Billon and the Polish Credit Office (Biuro Informacji Kredytowej - BIK), the largest credit bureau in Central and Eastern Europe, have announced they will implement blockchain for storage and secure access to sensitive customer information. Billon's blockchain technology will benefit the bureau through superior security, integrity and immutability of data. The fully-GDPR compliant solution guarantees total visibility, trackable history and full data integrity for any client-facing document including banking records, loan agreements, insurance claims, telephone bills and terms & conditions.
BIK, owned by the largest banks in Poland including Pekao, ING, mBank, Santander and Citi, tracks nearly 140 million credit histories of over 1 million businesses and 24 million people. "Our cooperation with Billon is long-term. We believe that blockchain technology will transform client communications in the financial sector. Our solution will soon be expanded to include electronic delivery with active confirmation and remote signing of online agreements. It is also important that the solution meets legal requirements of a durable medium of information, as well as the EU GDPR requirements," said Mariusz Cholewa, President of BIK.
BIK and Billon developed the solution for durable medium of information, defined by EU regulations and directives such as MIFID II and IDD directives. The partnership saw eight Polish banks participating in trials, which established that Billon's scalable blockchain architecture could publish over 150 million documents every month. This would be more than sufficient for even the largest institutions to move to paperless customer service.
The solution has been approved following extensive consultation with the Polish Office of Competition (UOKiK) and Data Protection Regulator (GIODO), making it one of the world's first Regtech compliant blockchain solutions, and the only one with on-chain data storage and a mechanism enabling "the right to erase personal data". Currently, the only major alternatives to this are hardware-based archive solutions such as legacy WORM drives. Compared to them, Billon's solution offers 30% saving in TCO, ensuring minimal upfront costs.
"Our partnership is the start of a true revolution in information management. It is now possible to move away from the constraints of closed central databases to a democratic blockchain-based Internet where every user will be able to control their identity," explained Andrzej Horoszczak, CEO of Billon. "This solution provides the world's first GDPR-compliant blockchain platform that streamlines customer service processes and implements customer rights such as the "right to be forgotten". We're fixing the problem of consumer data control, creating a level playing field between individuals and corporations. The benefits could affect more than the financial sector, and we anticipate it will soon be adopted by industries such as telecommunications, insurance and utilities. Our cooperation is only the first step to introducing mass blockchain technology use for trusted document management."
The Internet of Things (IoT) is all around us. From providing doctors with patient data in real time, to tracking vehicle performance, to automating building systems, IoT is transforming businesses and enabling organisations to create entirely new systems and services, engage customers and drive growth. Below Richard Smith, Regional Manager at SOTI, gives us a brief on the top three industries ready for IOT transformation in 2018.
Despite the huge rise in connected devices, there are still some industries that are hesitant to adopt new technologies, regardless of the business benefits. With nearly 20 billion devices[1] predicted to be connected to the IoT by 2020, it is essential that organisations invest in new IoT technologies to keep up with evolving customer demands.
With IoT’s growing maturity comes new approaches, business models, and solutions that will see organisations ramping up deployments and incorporating this technology into their products, processes and workflows.
Almost every industry can benefit from investing in IoT but the important thing to consider is that IoT cannot be deployed in silo. Connecting a business from a technology perspective is all about leveraging mobile (where the business information resides) with IoT. Mobility has taken functionality way beyond the four walls of a business but IoT stands to amplify this.
The communication between mobile and IoT allows even more information to be connected to back office systems even without the need for human intervention. As the adoption of this technology continues, these three industries are ripe for IoT transformation.
Healthcare
IoT has taken healthcare by storm. From wearables that track patient health, to providing remote care to patients who live in isolated areas, the shift towards the digitalisation of the healthcare industry has seen more healthcare workers getting connected and relying on mobile devices. The biggest benefit of IoT in healthcare is to keep patients out of the hospital by providing more effective home care. This is helping to reduce re-infections but also reduces costs, especially when it comes to monitoring patients with chronic illnesses.
Mobile devices are enabling doctors, nurses and other healthcare practitioners to monitor patients outside of the hospital; wearable devices track pulse rates and motion sensors and trackers protect more vulnerable patients. These remote patient monitors provide richer information in a timelier fashion. The ability to now track patients over a 24/7 period - compared to an hour’s assessment in a hospital room – can not only help to diagnose illnesses quicker, but can also measure the effect of treatment. If a medication impacts the patient’s readings, a doctor can be aware of this problem before a patient tells them.
This method of patient tracking not only reduces the complexity for the healthcare facility in offering an exemplary level of patient care, but also reduces the cost. Wearable devices are extremely cost effective and the accuracy of the data reduces patient time in the hospitals, which has another positive impact on costs.
As more and more medical devices become internet-connected with this evolving technology, it is vital that the healthcare industry ensures its compliant with data protection laws when it comes to the transportation of this data. Operators must ensure that medical grade devices are configured effectively, that passwords and encryption is in place and that the connection between the devices is secure to protect patient data from potential hackers.
Transportation and Logistics
Whether by air, ground or sea, transportation and logistics are essential components to many enterprises’ productivity, and access to real-time data is critical. There is a growing reliance on IoT and mobile devices to provide visibility into the supply chain right through to personnel, equipment and transactions that enable enterprises to better support peak operations in real time.
Transportation and logistics businesses are focused on maximising supply chain efficiency to sustain profitability and efficiencies. IoT has already begun to disrupt this industry through systems that are able to sense and respond to vehicle usage and changes in real-time, managing downtime to operate fleets at the lowest possible cost.
IoT provides the ability to track where vehicles are in their route, ensuring they are delivering packages and goods on time and being able to reroute trucks based on live situations such as accidents, road closures or weather conditions. With workers constantly on the move, visibility into where these assets are, and what they are doing can improve business operations.
With the announcement of driverless trucks, IoT will play a major role in tracking vehicles on their routes, deploying preventative maintenance, observing driver behavior and monitoring vehicle security with the goal of improving the bottom line.
Retail
Retail is one of the most fast-paced industries globally. According to Accenture[2], the IoT movement offers retailers opportunities in three critical areas: customer experience, the supply chain and new channels along with revenue streams.
IoT is already being used in retail, but 2018 will be the year where this technology really transforms the customer experience. We’ve already seen an increase in customer touchpoints – such as in-store tablets and online chatbots – but this will evolve rapidly over the next 12 months as shops become even more connected.
For example, we will increasingly see sensors being used for inventory management, allowing a connection to be made from back-end inventory to in-store and online. Also, the in-store customer experience is transforming to meet the demands of the digital consumer – as such, beacons will be used to push relevant messages at point-of-sale and sensors will be in operation to track patterns to develop better instore layouts
Consumers are now taking these features of the technology into account. According to our own research[3], 67 per cent of shoppers are more likely to shop at a store that integrates technology and over two-thirds believe retailers that utilise more technology enable a faster shopping experience.
What’s most exciting for the coming year is how extensive the applications of IoT in retail are. Robots will stack shelves, freeing up staff to add value to the customer, while smart mirrors will let customers virtually try on clothes and connected beacons will send out personalised offers to consumers immediately as they enter the shop.
Future-proofing IoT
This year will be a breakthrough in IoT usage and applications across a wide variety of industries. The ubiquitous nature of IoT will be evident and the technologies driving the usage will continue to emerge and evolve to meet the important needs of deployment, distribution and security.
SOTI MobiControl is an enterprise mobility management solution that secures and manages IoT devices, offering geo fencing functionality to track devices, allowing remote management and keeping both the device and connection secure.
As with any early technology deployment, the standardisation of IoT will be a critical consideration across all industry sectors, to avoid fragmentation and allow integration of all business operations that need to be built in.
Each industry will be uniquely impacted by IoT but essentially they will all experience a more streamlined business process because of increased connectivity, reliability and efficiency taking business connectivity to the next level.
[1] https://www.gartner.com/newsroom/id/2636073
[2] https://www.accenture.com/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Dualpub_14/Accenture-The-Internet-Of-Things.pdf
[3] https://www.soti.net/media/269478/retail-infographic-2018.pdf
Ramphastos Investments is a venture capital and private equity firm focused on driving top-line growth in enterprises in all stages of their evolution: from start-ups to scale-ups to high-growth medium-sized companies and mature enterprises.
The firm was founded in 1994 by Marcel Boekhoorn, who left a career in accountancy at Deloitte after becoming the Netherlands’ youngest Partner to pursue his passion for entrepreneurship. Within a few years, Marcel had grown the firm’s portfolio and invested capital exponentially after realising spectacular returns through several high-profile exits. In this period, he also laid the foundations for the approach toward building businesses that the firm pursues today: a focus on driving growth on the revenue side of the equation through buy-and-build strategies, marketplace innovation, internationalisation, management empowerment and strategic partnerships.
Today, Marcel is joined by a team of seven partners who share his passion for and hands-on approach to business building as well as his upbeat, solutions-focused and status quo-challenging mindset. As founders, builders, operators and investors in businesses of all sizes and in all phases in their evolution across multiple sectors and geographies, Ramphastos’ partners have successfully turned around businesses, created and sold start-ups, launched IPOs and completed de-listings, achieving outsized average returns on investment throughout the firm’s growth.
The firm currently holds interests in more than 20 companies with a cumulative revenue above 3.5€ billion and more than 8,000 people employed across a range of sectors from financial services, gaming, new materials and advanced manufacturing and energy and across all continents. Ramphastos is focused primarily on acquiring majority stakes in companies that meet three criteria: a unique competitive position (through a patent, brand or operational efficiency), strong intrinsic growth potential and favorable underlying trends in the industry or marketplace. As an investor of its own capital, the firm has the financial independence and appetite to take on complex transactions and special situations.
This month, Finance Monthly had the privilege to catch up with Marcel Boekhoorn and hear about the exciting journey that founding and running Ramphastos Investments has been to date.
What was setting up your own investment company in the Netherlands back in 1994 like? What were some of the hurdles that you were faced with?
When I left my job as a Partner and M&A Expert at Deloitte & Touche, I had no money of my own to invest, so my first step was to set up shop as an independent M&A consultant. That work brought in enough money, and when one of my clients was unable to pay for my invoices, I decided to take a stake in his business. I made just about all the mistakes you can make, starting with taking a minority stake and having no control over the direction of the business. I also witnessed first- hand that a Founder’s entrepreneurial creativity doesn’t necessarily translate into day-to-daymanagement or leadership skills.
Within eight months, the company had folded, and I was on the verge of bankruptcy. But poverty breeds creativity, and within a year, I had earned enough to try it again, this time taking control of a struggling wood box maker and turning it around by focusing production on cigar boxes. We produced boxes for Davidoff, Tabacalera and other global brands, and I sold my shares for a good profit – enough to branch out into more investments.
My strategy from the start was to focus on unconventional companies that no one was interested in, like small wheelbarrow or spray can manufacturers, and to build them into market leaders through buy-and-build strategies. By realising significantly higher margins as market leaders through premium pricing strategies, these companies were able to accelerate outsized growth in their sectors. By purchasing them when they were small and selling them quickly as market leaders, I was able to realise outsized returns in the process.
Now, almost 25 years later, we’ve moved on to larger, different and more complex investments, but our fundamental emphasis on top-line growth, as well as our preference for taking a majority stake in our investments and our interest in companies, markets or complex transactions and special situations that others shy away from, are still our main priorities.
A key component of any successful PE investment is to turn the business around; what are the considerations in terms of operational integration? What are the typical challenges you face?
When we consider investing in a business to turn it around, we look to see how we can add value on the revenue side of the equation – through a buy- and-build strategy or by challenging the status quo with the introduction of a new channel strategy, internationalisation, or a new product portfolio or pricing strategy. We have seen that it’s on this side of the equation that we can make the biggest difference and add the most value. It’s also where we’re most at home. We are entrepreneurs and business builders first and foremost.
This sets apart from much of the private equity world, with its emphasis on the cost side of the business. Don’t get me wrong: all of the revenue- driving strategies I just mentioned will only succeed if the organisation and operations are structured effectively to deliver on them. And any successful turnaround includes robust cost control and simplified, streamlined operations. Getting that right will always be part of our turnaround strategy, but we are fundamentally more about catalysing growth through entrepreneurial innovation and management support on the revenue side rather than driving profit by slashing on the cost side of the equation.
A hallmark of our approach to turning businesses around is to focus on company leadership. The company’s management and its employees – the people – are the ones who will make or break the business. Our work starts at the top, getting the leadership bought into and aligned on the new direction, ensuring that they embrace the same vision of the future, the same sense of who we are today and where we are headed. We make it a point to be there for leadership teams and help them work through such processes. We’re hands-on builders, and this is a role we love to play. Getting a turnaround right throughout the organisation – not just among leadership’s direct reports but company-wide – hinges on consistent, well-aligned communication. We find time and again that executing consistent communication – from instilling an understanding of strategy to fostering a growth-focused culture among employees. This is one of the most important operational KPIs for a successful turnaround.
You ask about typical challenges. Well, for starters, most people aren’t hardwired for change, and if the change isn’t something that they introduced themselves, it scares them. They don’t like it – until they see that it works and benefits them, of course. Take the example of introducing a channel strategy to move a retail business entirely online – or vice-versa. We’ve done both in different sectors, geographies and cultures, and we have found that three things help mitigate resistance and galvanise employees to deliver on the new strategy: first, a clear and consistent communication about the strategy and its benefits, second, creating and showing progress against a roadmap with compelling short- and mid-term milestones and third, cultivating a culture of listening and dialogue among employees.
What is the state of the market in relation to venture capital right now? What challenges are faced by businesses looking for funding?
Looking at the markets for venture capital and private equity, we see that increased competition has driven up valuation multiples up consistently.
From 2009 to today, sustained low interest rates have made debt cheap and have driven investors’ money toward VC and PE in their search for higher returns. Strategic buyers with strong balance sheets and big cash reserves are competing with one another, driving prices up.
In spite of this overall pattern, there are plenty of businesses who struggle to find funding. In the VC space in particular, we see that geography plays a role. If you’re a start-up based in the States looking for, say, two-to-five-million dollars, you’ll be well served by the market. If you’re a European company looking for the same investment in
Europe, you’ll struggle. The VC market is far less developed than the market in the States, with investment concentrated around a handful of potential unicorns.
At Ramphastos, we have always focused as much as we can on companies in underserved markets and in investments that others avoid. Conversely, we’ve always stayed as far away as we can from competition with other investors. Our point of view is that if you have to compete in an auction with
20 or 25 other players, then you’ll always end up paying too much and struggle to reach your target IRR.
We build businesses with our own capital, and in doing so, we pursue the high-risk, high-return opportunities that others avoid. We’re currently focused on turning around larger enterprises that face complex challenges. Unlike typical private equity firms that are happy with 25 or 30% IRRs, we are looking for driving significantly higher returns. So far, our approach – which plays to our strengths as creative thinkers and hands-on business builders – has paid off. In our 24 years as a firm, we’ve realised average multiples of money invested above ten.
How are most of your investments structured? To what level do you, as the investor, want a say in the day-to-day running of the business?
We do the majority of our investments on our own.
We invest our own capital and value our financial independence. This keeps us flexible and agile as investors. We usually take majority stakes to allow us to do what we do best – roll up our sleeves to help company leadership hands-on as they build their business. As founders, builders and leaders of businesses of all sizes and in all phases in their evolution, our partners have first-hand experience with just about anything you can encounter as an entrepreneur. We usually take a board position in our portfolio companies working side-by-side with company leadership to shape strategy and – if needed – give them tactical counsel, talent, tools and innovations to deliver on their plans.
Whereas we’ve been successful to date in the VC space across multiple sectors from flight simulators (Sim-Industries) to online brokerage (TradeKing) to flooring technologies (Innovations4Flooring) and open to opportunities, we are increasingly focused with our investments in larger, more mature companies, particularly ones with three qualities: one, a unique competitive position through a patent, brand or operational efficiency; two, strong intrinsic growth potential; and three, strong underlying trends in the industry or marketplace. We also love helping companies tackle tough, complex problems and turn themselves around. We’re actively looking at opportunities in that space, particularly among larger enterprises.
How are exit strategies agreed and structured? What are typically the common areas of disagreement regarding exit timing and strategy between the business owner and Ramphastos Investments?
We don’t have a predefined exit strategy, but we never buy into an enterprise without having a good idea about whom we’re going to sell it to. If we don’t know our exit, we won’t buy it – it’s as simple as that. And because we invest our own money, we have no pressure or obligation to sell. Our capital is patient: we’re in no hurry. Rather than working towards a specific exit, we focus on the execution of a predefined strategic value creation plan. When companies continue to grow, they will sooner or later attract buyers. We are all about value creation, and that can take time. We exit when the time is right.
To date, we have never had disagreements with the management teams on timing or nature of the exit strategy. The social dimension is important to us. With a good deal, everyone should be happy: buyer, seller, management, employees, partners – everyone. When the ABN AMRO bank dared to support us with 200€ million on our first really big deal, we rewarded them with a discretionary 10€
-million premium at exit, without any contractual obligation to do so. They had never experienced anything like that before. We don’t do deals where we can’t make such things happen.
Out of all of Ramphastos Investments’ success stories, what would you say are your three biggest achievements?
The first is without a doubt Telfort, a Dutch mobile telecom provider, which we acquired as majority shareholder, grew exponentially and sold within nine months to market leader KPN for more than a billion € in 2005. That deal was a milestone for Ramphastos, because it earned us our first half billion. It’s also a good example of the success of a robust top-line strategy. While part of our success involved getting the costs under control, we grew the company’s value explosively by swiftly migrating the business from an online- only platform to the high street retail channel, through creative retail and consumer incentives, and we raised the consumer price sharply while remaining the market’s price leader, driving profits from 50€ million to 150€ million in just eight months. We also capitalised on excess network capacity by opening our network to mobile virtual network operators, and we closed a unique deal with Huawei, as the company’s European launch customer.
A VC success story that we’re super proud of involves Sim-Industries, a developer of flight simulators that we launched in 2004 and sold to Lockheed Martin in 2011. The story is a good one, because it shows how being flexible and thinking out-of-the-box can steer a start-up to success. Sim started out in the software business, developing software for flight simulators. When the market leader in that space stood in our way, we asked ourselves: Why not go further and build simulators too? We fought hard to gain a place in an oligopolistic market, with incumbents poaching our employees and trying to scare away our suppliers, clients and us. In the meantime, by taking a fresh look at design, we built a superior product, overcame legacy issues, installed a senior management team, focused on execution excellence and became market leader in civil aviation simulators for leading aircraft types.
A third story I’d like to share has less to do with business, but everything to do with deal-making. It’s a deal that centres on an issue that is close to my heart: the preservation of species; and it’s a deal that fulfils a dream that I worked personally, persistently and patiently to fulfil over 17 years – making a home for two giant pandas in the Netherlands. That dream began when I bought a zoo located to the east of Utrecht and returned it to profitability. After hundreds of hours’ worth trips back and forth to China, education, complex relationship building with the Dutch and Chinese governments - across three Dutch prime ministers and three Chinese presidents, the dream became a reality in October 2015, when I travelled with a trade delegation and our King to the Great Hall of the People in Beijing to sign a ten-year agreement in the presence of Xi Jinping. The agreement includes an annual contribution of one million dollars to the preservation of the panda and the conservation of its natural habitat in China. The pandas arrived almost exactly a year ago at the zoo and are thriving in their new home, which was voted this year as the world’s most beautiful panda enclosure.
Over the years, what has kept the company moving forward? What sets you apart from the competition?
What’s kept us moving forward first and foremost is that we absolutely love what we do. We love building businesses. We love wrestling with thorny challenges and innovating our way with management teams toward successful turnarounds and outsized growth. We love closing deals that make everyone a winner.
It hasn’t been smooth sailing every year. I founded the company with plenty of fits and starts, as you heard, and when the Great Recession hit, it didn’t look at us and say: They’re a nice bunch of people, let’s give them a break. I’m happy to report that all of the companies in which we hold a majority of shares are turning a profit today.
What’s gotten us through the tough times is a combination of our unbreakable optimism and solutions-mindedness, our deep respect for one another and our collective creativity.
There’s also the fact that that we nurture close, trusting relationships with the management of our portfolio companies. We’re open with one another, and all of us here are ready and willing to jump in and contribute. We’re able to anticipate problems before they surface or tackle them quickly before they spin out of hand.
To put your finger on what makes us different, add to that our resourcefulness, boundless energy and appetite for challenging the status quo. We thrive on pushing ourselves and our companies to innovate and adapt constantly to drive revenue and margin growth, and in today’s world, if you don’t have the mindset and wherewithal to be agile and adapt, you’re in serious trouble. As a financially independent investor, we are free to take risks, tackle problems that others avoid and make the kinds of bold moves that catalyse truly breakthrough growth.
What do you hope to accomplish in the near future? Are there any exciting new projects that you can share with us?
I have an important role to play as the chief motivator, inspiration and driver of creativity within our team, and I hope to continue to do so for many years. Entrepreneurship is what fires my heart and gives all of us here energy, inspiration and strength. And all of us at Ramphastos see the kind of creativity-driven value that we’ve been creating here pays itself forward to beyond Ramphastos to the management teams and employees and suppliers of our companies and markets they serve. We have been doing well for almost a quarter of a century and aim to continue to steer this course.
As for projects on the horizon, we have some really exciting deals on the way. I wish I could tell you more, but I can’t. Stay tuned - there are more chapters to come.
Website: http://www.ramphastosinvestments.com/
Fraud is an intricate practice. The methods of criminals creative and meticulous, and the cost to companies and consumers staggering. In the UK, the fraud economy is thriving. It’s a growth industry. And it’s showing no signs of slowing down.
Last year, the Annual Fraud Indicator report revealed the total cost of losses to the UK economy to be a colossal £190 billion. To put that huge number into context: it represents more than the government’s combined spend on health and defence.
The best way to describe the current fraud problem: pervasive. A recent survey by professional services firm PricewaterhouseCoopers (PwC) highlighted that half of UK companies had fallen victim to fraud or economic crime in the past two years. Today, businesses are finding themselves fighting a surge of sophisticated attacks.
At the centre of fraud is technology. As technology advances, new forms of fraud emerge, and more robust security solutions are developed. It’s a double-edged sword. But businesses need to be aware of trends and predictions that will allow them to offer the best possible protection to their customers.
In the financial services sector, the struggle has been striking a balance between innovation and protection. So far, it’s something that many in the sector have failed to get right. A large part of this is due to increasing market and consumer pressures. In an age of hyper-globalisation, with industries undergoing rapid digital transformation, financial institutions are facing demands to increase the pace of delivery and provide an omnichannel experience.
Due to the rise of digital commerce and the proliferation of multiple-channels and payment types, there are more data transactions taking place than ever before. While this is a big benefit to businesses, it brings with it greater risk. An omnichannel environment creates a number of challenges when it comes to fraud management. The sheer number of avenues exposed at any one time can stretch security thin. For fraudsters, this makes it ripe for exploitation.
Yet, many institutions still rely upon disparate services and products that act in isolation of one another. This piecemeal approach is a hindrance. It makes it much more difficult to recognise certain types of fraud and leads to delays in decision-making.
The truth is that most legacy security systems and anti-fraud measures simply aren’t able to keep up with modern fraud attacks. They’re too wide in scope, complex in execution and high in velocity. So, the sector is now turning to technology in a bid to strengthen its efforts to fight fraud.
Automation has been the most widely adopted, so far. It’s able to reduce the burden on finance professionals, particularly when it comes to back-office processes, such as transaction and application processing, and audit compliance. It’s also a viable solution for assessing risk and limiting exposure to fraud. As a result, institutions are introducing everything from machine-learning platforms to robotic process automation (RPA), network analysis and artificial intelligence (AI).
The common theme among automation technologies is that they use algorithms to spot suspicious activity, detect patterns and predict outcomes in large data pools. Some of the more advanced platforms are even capable of assessing the anatomy of a fraudulent transaction. These solutions can draw inferences based on the information available, raise questions where the data is incomplete and produce audit trails (vital in such a heavily regulated industry).
But while we’ve seen a greater uptake of automation technology within financial services, questions remain. The sector has a history of being risk-adverse and sceptical of new technologies. And industry experts have queried whether institutions are using technology on the same scale to prevent fraud as fraudsters are to perpetrate it.
One of the biggest concerns to businesses, especially banks, has been the up-front cost of investing in these technologies – as well as how fast they can be implemented and how well they integrate with the existing infrastructure.
It’s fair to say that it’s a large-scale change for such a traditional industry. But to hesitate to modernise anti-fraud measures – and to defer investment in technology that’s designed to combat this problem – based on whether or not it complements the current system is short-sighted. When it comes to fighting fraud, the financial services sector must analyse the impact of technology trends and invest accordingly.
The default position from those within the sector should be: Sooner or later, we will succumb to a fraud attack. And businesses need solutions that are intelligent, efficient and provide actionable insights.
Fighting fraud across the omnichannel is a difficult task. In the digital era, automation technology is vital. If the financial services sector is to lessen its exposure to fraudulent practices, and provide greater protection to its customers, then it must think strategically. At present, the sector finds itself locked in a technological arms race with fraudsters. Institutions need fast-acting, agile solutions – not quick fixes or outdated legacy security systems. It needs to invest in, and place its trust in, technology.
By increasing its reliance on automation, the sector will be better positioned to keep pace with and protect against the frenetic nature of modern fraud attacks.
Banks are increasingly using your data intelligently and effectively. Let’s find out how far they can go. Julius Abensur, Head of Industry and Financial Services at Relay42, explains.
Technology has advanced at a rapid pace in banking and our demands have changed, making our data – and banks using it properly to benefit us – more important than ever.
Through various utilities, facilities, transactions and experiences, banks have more opportunities to break down traditional barriers to offer us a more seamless experience across channels and outcomes, rather than products and functions. By using our data effectively, they can deliver us a unique journey, based around our personal interests and most frequently-used channels. The benefits to banks are clear; customers who are fully engaged bring an average of 37% more annual revenue to their primary bank than customers who are disengaged.
To achieve the levels of engagement and loyalty we now expect, banks need to ensure they are using our data wisely and responsibly in order to nurture our trust. If banks aren’t using our data to provide us with a better and more valuable user experience, it won’t be long before we stop sharing it altogether. This will only be made easier in light of regulations such as GDPR and PSD2, which are placing stricter rules on how banks use our information.
So how can banks use our data more effectively, while maintaining our trust?
Merging the real and digital worlds
Impending regulation changes are slowly pushing banks and disruptive fintech start-ups to collaborate, rather than compete, and this is opening up a whole new world of opportunities for us as customers. Banks possess a stronghold of customer data ripe for delivering personalised and useful experiences, and by partnering with fintechs who specialise in innovative, agile technologies, they can deliver true value.
For example, let’s say that a customer (we’ll call him Bill) has just paid for dinner at a restaurant with his friends, and they all want to split the cost and pay Bill back. By partnering with the right fintech and sharing customer data across platforms with a smart data platform, the bank can make this repayment process easier by enabling Bill to distribute payment requests through an online chat service via a single link. By using this link, Bill’s friends can then repay him instantly regardless of who they bank with.
By using data management technology to responsibly share data across different platforms, banks can launch intelligent customer experiences and solutions relatively quickly across both the real and the digital world. This offers clear advantages for customers, who can now use more intelligent services to increase convenience. And this is just the beginning.
Connecting with other industries
When it comes to delivering truly beneficial experiences, banks need to be looking beyond the industry they serve. We all have a vast range of interests that can be capitalised upon through the sophisticated use of data, and this can be achieved by connecting with other industries.
Take the travel industry, for instance. As seamless partnerships between payment providers, booking interfaces and airlines become ubiquitous, travel and financial services leaders need to take a sideways glance to carefully choose trusted partners, value propositions and technology.
To translate this into a practical example: Let’s revisit Bill. Bill has a Global Travel Plus credit card, which is issued by his bank and connected to a global airline, granting him rewards and discounts when he travels. The bank has also created a service called the Travel Plus app, which offers relevant recommendations related to Bill’s journeys and behaviours, and is orchestrated by the bank’s customer journey technology.
Through intelligent cross-pollination of insights and data, the bank can deliver a suite of offers based on Bill’s loyalty and customer value, including frequent flyer points and hotel discounts. Then, through contextual retargeting, Bill’s bank can send financially-related recommendations for his next trip to Barcelona, from the best insurance rates to lock-in forward Euro rates. This kind of data-driven personalisation is what we now crave, and simply would not be possible without banks connecting with other platforms and industries.
Stitching data intelligently
Data is undoubtedly the key to delivering the innovative, highly personalised banking experience that we are all seeking. For banks, the benefits are clear - customer retention is around 14% higher for companies that effectively apply big data and analytics to deal with velocity.
However, if banks are to achieve this then they need to make sure they use our data intelligently. As we have explored, using data management technology can go a long way to effectively stick data together to create a single customer view — the foundations for orchestrating right customer experiences — for the right people. Additionally, partnering with companies both inside and outside of the financial sector can open up new opportunities for next-generation loyalty and engagement.
FinTech companies have been the foundation of innovation in the payments and financial services sphere over the past decade, whilst legacy financial institutions, such as banks, have struggled to keep up. Generally considered in competition with one another, what would happen if FinTechs and Banks joined forces? Prabhat Vira, President of Tungsten Network Finance, explains.
Recent research shows that financial institutions are increasingly forming partnerships with fintechs to create products that streamline and improve the customer experience and eliminate inefficiencies. In fact, when questioned by PwC, 82% of banks, insurers and asset managers said they expected to increase the number of fintech providers they work with over the next 3-5 years. So what is driving this trend and how can commercial banks follow the lead of their retail counterparts?
A symbiotic relationship
Over the last few years, fintechs have evolved the customer experience – prioritising the user experience to connect with and empower customers with alternative finance. Many banks are coming to the realisation that if there is a great opportunity to participate in fintech developments.
In light of this, instead of competing with fintechs, some banks are seeing the wisdom of embracing the dynamic nature of fintechs and are actively collaborating with them. It is a very positive step forward as each party has something significant to offer the other. Fintechs require access to capital, and Banks in contras, are looking for ways to innovate more quickly, provide a slicker customer experience and leverage data to mitigate risk. Collaboration with fintechs enables banks to outsource their R&D to them and bring new products to the market much more quickly and for less cost. Ultimately, the partnerships between banks and fintechs are creating a unique opportunity for the expansion of finance solutions, and thereby adding real value for customers.
Commercial banks following retail counterparts
However, this subject is not purely theoretical for us – we have recently teamed up with BNP Paribas, a leading international bank, to offer e-invoicing linked Receivables Purchase and e-invoicing linked Supply Chain Finance (e-SCF) to large corporates in the USA and Canada. Our customers can now obtain an attractive working capital solution through the same technology provider they use for e-invoicing and procurement activities. It is the first partnership of its type and a sign that commercial banks are following the lead of their retail counterparts in collaborating with fintechs.
By linking e-invoicing with supply chain and receivables purchase, customers are offered a one-stop solution that brings together process efficiency and working capital optimisation in a single portal. They are offered attractive rates in a straight-forward, hassle-free way. From the bank’s perspective, a lot of energy can be spent connecting clients and on the payables side, on-boarding suppliers onto the system. This creates friction in the relationship, and inhibits the supply chain. The advantage for a bank and for the customer is that by partnering with a fintech like us, these trade flows are already on our platform. Therefore, both do not have to onboard suppliers twice and deal with complex technology integrations. Ultimately, the partnership helps to make the supply chain process smoother for all.
We believe partnerships such as this are shaping the future for businesses and financial institutions alike. They are enabling us to work more smartly and offer added value to customers. Speed to market is of the essence in our fast-paced, consumer-centric world and fintech providers are agile by nature and best placed to bring innovations to the masses. As retail and commercial banks realise the mutual benefits of partnering with fintechs, we are certain we will see more and more collaborations that will delight customers around the world.
From AI to all things IoT, Russell Bennett, Chief Technology Officer at Fraedom, discusses with Finance Monthly the top five technologies that are already making waves in the banking sector.
Over the past five years, technology has fundamentally changed how the financial services sector operates. Many retail banks already successfully cater to customers’ digital needs. Business banking is now beginning to follow retail’s lead – and here we outline five of the top technologies transforming commercial banking today.
- Biometrics and security
When adopting new payment methodologies, banks must strike a balance between ease-of-use, ease-of-access, and security. We’ve already seen that consumer payment methods using biometric authentication becoming mainstream and it won’t be long before corporate clients expect the same.
Extending this functionality into corporate cards has the potential to make commercial payments more seamless and secure. Mobile wallets that defer to personal attributes to make secure payments on cards offer a potential route forward.
- Artificial Intelligence
Automation is dramatically increasing the number of financial transactions in an organisation. However, while it can track and store more processes than humans can – and more accurately – it currently can’t provide the next level service many clients are coming to expect of their financial partners: planning and modelling.1
AI is rapidly establishing itself as the missing piece of the puzzle that takes the data flows created by automated transactions and knits them together to discover patterns. All this is important to commercial banks because patterns in spending and efficiency can potentially deliver valuable insights to help clients improve their financial health.
- APIs
Customers’ demands, and expectations are moving rapidly, so there is growing pressure on the banking industry to provide new, easy-to-use, frictionless digital services fast.
Application programming interfaces (APIs) provide the technology to exchange customer data with other parties in a simple and secure way2, facilitating rapid innovation in products and services. Creating new applications such as voice banking, P2P, loan processing and risk management and using APIs as building blocks, is now seen as the best way to keep up with the innovation challenges facing the financial industry.
Fintechs have dominated the API landscape by creating apps that have challenged and often surpassed solutions made by the banking industry.
To keep pace, banks now need to either invest heavily to develop this technology themselves or partner with fintechs in a bid to be more effective and efficient.3 By working together and taking advantage of APIs, banks and fintech firms can enhance the customer experience much more than either entity could do on its own.
- ePayables – Crossing over from the Consumer to the Commercial World
The use of different payment types is partly a response to the consumerisation of our financial experience. Corporate clients can’t understand why payments should still be a laborious process of raising invoices and purchase orders, requesting printed cheques or bank transfers and creating lengthy payment terms.
Instead, the immediacy of a card – real, virtual or embedded in an app – ties all the above elements together. It gives unsurpassed traceability and is easy to add to financial management software.
Historically, paying by using a card has been seen as a debt generator. However, using payment cards as a substitute for invoice terms makes them a useful tool both to enhance a company’s working capital positions and to improve traceability, security and the level of control that can be placed on business spend.
- Expense Management Systems (EMS)
An Expense Management Systems (EMS) is just one of many tools that can be brought together into a single financial view, helping businesses gain greater control over expenditure. Unlike written expense policies and separate transactional management software, an EMS embeds expense policies into the technology, allowing real-time reconciliation and approvals to take place.
Up to now, retail banking has been ahead of the game in embracing new technologies and digital disruption but corporate banks are now grasping the need to take advantage of the latest technologies to ensure commercial clients reap the same rewards - from workflow efficiencies through to intuitive, mobile first experiences, a trend that is only likely to accelerate in the future.
How are banks meant to co-exist, work with or become the initiators of fast-developing fintech when most are so caught up in legacy systems? Below Finance Monthly benefits from expert insight from Kyle Ferguson, Chief Executive Officer at Fraedom, on the potential avenues banks could focus on in the pursuit of tech advancement and the maintenance of a competitive edge.
Legacy systems are seen to be the most common barrier preventing commercial banks from developing fintech applications in-house. That was a key finding of a recent survey conducted by Fraedom. The research that collected the thoughts of shareholders, middle manager and senior managers in commercial banks revealed that more than six out of ten (61%) of banks are being held back by this technological heritage.
The banking industry has historically found it difficult to make rapid technological advancements so in some cases it is unsurprising that older systems are holding them back. However, with this in mind, smaller fintech firms have already started to muscle their way in to help assist retail banks with providing a more comprehensive range of services to consumers.
Banks now have the option to negotiate the obstacle of legacy systems through partnering or outsourcing selected services to a fintech provider. Trusted fintech firms are offering banks the chance to reap the benefits from technical applications that can lead to more revenue making opportunities, without taking the large risk of banks taking the step into the unknown alone.
However, a shift does appear to be on the horizon with only 26% of commercial banks not outsourcing any services 41% of respondents globally stated that their bank currently outsources payment solutions to fintech partners. This was in comparison to 33% who say they do the same for commercial card management solutions and 26% who claim to do so for expense management solutions.
It was also interesting to note that banks are planning to ramp up their fintech investment over the next three years, with 77% of respondents in total believing that fintech investment in their bank would increase. This feeling was especially strong in the US where 82% of the sample stated this belief opposed to 72% of those based in the UK.
This transitionary period is great news for ambitious fintech firms. Banks are starting to realise that established fintech providers can make a big difference in areas of their business by providing technical expertise as well as in-depth knowledge of local markets.
It’s all about selecting key, digital-driven services that will help retain customers and entice new ones. The ability to offer card expenditure and balance transparency can reduce risk and costs for issuing banks. It is a service that can be joined on to an existing business with little overhead costs.
This is just one of several ways that partnering with fintech firms can bring substantial benefits. This increase in agility also helps banks to speed up service choices and improve customer satisfaction.
Forming a partnership can provide banks with a way around the issue of coping with legacy systems and avoid implementation costs. By forming a partnership, outsourcing banks buy in to a product roadmap that will keep their offerings ever relevant as fintechs develop the technology required.
The partnering approach is becoming more appealing to commercial banks. They understand their customers value their reliability, trustworthiness and strength of their brand. But increasingly, they also understand the importance of encouraging innovation to remain ahead of the technology curve, while recognising it is not the bread and butter of their business.
While legacy systems appear to be the most common factor in preventing banks from creating in-house fintech applications, the study did also reveal that a lack of expertise - recognised by 56% of respondents was also a major stumbling block.
To innovate and grow, banks and fintech firms alike must have employees that understand the technology – developers, systems architects and people with a record of solving problems. Taking a forward-thinking approach to recruitment is key.
If they want to attract and retain the best talent, organisations need to be listening, adapting and trusting each other to work together to resolve issues and frustrations. We believe all the above elements will become increasingly important in any successful business.
Overall, the research represents growing strength within the fintech sector and it is great to see that more banks are beginning to see the value in partnering with a fintech provider. In turn, this is delivering a better service for banks and customers alike and it is a trend that I expect to continue as banks fight to keep on the pulse of technology in the sector.
Apple Inc. is planning to use its own chips in Mac computers beginning as early as 2020, replacing processors from Intel Corp., according to people familiar with the plans. Bloomberg's Ian King reports on "Bloomberg Markets."
Everything evolves, constantly. Each new breakthrough poses heaps of new questions to which answers are yet to be discovered. One of these breakthroughs happened with fintech. Fintech, as a word, is what linguists would call a portmanteau – a combination of two separate words. In the case of fintech, those two words would be financial and technology. However, as a system or a sector, fintech is what experts would call the future.
Quite simply, when technology put its fingers in the financial services’ pie, fintech was born. We are talking about mobile payments, transfers, fundraising, cryptocurrencies; you name it. Even though fintech liberalized the whole financial system and put the power into people’s hands, the traditional financial sector felt threatened by it, and understandably so. To share our amazement with it, here are some incredible facts on the incredible growth of fintech in the last couple of decades.
-optimized.jpg)
(Source: 16Best)
In this clip from 1999, Jack Ma delivers a speech to 17 friends in his apartment to introduce Alibaba and lay out his plan to compete with US internet titans.
In a recently published report, S&P Global Ratings said it sees political risk and international investor sentiment toward the UK as the key risks facing UK banks in 2018 (see UK Banks: What's On The Cards For 2018). This isn't new--the UK banking system has operated against a constant backdrop of elevated political risk since 2014 and during that period, they have made good progress toward improving their balance sheets. Achieving stronger returns on equity has proved more elusive, however.
As the Brexit talks rumble on, we expect them and the related parliamentary processes to dominate the newswires. The UK's minority government increases political risk, especially as the UK is unused to operating with a minority government. Our sovereign rating on the UK has a negative outlook and our economists forecast relatively low GDP growth of 1.0% in 2018. Nevertheless, we anticipate that economic and industry trends will be stable for the UK banking sector.
We see some possibility of unsupported group credit profiles (UGCPs) being revised upward in 2018, if balance sheet strength further improves and earnings prospects accelerate, but it is hard to imagine wholesale sector upgrades, given the political backdrop. Unless the political and economic environment deteriorates more sharply than expected, or banking groups experience management mishaps, we consider the likelihood of lower UGCPs to be limited.
Uncertainties related to Brexit negotiations, specifically regarding transitional arrangements, are likely to weigh on business confidence, while inflation is set to outpace pay growth for most of 2018. We forecast that the economy will grow more slowly in 2018 than in 2017 as these factors weigh on business investment and private consumption. In our baseline forecast, we expect that economic growth will moderately accelerate in 2019 and 2020 while the UK transitions to its new relationship with the EU in 2021.
Only a rating committee may determine a rating action and this report does not constitute a rating action.
(Source: S&P Global)
