numerous passwords is impractical for portfolio managers to the extent that some have cut providers which do not provide easy access to their portals. Distributing research via aggregators or marketplaces in order to reach the maximum number of channels is another option in today’s market. This could be applied to any type of research or data, in whatever format, for the easier and faster use of the portfolio manager.
The second innovation we are starting to see is from research providers who, in response to plummeting prices, are reducing the number of analysts and opted for more automated production. Commerzbank is one provider which is experimenting with artificial intelligence to see if it can write basic analyst notes automatically to trim research costs.
Alternative research and AI
With regulation forcing active managers to value their historical research franchise, it’s become clear that research has barely evolved whereas the world of investible assets has changed dramatically. Factors affecting a company’s valuation go way beyond the simple analysis of its financials or strategy.
The rise of alternative datasets which cover a wide range of digital inputs from social media to credit card data, are becoming increasingly valuable to asset managers. In many ways, the rise of alternative data is one of the first manifestation of how research is changing for the better under MiFID II.
Similarly, the research product may no longer be exclusively research reports but also the technology layer which is able to extract intelligence from them automatically, quickly and at scale. Since the buy-side has always heavily relied on the sell-side when it comes to technology, most active investors are stuck in a technological gap. Capturing and processing a more and more sophisticated and voluminous information resource seems the way forward.
Is MiFID II helping or hindering innovation in financial markets? It already seems that asset managers are considering how tomorrow’s technology is affecting today’s research – let’s hope the speed of implementation can match the exponential changes in data volume and value which we are seeing in the wider world.
This week Finance Monthly talks to Daniel Kjellén, CEO and Co-founder of Tink on the democratisation of data and what this means for both financial services businesses and consumers.
Open Banking was designed to open the retail banking market by giving everyone access to the data they needed to deliver banking services. Initially viewed as a massive boon for fintechs, and a worrying threat for banks, the mindset of the latter is shifting.
They may have been slow to start, but today the majority of retail banks are waking up to the opportunities offered by Open Banking. Banks are realising that the new battleground is the level of valuable insights and product offerings, tailored to the individual, that can win over consumers. And the key to unlocking this customer value? Data.
But CIOs and product analysts will be only too aware that data was relatively unmanageable until fairly recently. Historically, legacy systems and fragmented technology stacks have meant that getting the right data-sets in one place has been a huge struggle for banks.
What’s more, being able to use these data-sets to create data-driven insights and support data-driven sales has proved even more of a challenge. This means that, until recently, banks and consumers alike have been unable to make full use of the financial data at hand to make better, more informed decisions.
Out-engineered or the opportunity of a lifetime?
Banks might still be grappling with trying to make the best of their consumer’s financial data. But heel-dragging is not an option.
For several years, banks have been under siege from all sides. The technology that allows consumers to grant third parties access to their financial data has existed for some time, and agile fintechs have out-engineered banks in the field.
There’s no question that the advent of Open Banking has widened the data floodgates now that banks have had to open up their APIs. With data more readily accessible, third party providers in all sectors - from finance to insurance - can begin to compete with the traditional banks by introducing innovative new products and services.
What’s more, these challengers have the advantage of being more agile with their time to market; getting new software off the shelf and into people’s pockets in a fraction of the time previously taken.
Banking on the future
Banks have work to do. They’ve been caught napping by these nimble fintechs who have stolen a march.
Regulation is really only the rubber stamp on a technology-led revolution that was already well underway. Banks are now waking up to the same opportunities by partnering with agile industry players that can leverage the financial data at hand.
They need to act now to keep pace with the new market entrants who have already tapped into a world where the access to financial data is democratised, to build newer and better products for consumers. Instead of inventing the wheel once again, banks can choose to invest in the best technology that will provide them with the right data-sets that will both give them a holistic overview over their customer’s finances, and the ability to deliver data-driven sales and insights, tailored at the individual.
Why does this matter?
Open Banking has changed the way consumers can choose to manage their finances. By democratising the access to financial data, consumers are beginning to understand, and take advantage of, the benefits of sharing their financial information with third parties.
Once faithful to traditional banks, people are becoming increasingly fickle - flirting with other providers to find the best deal, service or experience on the market.
It might be intelligent personal finance technology that can predict consumer spending habits and provide advice and recommendations based on these predictive insights. Or it might be a current account platform that allows people to monitor and change their mortgage and savings in the same place, despite using different providers.
Whatever the specific solution, consumers are feeling the benefit of increased flexibility and choice, and demand for new ways to manage money is growing.
It really is win-win-win
Banks must stop viewing the democratisation of data as a zero-sum game - where their loss is a fintech’s or another bank’s gain. Instead, they should see it as an opportunity to gain an advantage by ensuring that their data analytics capabilities keep them one step ahead of their rivals.
While aggregation is just one part of the puzzle, the democratisation of data opens up a wealth of opportunities for banks. Data-driven banking will allow banks to make better commercial decisions based on their customers behaviour, while PFM (personal finance management platforms) will help banks give their customers a better experience.
There is a huge opportunity for banks to successfully monetise Open Banking through identifying where they can offer customers a better deal to meet their needs and targeting them accordingly with a personalised offer.
In this brave new world of banking, the winners will be those who decide what their unique offer to consumers will be and focus on doing it better than anyone else in the market. This might be providing the smoothest UX, the best predictive personal finance management platform, or the slickest analysis and insights tools. Or it might be offering the best products in one particular area - for example the most competitive rates on mortgages or loans
Unlocking this opportunity might require developing new customer centric platforms in house or buying technology of the shelf by partnering with fintechs to take advantage of their technology solutions.
But one thing’s for certain. Far from sounding the death knell for the banking industry, the democratisation of data will become the smart bank’s secret weapon for winning their segment.
