In today’s digital world, data is a vital asset that gives organisations the ability to uncover valuable insights about customer behaviour, which ultimately provides businesses with a competitive edge. However, new research commissioned by managed services provider Claranet has revealed that UK financial services organisations are struggling to capitalise on the vast amounts of customer data they collect.

The research, which was conducted by Vanson Bourne and surveyed 750 IT and Digital decision-makers from a range of organisations across Europe, is summarised in Claranet’s Beyond Digital Transformation report. The findings reveal that despite the increasingly large quantities of data that the financial services sector is now collecting, over half of UK companies (54%) struggle to use and understand their customer data to help them make important business decisions.

According to the survey responses, 43% of UK organisations in the financial sector cite centralising customer data as being a key challenge encountered when trying to improve the digital user experience, and 41% reported that they were unable to provide a consistent experience across channels as a result.

For John Hayes-Warren, Head of Vertical Markets at Claranet UK, the findings highlight how the often-siloed and legacy approaches to data management are preventing businesses in the financial sector from exploiting the potential of the information at their fingertips.

Hayes-Warren commented: “Data has quickly become an incredibly valuable asset in the financial sector and the source of important intelligence that can be applied to respond to changing customer demands. Most businesses are sitting on vast amounts of data and those that can harness it effectively can gain a much deeper understanding of their customers, better predict, improve and personalise the customer experience and, ultimately, create stronger brand loyalty and repeat business. It’s therefore troubling that over half of UK financial services organisations are reporting challenges in this area, so addressing data management shortcomings needs to be a priority for any business that is passionate about delivering a positive customer experience.

“To realise the benefits of data you’ve got to be able to combine and mine different repositories of data and make it actionable in real time. However, that’s something that is often frustrated by legacy systems and batch processing. These unconnected and incompatible IT systems create data siloes and prevent data and insights from being discovered and actioned within organisations,” he continued.

“Cloud technologies can help a great deal, providing the tooling and infrastructure needed to collect, process, and analyse vast sets of data from across the organisation and make it actionable in real time. By creating a platform that can capture and analyse data from across an organisation, leaders can discover unique insights, issues and opportunities that will ultimately help them achieve the competitive advantage they seek,” Hayes-Warren concluded.

(Source: Claranet)

For almost three quarters (73%) of financials services leaders, customers are the main driving force behind their company’s digital transformation, however fear of failure is holding back the implementation of digital projects, with almost three quarters of financials services leaders put off by the costs of failed projects. This comes as no surprise, as seven-in-10 admit to cancelled projects in the last two years, according to Fujitsu’s Digital Transformation PACT Report.

“Financial services firms are under pressure from their customers to deliver greater speed, convenience and personalisation, as well as better customer services,” said Ian Bradbury, CTO Financial Services at Fujitsu UK & Ireland. “Digital transformation is certainly a key strategy in helping banks and insurers achieve this, however, despite the sector going from strength to strength, financial sector firms have undertaken unsuccessful projects and lost money. This has made them nervous about deploying new projects. But we feel that success can be born out of previous unsuccessful projects, as previous failures allow organisations to learn. In an ever-changing market, there is no such thing as permanent success. Organisations must continuously improve, learning from their mistakes along the way.”

Even though over four-in-five (87%) have a clearly defined digital strategy, almost three quarters (73%) admit that their digital transformation projects often aren’t linked to the overarching business strategy. But is this the sole reason UK financial services leaders can’t get to grips with their digital projects?

Realising a digital vision is not just about having the right technology. In order to successfully digitally transform, this research highlights four strategic elements businesses must focus on: People, Actions, Collaboration and Technology – the Digital PACT.

1. People

While admitting to a problematic skills gap – especially as 80% believe the lack of skills within the business is the biggest hindrance to addressing cybersecurity – it is encouraging to see that over nine-in-10 believe they have a culture of innovation within their organisation. Despite this believe, 87% believe that fear of failure is a hindrance to digital transformation projects. There is therefore a long way to go for financial services companies to truly transform their culture to thrive on innovation. As UK financial services firms are taking measures to increase their access to digital skills and expertise (93%), four-in-five believe attracting ‘digitally native’ staff will be vital to their firms’ success in the next three years, as well as turning towards targeted recruitment (72%) and apprenticeships (50%) to support digital transformation.

2. Actions

Although having the right processes, attitudes and behaviours within the organisation to ensure digital projects are successful are seen as the least important of the four key elements of digital transformation, 87% are taking specific measures to support collaboration on digital innovation and over two-in-five (43%) are creating networks for employees to share expertise across the business.

3. Collaboration

Over a quarter (28%) of UK financial services leaders believe collaboration is an important element in realising the company’s digital strategy. While almost four-in-five (78%) turn to technology experts for co-creation, 67% go as far as seeking consultancy and training from start ups and organisations outside their industry.

4. Technology

Many organisations are already leveraging new technology that will radically change the way they do business. A fifth of financial services leaders believe implementing technology will be the most important factor to realising their digital strategy, with cloud computing and big data and analytics playing a key role in helping drive the financial success of their organisations over the next 10 years.

Bradbury continues: “Historically, financial services firms have been cautious when it comes to innovation. They are working under strict regulations and the very nature of what they do, means that a radical digital transformation project could have a detrimental impact on people’s lives – for example, negatively impacting access to bank accounts or making insurance claims. But this shouldn’t hinder innovation across the sector. Quite the opposite – with the help of external expertise and willingness to implement digital transformation, we can be soon pleasantly surprised at a revamp of the industry. Change doesn’t always come naturally, but the financial sector understands what’s at stake, with 86% admitting that the ability to change will be crucial for the business’ survival in the next five years.”

(Source: Fujitsu)

A decade on from the great financial crisis and the fall of Lehman Brothers and Europe’s financial services is the only sector not to have returned to pre-crash levels. Below Finance Monthly hears some expert commentary from Beranger Guille, Global Editorial Analytics Director at Mergermarket, an Acuris Group company, on the current state of European M&A in the Financial services sector.

Despite an appetite for large-scale banking mergers and an eagerness to create pan-European banks capable of challenging rivals across the Atlantic, Europe still operates under strict rules that have so far prevented such merger ideas from materialising.

Between 2006 – 2008, Europe saw a total €607.9bn change hands across 1,592 deals. Since 2016 to date, activity remains still nowhere near these pre-crisis levels, with a mere €221.1bn traded over 1,251 deals and a spectacular absence of mega-deals that were once a prominent fixture in the build up to last financial crisis.

10 years later

A decade on from the crash, regulators continue to introduce new rules on top of what is already a very comprehensive rulebook. Basel III and Solvency II: the first ever set of rules on liquidity, placed a robust set of capital requirements on banks and insurers, with additional process still not complete. The capital conversation buffer, which ensures banks build up capital reserves to weather losses incurred during downturns, will take effect on 1 January 2019. In 2013, The European Market Infrastructure Regulation (EMIR) drove the centralised clearing of derivatives and promoted robust reporting requirements to trade repositories. While most recently, the Markets in Financial Instruments Directive (MiFID II) and Central Securities Depositories Regulation (CSDR) has pushed more transactions to occur on exchanges to improve transparency and the overall efficiency and safety of securities settlement.

In the build up to the crash, Italian lender Unicredit conducted a string of mergers between 1998 – 2006, while Royal Bank of Scotland spent €71.1bn acquiring Dutch lender ABN Amro on the eve of disaster. Both left shareholders and taxpayers alike reeling from heavy losses.

The current situation

Today, mega-mergers are once more mooted with cross-border deal discussions between Unicredit and Société Générale reportedly taking place. However, “there is nothing on the table,” according to France’s Minster of the Economy and Finance, Bruno Le Maire.

There is also talk of potential national mergers afoot. In the UK, Barclays chairman John McFarlane is eager to do a deal with Standard Chartered, while German lenders Deutsche Bank and mull a merger of their own.

But, despite an apparent eagerness to get deals done, there is a lot of cold water that investors and analysts are only too quick to pour on such tie-ups.

There is a lack of strategic rationale behind a Barclays-Standard Chartered deal, with two banks having little to no geographical overlap, with the former boasting strong ties in the UK and US and the latter firmly focused on emerging markets in the Asia and Africa. Meanwhile, discussions between Deutsche Bank and Commerzbank certainly offer a stronger rationale, but it should not be forgotten that Deutsche Bank launched a €8bn rights issue – its fifth capital hike since the crash – to plug holes that continue to leak.

A political climate

Given the political environment in the EU, and that there is a degree of nationalism when it comes to banks, large-scale cross-border deals look anything but likely. Two years ago, Swedish lender Nordea made an approach to acquire ABN Amro but had its offer slapped down by the Dutch government. Some bankers were even brazen enough to pitch a merger between Barclays and Santander. Cross-border European deals for the time being at least seem off the table, but domestic mergers could provide dealmakers something to chew on.

The timing of renewed merger talks is interesting, with the next cyclical downturn expected to come to bear in the next two years.

Calls for consolidation amid so much uncertainty is cause for concern, but desperate times lend themselves to management contemplating desperate measures. Weak profitability is putting pressure on banks to take action at a time when big tech, fintech and alternative lenders threaten to grab market share. And while the appeal of cross-border mergers may provide a boost to the sector's profitability, bigger banks, history tells us, are not necessarily healthier banks.

The growing necessity to adapt rapidly to disruptive technologies and react to shifts in the market at an accelerated pace, is driving ‘agility’ in the financial services sector. Below Adam Gates, Principal at Odgers Connect, explains why the financial services sector is increasingly turning to independent consultants over traditional management consultancies.

Firms are increasingly looking at how they can evolve their organisations to operate more flexible business models and become more responsive to customer expectations. It’s a growing trend that is reflected in the way financial services firms are using consulting support.

The UK’s consulting market is estimated to be worth anywhere between £9 and £10 billion. Almost one-fifth of this is being delivered by a growing number of independent professionals. Often called the ‘professional gig-economy’, this cohort of freelance consultants is, for the most part, made up of ex-Big Four partners or senior managers. It’s a pool of highly-experienced individuals that the financial services sector is increasingly calling upon.

Offering a blend of strategic direction and hands-on implementation, independent consultants are a highly flexible resource that can be used for a range of business issues. Our latest research has found that it’s because of this level of flexibility that 43% of financial services firms are choosing to work with independent consultants over traditional management consultancies.

Of course, when it comes to meeting mass capacity demands, the big consultancies have teams of people available. It’s why 57% of businesses in the financial services sector cite this as the primary reason for working with a traditional consulting firm. This is however, becoming an unwieldy approach to delivering strategy, especially when staying ahead of the competition means operating at pace and being able to adapt to the whims of regulators and shifting market currents.

This competition is coming in the form challenger banks and ‘digital native’ fintechs who have a level of inherent flexibility that is enabling them to bring products to market faster and more readily adapt to the needs of customers. As a result, a trend towards agility is emerging in the financial services sector which coincides with the use of more flexible consulting support.

What’s more, owing to the level of experience they have built during the course of their careers, independent consultants tend to deliver a better quality of work, which is why most financial services firms will seek out specific skills from independent consultants, rather than from a big consultancy. This ‘area expertise’ means organisations will often expect an independent consultant to ‘get things moving’ within the first couple of weeks of coming on board; something that links an independent so closely to this aspect of flexibility.

That said, quality assurance remains an area of contention. Whilst an independent professional offers that much needed level of flexibility for financial services firms, a mainstream consultancy can often be seen as the safer bet; if things aren’t going well, you can always escalate the problem ‘up the chain’.

It is clear however, that with organisations in the financial services sector now focusing on meeting the changing expectations of their customers at the same time as staying ahead of continuous disruption, flexible consulting support is going to become that much more critical.

Since the beginning of the digital age, the financial industry has gone through a shake-up, and it is now estimated financial services make up 14% of spend is invested in online marketing channels. However, attributing the success of these channels throughout the customer journey, whether online or offline, is proving to be a common challenge within this sector.

According a study by Experian, 51% of financial businesses are relying on simplistic, inaccurate forms of marketing attribution, while some are using none at all, meaning they have no clear, data-driven insights into which channels are driving the most conversions and ultimately the highest return on investment (ROI). Furthermore, considering it takes six to eight touchpoints before a sale, determining the success of each channel should form the foundation for allocating marketing budget to avoid wastage.

To achieve this level of understanding, the financial sector needs to start introducing multi-touch attribution (allocating credit to every conversion (a completed call-to action such as filling a contact form, accessing a live chat or picking up the phone within the customer journey) to evaluate their marketing success. However, getting to grips with this can be tricky.

Here’s exactly why multi-touch attribution is key to shaping the future of marketing for the finance sector.

Paid Search

Out of all the marketing platforms available, paid search is appearing as one of the most successful within the financial sector. According to research by Growthpoint, the finance industry has one of the highest paid search conversion rates at 7.19%; indicating that many consumers are using paid search throughout their journey. However, they also have the third most expensive average cost-per-click (CPC) at $3.72.

When looking into the most popular keywords for financial advisers in Google Keyword Planner (see above), it’s clear the average CPC increases substantially, with ’independent financial adviser’, ’financial adviser near me’ and ’financial advice’ appearing as the top three most expensive keywords. Considering that high cost paid search expense seems inevitable for those in this sector, staying ahead of the game and determining how much ROI paid search is driving for your business is crucial.

Instead of blindly throwing money at the most obvious keywords, the smart financial marketer needs to be thinking of how they can optimise their other keywords to reduce the cost of customer acquisition, whilst maintaining click and conversion rates. To do this they need to attribute how effective particular keywords are throughout the customer journey.

For example, although the digital presence of the finance industry has grown rapidly in recent years, it doesn’t mean that consumers are no longer converting offline, for example by picking up the phone. In fact, a recent survey found that consumers are 2.8 times likelier to call from a paid search ad for financial services than other industries when researching their options.

Let’s say you’re a mortgage adviser who is bidding on the term ’best fixed rate mortgage rate’. How exactly can you attribute the number of phone calls this keyword has driven throughout a customer’s journey?

Call tracking attribution software from Mediahawk, allows you to connect them all, and the activity that generated the call, together, enabling you to analyse the impact phone calls have during the customer journey to determine campaign success. It can also show the full value of the mortgages generated from this specific keyword enabling you to attribute your full ROI from paid search.

Price Comparison Sites

As we’ve already stated, digital marketing is proving to be a popular, yet expensive choice for the finance sector. However, the prospect of high-value conversions means being competitive in this market doesn’t come cheap and these channels include price comparison sites.

When it comes to finance, no consumer wants to feel like they’ve overpaid for a policy for instance, or a mortgage or loan; which is why 60% of consumers are ’very likely’ to use a price comparison site when researching or buying a financial product.

Considering that they’re playing such a crucial role in the customer journey, financial services should certainly advertise on price comparison sites to drive desired results and profits. But this is a rather saturated market and future growth can depend on any changes that might occur to the comparison sites themselves. Therefore, the most successful financial marketers will be those who can hold their position on price comparison sites whilst optimising other channels to achieve growth.

By optimising other channels, such as social media, remarketing and PPC (pay-per-click) whilst maintaining efficient price comparison site coverage, financial businesses can prevent themselves from becoming too reliant on a singular advertising outlet, compensate the costs created from the comparison sites and continue to drive traffic through less costly methods. Determining the success of these campaigns can be a difficult task when financial businesses are using their current marketing tools. With the extensive digital competition that financial marketers are facing, an effective marketing measurement solution is essential for staying ahead, which is where multi-touch attribution comes in.

By making a correlation between actions and revenue, multi-touch attribution can paint the full picture of marketing effectiveness and highlight opportunities to optimise campaigns further. This is essential for finding an even balance between advertising on price comparison sites and external marketing activities.

Paid Social Media

Although it might not appear as an obvious choice, social media is becoming a popular marketing platform for the financial services industry with more and more companies using various platforms for consumer retention. According to research conducted by Community Rising on social media within the financial sector, 87% of respondents said their business uses Facebook, while 52% are using Twitter and 47% are using LinkedIn. The advantages of paid social media are clear and, although it won’t drive as many last-click conversions, it plays a crucial role in portraying a positive image of your company and building brand identity.

In a world where competition is significantly fiercer for financial services, and where it is considerably more expensive to obtain new customers than keep existing ones on board, paid social media is providing a clever, new way for financial businesses to market themselves. However, it isn’t without its issues. Typically, social media platforms play a more nurturing role within the customer journey and lack any real influence at the beginning or end of path to purchases. This means that when it comes to measuring effectiveness, both first and last-click attribution models have become obsolete.

To really understand the vital role paid social media platforms play in financial marketing, a data-driven multi-touch attribution model is essential. By incorporating, into your reporting, exactly how often social media is used during the customer journey you can obtain real insights to aid decision-making over strategy and spend. Furthermore, you can home in on specific channels to maximise your optimisation efforts.

We speak with thought leader Andrew Morris - a wealth transfer expert who’s dedicated his career to helping clients plan, grow and protect their assets. For over 25 years now, he’s been passionate about helping families with setting up charitable remainder trusts and assisting families with special needs to secure their future through the use of insurance. As a Social Security Analysts, Andrew helps clients maximise and understand their Social Security benefits to optimise their retirement planning.

What trends are you seeing in the current insurance landscape and how do you intend to keep up with these?

The current trend I see in the industry is the tremendous need for an alternative form of guaranteed lifetime income in addition to social security for the aging baby boomer population. Since many major corporations no longer offer a defined benefit type pension plan, many retirees are looking for ways to have a guaranteed lifetime income stream which can only be offered through insurance companies and their living income benefit riders. The recent DOL (Dept. of Labor) legislation regarding the fiduciary rule has made the return of guaranteed lifetime benefit riders popular again, since many companies have now lowered fees and have simplified the benefits to adhere to the new rules.

Another trend that I see in the insurance industry is the need to make sure that older whole life policies are upgraded to make sure that the aging 76 million baby boomer population has adequate life insurance coverage. With the increase in American retirees living longer and the standard life expectancy numbers increasing from age 78 to age 85, life insurance mortality tables had to be updated a few years ago to reflect these longer life expectancy rates. This increase in the mortality tables has left many old policies old and ‘underinsured’. Clients can now enjoy receiving larger coverage increased face values for old permanent life policies for a lower cost or the same amount due to the recent change in mortality tables. The only way I can keep up with the amount of new service for these older policies and aging clients is through the use of technology.

What is the biggest challenge the US insurance sector faces today? What would be your solution?

The biggest challenge the insurance industry faces today is technology and the ability for insurance companies that are considered old and antiquated to keep up by updating their systems for servicing and cybersecurity. As a result, I anticipate that there will be further consolidation within the insurance industry over the next couple of years. With the baby boomer population turning 65 at a daily rate of 10,000 per day, it is an enormous number to keep up with. So, the companies that are not up to speed technology wise will fall by the waste side and will be acquired by larger insurance companies.

The only solution for companies that are currently behind in their technology would be to establish a new strategic alliance or joint venture, where they partner up with a third-party vendor and potentially outsource the work. Very few insurers have all the resources they need to become truly cutting edge. Technological advances are changing business and operating models, which is challenging to an industry that is accustomed to slow evolution.

What do you find businesses commonly fail to consider when it comes to insurance?

Businesses commonly fail to consider the fact that that they are ‘underinsured’ in relation to price. Many businesses will value good price as opposed to the proper amount of insurance for their business. Having a good insurance adviser or consultant can help business owners who are underinsuring themselves to start saving them money. Insurance is one of the most important needs for a small business, yet it is something that many owners skimp on. People don’t reevaluate their insurance needs as their companies grow and numerous small businesses don’t have business interruption insurance in addition to property and casualty coverage, even though it is something that can put their companies and livelihoods at risk. I think that it is vital for company owners to consider and be mindful of the damaging impact that an emergency incident can have if your business is not properly insured.

To hear about tax planning and the things that need to change in the UK tax legislation Finance Monthly speaks with Adele Raiment, Director of the Tax Advisory team that specialises in entrepreneurial and privately owned businesses at Mazars LLP. Adele’s main area of expertise is working with privately owned businesses to develop and implement a succession plan, to ensure that any assets that the shareholders wish to retain are extracted in a tax efficient manner and she also works with all parties to assist in the smooth running of transaction.

What are the typical challenges faced by shareholders of entrepreneurial and privately owned businesses in the UK, in relation to the management of their finance?

I think the main concern on the horizon is the potential impact of Brexit on the UK economy and business confidence more widely. For privately owned businesses in the UK, many are still very cautious following the 2008/09 recession, and with the uncertainties surrounding Brexit, it is difficult to plan too far ahead. One of the main priorities of shareholders is ensuring that they have sufficient cash reserves to ride any potential downturn in the economy whilst recognising that they need to invest and innovate to thrive.

What is your approach when helping clients with tax planning?

My approach is to primarily understand the client’s commercial and personal objectives in priority to considering any tax planning. When planning for a transaction, I frequently find that the most tax efficient option isn’t always going to meet the key objectives of the shareholders or the business. It is important to consider the shareholders and the business as one holistic client, and therefore strike the right balance between personal, commercial and tax objectives. In respect of tax specifically, it is important to take all relevant taxes in to consideration whether it be corporate or personal. A good understanding of all taxes is therefore required.

My clients vary from FDs, to engineers, to self made entrepreneurs - all requiring different approaches. I believe that it is fundamental to get to know your client and adapt your approach to ensure that they understand you and what you are trying to achieve.

What are some of the day-to-day challenges of operating within tax planning? How do you overcome them?

As I predominantly work on transactions, I often work very closely with other professionals such as corporate finance professionals, lawyers and other accountants. The key challenge to this is making sure that the whole team is working collaboratively to achieve the best result for our client.

We are also under pressure to keep costs down, whilst ensuring that we provide quality advice. This can be difficult if the team has multiple transactions on the go at the same time and senior resource is constrained or if the project is wide-ranging, requiring several specialists to input in to the advice. The key to this is having a driven and supportive team, where teamwork and openness is pivotal to success. The working environment of my team at Mazars is incredible as we encourage open discussions on a variety of areas but one of the most useful ones is on technical uncertainties, which encourages consultation in times of uncertainty and technical development.

In your opinion, how could UK tax legislation be altered for the better?

Despite an exercise to ‘simplify’ UK tax legislation over more recent time, the legislation has increased in volume. A good example of this is that there are now two separate corporation taxes acts, when previously there was one. Having said this, the majority of the language used in more recent acts has made the legislation more user-friendly. However, there are still pockets of the legislation that seem to have been rushed through parliament and the practical use of the legislation was not considered fully prior to being enacted. This has resulted in several pieces of legislation being amended a year or two down the line. Although there does seem to be an element of consultation between Practice and HMRC prior to some legislation being enacted, I’m not always convinced that HMRC take on board the feedback. I therefore feel that a more rigorous consultation process should become standard to ensure that the commercial and practical elements of legislation are considered prior to enactment.

Contact details:

T: +44 (0) 121 232 9583/ M:+44 (0) 7794 031 399

Website: www.mazars.co.uk

Email: adele.raiment@mazars.co.uk

LinkedIn: http://uk.linkedin.com/pub/adele-raiment/13/693/360

Email: adele.raiment@mazars.co.uk

LinkedIn: http://uk.linkedin.com/pub/adele-raiment/13/693/360

For more insights into American insurance, Finance Monthly interviewed Joe Montgomery, the Founder and Managing Director - Investments of The Optimal Service Group of Wells Fargo Advisors.

Since you founded The Optimal Service Group in 1975, what are the three biggest observations you’ve made in regard to the US insurance sector?

Number one is going to be the environment they're working in. Since interest rates broke in 1981, the decline of interest rates has taken away the ease of making money in fixed income, which predominantly composes many insurance companies’ investment portfolios. Subsequently, the decline has continued to make a case for the diversification and the exploration of other asset classes to compensate for the decline in interest rates. Thirdly, it has highlighted the importance of developing the expertise of those who manage their investments such that prior to 1981, we would argue, would have been important but now is critical to the success of these companies.

What are the biggest trends you follow today and how do these work in growing relationships with your clients?

As a follow on from the second point we discussed, the expansion of the use of asset classes in order to be able to get an adequate investment return, whatever that may be for that particular company, makes the customisation of the investment process for the insurance company that much more important. Our constant motive to innovate and be ahead of the curve carries over to our diligence in working with our Investment Institute to implement new or broadly underutilised asset classes into our clients’ portfolios.

What do you find are the considerations your clients commonly fail to make when it comes to insurance? How do you help prioritise the important considerations?

When clients need to drive a business with sales, they normally have a focus on the front end of the business i.e. the bringing in new business, competing and pricing. Because that goes through cycles on the underwriting side, the investment side tends to take a little bit of a back seat. We help prioritise these considerations by functioning as an investment consultant to those companies. By delegating us to this role, we are helping make sure the investment policy is written so that the management of the assets can be done on a long-term basis, while not having an overreaction by management regarding changes to the investments each time there is a shock in the underwriting cycle.

What are the biggest obstacles you run into in doing so?

The biggest obstacle for most people in anything is running out of time. They don't have enough time in their day, so they set a priority; frequently because things haven't been broken or they became accustomed to doing well when interest rates were declining. The investment side then does not really become a priority for some companies. Unfortunately, they then realise that a focus on their investments should have taken a higher ranking in their priorities when it’s too late.

Within the institutional consulting sphere, what would you say are the top three insurance challenges and how do you find solutions to these alongside your clients?

It's an interesting combination of time and cycles where people should have enough time to pay attention to the investment side by getting the policies in place before there is a crisis situation. Additionally, because of the decline in interest rates, as mentioned earlier, the constant search for yield is more prevalent now than ever. And because companies had to move away from just the traditional high quality bonds they used, they are now in uncharted waters which has resulted in a learning curve. The questions many insurance companies are asking themselves now are ‘How should we develop the investment expertise necessary to allocate appropriately in today’s environment’ and ‘Should we develop in-house or hire a team externally?’.

Another challenge we see is navigating how portfolios are structured within the highly regulated and restrictive insurance industry. We are able to utilise our knowledge and 28 years of experience in navigating these highly regulated industries to mold a strategic asset allocation that is built with enterprise level objectives and risk as the backdrop.

You are charter member of both the Barron’s Top Institutional Consulting teams and the Top 100 Financial Advisors and have remained on each list. How do you feel such accolades incite confidence in your clients?

All accolades and any honours are appreciated and humbling. As far as our clients, we think the accolades hopefully provide some comfort along with the research they should do before working with us or anyone in this industry. Furthermore, we believe they provide some confidence that our experience and background can add value to our clients’ businesses.

How do you continue to uphold this reputation today?

That's basically a combination of the strength, experience, background and training of our team, as well as our constant due diligence and professional development. One of the big things we are able to do for our clients in terms of adding value to their portfolios is spending the time to look for resources, developing them and then helping determine the best way to apply them.

Widespread confusion about cancer symptoms among employees could be leading to delayed diagnoses and irregular self-examinations according to new research by Bupa UK.

One in two people in the UK will be diagnosed with cancer in their lifetime, however 53% of employees in the financial services sector are confused about what to check for when it comes to common cancers such as skin, bowel or lung.

The study found over half (56%) also say it is hard to remember the warning signs or physical changes they should look for. As a result, a third (32%) of employees have never checked themselves.

This confusion is one of the significant factors that could delay diagnosis. One in five (19%) employees said they have delayed seeking medical advice about a symptom as they “didn’t realise what to look for”. But for a fifth of these people (4%), this symptom was later diagnosed as cancerous.

Additionally, a third (35%) of those across the financial services sector would worry about taking time off from work to have a symptom checked.

Being able to recognise if something is wrong is important for improving survival rates, which is why Bupa has created a simple Cancer Check-CUP guide, which can be incorporated into health and wellbeing guidance for employees.

If someone experiences all three signs they should get medical advice.

Change:

Is something about your body different or unusual? Is something new, or does something feel ‘wrong’ to you? Trust yourself to know what is right and wrong and seek help.

Unexplained:

Can you pinpoint why something has changed, why you are feeling physically unwell? If not, it is worth further investigation.

Persistent:

Have you been experiencing this or feeling unwell for longer than two weeks? Watch out for the symptoms that you can’t shake off.

Creating a culture where people feel comfortable discussing health challenges at work can help ensure that employees receive the support they need, but the research also highlights that for nearly half (46%), cancer isn’t talked about in their workplace.

(Source: Bupa)

New research from Haven Power, one of the UK’s largest business electricity suppliers, reveals two fifths of Financial Services firms think renewable energy is just a passing trend. A perception that is significantly higher than any other industry.

Despite scepticism, almost two thirds of businesses in the sector are keen to start selling energy back to the grid. The Financial Services industry is one of the greenest compared to others surveyed, with 41% stating they already had onsite battery storage facilities installed.

The survey of Utility Decision Makers in Financial Services showed the biggest barrier preventing them from implementing sustainable change was cost (44%), followed by uncertainty on both how to measure the impact and ROI (30%) and how to discuss with investors or senior management (26%).

Paul Sheffield, Chief Operating Officer at Haven Power, commented: “Despite a proportion of firms still seemingly sceptical about the future of renewables, it’s encouraging to see that many are implementing positive changes. Understanding of renewable energy and its benefits varies greatly from sector to sector. We believe that every industry needs to start making sustainable changes to help reduce carbon emissions and embrace cleaner energy.”

When asked to list whose responsibility it is to lower carbon emissions, energy suppliers were cited top (48%), ahead of the Government (47%) and manufacturers (44%). Additionally, almost half (46%) strongly agree it is the energy providers’ responsibility to educate decision makers on the different types of energy available.

Paul Sheffield continued: “It’s imperative that organisations of all sizes across different industries work together with their energy provider to ensure the future of British business is low carbon. By moving beyond viewing energy as a commodity, we can help to drive sustainability and profitability. Here at Haven Power we are keen to help businesses understand the wider benefits of renewables.”

Haven Power is one of the UK’s largest business electricity suppliers, founded over ten years ago, it aims to help businesses control spend, manage risk and boost sustainability by using renewable electricity, energy efficiency and bespoke energy solutions.

(Source: Haven Power)

In the last few years we have seen the frequency and severity of third-party cyberattacks against global financial institutions continue to increase. According to Tom Turner, CEO at BitSight, there is a growing need for more effective risk management firms in the financial services sector.

One of the biggest reported attacks against financial organisations occurred in early 2016, when $81 million was taken from accounts at Bangladesh Bank. Unknown hackers used SWIFT credentials of Bangladesh Central Bank employees to send more than three dozen fraudulent money transfer requests to the Federal Reserve Bank of New York asking the bank to transfer millions of the Bangladesh Bank's funds to bank accounts in the Philippines, Sri Lanka and other parts of Asia. The Bangladesh Bank managed to halt $850 million in other transactions, and a typo made by the hackers raised suspicions that prevented them from stealing the full $1 billion they were after.

Landscape

The Financial Conduct Authority (FCA) reported 69 attacks in 2017 compared to 38 reported in 2016, a rise of more than 80% in the last year. We saw two main trends last year. First, there was a continuation of cyberattacks targeting systems running SWIFT — a fundamental part of the world’s financial ecosystem. Because SWIFT software is unified and used by almost all the major players in the financial market, attackers were able to use malware to manipulate applications responsible for cross-border transactions, making it possible to withdraw money from any financial organisation in the world. Victims of these attacks included several banks in more than 10 countries around the world. Second, we saw the range of financial organisations that cybercriminals have been trying to penetrate expand significantly. Different cybercriminal groups attacked bank infrastructure, e-money systems, cryptocurrency exchanges and capital management funds. Their main goal was to withdraw very large sums of money.

With the evolving risk landscape and the challenges of new potential risks including third party risks, companies within financial services need a set of management procedures and a framework for identifying, assessing and mitigating the risks these challenges present. Effective risk management offers sound judgement in making decisions about what is the appropriate resource allocation to minimise and mitigate risk exposure.

Risk management lifecycle

The basic principle of a risk management lifecycle is to mitigate risk, transfer risk and accept/monitor risk. This involves identification, assessment, treatment, monitoring and reporting.

In order to mitigate risk, an organisation must measure cyber risk performance and incentivise critical third-party vendors to address security issues through vendor collaboration.

In terms of identification, you can’t manage your risks if you don’t know what they are, or if they exist. The first step is to uncover the risks and define them in a detailed, structured format. You need to identify the potential events that would most influence your ability to achieve your objectives, then define them and assign ownership.

Once the risks are identified they need to be examined in terms of likelihood and impact, also known as assessment. It is important to assess the probability of a risk, and its consequences. This will help identify which risks are priorities and require the most attention. You need to have some way of comparing risks relative to each other and deciding which are acceptable and which require further management. In this way you establish your organisation’s risk appetite.

To transfer risk, an organisation is advised to influence vendors to purchase cyber insurance to transfer risk in the event of a cyber event.

Once the risk has been assessed, an approach for treatment of each risk must now be defined. After assessment, some risks may require no action, to only be continuously monitored, but those that are seen as not acceptable will require an action or mitigation plan to prevent, reduce, or transfer that risk.

To accept and monitor risk, the organisation must understand potential security gaps and may need to accept certain risks due to business drivers or resource scarcity.

Once the risk is identified, assessed and a treatment process defined, it must be continuously monitored. Risk is evolutionary and can always change. The review process is essential for proactive risk management.

Reporting at each stage is a core part of driving decision-making in effective risk management. Therefore, the reporting framework should be defined at an early point in the risk management process, by focusing on report content, format and frequency of production.

Managing with risk transfer

Risk transfer is a strategy that enterprises are considering more and more. It mitigates potential risks and complies with cyber security standards. As cybercrime rises, an insurer’s view of cybersecurity has changed from being a pure IT risk to one that requires board-level attention. Insurance is now viewed as fundamental in offsetting the effects of a cyberattack on a financial institution. However, insurers will want to know that appropriate and audited measures are in place to prevent an attack in the first place and respond correctly when cybersecurity does fail. An organisation’s risk management responsibility now extends down the supply chain and insurers will want to know the organisation’s strategies to monitor and mitigate third party vendor risk.

Simplifying risk management and the transfer of risk can also be accomplished by measuring your organisation’s security rating. This is a similar approach to credit ratings for calculating risk. Ratings provide insight into the security posture of third parties as well as your own organisation. The measurement of ratings offers cost saving, transparency, validation and governance to organisations willing to undertake this model.

The benefits of security ratings will be as critical as credit ratings and other factors considered in business partnership decisions in the very near future. The ratings model within risk management can help organisations collaborate and have productive data-driven conversations with regards to risk and security, where they may not have been able to previously.

Long term potential

This year we will see a continuation of third-party cyberattacks targeting systems running SWIFT, allowing attackers to use malware in financial institutions to manipulate applications responsible for cross-border transactions across the world. Banks generally have more robust cyber defences than other sectors, because of the sensitive nature of their industry and to meet regulatory requirements. However, once breached, financial services organisations’ greatest fear is copycat attacks. This is where an effective risk management strategy can enable better cost management and risk visibility related to business operational activities. This leads to better management of market place, competitive and economic conditions, and increases leverage and consolidation of different risk management functions.

Employee wellness is all about ensuring staff are happy and healthy in and out of work. Mental health-related presenteeism costs employers up to three times the cost of mental health-related absence so it’s more important than ever for businesses to take action and take greater responsibility for the wellbeing of employees.

It’s undoubtedly a win-win for both parties as employees are more likely to work longer and be more productive when they are happy and healthy.

Alongside this, it is emerging that employees are calling out for greater support at work, with 8 in 10 saying they do not believe their employer does enough to support their physical and mental wellbeing.

Richard Holmes, Director of Wellbeing at Westfield Health, advises what actions you can take in your business to improve wellness.

1. Encourage staff to get out the office

“Not only is eating at your desk bad for your body, it’s bad for your work and your mental health. Getting fresh air and a change of scenery will mean employees return to their desks feeling recharged and less stressed. It is also a good way to encourage employees to get out the office and exercise. You can also help decrease the risk of depression and poor mental health by suggesting a walking meeting every now and again.”

2. Approachable line managers

“The first point of call sits with line managers. As well as helping employees achieve their work-related goals, a key part of a line manager’s role is to be an approachable mentor, a good listener and to be understanding. This communication between an employee and their line manager can play a massive part in their mental wellbeing at work and therefore reduce mental health related absences.”

3. Destigmatise mental health

“In 2016/17, there were over half a million (526,000) cases of work related stress, depression or anxiety, and this accounted for 40% of all work-related ill health¹. A ‘mental health day’ gives staff the ability to treat a mental health absence with the same approach as a physical sickness day. This will reduce the stigma around mental health and encourage staff to talk openly about their mental wellbeing. It is also a good way to monitor how people are feeling, for instance if someone is absent as a result of their mental health, something can be put in place to monitor and support them.”

4. Keep it fun

“Implement schemes and competitions in the workplace as an incentive for staff to get involved. Competitions can include sports days, quizzes or a step challenge and can either be judged individually or in teams. Introduce prizes to build competitiveness such as a free massage, healthy food vouchers or a gym subscription, resulting in a happier, healthier lifestyle.”

5. Flexible working

“The traditional 9 to 5 hours may not fit in with everyone’s lifestyle, so offering a flexible schedule may make a lot of employee’s lives easier. Businesses can also offer the option to work from home a few days a week. If an employee has a long commute, this can have a big impact on energy levels and general wellbeing.