There are new competitive threats. Blockchain and smart contracts are changing the way people procure financial services. At the same time, client expectations are continually rising, a process accelerated by the arrival of new digitally-orientated competitors.

Recruitment is also a challenge, as skills shortages take their toll on the ability of businesses to grow and innovate.

Then there are compliance obligations, which are getting tougher. GDPR and PSD2 will continue to have major effects on financial services, which spend an estimated £5 billion each year on compliance.

Cybersecurity is another pressing concern. Financial services are a prime target for hackers, with large banks of sensitive and lucrative data that can be stolen and sold on.

All of this is happening against a backdrop of economic uncertainty, driven by issues including Brexit, which are forcing financial firms to reconsider where and how they work.

In response, forward-looking firms are reviewing and reshaping established working practices and structures, assisted by technologies that allow for greater flexibility, responsiveness, efficiency and service levels.

New ways of working

Establishing new ways of working depends on equipping key personnel with the tools to be agile, productive and compliant, regardless of where they are working.

CDW is working with Microsoft to demonstrate the potential of the Microsoft Surface family in the professional services sector. Let’s look at how the key capabilities of Microsoft Surface come into play at different levels of the organisation.

Out in the field, employees including insurance adjusters and wealth advisors benefit from having the latest productivity and collaboration tools built into a device that enables online connectivity even without Wi-Fi. The Microsoft Surface Go, with advanced LTE capabilities and scope for the insertion of a SIM card, empowers these professionals to work without compromise. They can deliver enhanced customer experiences with on-the-spot insight.

Back at the office, colleagues including corporate legal associates and solicitors could use the Microsoft Surface Pro 6, to draft complex documents, work with colleagues via Teams, bring up information via PixelSense touchscreens and run full-featured desktop and mobile apps.

However, making a case for IT investment requires robust ROI projections that are notoriously difficult to calculate.

What’s the payback?

To establish a robust business case for its Surface devices and associated software, Microsoft commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI).

The objective was to examine the potential ROI enterprises may realise by implementing Microsoft 365 Enterprise on Microsoft Surface devices. To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed and surveyed hundreds of customers with experience using Microsoft 365 on Microsoft Surface devices.

In the report, ‘Maximizing Your ROI From Microsoft 365 Enterprise

With Microsoft Surface’ [i], Forrester concluded that organisations using Microsoft Surface devices powered by Microsoft 365 Enterprise have the following three-year financial impact:

• $21.06 million in benefits versus costs of $9.93 million, resulting in a net present value (NPV) of $11.13 million and an ROI of 112%.[ii]
• Payback period of 16 months.

Forrester reported: “To rapidly innovate, better serve customers, and engage workers, organisations across the globe are using technology-driven solutions that improve information sharing, enhance teamwork, accelerate decision making and drive process efficiencies. Organisations are leveraging modern devices with next-generation capabilities, including voice recognition, digital pens, and touchscreens, to further empower their digitally-driven workforces. This strategy is working: 62% of information workers agree that using these next-generation technologies help to make them more productive in their jobs.”

Quantified benefits

The following risk-adjusted quantified benefits are representative of those experienced by the companies surveyed and interviewed:

• Employees more than doubled the communication, information sharing, and business workflow productivity gains seen from using Microsoft 365 Enterprise without Surface. Workers realised nearly five hours in weekly productivity gains using Microsoft 365 on Surface.
• Using the combined creative capabilities of Surface and Microsoft 365, including Pen, Touch, Dial, 3D in PowerPoint, collaboration features in Skype and Microsoft Teams, organisations streamlined creative tasks, saving creative workers 27 minutes per day.
• Enhanced teamwork capabilities using Microsoft 365 Enterprise powered Surface devices saved employees over three hours per week.
• Using Microsoft 365 Enterprise with Microsoft Surface, business leaders reduced decision-making time by nearly 21% versus 18% for leaders using Microsoft 365 Enterprise on other devices.
• Organisations reduced product development overhead costs by 11%. They accelerated time-to-market and reduced product development costs through better task prioritisation, research and development (R&D) collaboration, and improved data management and analytics capabilities using Microsoft 365 on Surface.
• The mobility benefits of Surface combined with secure remote access features of Microsoft 365 Enterprise saved mobile workers over four hours per week.
• IT saved two and a half hours per application provisioning request and over 25 minutes configuring each device. The combined device, application, and security configuration and provisioning synergies of Microsoft Surface, Windows AutoPilot, Windows 10, and EMS improved IT and user productivity.
• The stability of Surface resulted in fewer incidents of crashing, while the number of password reset-focused help desk tickets were nearly eliminated using the self-service capabilities from EMS to administer password resets. Help desk calls for password resets were reduced by over 86%, while device and application performance-related tickets were reduced by 15%.
• Security breach remediation costs were reduced by 80% and the number of annual breaches was reduced by 50%. Using two-factor authentication, Advanced Threat Analytics and Surface Enterprise Management Mode (SEMM), organisations cut the volume of breaches experienced annually in half.
• The organisations reduced several third-party technology costs, devices, infrastructure and IT support requirements using Microsoft 365 powered Surface devices.

On the job with Microsoft Surface

With advanced devices such as the Surface Laptop 2, Surface Go or Surface Pro 6, running Microsoft 365, finance professionals can:

• Take photos and notes, using the integrated Surface Pen and OneNote, uploaded directly and securely to OneDrive.
• Stay up to date with the latest market trends, through an HD PixelSense touch display.
• Give compelling presentations with Surface Pen and PowerPoint.
• Answer client questions on the spot via seamless Microsoft 365 integration.
• Run powerful financial and analytics applications thanks to 7^th generation Intel® Core™ processors.
• Share ideas from colleagues and clients in real time, negotiate tasks and agree on fees, using Office co-authoring, OneDrive document sharing, the Surface Pen, and Skype for Business.
• Draft complex contracts on a specially-designed keyboard.
• Stay connected and access essential resources with built-in long-term evolution (LTE) and Wi-Fi connectivity.
• Work with legacy apps that run smoothly on Windows 10.
• Get management approval and digital signatures, regardless of location.

To help IT leaders in financial and legal services exploit the advantages of the Surface family, CDW provides a range of wrap-around services that add value in important areas. An extensive range of maintenance and support services are offered by CDW, underpinned by tailored SLAs and delivered by accredited engineers with demonstrable technical expertise. Design services, including the build of a main image, are also available alongside pre-delivery asset-tagging, deployment support and delivery.

Download the free guide to Digital Empowerment in Legal & Financial Services: https://bit.ly/2PuRDvQ

 Or you can learn more by calling 020 7791 6000

Website: https://www.uk.cdw.com/

[i] https://info.microsoft.com/ww-landing-Forrester-TEI-Surface-M365-Full-Report-Whitepaper.html?lcid=en

[ii] The financial results calculated in the benefits and costs sections of the study were used to determine the ROI, NPV, and payback period for the composite organisation’s investment in Microsoft 365 powered Surface devices. Forrester assumed a yearly discount rate of 10% for this analysis.

Little did we know that when SM&CR was just a glimmer of an idea at HM Treasury, it would have such an impact on the industry and, in doing so, it would change Worksmart so substantially. Borne out of the ‘Changing Banking for Good’ review led by MP Andrew Tyrie back in 2013, the idea of greater Individual Accountability and Conduct Standards for all landed in the form of the SM&CR in March 2016 for banks, building societies, credit unions and the largest designated investment firms.

Led by the PRA and the FCA, the regulation has had and continues to have, a major impact on these firms in a way foreseen by only a few a number of years ago. I recall my conversations with banks during this time when many firms saw the incoming regulation as a relatively minor additional piece of reporting required by the regulators; how wrong they were.

Unlike most people, the Worksmart team had a rather different take on the incoming regulation. With the overlay of additional corporate governance requirements that SM&CR brings alongside the requirements to manage, maintain and update a Management Responsibilities Map (MRM) and associated Statements of Responsibilities (SORs), the technologists amongst us knew what’s coming. The in-house view was that the new regime needed to be supported and underpinned by technology that not only helped firms meet their regulatory responsibilities but also offered genuine business process improvement capability. As a result, we invested heavily in every area of our business, from re-platforming our SM&CR solution and moving to a SaaS model, to growing our regulatory consulting capability. We also worked hard to deepen our relationships with the trade bodies that support the affected sectors of the market place.

Borne out of the ‘Changing Banking for Good’ review led by MP Andrew Tyrie back in 2013, the idea of greater Individual Accountability and Conduct Standards for all landed in the form of the SM&CR in March 2016 for banks, building societies, credit unions and the largest designated investment firms.

In what seems like the blink of an eye, we became the SM&CR supplier of choice for the then British Banking Association (now UK Finance). In turn, this led us to become the ‘leading supplier of SM&CR solutions’ in the UK. And from there it was a very short, but very proud, step to winning a clutch of ACQ5 Global awards in 2018 for our work in the industry.

All very nice you might say, but how does that help me? Using our experience gained over the last four years, this article highlights the top five challenges you can expect to face as you implement and then manage the regime in BAU. With more SM&CR implementations within the affected markets under our belt than we can now even remember, we’re confident that we’ve encountered most of the challenges the new regime presents.

Challenge 1: Sorting out the Senior Manager Regime (SMR) won’t be as easy as you initially think.

The regulation requires firms to identify which Senior Manager Functions (SMFs) and Prescribed Responsibilities apply to their firm. To help, the regulators provide a list of the SMFs for each type of firm under the new regulation, i.e. Enhanced, Core or Limited, and Prescribed Responsibilities for Enhanced and Core firms.

Sounds straightforward and, indeed, for the most part, it is. However, beyond the standard Control Functions such as SMF1 (CEO) and SMF3 (Executive Director) and the Required Functions – SMF16 (Compliance Oversight) and SMF17 (MLRO), Enhanced firms need to decide whether other SMFs apply to them, e.g. SMF18 (Overall Responsibility) and if so, how many individuals are affected. Easy? Maybe, but maybe not. Add into the mix firms that have been regulated for many years, with individuals involved in areas of the business for which they may not be approved (but in a function that requires approval), and things start to get a bit more complicated.

However, the task that was consistently underestimated through the banking implementations involved senior executives scrutinising the detail of their proposed SMFs and responsibilities and reviewing, even renegotiating, their personal Terms & Conditions in return for this (perceived) greater accountability. As a Programme Manager in a major building society said to us: “We’ve only just got sign off on what we proposed to the exec team a year ago”; so be warned!

When agreed internally, firms need to inform the regulator which executives are transitioning to the SMF equivalent of their existing Control Functions (CFs) and seek approval for executives that wish to take up roles that aren’t directly mapped. Additionally, Enhanced firms need to submit a Responsibilities Map that shows how the firm’s governance arrangements fit into place. Where the regulated firm is part of a group and services are shared across the group, then they must explain how this arrangement operates in practice. Add into this a Statement of Responsibility for every individual holding an SMF Function, regardless of whether they grandfather across or have to submit a new application, and it becomes clear that setting up and agreeing on the component parts of the Senior Managers Regime in your firm is not a small task.

The FCA has learnt lessons from the first tranche of firms’ subject to the new regime and has helped by providing feedback both on Responsibilities Maps and Statements of Responsibility, but even with this type of assistance, nothing ever is straightforward, so expect to plan for the unexpected.

The learning from the banking sector is clear - planning and gaining approval for your proposed Senior Manager Regime arrangements takes time. The challenges across the wider financial service sector may vary a little, but the lesson learned by the banks remains true; namely start early and expect things to take longer than planned.

"As part of the senior
managers regime, it was essential
that we had a robust system to
evidence how we have met the
regulatory requirements. Worksmart
has been core to ensuring that we
have met the requirements
of the rules”.
Lisa Nowell, Chief Risk Officer, Masthaven Bank

Challenge 2 – Sorting Out the Certification and Conduct Rules Regimes will also take longer than you plan for.

If the message is about getting started early with your Senior Manager community, then it is equally true for the newly introduced Certification Regime. Many firms in the banking sector simply underestimated the amount of time it would take to define and gain agreement on what roles were caught by Certification. When we ask customers how many members of staff are in their Certification Regime, we often got answers like “anything between 10 and 150” or “we’re still deciding”. Depending on the interpretation of the rules, both responses can be equally valid when an organisation comes to the regime for the first time, however, the discussion on the interpretation of the definition of certified roles will eat into your project timeline. And of course, expect a second-time delay to then occur when allocating which Certification Functions applies to each role. Whilst the guidance is clearer for the wider financial services market, deciding what roles are caught by Certification and what roles fall into Conduct Rules should not be underestimated.

Once decided, planning the design and delivery of training activities for certification staff will again take time. Not only will there be the need to design, organise and deliver the training both on the new regime and the impact of the newly introduced conduct rules, in order to assist each role holder in clearly understanding the conduct rules in the context of their role, training must be as roles specific as possible. Experience over multiple implementations has taught us that training is often an afterthought on the project plan. If this is the case, then your training will probably be delivered late, leaving you exposed to the risk that staff are not fully aware of their responsibilities under the new regulations.

Finally, because the regulator expects competent, not just compliant behaviour from those subject to the Certification Regime, there will also be a debate about what evidence you will need to gather in order to demonstrate competence. If your firm has a fully functioning performance appraisal process, then this may well be a huge step in the right direction. However, if your firm does not have a robust performance appraisal process in place, I suggest the new regulation will be the tipping point to implementing one.

Like SMR, the learning is clear that implementing and embedding Certification and Conduct Rules into a firm will take time, focus and resource to do properly. So be prepared.

Challenge 3 – SM&CR will require a ‘root and branch’ review of some supporting processes.

In the early days of your SM&CR project, the main focus will be on defining communities, assigning functions, etc. However, when the implementation team takes the planning to the next level, questions will almost certainly be asked about the efficacy of the firm’s underlying processes, particularly in the area of HR. These questions come from two areas; the need to have robust processes for recruiting staff into Senior Manager and Certification roles and the need to demonstrate that individuals in those regimes are competent to undertake their role on an ongoing basis. From experience with the banking sector, the processes that are most likely to be challenged are:

• References: The new rules require firms to gain positive work references for the last six years before an individual can be appointed into an SMF or Certification Role. Experience from the banking sector showed the process of requesting, and being able to provide, references was patchy. However, the new rules are clear, satisfactory references for the last six years are mandatory. Therefore, a firm’s processes need to be stringent on seeking and being able to provide regulatory references for all external hires. Expect that effort will need to be put into tightening up your referencing process.
• Job descriptions (JDs): Although the best practice is for job descriptions to be regularly updated, change is such a constant in organisations that JDs are often out of date. Added to that, SM&CR will force attention on accountability, competence etc., and the need to make explicit any new accountabilities taken on as a result of SM&CR. Combined, this means that it is very likely that there will need to be a significant overhaul of JDs across large parts of your firm. Time should be assigned to create and gain agreement to these updated JDs.
• Employment contracts: Our experience in the banking sector was that as soon as JDs were updated, many individuals started discussions, which sometimes led to a negotiation, about employment contracts. Increased pay to reflect the increased accountability was the most common discussion point, particularly for those holding SMF Functions. However, similar discussions were also had in key roles in the Certification Regime.
• Fit & Proper (F&P) checks: Like JDs, the approach to F&P checks varied widely between banks. However, the incoming SM&CR regulation is clear, firms must satisfy themselves that every individual in SMR and Certification is fit and proper to undertake their role each year. Some organisations assumed that F&P checks were all about financial soundness when in practice F&P covers three key areas, Financial Soundness, Competence & Capability and Integrity. This means that any F&P check introduced as part of your Certification Regime must be multi-faceted and not just focused on the financials. Firms in the wider financial services sector need their fit and proper checks to be robust. There is lots of guidance out there in the market place now the regime has been in operation for some time. However, we would advise firms to consider the wider market advice on this topic before they decide on what the fit and proper component of their response to SM&CR might look like.

Also a small, but often overlooked point is ensuring that the sensitive data underpinning F&P checks needs to be held securely, with a balance struck between tight control over access and visibility for those needing oversight.

• Competence: As discussed above, because the regulator’s expectations are for competent, not just compliant staff and senior managers, it is up for firms to be able to evidence this. Expect robust discussions about competence and, in the first instance, whether your performance appraisal process is ‘up to the job’. If so, that’s great; if not, however, something needs to be implemented that evidences employee competence on an ongoing basis.

Ensuring robust SM&CR records will ask searching questions of your supporting processes. Anticipate the need to review, and probably, strengthen your processes. If not, the quality of your records, and so decisions, may well be at risk.

Challenge 4 – SM&CR will start to fundamentally change how you operate.

Being compliant with the new rules is not just about providing accurate and up-to-date records, ultimately SMC&R is about a cultural change within financial services. The FCA, our conduct regulator, has been clear on their views and expectations on this. For firms that think they will just implement SM&CR as per the rule book then walk away, they are very much mistaken. It’s no understatement when I say that SM&CR is fundamentally the greatest change in regulation that I’m likely to see in the remainder of my working life.

When talking with senior executives in the banking sector, it’s clear that there is a far greater focus on corporate governance and personal conduct. Whilst many firms are not formally required to adhere to the Corporate Governance Code, SM&CR challenges firms to ask themselves questions such as: Are we effectively governed?; Do our committees and processes deliver the business results we want?; Are our committees effective or are they just ‘talking shops’? This focus on corporate governance is significant and certainly has increased since 2016. Alongside this, there is far more interest in the personal conduct of individuals at all levels in firms by senior executives. One could be cynical and say this new level of interest is the direct result of certain senior managers being personally accountable for the conduct of individuals in the Senior Manager Regime and Certification Regimes. Whilst there may be some truth in that cynical view, the reality remains that personal conduct is, and will remain, under scrutiny like never before.

It is true that culture in a firm is multi-dimensional and often elusive to define and so monitor. However, it is clear the changes brought about by SM&CR in the banking sector go beyond minor upgrades to internal processes and record keeping.

Whilst, in the early days of implementing SM&CR, the focus will inevitably be on defining communities, modifying processes and tightening up record keeping, in the medium to long term SMC&R will force attention to switch to individual conduct and culture change.  

Being compliant with the new rules is not just about providing accurate and up-to-date records, ultimately SMC&R is about a cultural change within financial services.

Challenge 5 – Keeping SM&CR records will not be as straightforward as you expect.

The final challenge you can expect is that of record keeping. I expect the immediate reaction of your firm, like many banks, is to use existing systems to store your SM&CR records. However, doing this poses significant challenges, even if they don’t surface immediately.

Banks typically initially held SM&CR records in a variety of places, e.g. F&P records in the HR system, records of committee structures and meeting minutes in a governance system, appraisal records in another system, a record of the Management Responsibilities Map (MRM) on Excel etc. However, keeping records in this way created major challenges for central teams with the responsibility for oversight. The regulator expects ‘point in time’ reporting, i.e. for a firm to explain in detail which exec was accountable for what on any given date once the regime has commenced. So, fast forward a year or even a few months, and managing SM&CR via an Excel spreadsheet will unravel as board members leave, new ones join and others switch role (and so SMFs and responsibilities). As one Operations Director put it: “If you ask me what our MRM was in late September or early November I can tell you, but we completely lost track of what happened in October”.

SM&CR requires firms to model, map and record their governance arrangements, and ‘date stamp’ every change. Add to this the requirement to ensure continued compliance with SM&CR by maintaining records and completing tasks to time and to standard, there is no simple way or shortcut to comply. That is why the team at Worksmart decided to re-platform and upgrade the SM&CR offering taking into account the lessons learnt in banking.

Financial services firms need to think hard about their existing systems and whether they are up to the demands of SM&CR before they go live. And if an existing supplier tells you that their HR/E-Learning/Appraisal system can manage the complex and newly introduced SM&CR requirements, that’s great – but exceedingly unlikely. Your response should be “show me – in real time” or even “let me play with the system for half a day to see how intuitive and capable it really is.” If the solution provider is unable or unwilling to do it, then you should take this as a sign that maybe it’s not all it’s cracked up to be.

In the desire to get SM&CR implemented, record keeping is seldom ‘front of mind’ for the project team. However, the message is clear, if the quality of record keeping isn’t anticipated and confronted, major problems will bubble up after ‘go live’, and the longer sub-standard systems are relied on post live, the bigger the problem will become.

Since 2015, the Worksmart team have been involved in multiple SM&CR implementations in the banking and insurance sectors. Whilst not claiming to be the definitive list, these five challenges were by far the most common we experienced. Our hope is that by being aware of these challenges, your implementation project team will ‘land’ SM&CR without hitting the potholes encountered by many in the banking sector.

My job, with the help of all the Worksmart team, is to continue to support firms implement both the letter and the spirit of the regulation as speedily and painlessly as possible. It’s going to be a very busy year!

Website: https://www.worksmart.co.uk/

Below, Harpreet Singh, Executive Director at Brickendon, delves into some case studies and examples that point towards an evolving workplace, remarking on the financial services sectors and its need to conform or adapt.

In November 2018, tens of thousands of Google employees conducted a worldwide walkout targeting workplace culture less than a year after the internet giant topped Fortune magazine’s list of best companies to work for the sixth year running. The protestors’ main issue was how the company was treating women, but this wasn’t their only concern.

Following the protests, media reports cited Google saying it would increase transparency and improve its harassment policies, but it shouldn’t have taken a revolt of this scale for the issues to be acknowledged. Jose Mourinho, former manager of Manchester United, who was unceremoniously sacked in December, may have the answer to Google’s problems.

Speaking to the media in January, Mourinho, one of the most successful football managers of the last two decades, said: “Nowadays you have to be very smart in the way you read your players”. He then went on to compare current players with players from previous generations and spoke about the increased need to have the right structure in the club to support the players and the manager. Like football, employee demographics in the corporate world have changed significantly over the past decade. According to a recent study by Deloitte, 75% of the global workforce will be millennials by 2025. And therein lies the problem. In the same way as Mourinho believed Manchester United was not reading its players correctly, neither, if recent events are taken into account, are many businesses.

The expectation of flexibility is neither misplaced nor impossible

In addition to having been born and grown up in an online age, there are several characteristics that differentiate millennials from previous generations. Whilst they consider themselves equally as hardworking and as ambitious, if not more so, than generation x and baby boomers, they also require more flexibility, faster results and care more about their personal well-being. According to a report in US news magazine INC., more than half of all millennial workers would like the option to work remotely, while up to 87% want to work on their own schedules.

They also perceive themselves to be more socially aware and eco-friendly and expect these traits from their employers too. Luckily, with the significant improvements in technology over the past decade, this expectation is neither misplaced nor impossible to achieve, as long as employers are prepared to innovate.

Technological improvements make remote working an easy option

Take flexibility, eco-friendliness and well-being for example. With massive improvements in communication-related technology, it is now possible to work remotely without any loss of productivity. Providing flexible working options not only reduces real-estate costs and lowers the firm’s carbon footprint but can also help increase employee motivation.

So, if done correctly, one single action or statement, such as allowing employees to start work earlier or later, or to take longer lunch breaks to facilitate participation in sporting activities, can lead to a chain of events that significantly improves the attractiveness of an employer.

But, the reverse is also true. What if a telecommuting employee needs to come into the office for a face-to-face meeting and realises that he/she doesn’t have a desk to work from? The obvious impact is a decrease in efficiency. However, research shows that not knowing whether you have a desk space can also lead to lack of motivation and stress and can in turn, have a serious impact on an employee’s overall well-being. In addition, it can create an environment of unhealthy competition due to a lack of information, in this case, related to desk space and employee whereabouts. Unlike employees from previous generations, millennials don’t tend to feel the same connection to their company and as a result will not stay somewhere they are not happy.

It’s all about work-life balance

As a result, it may be worth managers considering the way in which a flexible work schedule provides a stronger sense of work-life balance – a quality that is reported to attract millennial employees to a workplace in droves and keep them happier for longer than the two-year stint that has become the norm.

It may be worth managers considering the way in which a flexible work schedule provides a stronger sense of work-life balance.

Typically, desk space is the responsibility of real-estate management teams and doesn’t list as a top priority for senior operational managers. Desk allocations are usually managed on spreadsheets or similar static data-storage tools, which don’t allow for the constant monitoring required for effective desk-space allocation. Technology can again rectify this situation, with tools (such as HotDeskPlus, a new workplace optimisation tool and app powered by Brickendon Digital) that use mobile apps, sensors and QR codes to allow employees to view, reserve and check-in-and-out of specific desk spaces at a specific time.

Millennials may require more recognition and faster routes to promotion

Equally important is to foresee the problems that may arise as time evolves and millennials move through the ranks and take up senior positions. They may require more recognition and therefore faster routes to promotion. At the same time, incoming employees may prefer a more informal and non-hierarchical structure. This will require a shift in the organisational model and a willingness to embrace change in a way not seen before.

A quick look at the last couple of years reveals that many CEOs were either asked to leave their positions or forced to deal with discontented employees. These non-unionised breeds of relatively new organisations, such as Google, Microsoft and Uber, were expected to be torch bearers for the next generation of working practices, but their actions have largely been reactive. There is no doubt that what is thought to be an isolated incident can very quickly gain momentum and become a global phenomenon.

So, when it comes to millennials, you may want to count (and listen to) your chickens before they tweet, otherwise they may leave your roost sooner than you expect.

According to Tony Smith, MD of Business Expert, for the most part, London has bucked this trend by beating even Silicon Valley to becoming the global Fintech hub. The historic financial centre has welcomed thousands of startups via progressive regulation, a forward thinking consumer market for tech products, and a central European location.

With the shadow of Brexit causing mounting uncertainty in the business community, the question of whether London can retain its title as the Fintech capital is becoming a talking point. More than almost any other industry, the ability to scale Fintech companies relies on access to global talent pools and, with post-Brexit employment laws still uncertain, many fear Britain is going to lose one of its greatest financial assets.

European Capitals Mop Up Fintech Exodus

While Theresa May struggles to push through her Brexit plan, other countries have been busy rolling out the red carpet with tax incentives and easy access to funding as a means of luring potential Fintech talent while the going is good.

Paris is one example of this. Sharing London’s historical reputation as business centre, Paris already hosts banks and large insurance companies, alongside a workforce rich in engineers and data scientists. Efforts are being made to entice tech talent via smoother regulation and a city-wide focus on AI training courses.

The German capital, Berlin, is another contender. Berlin is actively promoting Fintech relocation with it’s slogan ‘Keep Calm Startups and Move to Berlin.’ With cheap commercial real estate, governmental funding support, and 100 Fintech startups already placed, Berlin is likely to benefit widely from the political situation in the UK.

Tallinn, Estonia, while smaller than the major capitals, already has the third highest concentration of startups in mainland Europe. Tallinn is now benefiting from the efforts of the post Soviet government who recognised that technological education could drive the economy of the future. Estonia now has one of the most tech-savvy workforces in the world.

London still has a lot to offer

Despite the Brexit gloom, many pundits are at pains to point out that London is by means on the ropes just yet. In addition to its position as one of the world’s financial centres, a number of universities specialising in artificial intelligence have added to its hub status.

At the recent Amsterdam Money conference, London’s Deputy Mayor for Business, Rajesh Agrawal commented: “London is the greatest city in the world, and it’s no wonder that so many financial tech companies proudly call it home. As a fintech entrepreneur myself, I know that London has the right mix of clear regulation, world-beating talent, and a massive customer base to make it the international fintech capital.”

Also playing to the focus on expertise, 48% of the sample overall referenced ‘a third party has productised industry knowledge that we can benefit from’, among their main drivers for adopting standard products and services instead of internally solving business data challenges. In line with this focus, by far the biggest consideration respondents had when costing an external technology solution was ‘the availability of skills in the market for the approach chosen,’ cited by 49% of respondents in total. 

Cost was also a big issue driving the uptake of third-party technology solutions. 48% of the survey sample ranked the fact that an outsourced solution ‘was more cost-effective’ among their top reasons for using it.

Martijn Groot, VP Marketing and Strategy, Asset Control said: “Financial services businesses are often attracted into adopting an outsourced approach by a straightforward drive to cut costs, coupled with a desire to tap into broader industry knowledge and expertise.

“Adopting third-party solutions typically allows firms to reduce costs through improved time to market and post-project continuity,” he added. “And the opportunity to take advantage of the breadth of expertise and understanding that a third-party provider can deliver gives them peace of mind and allows the internal IT team to focus more on business enablement which typically involves optimal deployment, integration and change management.”

The benefits of an external third-party provider approach were further highlighted when respondents were asked where they looked first for data management solutions. The most popular answer was ‘externally bundled with complete services offering (e.g. hosting, IT ops, business ops) as part of business processes outsourcing deal’ (28%), followed by ‘externally bundled with tech services offering (e.g. hosting, IT operations) as part of IT outsourcing deal’ (21%). ‘In-house with internal IT’ trailed well behind, with only 17% of the survey sample referencing it.

According to Groot: “The answers show that rather than just following the data and having to install and maintain it, businesses are increasingly looking for a much broader managed data services offering, which allows them to access the skills and expertise of a specialist provider.

“Firms today also increasingly want to tap into the benefits of a full services model,” he continued. “They are looking to join forces with a hosting, applications management or IT operations approach and often that is in a bid to achieve faster cycle time, reduced and more predictable cost of change and a demonstrably faster ROI into the bargain.”

(Source: Asset Control)

However, if you fail to spot the right candidates, your firm runs the risk of needlessly overspending and wasting resources across the searching and recruitment process.

To find top talent, Molly Evans, an administrator for StellarSelect.co.uk, suggests switching to these creative strategies:

1.       Interview first before relying on an algorithm

Companies make use of computers in candidate selection to remove bias from the equation. However, algorithms are not yet that sophisticated to gauge important human traits like influencing skills. Such limitations are probably why big companies like Amazon have temporarily suspended their online recruitment platform.  So consider interviewing some of the applicants before letting the algorithm eliminate them.

2.       Don’t limit the interview with questions

After selecting a group of potential candidates, your next step is probably to ask standard sets of questions. However, don’t stop there. Aside from asking them about their work experiences, you can ask them to demonstrate their skills.

For example, you can set a scenario where they have to advise clients about their mortgage needs. See what strategies and ideas they come up with on how to meet the client’s needs. Such an assessment can tell you right away if they will be a valuable asset for your company.

3.       Consider the talents working for you in the long term

Hiring the best talents is hard, but retaining them is harder. Many top performers are aware of their skills and abilities. Keep in mind that high salaries are not enough to keep them. Instead, you can give them:

• Opportunities to showcase their talents
• Recognition
• A chance to participate in your company’s growth

Also draw attention to their current role’s importance and status, as well as possible promotions or greater responsibilities for staying with your company.

4.       Pick people who are willing to learn

Changes in an organisation’s structure are inevitable. You’ll need people who are agile, excellent communicators, and willing to collaborate. You’ll also need people with a creative mindset who can innovate and adapt. You’ll need candidates that are:

• Resilient
• Able to handle failures
• Adapt quickly to change

You can learn these qualities by making your interview questions detailed and specific. For example, you can ask them how they would handle a lost account.

5.       Hire people from your community if possible

One of the best places to start looking for potential employees is within your community or industry. You can do this by reaching out through:

• Sponsorship of professional development events.
• Selecting some of your current employees to share their career paths and reasons why they continue to work for your company.
• Helping candidates learn about the company by letting them see or meet the organisation’s leaders.

6.       Get thinkers not taskmasters

Successful candidates know how to delegate tasks. However, if you want your company to grow, you’ll need thinkers. They are the people who are always asking ‘why?’, pushing for quality and efficiency. If implemented correctly, they can change the company’s culture for the better. Consider encouraging and supporting these kinds of talents. You may have to adjust or change the old ways but this is a small price to pay for raising your company’s competitiveness.

7.       Get referrals

There are advantages to getting referrals both from within and outside your company. Your staff will usually refer you to top performing people rather than underperforming ones. Consider providing incentives to your current employees for their referrals. Outside the company, you can look for job candidates from financial recruiters like StellarSelect.co.uk.

8.       Develop talents for the job

Finding and hiring the best people isn’t cheap and could take time. So why not try to develop those talents within your company? Consider investing in your employees through training, coaching, seminars, and workshops. Also, don’t forget to give them continuous feedback to sharpen their abilities. By recruiting the best talents from within, you could boost loyalty and productivity in your company.

9.       Use trial periods

If it’s possible, you can ask potential employees to undergo trial periods first. Once they’ve passed, you can then choose to offer them full-time work. Trial periods are like internships except that the pay is better with more serious work responsibilities. You can run it for several weeks or months – just enough time to assess their performance.

For example, you can get the candidate to start by assisting or handling minor client accounts. During that time, you will be able to gauge their attitude and skills for the job. It’s also important to pay the candidates fairly to avoid any legal and moral complications.

Conclusion

CVs and algorithms are useful for providing a list of skills. However, to build a great team of talent, you need to ask more than routine questions. Use the interview to learn how they work based on their skills and capabilities. By doing so, you’ll know that you’ve found the right people. Remember also to cast your recruitment net wide to increase your opportunities for finding the best-skilled people. This means maintaining links with your industry and community and using incentivised candidate referrals. Follow all these strategies and you’ll be in the best position to encourage top talent to beat a path to your door.

Many thought it was too good to be true, but was it? Below Karen Wheeler, Vice President and Country Manager UK at Affinion, gives Finance Monthly the rundown.

YouGov research  highlights that 72% of UK adults haven’t heard of Open Banking and according to PwC, only 18% of consumers are currently aware of what it means for them. However, that doesn’t mean the changes aren’t filtering through.

The story so far

The Open Banking Implementation Entity (OBIE) reports there are now 100 regulated providers, of which 17 Third Party Providers (TPPs) are now using Open Banking in the UK. Open Banking technology was used 17.5 million times in November 2018, up from 13.9 million in October and 6.5million in September, with Application Programming Interface (API) calls now having a success rate of 97.7%.

One of the earliest examples was Yolt, by ING Bank. It showcases a customer’s accounts in one place so they can see their spending clearly and budget more effectively. Similarly, Chip aims to help people save more intentionally. Customers give read-only access to their current account and then sophisticated algorithms calculate how much a customer can afford to save, and puts it away automatically into an account with Barclays every few days.

High Street banks have certainly taken inspiration from fintechs. For example, HSBC released an app last year enabling customers to see their current account as well as online savings, mortgages, loans and cards held with any other bank. The app also groups customers’ total spending across 30 categories including grocery shopping and utilities, making it a really helpful budgeting tool.

Perhaps, most advanced of all, Starling Bank allows customers access to its “Marketplace” where they can choose from a range of products and services that can be integrated with their account. The offering currently includes digital mortgage broker Habito, digital pension provider PensionBee, travel insurer Kasko, as well as external integrations such as Moneybox, Yoyo Wallet, Yolt, EMMA and MoneyHub.

Open Banking and GDPR

One key question is whether Open Banking puts the needs of financial services companies over those of the consumer. There is a general cynicism regarding the real reasons for encouraging Open Banking and this is exacerbated when most customers aren’t seeing the benefits.

Also, there is confusion caused by the apparent conflict of interest between Open Banking and GDPR.

In this day and age, do consumers really want more organisations to have access to their data? Can they trust the banks? According to PwC, 48% of retail banking customers cite security as their biggest concern with Open Banking and this is a significant barrier to overcome.

The way forward

It’s hard to overcome cynicism and doubt. Perhaps, once customers begin to enjoy the positives, they will be less sceptical about Open Banking, leading to more opportunities to build longer term customer engagement. For example, if products help them avoid going into debt or nudge them when new mortgage rates are on offer, they will see that banks are using the technology to support wise financial management rather than just serve their own marketing purposes.

It’s also hard to change entrenched consumer habits. To encourage consumers to get in the habit of comparing and switching, financial organisations must create truly compelling propositions. They need to focus on delivering intuitive, useful digital products which make a real difference to customers’ daily lives.

They also need to demonstrate how seriously they take their role in the fight against cybercrime while educating the consumer about how Open Banking works and how to protect their data. For example, many may not realise that one of the key tenets of Open Banking is security. Open Banking uses rigorously tested software and security systems and is stringently regulated by the FCA.

Placing the customer at the centre of their finances and giving them complete control directly increases competition and brings a myriad of everyday benefits to the customer. There is huge opportunity for traditional banks, fintechs and disruptors to use Open Banking to pioneer new products that build longer term customer engagement. However, the current priority is communicating the huge advantages and opportunities that Open Banking brings while reiterating that their data will remain secure.

The tumultuous backdrop of volatile financial markets has seen commodities such as precious metals steal the limelight recently – particularly gold. According to a recent report by the World Gold Council, Central bank demand for gold was 651.5t in 2018, up 74% compared with 374.8t in 2017[1], hitting a recording-breaking half-century high of gold bought by central banks, the largest increase since the US’s decision to end the dollar’s peg to bullion in 1971.

This renewed interest in gold is due to the perfect storm of political tensions, trade wars, global debt and economic downturn, fuelling the need for institutions to diversify their investment portfolios. Countries across the world are turning their backs on the US Dollar as a reliable means of reserve, exemplified by the Russian central bank which sold almost all of its US Dollars to buy 274.3 tons of gold in 2018[2].

Following its annual report, the Director of Investment Research at the World Gold Council has announced central banks’ appetite for gold is here to stay. These official purchases are expected to provide a stable base for the gold market long-term, but how can the full commercial potential of the booming gold industry be unlocked? The answer is simple – blockchain technology.

Digitising gold on the blockchain could hold the answer – providing a stable currency through a safe haven asset.

Christine Lagarde, the head of the IMF, declared late last year that all central banks should consider issuing their own digital currencies, cementing blockchain as a financial services mainstay[3]. However, two IMF economists recently explored how this digital currency could be used by central banks to stimulate economic growth and counter a possible recession by implementing as negative an interest rate as necessary. So, the question arises whether blockchain-based currencies can truly serve consumers.

Digitising gold on the blockchain could hold the answer – providing a stable currency through a safe haven asset. This evolutionary system would need to be backed by real assets of gold and silver, providing a 1:1 allocation to physical bullion. The gold industry must adapt to join the fast-paced digital world to stay relevant today. A digital currency pegged to gold is the most suitable way to usher in a new era of stability to financial markets.

Although previous digital gold currencies have failed in the past, the latest innovations in blockchain technology provide a trustworthy way to record transactions and ownership of gold, whilst permitting fast international transactions at low rates. This platform will allow the seamless everyday spending, management, and retrieval of these gold and silver-based currencies by using a physical debit card leveraging the global networks such as Visa. The transaction fees accumulated whenever the currencies are sent, spent or traded are proportionately redistributed as a velocity-based yield, incentivising use. Renewed interest in gold, distrust in the banking system, combined with the shift to convenient, agile online-only banking has set the perfect scene for digital gold to flourish.

This platform will allow the seamless everyday spending, management, and retrieval of these gold and silver-based currencies by using a physical debit card leveraging the global networks such as Visa.

A precedent in the FinTech scene has been established; providing the stable, trustworthy financial platform consumers are looking for. The use of advanced blockchain technology is bringing accessibility to gold trading and shows how old world investment and new world technology can work together to create a new stable currency. Significant technical developments have already been completed, and this year will see a new monetary system flourish that will change the way people see and use gold. With gold at a 50 year high, there has never been a better time to invest in this bank-free monetary revolution and return to the gold standard.

Website: https://kinesis.money/en/

[1] https://www.gold.org/news-and-events/press-releases/central-bank-buying-drives-growth-in-gold-demand-in-2018

[2] https://www.cnbc.com/2019/01/31/world-gold-council-central-banks-buy-most-gold-since-1967-.html

[3] https://www.theguardian.com/business/2018/nov/14/imf-says-governments-could-set-up-their-own-cryptocurrencies

Business telecommunications provider, 4Com has looked into Britons’ attitudes towards their co-workers to reveal just how willing the nation is to create meaningful relationships with those they spend so much time with day-to-day.

According to the research, our willingness to be social in the workplace differs from industry to industry. Finance comes in as the friendliest occupation with a huge four in five (81%) of workers saying they have made lifelong friendships with colleagues, refuting the idea that work is merely a place to get a job done, then go home.

Based on the percentage of people (per industry) who said they have made meaningful friendships at work, 4Com can reveal that the top five friendliest industries in the UK, are:

1. Financial services (81.1%)
2. Business to business (80.8%)
3. Health/healthcare (79.5%)
4. Education (77.9%)
5. Retail (77.9%)

But is having close friendships at work a help or a hindrance?

According to Consultant Psychologist and Clinic Director Dr. Elena Touroni from The Chelsea Psychology Clinic, close relationships at work can actually be good for productivity. She says: “When people get on well and develop friendships, there is a greater supportive and positive energy, which ultimately makes the experience of going to work more pleasant. Although it can be more complex in some instances, being in an environment that you enjoy generally has a positive effect on your overall productivity. Long story short: happier people work harder.”

This tallies with the experiences of financial services workers as the majority of those with close friendships agree that the relationship makes them more productive. Their top reasons for this are:

1. Because they make me enjoy my job more (72%)
2. Because I know I can ask them questions about things I’m not certain on (51%)
3. Because I can turn to them for advice  (40%)

Speaking about her best friend, Rachel from Leeds says: “I met my best friend two years ago at work. A few weeks after starting at the company, I went to the Christmas party where I met the other newbie, Charly. We clicked straight away, couldn’t stop talking and literally cried with laughter. We quickly became inseparable in and outside of the office.

“As we were both new to working in the industry, we helped each other tremendously. We had talents in different areas of the job and felt comfortable asking each other for help without the fear of judgment on things we weren’t yet confident in. This helped to ease any anxieties or worries about our own abilities and learn new skills. We stood side by side throughout the (many) ups and downs, in and outside of work, and although she’s moved to a different country, I know we’ll be friends for life.”

On the other hand, almost one in five (19%) of finance workers say they have never established a relationship with colleagues that go beyond the normal small talk. For them, the most common reason is simply that they are at work to do a job, not for friendship (40%), while a further two in five (40%) admitted having nothing in common with their workmates. This is most true however, for those in the public sector, of which one in four (25%) have never made meaningful relationships at work.

Consultant psychologist Dr. Touroni provides some insight: “Some people can find vulnerability in a work environment threatening, so preserving a boundary between personal and professional life helps them feel more secure. This self-protective mechanism is especially relevant when one is in a position of authority. Close friendships become a lot more complicated when a power dynamic is introduced, so it is often easier to maintain a level of distance with lower-level colleagues if you are in a position of seniority over them.”

Commenting on the research, Mark Pearcy, Head of Marketing at 4Com, said: “We spend a lot of time with our colleagues, more so than with our other friends and family, so it’s nice to see we’re building strong and meaningful relationships with these people. To help you make the most of your work relationships, we have put together a blog post with more findings from the study and some helpful tips.”

(Source: 4Com)

We’ve all heard of the so-called ‘war-for-talent’ within the US’s Investment Banking and Financial services field. In fact, it’s no secret that there’s an ever-increasing demand for specific and niche skills, but short supply of the requisite talent.

According to EY, over the next two to three years, machines will be capable of performing approximately 30% of the work currently done at banks: yet the ability to attract technology experts into investment banking is arguably presenting the greatest challenge for many employers.

Regulatory changes, coupled with digital advancements, mean that business models are adapting at a rapid rate. Today, automated electronic trading powered by AI and machine learning mean that the skills of the top traders of yesteryear are quickly becoming obsolete. However, the data scientists and programmers needed to drive today’s systems are in short supply. And with increasing reports of tech firms such as DeepMind, the Google artificial intelligence division, stealing top tech talent from the world of investment banking, this is only going to get more difficult in the coming months and years.

Today, automated electronic trading powered by AI and machine learning mean that the skills of the top traders of yesteryear are quickly becoming obsolete.

Furthermore, recent research from Accenture has found that just 7% of US graduates see banking and capital markets as a top industry to work for. However, by predicting both the behaviors of internal employees and market demand fluctuations, investment banks can map out a coherent plan to overcome forecasted skills gaps and bring in expertise to guarantee future growth and profitability.

Despite the clear benefits of implementing an effective strategic workforce plan, a 2014 Workday/Human Capital Institute survey of 400 HR professionals revealed that 69% consider the function either an “essential” or “high” priority, but that only 44% actively engage in it. This is not because there are not tools available – there are. Both internal data and industry trends are usually an excellent source of knowledge of individual jobs’ attrition rates, which can lead to a surprisingly detailed forecast of skills needed for the future. Technological tools can also be used to predict the likelihood of employees jumping ship, including through social media monitoring applications. So why is this disparity in numbers?

Although increasing percentages of businesses are recognising strategic workforce planning’s place within their growth plans, it can still be difficult to implement and sustain effectively. As well as needing the support of a CEO – or at least, a board member – to drive the initiative and free up resources, HR departments must also be star players in its success. This is because they can provide reliable data regarding which employees are eligible for up-skilling/re-skilling, helping to predict gaps within the workforce – although these may open and close as market demand fluctuates. In this way, the data can also be used to implement a policy of growing your own internal talent, which can subsequently help to close projected managerial gaps in the future. You can see that it is important to remember that technology is just a support tool and should not overshadow the input of your stakeholders – they also have real insight in the business’ needs.

The traditional trading desks of Wall Street in the early 80s are now well and truly a thing of the past.

One common misconception about a successful workforce plan is that it is rigid and set in stone when in fact, almost exactly the opposite is the case; what might be needed for a financial institution now may be totally different in five years’ time. Naturally, it is important to address the organisation’s most critical needs first, and not rush to implement an overarching strategy. This allows for progression and, critically, facilitates the avoidance of paying premium rates whilst trying to fill immediate skills gaps.

The traditional trading desks of Wall Street in the early 80s are now well and truly a thing of the past. But just as open outcry and hand signals have been replaced by predictive analytics and machine learning, no one knows what the future will hold for the profession. With this in mind, an effective plan must be adaptable and almost constantly fine-tuned in order to stay in line with market demand, new platforms, emerging markets and regulatory change – especially when reacting to or predicting competitors’ moves.

In fact, it is intrinsically important to keep your competition at the very front of your mind when constructing a workforce strategy. It is highly likely that you will be fishing from the same talent pool down the line, and predicting skills gaps means that your business will be able to create pipelines and contacts within these areas long before anyone is needed on board. This provides the best chance of winning the top talent – and these acquisitions can be the difference in staying a head and shoulders above the rest.

About Nicola Hancock:

Nicola Hancock has over 15 years’ experience in resourcing for financial services organisations. During her time with Alexander Mann Solutions, she has led a number of key clients globally, including RBS, Deutsche Bank, HSBC and BAML and has built extensive experience and understanding of financial services and the challenges and opportunities this brings to talent acquisition and management. 

Finance Monthly speaks with Dan Peters, the Managing Partner of Valentiam Group – a firm focused on transfer pricing and valuation that spun out of Economics Partners in 2018. Dan has practiced transfer pricing and tax valuation for over 25 years, and previously led global practices at KPMG and Duff & Phelps.
Valentiam currently has 7 Partners and about 20 professionals in the company’s offices in New York, Dallas, Salt Lake City, Los Angeles, Seattle and West Palm Beach.

The firm serves clients from the middle-market to the largest and most complex multinational firms and focuses exclusively on transfer pricing and valuation matters, which are primarily for tax purposes – such as property tax valuation, valuation of legal entities within a related-party group structure, or valuing specific intangible assets.

All of the firm’s Partners are leaders in their specialties and Legal Media Group lists each of Valentiam’s transfer pricing Partners as ‘Leading US Transfer Pricing Advisers’.

Below, Dan tells us more about the work they do and the things that set them apart from other tax advisories.

 Tell us about the beginnings of Valentiam Group? What inspired the founding of the company?

Valentiam Group’s origins date back to when I started my own practice in 2009. We ultimately entered into a collaboration with Economics Partners in 2013. EP later sought and found a transaction to be acquired by Ryan and Company, which was finalised last year.

Everyone from my original team and several of the other Partners that have been with us for many years weren’t interested in that transaction, so we decided to establish an independent firm focusing on our specialties. So we tried to create Valentiam as a perfect platform for 2019, rather than 1919.

So we tried to create Valentiam as a perfect platform for 2019, rather than 1919.

What was the process of creating the new brand like? How did your clients react to the new brand?

Creating Valentiam in 2018 was a lot different than starting my own firm a decade ago. We used ‘crowdsourcing’ to help us choose a name, design a logo, and develop our website. It was astonishing to see how radically different and better that process can be when you use technology.

Our clients have been incredibly loyal to us. My experience in our industry is that clients are primarily focused on the quality of the adviser and the work product that they produce. None of that changed with us when we rebranded as Valentiam and the transition has been as smooth as we could have hoped it will be. In fact, our clients are as excited as we are about the new platform and what it means for them.

What are the company’s overall principles, beliefs and mission?

Our mantra is that the firm’s purpose is to support our advisers and clients. There are three actors in our business – the advisers, the firm, and the clients. We fundamentally believe that way too much of the value in other platforms is attributed to the firm.

The typical firm ends up bloated – with Senior Partners acting as administrators and the overhead part of the firm unnecessarily consuming resources that should be invested in serving clients in a better way or paid to the advisers. All this drives up costs and thus, prices for clients, and results in the actual advisers earning only a small fraction of what is billed to the clients. This is why our core principle is that our primary focus should be on serving clients and developing our team of advisers.

Our other mission is to be an independent provider of transfer pricing and valuation services, as we understand the synergies and complexities between them and we see the value in being independent.

Combined, these differentiators allow us to reward and grow our top performers’ careers, providing our clients with better advice and fairer billing rates.

What makes Valentiam Group a different platform for both clients and professionals that practice transfer pricing and valuation?

Our platform is optimal for both our clients and our professionals for three reasons. First, we are extremely low overhead. We have no Partners who are administrators – actually we don’t have administrators at all. I spend the great majority of my time advising clients. We either outsource administrative functions or leverage technology to perform the routine functions of a professional services firm.

Second, all of our professionals share in the success of the firm as our compensation model has more risk and reward than what the industry typically offers. That helps align the incentives of all of our professionals to be focused on serving the client.

Third, we have a much flatter structure than our competition – it’s really an ‘apprentice model’, where our young professionals work directly with Directors and Partners. Our staff/Partners ratio is roughly 1.5 to 1 - compared to leverage ratios of about 8 to 1 in big accounting firms.

Combined, these differentiators allow us to reward and grow our top performers’ careers, providing our clients with better advice and fairer billing rates. It also allows our Partners and younger professionals to work closely together in the trenches on client matters, which is satisfying for both sides.

How do you best help companies set their transfer prices and manage their transfer pricing risks?

Setting transfer prices is by definition subjective, and we sometimes say that we are only limited by our imagination in thinking of how third parties would transact with one another.

But in today’s world, the transfer pricing risks that our clients face – which obviously include tax risk, but also reputational risks and even the risk of disruptions to operations – as a result of inappropriate transfer pricing are so great that we have to be extremely careful to ensure that the advice we give to our clients is absolutely correct and defensible.

We can’t be certain that what was acceptable in the past will be so in the future. Our clients need to be sure that the economics of what we do are sensible. The best way we’ve found to do that is to ask: “Would both parties agree to this price or value?”. We make sure that our analysis holds up for both the buyer and the seller.

What makes your property tax advisory business unique?

Carl Hoemke, who leads that practice for us, has been an innovator in the property tax space throughout his career and has developed property tax compliance software that is market-leading. He focuses on valuing complex assets for the largest companies who have the highest property assessments.
Carl is planning to make us the key player in the complex property tax valuation area - we’re going to do some exciting things in the next 12 months!

Setting transfer prices is by definition subjective, and we sometimes say that we are only limited by our imagination in thinking of how third parties would transact with one another.

Why do you focus on valuation for tax purposes?

Tax Valuations require the practitioner to understand tax. We see tax valuation studies that are fundamentally wrong because the adviser didn’t understand the purpose of the transaction, or the risk profile of the entity within a larger group. Since we focus exclusively on tax matters, we believe we do this work better than other firms.

What are the synergies between transfer pricing and tax valuation?

It starts with the skillsets of the advisers. The training, databases, methodologies used – there are more similarities than differences in the skills required to perform a valuation study and a transfer pricing study.

It then extends to the issues we face – one can’t be a complete transfer pricing adviser without being able to value assets, and you can’t really do solid tax valuation studies without being expert in transfer pricing.

We believe that our approach to addressing these two services in a single practice gives us a competitive advantage in attracting young professionals to our practice and in providing our tax clients with the most expert service possible.

Research from AVORD – a revolutionary new security testing platform that launches today – reveals 95% of businesses in the financial sector have seen an increase in the number of data breaches over the last five years. And as a result of the growing threat to mobile devices, more than half (52%) are now investing more in identifying and protecting against app-based threats.

Opportunistic multi-national consultancies are being blamed for inflating the price of security testing in the UK, with many financial services businesses being charged inflated prices to conduct tests on their critical assets.

Consultancies taking advantage

Today’s findings put the spotlight firmly on the security testing market, which is dominated by consultancies who provide services to businesses, sometimes at twice the daily rate of an independent tester – often referred to as ethical hackers. With 76% of businesses claiming the cost of testing is too expensive, there is a clear demand for change.

More than three quarters (79%) of businesses in the financial sector currently outsource the security testing on their critical assets. The need to use consultancies is being driven by a skills shortage, with many (41%) revealing that they don’t fully possess the in-house, employee skills and knowledge to carry out security testing.

More than three quarters (79%) of businesses in the financial sector currently outsource the security testing on their critical assets.

A surge in cybercrime

Worryingly, the financial sector was subject to the most security breaches - of all surveyed industries - last year, with two in five (41%) suffering from an attack that directly hit their bottom lines, lost them customers and damaged their brand reputations. Of those hit by a cyberattack, 77% reported that the breach occurred partly as a result of issues with the security testing process.

Over the past five years, the majority of companies have seen a major increase in the number of data breaches: 29% reported an increase of between 11% and 20%, while more than two in five (44%) reported up to 10% more data breaches.

The true cost of cyberattacks

As new emerging technologies are deployed, and applications increasingly underpin core business processes, firms across the UK claimed that cybercriminals are creating new ways to exploit vulnerabilities, which is putting increased stresses on them at an already challenging time.

The impact of breaches in the past 12 months has been wide spread. 84% of those affected reported losing customers, while almost a half (48%) had to pay legal fees and 58% experienced reputational damage. In addition, nearly seven in 10 (68%) were hit by fines from regulators.

(Source: AVORD)