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Drone U, an internet-based drone training company, will be holding its first ever Fly-In at its Albuquerque headquarters next month. The sold-out event will be an opportunity for drone pilots, enthusiasts and advocates to meet, network and compete in a series of professionally-designed "missions".

Hosting 75 pilots from around the United States, Drone U's Fly-In is the first event of its kind. Members of the ever-growing drone community will gather to take part in six separate drone competitions, each constructed to highlight key skills involved in drone flight. Prizes will be awarded.

While designed to test each pilot's flying ability, the competitions are intended to reflect the practical application of drones in real-world situations. Challenges will include race courses, vehicle tracking, and "rescue missions" based around the transportation of life preservers.

It is the goal of Drone U to promote the growth of the drone industry and its participants. The company, which trains pilots of all ages and skill-levels, specializes in helping drone hobbyists transition into the professional world. The membership-based platform provides online training and industry advice to its rapidly growing network of pilots.

Here's a map of the scheduled event.

Drone U's first drone olympics or Fly-In is Sold Out.

(Source: DroneU)

By Rob Brown, Associate Vice President at Cognizant’s Centre for the Future of Work

Chatbots are gaining in popularity in a number of industries as an important customer service tool, with financial services and insurance particularly keen to roll them out: Crédit Agricole Assurance has Marc, and Bank of America recently announced it was introducing Erica. Barclays, Société Générale, USAA, BBVA, and Capital One have all also begun investigating the technology.

The rise of chatbots is being driven by several converging trends: the popularity of messaging apps, the explosion of the app ecosystem, advancements in artificial intelligence (AI) and cognitive technologies, conversational user interfaces and a wider reach of automation. Their adoption is accelerating so quickly that Oracle believes that 80% of brands will be using them by 2020. But will the current hype be sustainable over time without a stronger business rationale and better short-term results?

We live in an age of instant gratification, and this certainly applies to exchange of information – the core mission of financial services.  So why are customers confronted with long wait-times on hold, being transferred department-to-department, or having to wait through a list of phone prompts? In the context of chatbots, it is actually not about “the robot” at all, it is all about how easy the end-user finds it to use, and simply whether it works or not. To get it right, businesses should start preparing for the coming bot age now if they have not begun to already. This means peeking into the future and designing bots to respond to today’s customer needs, such as personalisation, context, meaning, first contact resolution, management, as well as bot-human interaction and interface design.

Here are four areas chatbots will evolve.

  1. Specialisation and Personalisation
    For chatbots to be effective, they need to become far more specialised in topics and tasks, and have the ability to personalise interactions. As time goes by, we will begin to see this happen. Very soon we will see expert chatbots that specialise in providing information about different banking solutions, while there will be some like x.ai’s Amy, Apple’s Siri or Microsoft’s Cortana that are experts in making calls and scheduling meetings, or helping to orchestrate process steps. For example, your close of escrow got delayed due to unforeseen disclosures from the seller – was the bank notified not to fund the mortgage loan? In-the-moment examples like these will make chatbots more utilitarian and dependable.On the flip side, users will also then need to understand what the chatbots does, specialises in, excels in and – most importantly – where it has limitations. This leads to one of the most crucial design decisions: the history of continuity and personal connection. Consider this element as a “tuning fork” of sorts that brings together and harmonises all interactions a person may have on a given subject.If the user were to stray from a central line of main dialogue, for example, from Siri to Facebook Messenger, a chatbot will need the history and context of other discussions with people, places, and things in order to provide continuity and personal connection. In turn, this will dictate how much personalisation can be brought into the interaction itself. For instance, can the system remember user profiles, previous interactions, the interactions of other users in the system, the current context and the situational bigger picture? Chatbot creators will then need to design them so that they can access this information using a multitude of systems and derive meaning from that information, all while keeping the central “plot line” of context intact.
  2. Speed of ResponseOne of the things that makes most present-day browsers so useful is their ability to answer questions at almost the speed of the user’s thoughts – sometimes faster. The experience of a good chatbot interaction is not judged only on its capacity to answer a question correctly but also the speed at which such a response is provided. In the bot world, solving a problem after a first contact with a customer will become a key performance metric.Chatbots that can provide basic solutions in the first instance without the need to paraphrase or explain the problem in greater detail will be the most useful and, by extension, the most popular.
  3. “Superbots” – Your Personal Assistant
    The concept of a superbot is not yet well known but will be a significant element in the future of bots. Indeed, as bots become more specialised and popular, they will proliferate. For many companies, managing them could become as overwhelming and complex as managing apps is today. The solution could come in the form of a superbot.A superbot, or “bot of bots,” would act as a personal assistant, getting things done on behalf of the user. That would mean calling other bots to complete tasks such as scheduling meetings, dialing conference call numbers or redirecting the customer to the appropriate page to make a claim. The superbot would know which bot to call for a particular task and instruct that bot to provide feedback to the user, therefore being faster and more efficient. Some platforms already use “global managers”, automated robots that orchestrate workflow, and delegate which process transactions should be worked on by myriad other robots.
  4. Humanising Chatbots
    Many of us will have seen an example of a gimmicky, humanoid “greeter robot” deployed in your high-street bank branch but the chances are, it fell short on actual needs-based problem solving for the customer. Chatbots, to the rescue – customers actually want solutions to process common choke-points in the gaps between information flows. Most of today’s technology exploration focuses on enhancing features and improving functionality to enable chatbots to mimic human responses, engaging in a more natural, intelligent conversation with users. Despite the merits of this work, the continued success of chatbots will not wholly depend on their ability to conduct a natural conversation but on the accuracy of their responses to customers’ questions at the moment-of-truth: when the tax bill is due, when the overdraft charge kicks in or when the mortgage documents are being finalised.Humans can sense when they are interacting with a machine, and any attempt to make it appear more human rather than intelligent may end up triggering negative emotional responses in humans— this phenomenon has been called “the uncanny valley” by a Japanese roboticist in the 70s. That is why some novelties robots are merely a distracting detour on the road to real breakthroughs in applying automation that matters to the financial services sector for real and lasting results.

Chatbots will be the vanguard of these efforts, and success will hinge upon their ability to become useful, maybe even indispensable, to human beings. Automation has its limits — and there are some things that robots just cannot do. That is where a blended model of automation augmenting people in their daily lives, conversations, and information requirements can provide extraordinary outcomes. By connecting conversations with meaning, context and intelligence, and providing people with relevant information in real-time and after absences, chatbots will provide as higher quality service and outcomes.

For companies in financial services, in addition to other industries, it requires striking a balance between speed, specialisation, and personalisation provided by chatbots and the ability to cater to human sensibilities and expectations. After all, the main goal is to support users and to make their lives easier.

 

Kicking off July’s Game Changers section is an interview with David Taylor, the Founder, President and CEO of VersaBank. Here he tells us all about the exciting journey that building Canada’s first virtual, branchless bank has been thus far.

 

You founded VersaBank in 1993 – could you tell us a bit about this 24-year journey and what it has taught you?

 It certainly has been an exciting journey, filled with challenges and lessons. I thought that by applying emerging digital technology to banking, I could create a bank without branches with low overheads that could economically serve small niche markets that were not well-served by Canada’s large full-service banks. Considering this ‘branchless model’ didn’t exist at the time, I expected that I would have to educate regulators, the banking industry, customers and partners about how it would work and what the benefits would be.

I think the most discouraging lesson I learned was that banking regulators like the status quo and do not welcome new ideas, even if it means that some Canadians in niche markets would continue to suffer with only limited access to economical banking.

On converse, I think one of the most encouraging lessons I learned was that some large Canadian full-service banks recognized the important role that VersaBank could play in serving niche markets, which are perhaps too small or obscure for them, and have aided VersaBank in fulfilling its mission to serve these markets.

Developing and improving the software and systems to deliver ideally suited products to our niche markets is always an ongoing challenge, but as Terence Mann said in ‘Field of Dreams’, “If you build it he will come”. I found to my great satisfaction that if you truly endeavor to deliver ideally suited products, you will never have to look for customers. They will ‘come’.

Our niche markets are diverse and include: financing hospitals and schools in the remote Canadian arctic, developing customized web-based banking packages for the insolvency industry, providing back-end funding for the Fintech industry and point-of-sale financiers so that people can lease their hot water heaters, have cosmetic surgery, or lease equipment for their retail or business operations.

In many respects, we are the original FinTech, continuing to leverage the power of new technologies to reach our customers and serve their needs, but unlike the FinTechs of today, we’re also a Schedule 1 chartered bank with access to a huge source of funds, through an expansive network of more than 120 financial advisory and brokerage firms who deliver deposits to us digitally.

Finally, we have proven that you don’t need lax credit standards to attract borrowers. Convenient access, reasonably pricing and flexible terms will attract good quality borrowers. VersaBank has had no need for a collections department and has established one of the lowest loan loss histories in the industry. My hope was that by applying new technologies to banking, we could really make a difference to our customers’ lives. I think we have been able to do this and I look forward to continuing to grow our bank and to finding more innovative ways to serve my fellow Canadians.

 

Could you tell us a bit about your background prior to founding VersaBank?

 I was fortunate to be provided with a solid foundation in banking by working at two leading, but very different, banks. I started my banking career at a large full service Canadian bank, the Bank of Montreal, where I discovered a passion for the business. It was a terrific opportunity to learn the basics of banking and I spent eight years there, before moving to Barclays Bank of Canada. In Canada Barclays PLC employed a niche strategy. However, when, amidst a downturn Barclays decided that the country was a non-strategic market, I saw an opportunity to create a Canadian niche bank, which ultimately led to the formation of VersaBank.

 

What have been your biggest achievements to date?

 A couple of things immediately come to mind, which are at opposite ends of the VersaBank journey. They being: getting the digital bank started back in 1993 and successfully completing a very complex amalgamation transaction earlier this year. Both of these achievements were ‘firsts’.

I soon discovered that the banking regulators had no appetite to grant a bank license for a brand new bank with an untested model. So I decided to acquire an existing financial institution and transform it into my new model. I looked for the smallest financial institution I could find and discovered Pacific & Western Trust in Saskatoon, Saskatchewan. I met with the owner - Bill MacNeill at a restaurant and sketched out a plan on how I could transform Pacific & Western Trust on a napkin. When he asked if I was there to buy his trust company, I surprised him by suggesting instead that he ‘buys’ me to run and transform his trust company. I had extensive experience in the industry and was a banker and he was, in fact, a miner. He agreed to my suggestion and that opened the door for me to build Canada’s first virtual, branchless bank.

I also believe that the completion of our amalgamation in January 2017 was a key accomplishment. It was the first successful merger under the Canadian Bank Act and enabled us to significantly simplify the structure of the bank, while also realizing some significant financial benefits. It was a very complex transaction that required approvals from the shareholders of VersaBank, PWC Capital, the regulators and even the Canadian Minister of Finance. We secured an overwhelming approval from shareholders of the two companies and the other required approvals. It was a great accomplishment and was vitally important to the positioning of VersaBank for the future. We’ve created a unique state-of-the-art bank that is profitably providing banking services in niche markets throughout Canada.

 

Could you please tell us a bit more about the merger with PWC Capital and what it means for the future of VersaBank?

 This transaction was historic in the sense that it was the first merger to be successfully completed by a Schedule 1 bank (a domestic bank that accepts deposits) under the Canadian Bank Act. Previous attempts by other banks had been unsuccessful.

While that’s a fun fact, the merger for us was critical to our future success, as it ultimately was about creating a simplified structure for VersaBank and eliminating confusion that existed with its parent company, PWC Capital. Previously, there had been two publicly traded companies, VersaBank and its parent a financial holding company, PWC Capital. This created duplication and PWC Capital had been highly leveraged. In addition, potential investors often were confused about the differences between PWC Capital and the banking entity, Pacific & Western Bank of Canada (now VersaBank). This structure was inefficient and it impeded our ability to grow. We needed to change it.

What emerged out of this complex transaction is a growing, standalone, publicly traded, high-margin, branchless chartered bank that uses its software to reach key niche markets, traditionally underserved by the big Canadian banks. We have enormous growth potential.

 

You’ve also recently opened a new digital facility, which provides the infrastructure for VersaBank’s branchless model and complements Canada’s FinTech industry – how did the idea about the platform come about? What is your outlook for its future?

 Right from the founding of VersaBank, we believed that we would have a significant competitive advantage by designing, developing and maintaining state-of-the-art, custom banking software that helps to address customers’ specific and unique needs, while also minimizing the required investment in physical infrastructure and human resources. We’ve tended to focus on niche markets that are traditionally underserved by Canada’s big banks.

By following this approach, for example, we’ve become the bank of choice for Canada’s national consumer insolvency firms, by creating a banking package ideally tailored specifically to the unique needs of insolvency professionals. It’s highly efficient and very economical both for us and for our clients and has become a win-win for ourselves and our customers.

We recognized that there could be tremendous synergies if we brought some of our in-house teams under one roof, which has led to the establishment of our new digital facility, the VersaBank Innovation Centre of Excellence – the modern, new home of our in-house software development division and its eCommerce division. By bringing them together, we have enabled these teams to work side-by-side to encourage collaboration to improve our existing banking solutions and create new solutions for tomorrow.

The team already is working on some innovative new solutions that likely will hit the market in the next couple of years.

 

Is there anything else you would like to add?

Arguably, when first conceived, VersaBank was a little ahead of the times, but the times have now caught up and VersaBank is finally able to take full advantage of its systems and model to serve people across Canada without branches. Its products are in high demand and its margins lead the industry without the usual loan losses. Twenty years ago this would have been a dream, but today, the dream has become a reality.

Website: http://www.versabank.com/

An Interview with:

·     Marc Vollenweider, Co-founder and Chief Strategist

·     Ashutosh Gupta, Co-CEO and Global Business Unit Head for Financial Services

·     Ravi Mehrotra, Co-CEO and Global Business Unit Head for Corporates and Professional Services

 Founded as a start-up in 2001, Evalueserve is a global professional services provider offering research, analytics, and data management services. The company is powered by mind+machine – a unique combination of human expertise and best-in-class technologies that use smart algorithms to simplify and automate key tasks. This approach enables Evalueserve to design and manage processes that can generate and harness insights on a large scale, significantly cutting costs and timescales and helping businesses to overtake the competition. The company works with clients across a wide range of industries and business functions, helping them to make better decisions faster, reach new levels of efficiency and effectiveness, and see a tangible impact on their top and bottom line.

This month, Finance Monthly had the privilege of speaking to Marc Vollenweider - Co-founder and Chief Strategist, as well as the company’s new Co-CEOs - Ashutosh Gupta and Ravi Mehrotra, who tell us all about the mind+machine concept and Evalueserve’s mission.

Marc, you have recently shifted your role from the being CEO to becoming Evalueserve’s Chief Strategist, can you tell us a bit more about this transition?

Marc: After spending about 16 years as Evalueserve’s CEO, I decided that it was time for the next generation to get involved in running the business, from an operational point of view. We decided to go with a Co-CEO structure, by splitting the role between Ashutosh and Ravi, while I shifted to a full-time board role, which allows me to concentrate on innovation-related projects. I am still strongly involved in the company, but instead of dealing with the day-to-day operations, I focus on proposing strategies and examining our next steps for the future.

Tell us about the experience of writing a book while running a global business? How have mind+machine and the book influenced Evalueserve and its business?

Marc: As soon as the idea about the book came about, it was clear that I wouldn’t be able to combine writing a book with my full-time CEO role. Thus, I took some time off, between March and June 2016, and wrote the book, while Ashutosh and Ravi got to practice running the business on their own. The experience of authoring a book on its own was extremely rewarding and I am proud of the final result.

The mind+machine concept is something that we started working towards 5 years ago, realising that a people-only approach was becoming too slow and too costly. We saw an opportunity for automating tasks and processes, and using machines to run repetitive tasks. We started coming up with workflow platforms, productivity tools, analytic engines, better knowledge management, etc. and fully rebranded the business. If we compare Evalueserve today to the company it was 5 years ago, I’d say that we have reached a productivity increase of about 30-40% on a per head basis. Mind+machine makes us faster - it makes the quality of our work better, and it gives our clients new capabilities to work with.

In today’s world, clients want to see innovation, so developing mind+machine has been essential for Evalueserve.

 

What are the benefits of a dual CEO-structure?

Ashutosh: At Evalueserve, we are very client-centric and also serve a variety of different industries. The fact that I have previously worked within financial services, while Ravi comes from a more corporate and consulting-oriented background, allows us to focus on these very different client segments. It also provides us with two different points of view and diverse ideas when it comes to dealing with common areas like HR, policies, marketing, etc. So the Co-CEO structure actually works really well for us.

Ravi:  Given the scope and scale of Evalueserve, being a very large and complex business, we want to make sure that we divide the different areas of the business and responsibilities between each other.

Additionally, the dual CEO structure, although not new, is still very rare and unusual. One of the reasons why it works for us is because, before embarking on this, we already had a very strong working relationship, with both of us having spent over 6 years in Evalueserve.

 

What are the main challenges that decision makers are facing today? How can mind+machine help overcome these challenges?

Marc: There are millions of decisions that need to be made in a company on a daily basis. And I’m not talking only about the decisions that the executive board makes; at Evalueserve we’re looking at decision makers at various levels of the company - from the CEO to the service technician. So for these millions of decisions, naturally, there’s a very large number of analytic use cases.

The problem of decision-making includes the logistics of having the right data at the right location, at the right time.  Then, these decisions must be transferred into a workflow where they get converted into actions and create impact. How does mind+machine help with all of this?

Unfortunately, when you look at how many decisions are being made within an organisation today, you’ll still see a lot of manual work. There are a few workflows, which make the life of decision-makers significantly easier. Mind+machine provides the client with the ability to crack the analytic use cases and then put a system or a machine in place to get them done on a recurring basis, as well as a platform that has all the necessary data feeds and analytics, and most importantly, links multiple end users and decision-makers in a collaborative way. This results in fast and efficient decision-making processes, with the knowledge management being done within the platform, so it doesn’t have to be redone every time.

 

Why do analytics matter for almost all types of businesses?

Marc: In today’s world, analytics are critical, solely because a lot of decisions within an organisation depend on diverse and complex data, which wasn’t so much the case up until 15 years ago. When it comes to decision-making, we need data that has been prepared, analysed and converted into insights and decision-ready output.

Today, every business needs an increasing amount of analytics because they improve the return on investment of many processes – it’s as simple as that.

 

How can one set up the use-case thinking in the company?

Marc:  Use cases have a number of implications for the whole company. Currently organisations tend to mingle everything together in a big pot - they set up central data scientist teams and large data lakes from where the teams try to come up with analytic output. However, this approach frequently leads to White Elephants not serving the end users’ needs well, often with negative Return on Investment (RoI). Companies should move to a culture of individual-focused analytic use cases.

A use case is not just an analysis; it comprises the data flow, the analytic engine, the UX (User Experience), the knowledge management for improving re-use, and the link to the overall workflow. Only in this way can the end users get what they need and achieve positive RoI.

It is my belief that this cultural change needs to be driven by the C-Suite, including the Chief Data Officer, who should jointly agree on putting this philosophy in place. Setting up the use-case thinking in a company should start with an agreement between the highest level executives, who should then drive it into individual units, so everyone gets into this mode of thinking over time.

 

How does Evalueserve use use cases to help its clients with decision-making?

Ashutosh: At Evalueserve, we have a whole collection of analytic use cases that are well-documented. Thus, when a new client comes to us with a business problem, we can easily leverage our database where we’ve cracked similar use cases before and come up with a specific solution, while saving our client a lot of time and money.

Ravi: Additionally, our use case hub is also helpful when it comes to showing our clients what mind+machine means. We’ve gathered all of these concepts that we are developing into a product, and have created a collection of use cases that we’re able to demonstrate to our clients at all times. The use case hub also enables the Chief Data and Chief Analytics officers to scale up their analytics capabilities by harnessing the knowledge, ensuring consistency and carefully selecting use cases for wider deployment and investment, based on the RoI.

 

What is your advice for successful leaders in the modern tech-focused world?

Marc: If we look at this from a ‘what lies beyond the horizon’ perspective, my advice is to get your feet wet - look into potential trends and then take well-informed, but still risky decisions. People nowadays are myopic when it comes to considering competition and future client needs and often get stuck in their current views. Being open to change and innovation and having a portfolio of new initiatives to play with is a critical element of strategy in today’s tech-focused world.

Ashutosh: Nowadays, it can be very difficult to stay on top of and respond to the changing technology trends, while running the business. So while it’s important to have a good technology strategy, it is also very important to communicate that strategy to your clients and throughout your organisation, so everyone shares the same goals and feels they can contribute to its success.

Ravi: The two things that I’d like to add are to firstly, be comfortable with uncertainty – we live in a very dynamic world and things change all the time. Leaders need to be flexible and always prepared for change.

Secondly, nowadays, it’s very easy to get so fascinated by the technology aspect; so my piece of advice is to not forget about the basics when it comes to leadership. i.e., technology and analytics are enablers to serve the broader business goals, and not the other way around.

 

Read more about mind+machine at: http://blog.evalueserve.com/ 

 

Everyone’s been saying for quite a while now that drones are going to take over, the technology will be used for flying cars and we’ll be delivering almost everything via drone, but is that really the case or are we too excited to see the obstacles ahead? William Sachiti, The Academy of Robotics explains to Finance Monthly that there is a more realistic perspective.

Drones are the future of home delivery! Or at least that is what I used to believe. They appear to be an efficient means of transporting items from one location to another. My mind ran wild, picturing a drone superhighway! I was keen to establish a dedicated airspace for drones to self-navigate, and to deliver packages to customers.

But… and there is a big but. Such a big one, I no longer believe drones are the future. The issue is not technical – it is social.

The Social challenges

The more I researched, I began to realise the safety defects of a cluttered airspace, peppered with flying machines, often controlled by amateur operators. Not to mention the cost of achieving this drone superhighway in the sky.

These issues have already been encountered by Amazon, which is currently leading the way with drone delivery. For example, the retail giant must house drones near to population centres in order to be more efficient than road-based delivery.

Now imagine your neighbour’s daily impulse-buys being delivered by a very loud drone, the novelty would fade fast. Imagine the sound of a washing machine spinner at full-belt during unpredictable hours of the day, waking up your kids and spooking your spaniel. Take it a step further and imagine living near a big retailer’s drone delivery centre. The noise and intrusion could be worse than living under the Heathrow flight path.

I had initially overlooked our roads – thinking of them as ‘the past’ and drones as ‘the future’ – but I no longer believe that to be the case. Ultimately, road-based delivery using driverless vehicles is far safer, quieter and more cost effective than the seemingly futuristic, yet comparably less-practical drone courier services.  It is easy to forget that we haven’t fully tapped the potential of our road networks – public, unmarked and residential. And autonomous vehicles present the opportunity to tap into and make better use of the infrastructure we already have.

So what form will deliveries of the future take?

Judging by early designs and models, autonomous delivery vehicles, will take diverse forms.

Italy’s Piaggio Fast Forward - a subsidiary of Vespa manufacturers, Piaggio - has invented a cylindrical luggage compartment capable of tailing its owner by a few metres, while holding up to 18km of cargo.  This clearly shows the value of wheels on the road.

Mole Solutions is ignoring both road and air for something completely different: below-ground freight capsules. Thrown into the delivery mix, such an invention could help to reduce road (and air) traffic congestion, as well as keeping out of sight.

Pelipod on the other hand, is seeking to cater specifically to businesses that need efficient, secure and direct delivery. Bypassing post offices, courier firms and depots, the firm is pioneering delivery pods that will travel straight to the destination. Integrated electronic systems will grant access to only authorised users, and provide proof of delivery.

And Kar-Go, the driverless delivery vehicle from my own Academy of Robotics, will autonomously navigate unmarked roads such as residential areas, and use an intelligent package management system to deliver packages to retail customers, day or night.

So, road vehicles will still be the primary force for delivering packages but they’ll come in all shapes and sizes.

Delivery beyond the physical

Looking beyond the first incarnations of autonomous vehicles and towards the far-future of delivery, I believe product delivery will be digital. Driverless vehicles, and smart devices in general, will benefit from 5G mobile technology. With so many devices feeding data into the Internet of Things (IoT), devices are able to communicate and act in unison.  Autonomous vehicles for instance, will be able to communicate with one another, and other road users.

Let’s put digital delivery into context. 25 years ago, the only way to send a document to someone was to have it physically delivered. With a little help from technology, the same document could, just a few years later, be sent via fax; scattered into bits of information, sent across the world and re-assembled in a matter of minutes.

As technology improved, sending a document moved from minutes, to seconds to an instant. So, if delivery of physical goods continues to incrementally improve over time, it’s not unrealistic to imagine that your latest smartphone could one day not be physically sent to you at all.

Instead, it could be purchased via a digital download and, through some 3D printer/fax machine-hybrid, be re-assembled in your living room. Of course, we can’t expect to see such an invention anytime soon. Technological advancements – despite accelerations in the digital age – are gradual.

And finally

With giants like Google, Tesla and Uber counted among the early adopters of self-driving cars, you can bet that the overwhelming majority of future vehicles, whether transporting people or packages, will be driverless.

When consumers are ordering compost from the garden centre, supermarket groceries or pretty much anything from the online superstores, you can bet that, regardless off the type of delivery vehicle, the driver will be digital.

Sopra Banking Software uncover why it is that men still dominate senior positions in Tech and why men are out-earning women, even in equal positions.

The UK gender pay gap won’t close until 2069 unless measures are taken to combat it now. That’s another 53 years that women will continue to pay a higher price for being female.

A study by McKinsey Global Institute found that in an ideal scenario, where female roles are identical to those of men, “as much as $28 trillion, or 26%, could be added to the global annual GDP by 2025.”

Gender Disparity in the Workplace

Laura Parsons, Senior Manager at Deloitte, shares these findings: Last year, girls outperformed boys in every science, technology, engineering and mathematics subject, and even though innumerable top-paid jobs demand capabilities in STEM subjects - 70% of women in the UK with a STEM qualification aren’t working in compatible fields.

What is it that pushes women out of these industries, and how do we secure them from entry level to senior positions, and offer support in pursuit of entrepreneurial ventures?

Unsurprisingly, McKinsey Global Institute found that 38% of women in the technology field feel that gender discrimination staggers growth and chances for progressing their career in the future. 60% of these women attribute not wanting to be a top executive to excessive stress and pressure. Of all the fields researched, these figures were among the highest.

Melissa North, head of human resources at Sopra Banking, shares: “Businesses are not taking adequate measures to ensure women feel they have the reassurance to pursue a work-life balance, including starting a family - and therefore women don’t succeed long term. Feeling like they must compromise having a family to have a career is one of the leading reasons women don’t stick around to get moved into leadership roles.”

Pip Wilson, entrepreneur, investor, and co-founder of amicableapps, adds: “Ultimately, the thing that will completely level the playing field is an even split between men and women in childcare.”

As a parent, Pip Wilson shared the domestic workload with her husband to be able to focus on the success of her business ventures. This often meant her husband would stay home while she worked, and vice versa.

Something as simple as employers providing or supporting childcare initiatives for employees could prove to be one of the most important incentives for females in the workplace.

Tech: A Growing Sector for Women

Entrepreneurs and business women, such as Melinda Gates, wife of businessman and philanthropist Bill, see the value of using tech to their advantage: “To me, the tech industry is one of the best places to work right now. If I was working again, I would work in biological science or tech or a combination of both. Every company needs technology, and yet we’re graduating fewer women technologists. That is not good for society. We have to change it”.

Women should view this as the best time to enter the tech market: more people are graduating from tertiary levels than ever before, and women are outperforming men in STEM subjects.

As businesses become aware of what this lack of gender representation means for their overall success, the more women will become empowered to hold positions they didn’t before.

It’s tough to identify whether the gender bias is due to subconscious views during the recruitment process, or from the ongoing cycle that sees women receiving lower pay and fewer promotions, thus resulting in women keeping themselves placed below men through these continuous actions. The social constructs for gender roles will take time to be broken down.

There is good news for women, however. Studies show that those who ask for the same salary as men, in the same role, tend to get offers in line with what they are asking.

What Should the Workplace Look Like?

Take gaming for example: Women make up only 22% of game developers, yet represent 50% of the people who play video games.

As a business woman and consumer, Pip Wilson believes that people inside your company need to reflect the people you’re trying to serve.

Businesses need to recognise the responsibility they have to women and gender equality in the workplace, but also the possible benefits that come with hiring from a larger pool of talent, that includes women:

- Increased labour supply
- Higher incomes
- Productivity gains
- Reduced poverty in developing countries
- A unique angle and approach to problems, due to a different atmosphere cultivated by women

Once a culture of diversity has been adopted and is naturally functioning, there will be a good discrimination in place – one that filters and keeps only the best for the job, regardless of gender.

How Companies Can Address the Gender Disparity:

Melissa North, Head of HR at Sopra Banking Software adds that networking is important, “Having a belief and not doubting yourself is important as a woman climbing the business ladder as well as making yourself visible to other women in the industry and talking about your struggles. Not chasing your dreams of going into a new field because of commitments attached to gender shouldn’t hold you back.”

Tips for Women in Tech:

Talk to others: Fight the temptation to ‘do it yourself’, and get help and advice from wherever you can

Find mentors and those who have been in your shoes before: male or female

Use tech to your advantage: A study done by Accenture details how mobile tech has made it easier than ever to balance work and home life. Exploit the connectedness, making use of mobile apps and cloud services. A successful business no longer requires a 9-to-5 in an office

Have confidence and trusting your abilities: Many women tend to believe they fall short in the skills needed to thrive in business. A lack of confidence means avoiding intimidating tasks or new disciplines, more so than some men, who are more likely to try

At a time when the tech industry and business overall is dominated by males, women should take this opportunity to get a head start in whatever they want to achieve, using the various tools available in a changing world. Businesses should recognise this as an opportunity to empower women, and to attract the best new talent, regardless of gender – as it’s crucial to growth.

(Source: Sopra Banking)

It's war on cash: Credit card giant Visa plans to pay Britain's shops and restaurants to ditch coins and notes.
A credit card giant is planning to declare war on cash by offering to pay shops and restaurants in Britain to reject notes and coins.

Visa claims that preventing customers from paying in cash would make transactions more secure.

Any switch from coins and notes to credit and debit card payments or services such as Apple Pay would also be of huge benefit to Visa, which makes money from transaction fees.

But consumer groups warned last night that it would put millions of elderly people and others who rely on cash and cheques at a huge disadvantage.

Tory MP Jacob Rees-Mogg said the firm should be referred to the competition authorities if it tried the move. 'It is essentially the behaviour of a monopolist and I do not think it should happen,' he said.

'People should be entitled to settle their bills using legal tender. The most deprived in society who do not have bank accounts and the elderly will be most affected by this.'

Visa has already begun a trial in the US which offers $10,000 (£8,800) to retailers who are prepared to update their payment terminals.

However, they can only get the deal if they agree to stop accepting cash transactions. A similar trial is expected to be launched in the UK. Jack Forestell, Visa's head of global merchant solutions, told The Daily Telegraph the company had its sights on Britain. 'We very much hope to bring a similar initiative to the UK in the near future,' he said.

'The UK is a bit further ahead than the US in terms of contactless use and cashlessness, so the initiative may look different but watch this space.' But James Daley, director of consumer group Fairer Finance, accused Visa of 'bribing companies to stop using cash more quickly' to make more money.

Consumer champion Which? said cash was still 'widely used' by shoppers. It added: 'Businesses should be led by how their customers want to pay, and not by the incentives offered by card firms.'

And the Federation for Small Businesses said the proposal could make businesses unattractive to tourists who wanted to use cash and was 'impractical' for rural areas with slow broadband speeds.

Its chairman, Mike Cherry, said: 'The vast majority of our members recognise the importance of offering cashless payment options. However, many have high volumes of customers that still want to pay in cash.'

In 2015 the amount of payments made electronically in Britain surpassed the number using coins and notes for the first time. However, cash was still by far the most popular way of paying in pubs, clubs and newsagents. A Treasury spokesman last night stressed that the Government remained committed to cash.

He added: 'The UK leads the way in financial technology such as contactless and digital payments. It's important that consumers have choice in how to pay for goods and services, and paying cash remains a legitimate and useful way to pay.'

(Source: News Capital)

In the eyes of multinational financial institutions, fintech innovators have moved from game-changing competitors to crucial allies. Ben Butler, Corporate Partner at national law firm Bond Dickinson gives Finance Monthly a rundown of the current progress between financial services, banks and fintech start-ups.

Customer demands and developments in technology have forced banks to think and act in a new way. In an industry in flux, the benefits for small and large companies of collaboration and building on each other’s strengths are clear.

The difference between well-established financial organisations and their start-up counterparts in many ways couldn’t be starker. The former can struggle to be agile, weighed down by processes and legacy – but they are often bolstered by their size, brand recognition and access to finance. All of which is in much shorter supply for small fintech companies: designed to be nimble, with digital talent at their core, they are at the same time constrained by their youthfulness in the market.

In a period of change and disruption, fintech startups are now key players in the digital transformation strategies of the established giants – and the most innovative amongst them can prove to be valuable partners.

Our new economic study Close Encounters: The power of collaborative innovation found that large financial companies took part in 1,864 such deals with UK SMEs in the last four financial years. £31bn is known to have been invested in these deals between the 2013/14 and 2016/17 tax years. The financial services industry is far ahead of any other sector in the UK.

But what are the five key areas organisations should consider and discuss frankly when entering into such deals?

  1. Motivation 

Beyond the fair arrangement on the financial settlement, it is important to think practically about how differing motivations might play out as the relationship develops. Is one side looking for a quick result, with the other more focused on the long-term benefits of the partnership? Or could it be a defensive move on the part of the larger player in an attempt to remove the product from the hands of competitors – in which case the future may not look so exciting for the SME?

The nature of such deals means that the players in the small organisation will inevitably be focused on making the most from their distinct offering, while the corporate will instead have an eye on delivering against the investment. The most successful alliances nevertheless bring two organisations together that are aiming for a shared outcome, and motivated by the desire for continued innovation.

  1. Culture 

Corporates often struggle to marry the objective of maintaining process-driven behaviours while still encouraging innovative thinking. Working together with a more agile SME might create a greater strain on this, and both parties need to carefully consider what this balance will look like in the new partnership.

The smaller partner will also need to be sure they can cope with the tighter controls that might be demanded of them, and the stricter processes that will likely come from working within a more established structure. Founders are often key for deals, but they should know what their exit route options are, should they find themselves in a less dynamic and rewarding environment.

  1. Brand 

In the wake of the financial crisis, maintaining trust is front and centre of mind for organisations when looking to maintain a positive brand. So it is perhaps unsurprising that one of the biggest concerns arising from such deals is the reputational threats they may bring with them. Both parties need to be upfront from the beginning about a potential need for conformity and a possible loss of independence for the SME as a result.

Attitude to risk can also differ greatly for start-ups, and this can sometimes be incompatible with the compliance restrictions faced by large organisations. Understanding these challenges, some small organisations choose to go through regulation in advance of approaching the banks.

  1. Tax 

At times, objectives can conflict when it comes to optimising tax: the corporate may qualify for Research and Development tax relief from the deal, while the SME shareholders may each be entitled to Entrepreneurs' Relief. In these circumstances, it can be in the interests of the corporate to secure more equity; yet those in the SME may want to hold on to a large enough stake so that they are eligible as individuals for the other scheme. This can be extra challenging when there are lots of shareholders, as the equity has to be spread more thinly.

  1. Exit

Our research highlighted the popularity of minority stake purchases, which accounted for 75% of deals in the industry – three times as many mergers and acquisitions (25%). This may reflect the challenges that can arise from M&As which involve fully integrating systems and processes. Or it may be a sign that financial services firms are becoming savvy to the short-term exit strategies that seem to be ‘of the moment’, and that they are looking for something new – such as the recent trend towards selling rather than listing.

For corporates looking to purchase future value as well as intellectual property, a full acquisition is a less attractive option as a long-term innovation strategy.

However, minority stake purchases won’t always be a suitable answer for the smaller party. To get around such opposing interests, entrepreneurs might want to ensure the earn out is structured around the long-term prospects of the organisation and the future leadership, or perhaps around innovation goals rather than revenue generation.

Analytic software firm FICO recently released an interactive map of European card fraud, which shows that card fraud losses for 19 European countries hit approximately €1.8 billion, a new high. The UK saw the highest losses at £618 million, a 9% rise over 2015, topping the previous peak in card fraud, set in 2008 after the introduction of chip and PIN.

Card not present (CNP) fraud has gone from 50% of gross fraud losses in 2008 to 70% in 2016. Ten countries saw an increase in fraud losses, while eight saw a decrease. The map is based on data from Euromonitor International, with additional information from the UK Cards Association.

“The growth in online spending and CNP fraud brings new challenges for banks and retailers, as criminals thwarted by chip & PIN have moved to a less risky channel,” said Martin Warwick, senior consultant for fraud at FICO. “Hiding amongst the growth in online purchases is great from a criminal point of view, but finding and stopping fraudulent transactions just gets tougher. Spotting the ‘needle in a haystack’ requires new behavioural analytics and artificial intelligence, combined with enhanced information from outside the traditional data contained within a purchase.”

In 2015 the UK’s card fraud rise was the highest in Europe, but in 2016 two countries saw higher rises — Poland (+10%) and Sweden (+18%). The UK’s rise from 2015 to 2016 was just half of that from 2014 to 2015.

France had the highest basis points at 8.9 (ratio of fraud losses to sales) among the 19 European countries, compared to 7 basis points for the UK. However, French card spending is half that in UK, making UK losses much greater. Together, the UK and France account for 73% of the total loses among the 19 countries in 2016, followed by Germany, Spain, Russia, Italy and Sweden.

Fighting Back with AI

FICO is working with banks to advance the use of machine learning and artificial intelligence to identify fraud faster. The key, Warwick says, is to spot anomalies without putting friction into the transaction.

“It’s no longer just about identifying patterns that are unusual for the customer — we’re also looking at anomalies at the mobile device, IP address and merchant level,” said Scott Zoldi, FICO chief analytics officer. “All of these have ‘behaviors’ just as individuals do, and we’re using our 25 years of experience in artificial intelligence to identify those.”

Mobile analytics is an important area here, said Zoldi, who developed or co-developed half of the company’s 70 patents in artificial intelligence and machine learning. “FICO has developed archetype analytics that taps into the rich source of mobile context such as advanced geolocation, allowing us to use that information in FICO Falcon Fraud manager to make real-time decisions during a transaction,” Zoldi said. “These analytics draw on our patented work with customer behaviour archetypes.”

Banks and card issuers are also beginning to step up their use of real-time customer communication. “Contacting consumers early using automated two-way SMS is a key solution to making sure the transactions are valid,” Warwick said. “If this is fully automated and tied into the fraud solution — as it is with FICO Customer Communication Services and the FICO Falcon Platform — then cases can be closed without human intervention and consumers can be allowed to continue to spend when and where they want.”

(Source: FICO)

Technology is often remarked as evolutionary ammo, and the statement stands just the same for the growth of businesses. Finance Monthly below hears from Frédéric Dupont-Aldiolan, VP Professional Services at Sidetrade on the latest and upcoming innovations that have hit 2017 hard.

Artificial intelligence, robotics, machine learning and the Internet of Things: 2016 stood out as a year marked by technological development and significant advances in several fields, not least that of connected, driverless cars. Against this backdrop, a clear trend is appearing: the growing influence of robotic technology in daily life.

In 2017, we have seen more promising innovations, here is my review of the top five things we are seeing:

5. IoT, the Internet of Things

Star of the Consumer Electronic Show (CES), which took place in Las Vegas in January, and Viva Technology, which took place in Paris, the Internet of Things was thrust into the spotlight in 2016 and continues to bring increasingly intelligent connectivity to our daily lives. Smart devices, equipped with bar codes, RFID chips, beacons or sensors, are taking the lead and enabling companies to gain greater visibility over their transactions, staff and assets.

In 2016, information and technology research and advisory company Gartner estimated that there were 6.4 billion connected devices globally, an increase of 30% on 2015. By 2020, this figure is likely to have grown to 20.8 billion.

4. The explosion of Big Data

Network multiplication brings with it a proliferation of data generation, whose analysis, use and governance have become a burning issue. According to estimates by IDC, an international provider of market intelligence for information technology, by 2020, every connected person will generate 1.7MB of new data per second.

The concept of ‘perishable data’ has lost validity. In 2017, companies now have the capability to use data before it becomes obsolete. Devices connected via the Internet of Things will rapidly speed up data decoding and processing for actionable insight.

3. The ramp up of artificial intelligence and automatisation

Artificial intelligence has been one of the main talking points in technology over the last year. Encompassing areas such as machine learning, robotic intelligence, neural networks and cognitive computing, it’s now in daily use in numerous forms including facial and voice recognition, endowing velocity, variety and volume.

This year, artificial intelligence has taken on an increasing number of repetitive and automatable tasks, beginning with wider use of ‘chatbots’ with the capacity to give coherent, easily formulated responses. IDC pinpoints robotics driven by artificial intelligence as one of the six innovation accelerators destined to play a major role in the digitalisation of society and the opening up of new income streams. Indeed, Amazon and DHL are already making use of warehouse handling robots.

2. Location technology, the Holy Grail of customer satisfaction

Location technology has taken great strides over the last year or so, to the marked benefit of customer satisfaction in the hotel, health and manufacturing sectors. Customers can now receive geo-targeted offers on their smartphones, for example for promotions or reductions, depending on their physical location.

In 2017, RFID chips enable yet more accurate tracking of customers and enhancement of their buying experiences.

1. Virtual reality makes way for augmented reality

One of the biggest innovations recently has been virtual reality, and with it came much media coverage too. From Facebook to Sony, Google to Microsoft, big brands grasped this new technology to offer an outstanding user experience, through the merging of virtual and real imagery.

In 2017, these virtual devices have acquired an awareness of their environment and give users a real sense of immersion of the digital environment from within their own homes. The potential of augmented reality for business will be harnessed too in the coming months. Some companies, among them BMQ and Boeing, are already employing it to increase their retention and productivity rates, or to provide training to their workforces across worldwide subsidiaries.

Over the next few months, as we gear up for another round of product launches, we should expect to see advancements in these key areas of technological innovation. Within business, this technology should help to improve customer service by streamlining production and processes, saving time and money, as well as providing new and exciting ways to reach and engage with customers, helping to retain existing clients as well as bring in many new ones.

John Orlando is the Executive Vice President and CFO of Centage Corporation - a leading provider of automated budgeting and planning software solutions. With his previous experience concentrated on Financial Planning and Analysis, John has now been with Centage for over 13 years. Here he introduces Finance Monthly to the company and the services that it offers and discusses the relationship between business decisions and technology.

 

Could you tell us about the Company’s ethics and priorities toward its clients?

 Centage has been providing budgeting and planning software solutions for over 15 years. We understand that the most important aspect of your job is to develop accurate and timely budgets and forecasts that help you drive the growth and profitability for your company. Everything we do at Centage, from a client perspective; product technology, functionality; through to training, services and support, is dedicated to making the client experience unique. That is our number one priority.

 

Tell us more about the Budgeting and Forecasting services that Centage offers.

Budget Maestro by Centage is an easy-to-use, scalable, cloud-based budgeting and forecasting solution that eliminates the time-consuming and error-prone activities associated with using spreadsheets. It is designed for small to mid-market companies to support a comprehensive Smart Budgets approach to corporate planning. Its built-in financial and business logic allows users to quickly create and update their budgets and forecasts and never worry about formulas, functions, links or any custom programming. It is the only solution in the market that offers synchronized P&L, balance sheet and automatically generated cash flow reporting. Today, Budget Maestro serves more than 9,000 users worldwide.

 

How has Centage developed into the company that it is today?

 The company was created because the founders saw a need for a budgeting and forecasting solution that was more automated than what existed in the marketplace at the time. We respected the people and the processes that go into creating accurate and timely budgets and forecasts and thought there was a better way. We understood that giving financial professionals a tool that had all the financial and operational logic pre-built was crucial. This went against the traditional formula-based applications that were in existence. Additionally, Centage developed a full set of synchronized financial statements that included a Pro Forma Income Statement, Balance Sheet and Cash Flow that were automatically generated.

The CFO role in general is important to any company because it brings operational and financial discipline to the organization. I am involved with and required to be familiar with every facet of the organization from financial accounting to operations to human resources, etc. I believe these responsibilities, along with my experience in the FP&A arena building many budgets and forecasts over the course of 25+ years, has helped Centage to build the best budgeting and forecasting application that we could.

 

What is the role that technology plays in transforming data for better business decisions?

 Technology and business decisions are inexorably linked. All the advances in business over the past 50 years have been related to technology. It has given us the ability to take massive amounts of information from accounting systems, CRM systems and operational systems, condense them in one place and give businesses the ability to instantly review the information for trends and make informed decisions in a much shorter timeframe with little need for manual intervention.

In the case of a CRM system such as Salesforce.com, once you start to use the application it is difficult to fathom how you would have run your sales organization any other way. There are too many pieces of information to keep track of and too many data points could be missed.

Centage similarly has used technology to make our product, Budget Maestro robust and agile by eliminating all the mundane work associated with preparing budgets and forecasts. We specialize in building out all of the financial and operational finance logic so that the client, as the user, only needs to concentrate on building a set of good business assumptions. Our reporting solution, Analytics Maestro, gives our clients the ability to take the data in Budget Maestro or their resident accounting system, and manipulate and analyze the data very quickly, so that more informed business decisions can be made.

 

What do you anticipate for the sector in the near future?

One thing that has become clear over the past 2-3 years is that budgeting and forecasting is moving from the realm of isolated 12-month timeframes and annual budgets and forecasts, to more of a rolling budget / forecast approach that takes into account anywhere from 18- 36 month timeframes. This allows the user to plan for a much longer horizon.
Secondly, customers have been asking for budgeting and forecasting systems to reach out to other sub
ledger systems such as Salesforce, Payroll etc., to gather information, eliminating the need to manually intervene in the data gathering process.

 

Visit us at www.centage.com , follow us on Twitter, or visit the Centage Blog for the latest insights on budgeting and forecasting strategies.

Email: jorlando@centage.com

Phone: (508) 948-0024

 

By Sylvain Thieullent, CEO of Horizon Software

It feels like the financial services are in a constant state of rapid evolution as regulators, leaders, active participants and vendors strive to move the industry forward. For the FinTech sector, this could be a golden age, with every challenge creating an opportunity. If the current trajectory continues, it’s a golden age that could last for some time, says Sylvain Thieullent, CEO of Horizon Software.

 The financial services thrive on change. Change drives innovation, and in turn, innovation finds faster, more efficient ways of doing things. Over the last decade, FinTech has become an independent sector in its own right, increasing the pace of innovation across the entire industry.

 Competition, regulatory requirements and the calibre of the teams involved are three key elements in the industry’s constant state of flux. An array of secondary factors are also adding to the mix, combining to deliver an impressive level of innovation.

 

Three primary elements

At every level, the industry is driven by competition. Leadership teams recognise that if they don’t keep bringing prices down, their competitors will quickly find ways to undercut them. While loyalty and relationships will always be very important for the market, price is a major consideration. This creates a constant appetite for quicker, more efficient ways of doing things.

The second element is regulatory expectations. Just as technology is changing what we can do, it is also making it easier to regulate. Trades are being tracked with a level of granularity that would have been inconceivable a decade ago, and because regulations are coming from multiple jurisdictions, institutions are expected to report on different things in different ways (as well as the same things in different ways). Making sure that the regulators are satisfied is a major catalyst for change and innovation.

The third element is the calibre of the people involved in the financial services. The downsizing of the banking industry over the last ten years has meant that a number of highly-skilled and very experienced people have found themselves free to pursue some fascinating ideas. In some cases, they’ve joined FinTech ventures and turned their attention to some of the deeper structural issues in the sector that are perhaps too specialised for major institutions. This is leading to a string of innovative solutions to challenges.

As a result, financial centres around the world are buzzing with new ideas, some of which have the potential to coalesce into very interesting products and services over the next five years.

 

Changing emphasis

There are also a number of secondary factors in play.

The first of these is a move towards FinTech vendors as hubs of innovation. The rising importance of regulation and compliance has come at the same time as the downsizing of banks. A decade ago, banks could keep all the talent they needed and look in-house whenever they had a conundrum to solve. Now, all but the largest institutions need to look elsewhere.

Until recently one of the tried and tested routes for successful firms to grow was through leading institutions setting up a division, strategy or technology, nurturing it for a few years (while enjoying first-mover advantage) and then setting it free to operate independently, or selling the division for a decent return.

Coupled with the downsizing, this model is likely to become less common over the next few years as fewer financial institutions will have the depth of resource to support it. As a result, there will be more fledgling start-ups looking for support earlier in their development, which could encourage them to be nimbler and more innovative in responding to potentially more risk-averse clients.

 

Shifting politics

Another ingredient in FinTech’s cauldron of innovation is politics. Brexit could lead to major changes in the global financial markets, and even though London has long enjoyed an enviable position as the world’s centre for many aspects of financial services, the current level of uncertainty could see its primacy eroded. This could be another catalyst that helps some innovative initiatives move forward as businesses reassess their strategies.

Ultimately, irrespective of the choices of the British public and the subsequent political manoeuvring, uncertainty creates opportunity. London has a heritage of financial innovation that spans centuries, but other centres have been keen to challenge its preeminent position for almost as long.

At the same time as Britain enters a period of internal debate and financial institutions look at their positions to ensure that they are ready for a variety of outcomes, the French electorate, for example, has delivered a government with a modernising agenda. The interplay between London and Paris, those most traditional of frenemies, could be a source of innovation and new thinking over the next five years.

Other financial centres will also be clamouring for attention throughout this process. The growing importance and confidence of Australasia and Latin America, as well as the changing outlook in the US, could well create evolutionary pressure to innovate.

These changes are taking place as the importance of physical borders and location are coming to mean less. Financial services are exceptionally international, and regardless of the changes in individual countries, market participants will continue to focus on getting the quickest, most cost-effective solution that most closely matches their risk profile and meets the regulatory requirements of the countries where they are based and their clients are active.

 

Enhanced flexibility

But innovation means flexibility as institutions are less likely to fall into the trap of building a comprehensive in-house system that only a handful of people know how to keep working. This is not only a vast improvement from an operational perspective, it also means that regulation and compliance requests are far more easily met, and there is a far wider variety of environments in which to test models and strategies.

A further benefit of flexibility comes in the form of market participants and vendors understanding each other better, effectively reducing the risk that a system will be developed that doesn’t quite do what the traders want.

As ever, there’s risk. Some of the initiatives across the world are destined to wither and die because they are not built on sustainable business models. Businesses are going to need to evolve their strategies and possibly their focus to become sustainable. This is a route that many innovative industries follow as they grow to maturity, but institutions need to be aware of what they are exposed.

 

Incumbent bias

The barriers to entry as a nascent game-changer are very high, which poses yet another challenge. Incumbents have the advantage of existing relationships and proven track-records which will always weigh heavily in their favour.

Regulators are also rightly risk-averse, a stance which again favours market incumbents. With the current regulatory environment going through a process of rapid evolution, there are significant sanctions accompanying non-compliance which could make potential clients more reticent about embracing innovation.

That said, regulatory changes could help level the playing field from a data reporting perspective, again creating the conditions where innovation can thrive. The implementation process could be highly challenging for many organisations, but they could provide a shared foundation that supports innovation in the longer term.

 

Living in interesting times

The FinTech sector exists to help the financial services innovate and keep moving forward. Even though the last five years have been a golden age for FinTech, it is difficult to predict what the next five will bring.

The array of fascinating challenges ahead, the deep well of expertise, technology that keeps enhancing and regulators that keep changing what’s expected, all suggest that the outlook is positive.

 

Website: https://www.hsoftware.com/

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