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Last week TSB lost around 16,000 customers following a serious IT meltdown. This event serves as a display to how important customer service and customer experience are in the commercial banking sector.

In light of TSB’s recent customer service blunder, Jonny Davis, vice-president of global client management partnerships at Fraedom, comments on how banks can enhance their solutions and services delivery.

The TSB story should serve as a reminder of the importance of customer service and the customer experience. Times have changed – businesses have more choice in who they bank with and can switch banks relatively easily, as we have seen from TSB’s customer losses. In this day and age, it’s unacceptable for banks to have faults on this scale.

Over the last decade, customers have come to expect more from their banks, largely thanks to technological innovation which provides seamless mobile transactions, generally responsive customer service and fast transaction times. These services are now seen as a given and banks, whether consumer or commercial, falling short of these expectations is seen as a failure. With ever-growing customer expectation banks must adapt or innovate in these changing times.

A recent survey conducted by Fraedom found that account management and customer service are priorities for 71% of commercial clients. Ultimately, people want more from their banks and this often means more automation, a focus on online banking and a more personalised service. Customers are looking for the banking system to change and up their game when it comes to customer service. In fact, we discovered that 95% of commercial banking clients want their providers to supply the same aggregated account views and real-time transactional information that their personal apps do. This is one area where commercial banks must innovate to keep up with customer expectations.

The recent development and adoption of technology within the banking sector has certainly given way to an increase in our expectations, as consumers, both in the personal and commercial sphere. We have now come to realise that we can do more and more without ever having to step foot inside a bank or even talk to another human being – and we now expect it. With more than 70% of consumers willing to receive computer-generated banking advice according to Accenture, this is a great way for banks to offer the 24/7 service customers have come to expect. Nowadays, customers see no reason for an adherence to ‘office hours’ when chatbots can provide a solution to this thanks to their 24/7 availability and intelligent access to customer information.

Chatbots are just one area in which banks can innovate beyond the basic banking apps to provide a better customer experience, with other areas including biometrics, security and AI. For instance, banks can provide an added value service by incorporating AI into their existing services for spend analysis or risk identification. This would raise banking services above the level of a commodity, improving brand consideration and customer loyalty and cementing their relationships with clients.

TSB’s experience should be a lesson to its peers about the power of their customers. If customers aren’t happy with the service they are being provided, then it is highly likely they will take their banking elsewhere. It’s therefore up to banks to innovate and use technology to provide faster, safer and more intuitive solutions for their customers.

Refugee crisis, political turbulences, economic struggles brought on by austerity and Brexit. Katina Hristova explores the crisis that the European Union has found itself in.

 

"The fragility of the EU is increasing. The cracks are growing in size”, warns EU Commission Chief Jean-Claude Juncker. With Italy’s Government crisis finally being resolved and the country’s shocking rejection of NGO migrant rescue boats, it has been easy to detract from the political earthquake that the third largest EU economy experienced and the quick impact that it had on the Euro. But Europe’s problems go deeper than Italy’s political turbulences. A month ago, Spain, the fourth biggest Eurozone economy, was faced with a very similar crisis and even though the country now has a new leader, analysts believe that the Spanish instability is not over yet. With the shockwaves of both countries’ political uncertainty being felt on Eurozone markets, on top of migration pitting southern Europe against the north and as the UK marches on towards Brexit whilst Trump abandons the Iran Nuclear Deal, which could mean the end of the transatlantic alliance between the US and Europe, is the EU in serious trouble?

 

Why is it so serious?

Billionaire Investor George Soros is one of those people that can sense when social change is needed and when the current cultural and political processes are about to collapse. A month ago, in a speech at the European Council on Foreign Relations, Soros claimed that: “for the past decade, everything that could go wrong has gone wrong”, believing that the European Union is already in the midst of an ‘existential crisis’. The post-2008 policy of economic austerity, or reducing a country’s deficits at any cost, created a conflict between Germany and Greece and worsened the relationship between wealthy and struggling EU nations, creating two classes – debtors and creditors. Greece and other debtor nations had sluggish economies and high unemployment rates, struggling to meet the conditions their creditors set, which resulted in resentment on both sides toward the European Union. Back in 2012, the European countries that struggled with immense debt, malfunctioning banks and constant budget deficits and needed help from other member countries were Portugal, Ireland, Greece and Spain. In order to help them the creditors countries set conditions that the debtors were expected to meet, but struggled to do so. And as Soros points out: “This created a relationship that was neither voluntary nor equal – the very opposite of the credo on which the EU was based”.

Although Italy finally has a government, after nearly three months without one, the financial markets are apprehensive about what to expect next, considering the country’s €2.1 trillion debt and inflexible labour market. On 29 May, fearing the political crisis in the country, the Euro EURUSD, +0.6570%  slid to a six-month low, whilst European stocks ended sharply lower, with Italy’s FTSE MIB I945, +1.43%  ending 2.7% lower, building on the previous week’s sharp losses. Bill Adams, senior international economist at PNC believes that: “The situation serves as a reminder that political risk in the Euro area hasn’t gone away. Italy is not on an irrevocable road to anything at this point,” he said. “I think what is most likely is another election later this year, and what we’ve learned is that outcomes of elections are very unpredictable.”

Spain on the other hand has made huge progress since being on ‘EU life support’ when ‘its banks were sinking and ratings agencies valued its debt at a notch above junk, on a par with Azerbaijan’. Since receiving help, the country’s economy has been growing, unemployment is not as high and its credit rating has been restored. However, with the Catalonia separatism, and the parties, Podemos and Ciudadanos who have emerged to challenge the old duopoly between the Popular Party (PP) and the Socialists, the political uncertainty in the country is set to continue.

Greece has been in a permanent state of crisis for a decade now, with its current debt of 180% of its gross domestic product (in comparison, Italy's is 133%). In less than two months, on 20 August, the country is due to exit its intensive care administered by the European Central Bank and International Monetary Fund. The EU will then have to come up with a new debt relief offer on the $280 billion Greece still owes – which could be challenging, as the ‘creditors’ are not in a charitable mood.

In contrast, Poland and Hungary are financially stable, however, both countries seem to be in opposition to the EU with regards to immigration, the independence of the judiciary, ‘democratic values’ and freedom of the press. Both governments have dismissed EU plans to share the burden that the Mediterranean region carries in terms of migrants arriving into these countries. In addition to this, Hungary’s Prime Minister is promoting an ‘illiberal’ alternative to European consensus, whilst Poland has sided with the US and against its European partners on a range of subjects, including the Iran sanctions and Russian gas pipelines.

And of course, let’s not forget the EU’s list of unsolved issues – the main one being Brexit. With nine months until its deadline, the terms of Britain’s exit from the EU are nowhere near finalised.

 

Make the EU an association that countries want to join again

Today, young people across the continent see the European Union as the enemy, whilst populist politicians have exploited these resentments, creating anti-European parties and movements.

Since its establishment, the EU, an association that was founded to offer freedom, security and justice without internal borders, has survived many turbulences. Although the current crisis is based on a number of deep-rooted problems, odds are that these challenges will be overcome. To save the EU, Soros believes that it needs to reinvent itself via a ‘genuinely grassroots effort’ which allows member countries more choice than is currently afforded.

"Instead of a multi-speed Europe, the goal should be a 'multi-track Europe' that allows member states a wider variety of choices. This would have a far-reaching beneficial effect."

And even though he isn’t offering a proposition for a bill that someone needs to draft and pass as soon as possible, he has opened a conversation - a conversation about moving away from the EU’s unsustainable structure. “The idea of Europe as an open society continues to inspire me”, says Soros. And in order to survive, it will have to reinvent itself.

 

On 6 April 2017, a new set of IR35 rules came into force for public bodies. Essentially, HMRC was no longer going to allow the public sector to take contractors operating through Limited Companies at their word that they were playing fair with employment status law. Bradley Post, Managing Director at Rift Tax Refunds explains for Finance Monthly.

Under the new rules, it's either the public body itself that has to make the IR35 decision, or the agency involved if there is one. If a public body decides that IR35 applies, then the body itself starts taking tax and National Insurance payments out of the contractor's pay, as they would for any employee.

HMRC created a called Check Employment Status for Tax (CEST) to help with making these assessments simple and accurate. However, a year later we’re seeing complaints from contractors that they’ve been wrongly classified and so are being over taxed.

Recent figures obtained under FOI show 54% of CEST results say IR35 doesn't apply, meaning that that under the terms of the working relationship the contractor should be classified as an employee. Hirers, though, simply aren't trusting CEST's judgements. Worse still, a lot of them aren't even trying to use it, instead making blanket decisions to class everyone as an employee, with many public bodies saying they felt they hadn't had enough preparation time or support to take on their new legal responsibilities.

TfL, for instance, reacted by banning off-payroll payments to Personal Service Companies altogether. Worse still, there's plenty of evidence of blanket judgements being made. Essentially, public bodies are simply assuming IR35 applies in all cases, hence the thousands of contractors being overtaxed. Many contractors are raising their rates to cover the extra tax they're paying. Others have simply refused to take on public sector work, leading to project delays or outright cancellations.

Crucially, only about half of assessments have gone through any compliance tests at all. In fact, CEST was a factor in just 24% of assessments made - partly because of blanket decisions and partly because the tool wasn't ready when the assessments took place. In an environment that relies on voluntary compliance, what's developing is a shocking lack of trust.

In reaction to this a number of contractor websites are now sharing information on “how to pass the IR35 check” using the CEST tool, but “contriving a pass” is a dangerous route to go down and won’t protect an individual from a status challenges if HMRC believes an individual deliberately answered questions incorrectly.

Honestly, from HMRC's point of view, the CEST roll-out has been pretty much a success. Of course, the only way they seem to measure that is in how much additional revenue it pulls in. The thing is, the raw numbers don't tell the full story here. Since wrongly overtaxing contractors has the same effect, it's thin evidence at best that actual compliance is being boosted.

While tax revenue has risen, the door's been opened on a whole new kind of non-compliance – this time on the part of hirers. Meanwhile, HMRC's upbeat outlook has a lot of people more worried than ever about a private sector roll-out – perhaps as soon as 2019. If that did happen, it could mean some upheaval for contracts and projects already in progress. Judging from the continuing turmoil in the public sector, it's going to take careful consideration and planning to avoid falling down the same rabbit-hole. At the same time, private organisations will face the same legal threats and consequences as public bodies.

If the new system hits the private sector as many expect, it'll take effective guidance and comprehensive support from advisers to defuse the ticking IR35 timebomb.

You may have seen the headlines just a few weeks back: Intel computer processors at risk form hackers. The computer technology firm owned up to some serious flaws in their systems and began to implement patches. Below Rusty Carter, VP of Product at Arxan Technologies, explains the ordeal and touches on the detail of the vulnerabilities, from CPUs to mobile banking.

Earlier this year the appearance of two vulnerabilities, Meltdown and Spectre, which affected a significant proportion of the world computer processors, hit the headlines and gained serious attention across the security and application industries.

The critical vulnerabilities that were recently found in Intel and other Central Processing Units (CPU) represent a significant security risk. Because the flaw is so low level, the usual protections that web developers are accustomed to, do not apply. Due to the vulnerabilities existing in the underlying system architecture, they can be exceptionally long-lived, providing attackers with sufficient time to develop direct attacks aimed at the hottest targets, a big one being the mobile banking and payments industry.

Both Meltdown and Spectre can affect devices used within the banking industry, an obvious one being mobile banking applications. Although similar, the vulnerabilities do have their differences. They both affect Intel; must have code execution on the system; and can be managed or mitigated through software patching. However, they each have slightly different methods of attack – both use speculative execution, but Meltdown also uses Intel privilege escalation, whilst Spectre uses branch prediction. Thus, they each have slightly different impacts. Additionally, Meltdown only affects Intel whereas Spectre can affect Intel, ARM, and AMD.

The location of the vulnerabilities makes them particularly hard to protect against. This is because it is the processor, its registers, and also its memory, that are being attacked. This creates unique challenges for protection, however, does not make protection impossible. Meltdown has now been patched in most cases, therefore, Spectre is the more concerning of the two.

With both vulnerabilities, the exfiltration occurs via the registers or memory addresses of legitimate programs in use, meaning cryptography-related items such as decryption keys and API credentials will be the likely first targets. This is because the vulnerabilities go across users of an application and, therefore, can provide ‘keys to the kingdom’. Follow-on targets are likely to be individual users’ personal information managed by marquee applications.

The banking industry is likely to suffer the effects of both these vulnerabilities, especially with regards to mobile banking and payments. Customer data such as account numbers and user credentials are very likely to be exposed.

With the rising popularity of mobile banking, applications are seeing more and more security risks affecting them. Even well written applications are still vulnerable. Whilst most applications maintain security by encrypting data between the app and the data centre, this is not enough. In order to be fully protected, banks need to encrypt the data within their application, only decrypting it at the moment it is needed, and then encrypting it again. Further application protection that is highly recommended for banks to incorporate into the security of their applications is anti-reverse engineering and anti-tampering.

For customers using mobile banking, it is vital they remember to turn off JavaScript if possible and to ensure they exit applications they do not need, or are not using at the time. Ultimately the application is run on a processor, when there is a vulnerability there, nothing is really safe. However, if a mobile application is not running, these vulnerabilities cannot facilitate the stealing of data. Encrypting data and implementing application protection that uses a variety of different techniques, can make it much more difficult to read memory out of a register, or to leverage a vulnerability such as Spectre. By doing this, banks can put themselves ahead of others within the industry, as well as protecting their customers and overall reputation.

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