Ride-hailing giant Uber has moved to sell its driverless car research division to self-driving startup Aurora, a significant shift in the company’s plans for future development.
The autonomous driving unit, known as Advanced Technologies Group (ATG), will be sold as part of a reported $4 billion deal which will see Uber investing $400 million in Aurora in return for a 26% stake in the company. The deal will also give Aurora access to Toyota, which has invested in ATG.
Uber CEO Dara Khosrowshahi will also be joining Aurora’s board, and the two companies expect to collaborate in bringing driverless cars to Uber in the coming years.
“Few technologies hold as much promise to improve people’s lives with safe, accessible, and environmentally friendly transportation as self-driving vehicles,” Khosrowshahi said in a statement. “For the last five years, our phenomenal team at ATG has been at the forefront of this effort – and in joining forces with Aurora, they are now in pole position to deliver on that promise even faster.”
Aurora is a Silicon Valley-based startup founded by former Tesla, Uber and Google executives and backed by Amazon and Sequoia Capital. The firm develops sensors and software for autonomous vehicles, with a focus on the commercial trucking sector over automated ride-hailing taxis. It currently employs over 1,200 workers.
The news follows a prediction from Volkswagen CEO Herbert Diess that autonomous vehicles will be ready for the consumer market between 2025 and 2030. In an interview with weekly German magazine Wirtschaftswoche, Diess said that autonomous driving technologies had progressed significantly, with advances in artificial intelligence continuing to accelerate.
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Germany’s Ministry of Transport has already begun to draft legislation to allow driverless vehicles to operate on public roads. Trials of self-driving cars began in the UK in October as part of the government-backed research scheme “Project Endeavour”.
The drive to access the digital economy during the pandemic has been behind much of the disruption in payments this year. COVID-19 has pushed the industry to think fast and contactless payments have emerged as a lifeline for businesses and consumers. Interestingly, a lot of the innovation that is taking centre stage leverages existing technologies, but in new ways to tackle new problems. Most notably, the QR code saw a revival and has become an increasingly popular way of paying for goods and services.
Crucial to the success of the QR code payment is the fact that simply, it’s a technology that is accessible to anyone with a smartphone in their pocket. And this signals a much bigger trend we’ll continue to see during the pandemic and beyond - we don’t need to reinvent the wheel to create disruptive payment solutions. Instead, the most exciting innovations will leverage technologies that are within reach of consumers and businesses. This will be the key to seeing widespread penetration of new payment experiences.
Opening up the digital economy with the smartphone
While much of the contactless payment drive has focused on the ease of access for consumers, it’s not been such an easy ride for businesses. Large swathes of micro and small businesses that were predominantly cash-based have had little choice but to accept contactless payments during the pandemic. But one of the challenges that come with this payment revolution is that contactless point-of-sale (POS) hardware can be costly and complex to maintain for businesses. This can present a financial burden for micro and small businesses that want to access the digital economy and accept contactless payments.
The launch of Visa’s Tap to Phone solution and the comeback of the QR code show what can happen when you keep innovation simple.
The launch of Visa’s Tap to Phone technology in October is a pivotal step towards breaking down this barrier for businesses. And its genius once more comes down to harnessing existing technologies – again, the smartphone - in innovative ways to open up access. Visa Tap to Phone transforms Android smartphones and tablets into contactless POS terminals so sellers can accept contactless payments from their customers.
By removing the need for costly POS hardware and complex maintenance, it is enabling smaller businesses to download an app and accept contactless card or mobile wallet payments within a matter of minutes. The proliferation of mobile means Tap to Phone is well within reach of businesses of all sizes – and the customers they serve. And this is key if we are to see widespread adoption of new payment experiences among businesses.
Visa’s Tap to Phone innovation signals the end of POS and the start of easy access to cashless payments for businesses.
Easing emerging markets into the cashless economy
What works for one market, might not necessarily work elsewhere. In emerging markets, the technology that is accessible to both consumers and businesses can vary and that can dictate what is possible. With many markets around the world still predominantly cash-based, there is also a greater challenge to ease consumers and businesses into cashless payments, in some cases, for the first time. Again, using technologies communities are familiar with and already comfortable using is an important first step to encourage adoption.
If new payment solutions are to see widespread uptick and success in these markets, understanding of local market behaviours will be crucial. It comes down to learning the unique challenges faced by the local community, as well as their attitudes towards cashless payments. Only then can you explore the tools accessible to them to create payment solutions that stick.
Let’s keep it simple to make real change
The launch of Visa’s Tap to Phone solution and the comeback of the QR code show what can happen when you keep innovation simple. These technologies are transforming payment experiences for consumers and business alike around the world. And it’s all powered by the humble smartphone – a device mostly all of us carry in our pocket.
By using the existing technologies around us, we can expect to see increased penetration of new payment solutions. It might have taken the pandemic for some consumers and small businesses to make the leap to contactless payments, but we can expect to see this shift in behaviour take hold, even as we revert back to normal. We’re only seeing the start of the contactless revolution. The payment solutions that are accessible to all will have the power to scale with ease and will see the biggest success. That’s where the real innovation lies.
Stuart Lane, CEO at Trade Nation, shares his findings on the trading habits of millennial and Gen Z investors and how they have been influenced by emerging trading platforms.
There’s been a surge in trading interest among the whole population since the start of the coronavirus pandemic, but especially so in millennials and Gen Zs. A survey by E*Trade Financial Corp found that over half of younger investors have traded more frequently, and while many have made notable gains, there have also been some serious losses.
Roughly 46% of millennials and Gen Zs are trading derivatives more frequently — double the average rate. What’s more, 51% say their risk tolerance has increased. This makes for a potentially dangerous combination, especially for amateurs, of whom there are plenty. Robinhood (by far the most popular trading app of millennials and Gen Zs) has said almost half of its new customers this year are first-time traders who, therefore, may not know the risks surrounding complex derivatives such as CFDs. As Trade Nation notes: “CFD trading certainly isn’t straightforward and there’s a lot of confusing terminology and hidden costs involved too. This means it usually isn’t the best way for traders to kick off their journey.”
And in addition to the risks individual traders may be opening themselves up to, experts like Princeton economist Burton G. Malkiel believe that the outlandish trading activities of millennials and Gen Zs are also wreaking havoc on the financial markets.
Why are young people trading more?
The general consensus is that trading has been a great way for the younger generations to fill extra time and deal with the boredom of lockdown. As the founder of RagingBull, Jeff Bishop, told CNBC: “A lot of people are at home and have got more time on their hands. And many, unfortunately, have lost their jobs and are looking for new opportunities. Younger investors are looking for ways to recoup their money.” Furthermore, many Americans have been able to fund their trading activities with their government stimulus checks, with software and data aggregation company Envestnet Yodlee reporting that trading was among the most common uses for the checks in almost every income bracket.
There’s been a surge in trading interest among the whole population since the start of the coronavirus pandemic, but especially so in millennials and Gen Zs.
Apps like Robinhood, eToro and RagingBull have also made trading more accessible for these traders, seeing demand for their services rise by 300%, 220% and 158% in the first quarter of 2020, respectively. And given that the vast majority of millennials and Gen Zs have been using their smartphones more due to the coronavirus outbreak, it’s unsurprising that the time spent on apps like these has also increased.
What are millennials and Gen Zs trading?
The E*Trade survey found that almost half of young investors are trading derivatives more frequently compared to 22% of the general population, while there’s been an especially sharp increase in options trading. What’s more, the surprising nature of their most popular stock picks have stunned, and perhaps even humbled, many Wall Street investors.
"We see a lot of buying activity of specific industries that were impacted by the pandemic," said Robinhood co-founder Vladimir Tenev, as reported by CNN. He singled out shares of airlines, videoconferencing and streaming media companies, and biopharmaceuticals. For example, even though Warren Buffet dumped his airline shares in light of the coronavirus travel restrictions, millennial and Gen Z traders had faith in a recovery. Frank Holmes, CEO of US Global Investors, told CNN that he noticed a surge in interest for the JETS airline ETF in March. Examining Robinhood trends, he learned that plenty of young investors had been buying it after a major dip. The funds' assets went from $34.6 million at the start of March to $615 million by the end of April — a 1600% increase.
“Although a lot of people may say that it’s crazy, it has turned out pretty well,” JJ Kinahan, the chief market strategist at TD Ameritrade, told Bloomberg. “Retail investors for the last few months have been a little bit ahead of the curve. There’s been a lot more perhaps optimism among retail traders around the turnaround than there has been from professionals. This continues to show that.” However, it’s inconclusive whether moves like this are really paying off for younger traders. While some analysts (such as those at Goldman Sachs) claim the stocks of Robinhood investors have outperformed hedge funds and the indices, others have found a negative correlation between these stocks and their returns.
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What are the potential problems of this?
Empowered but inexperienced traders
Robinhood has been the app of choice for many millennial and Gen Z traders, and though their ambition to “democratise finance for all” has clearly appealed to this market, it also means that many amateurs have jumped into trading without any experience and gone on to make grave mistakes.
“Robinhood has gamified investing. Trading is now so simple that it can be easy to make impulsive decisions,” one millennial investor told Financial Times writer Siddarth Shrikanth, adding that they immensely regretted the progressively riskier trades they had made during lockdown. Shrinkanth noted that while Robinhood doesn’t provide investment advice, it does “little to deter poor decisions”. For example, almost 200,000 users were holding very complex United States Oil ETFs in the days after it crashed in April. “Why were younger investors drawn into volatile commodity tracker funds, despite repeated warnings from regulators that these risky products were unsuitable for retail investors?” he questioned.
Many millennials and Gen Zs are diving into trading complicated financial instruments without fully understanding the risks. And as well as the potential for devastating losses, this can also come at a tragic human cost. Alex Kearns, a 20-year-old Robinhood trader died by suicide after seeing an unexpected $730,000 negative balance on his account, which he didn’t understand and may have only been temporary.
Many millennials and Gen Zs are diving into trading complicated financial instruments without fully understanding the risks.
Volatile markets
In addition to the potential problems for individual millennial and Gen Z traders, it’s also thought that their activities may be having a significant impact on the markets. For example, having filed for bankruptcy in May, Hertz shares had surged 800% just a few weeks later, with this being one of the most popular Robinhood stocks. Stocks like these may be rallying because of the sheer number of users on the platform — there were more than 160,000 Robinhood investors who owned Hertz stock as of 17 June.
That said, not everyone believes millennial and Gen Z traders are responsible for inflated stock prices. “In June, Barclays published a study of moves in the S&P 500 and positions taken by ‘Robinhooders’,” explained The Telegraph’s Garry White. “It concluded that retail investors speculating in stocks are not responsible for the market’s rally and the top picks of the app’s users tended to underperform, and moves in the S&P 500 were independent of the positions taken on these apps.” He also concluded that while many Robinhood users may see big gains, ultimately: “this strategy needs a lot of attention to follow market moves and it seems inevitable that most will eventually lose money”.
Nigel Frith, vice president of financial services at AskTraders, discusses how challenger banks have revolutionised the banking industry and the opportunities more traditional banks can explore as they aim to extend their digital offerings.
As the high street has evolved in order to meet the changing needs of consumers, retailers have been left with no option other than to reinvent themselves. The banking industry certainly hasn’t been immune to these shifting trends either and as a result, over the last few years traditional banks have been forced to adapt and change the way they operate. While their face-to-face services still remain a crucial string to their bow, banks have had to invest heavily in their digital offerings in order to compete with increasingly popular digital-first providers. So, why are these challenger banks such as Monzo and Starling so attractive to customers and how have the big players in the industry risen to this digital challenge?
A focus on challenger banks
With their chic apps and personalised offerings, new banks can’t be found on the high street but are instead on your mobile phone. Their customer-centric approach has simplified banking by providing users with features which make daily tasks that little bit easier. From being able to split the cost of meals with friends to keeping track of monthly outgoings, these app-based services have really hit the spot in the eyes of many.
With more than four million customers, Monzo is perhaps the most well-known challenger bank. It started out in 2015 as a prepaid card that could be topped up via its app before transforming into a sole banking brand in 2017. It offers all of the usual current account services regular banks provide but also enables customers to manage their money in an effective and efficient manner. The ease at which you can navigate through the app is certainly a big draw for digital-savvy youngsters who are able to quickly transfer money to their friends and set monthly budgets.
In recent years it has continued to broaden its services such as by adopting a ‘get paid early’ feature which allows users to be paid their salary or student loan a day early. By embracing a channel-based communication model, Monzo has also been able to respond to incidents such as outages in a typically effective fashion. Customers can report any issues using a chat service on the app and they have the ability to freeze a card from their phone should they lose it.
With their chic apps and personalised offerings, new banks can’t be found on the high street but are instead on your mobile phone.
Another major benefit of banking with Monzo and many of its other app-based competitors is that it doesn’t have any foreign transaction fees for spending. It has therefore become a highly attractive option with regular travellers and holidaymakers alike.
How traditional banks have risen to the challenge
Although recent analysis of bank branch data has revealed that (if the current rate of closures was to be maintained) there would be no high street banks left by April 2032, there is clearly still a demand for in-person banking. Many people still feel more comfortable going into a bank to pay-in cheques while others are reliant on the financial advice they can access in-store. Clearly there remains a need for traditional banks, such as the big four in the UK - Barclays, Lloyds Banking Group, HSBC and RBS - to evolve their offerings.
In recent years, therefore, these banks have invested heavily in their online and mobile banking services in a bid to compete with digital-first providers like Monzo. This has included providing customers with perks such as being able to pay for purchases using virtual cards on their apps and providing them with the ability to cash-in cheques from the comfort of their own homes.
Leading the way has been Barclays who in 2017 invested £4,148 million into their digital platforms. Now, more than 90% of Barclays’ transactions take place over mobile devices, emphasising the effective nature of their transition to a more digitally-focused way of operating. In December 2018, Barclays also designed a feature which allowed customers to turn off payments towards certain websites should they feel they are unable to curb their spending. More recently, it has taken things a step further by enabling users to view the accounts they hold with rival banks on their platforms - an option which would have been unthinkable a decade ago.
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Key to ensuring customers have felt comfortable transitioning to these digital services has been the commitment banks have shown towards tackling cyber crime. This has seen the banking industry team up with the government, police and other regulators in recent years. Initiatives have been set up to not only raise awareness of the threat scammers pose but to also reassure customers of the stringent measures banks have in place to protect their personal data. Last year, UK banking security systems prevented fraud on an estimated £1.4 billion scale, demonstrating the importance of their investment into tackling cyber crime.
The future
With banks now constantly innovating in a bid to steal a march on their competitors, it is likely we’ll continue to see big changes taking place within the industry over the coming years. One thing that is clear though is that there will be a continued drive by providers to further improve and simplify the customer experience. Although further high street branch closures are inevitable, banks are working hard to maintain their in-person services for those who prefer to operate in this capacity also. While digital banking isn’t for everyone, the ease and efficiency at which millions of people can now complete financial tasks has left a lasting impression on many.
Simon Shaw, Head of Financial Services and Insurance at Software AG, outlines three ways in which larger banks can – and must – make their business models more agile.
In the months since COVID-19 reared its ugly head and changed the way we live, there has been a noticeable uptick in conversations around digital transformation and embedding resilience. In the banking sector, the focus had been on the increased demand for online banking and questions around how banking monoliths will adapt.
The reality is that big banks can adapt – albeit slower than other industries. That’s not to say that change isn’t happening; banks have been transforming for years to align with changing customer needs. However, it’s a distinctly difficult and complex challenge. In fact, one of the primary challenges with digitalisation in banking is that moving quickly doesn’t happen easily. Of course, CFOs and financial leaders would love to quickly pivot their operations to meet changing needs and new requirements, but in their current state, most incumbent banks don’t yet have that capacity.
To achieve digitalisation, banks are grappling with many moving parts. From regulatory requirements, to safeguarding customer data, to overcoming silos – and that’s before we consider the sheer cost of it all. I have identified three ways for established banks to pivot more quickly and efficiently in today’s climate.
1. Go Hybrid or Go Home
A significant challenge in the digitalisation of big banks is that their ecosystems simply weren’t designed to enable quick transformation. Changes that may seem simple, or are simple in other sectors, can require full programme rewrites when applied in banking. The legacy systems on which most large banks are built are clunky and inflexible. Since these systems don’t run in real-time, they’ll never compete with the efficiency and analytic capabilities of challenger banks. Yet, despite that, these established systems actually hold the key to future success in banking – data.
The wealth of data contained within a heritage system has the potential to entirely transform the customer experience. However, to do so, banks must be able to access and integrate that data at speed.
A significant challenge in the digitalisation of big banks is that their ecosystems simply weren’t designed to enable quick transformation.
Hybrid cloud presents the best of both worlds; it combines the operational stability of on-premise solutions with the scalability, reduced cost and data accessibility of the cloud. Breaking up isn’t easy but, according to IBM, banks that are outperforming their competitors are 88% more likely to have incorporated hybrid cloud into their business model. For banks with decades of data in monolithic technology stacks, turning certain data and tasks over to the cloud can significantly lighten the load on their ecosystem to improve efficiencies.
2. Visualising Opportunities for Change
Digital transformation has changed banking expectations. Customers want speed and convenience and banks are competing to deliver. Excellence requires efficiency, but that can be difficult to achieve.
Process mining identifies optimisation opportunities and strives for excellence in process performance. As the name suggests, process mining delves into the detail of what occurs as a process is actioned, revealing patterns, anomalies and the root causes for inefficiencies. With greater insight into processes, banks are able to make informed decisions and tangible improvements to quality and performance. To compete with the challengers, established banks need to embed the ability to adapt to changing business requirements and make transformation routine. The first step to this is visualisation.
If hybrid cloud is the vehicle by which digitalisation is achieved, process mining is the check engine light.
3. The Building Blocks of Better Banking
One of the biggest challenges to transformation lies in evolving away from heritage applications. Transitioning from old to new is daunting and can come with a hefty price tag. Microservices enable banks to transform piece by piece and scale at a controlled rate.
Transformation in data-reliant and regulation-heavy sectors will never be a walk in a park, however, microservices start small by design. This returns much needed control to banks and ensures complex changes are developed and tested independently before being integrated into the banking ecosystem.
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To fundamentally change business operations, the very foundations of that organisation need to be redesigned. This applies across industry, which is why, between 2018 and 2023, the microservices market is predicted to nearly triple as more organisations shift their transformation up a gear.
Microservices embed agility and efficiency from the outset, making digitalisation a cultural and technological change. By returning control and enabling a customer-centric and scalable design, transformation can add big value to big banks.
Agility is essential, but moving a monolith isn’t easy
In banking, where archaic systems and rigidity have been governing organisational change for years, digital transformation really means reinvention and growth. While the end-goal is easily defined – agility, resilience, scalability, digitalisation, etc. – it’s difficult to know what’s needed to achieve it. When the dependencies, regulatory requirements and price of change are thrown into the mix, it’s no wonder that change takes time in the financial sector.
Hybrid cloud, process mining and microservices create the foundations for development by embedding transformation capabilities into the very core of a banks system. While financial institutes will always be subject to a high level of scrutiny, strategic solutions that bring order, visibility and an ability to compete with smaller and more agile banks are truly transformative.
The outgoing Trump administration has unveiled an executive order banning US investment in Chinese firms that it says are owned or controlled by the Chinese military, adding further economic pressure on Beijing.
The order has the potential to impact some of the largest Chinese companies, including telecom companies China Mobile Ltd, China Telecom Ltd and surveillance equipment producer Hikvision.
From 11 January 2021, the order will prohibit US investment firms and pension funds from purchasing the securities of 31 Chinese companies that the Defense Department identified as backed by the People’s Liberation Army earlier this year. However, transactions made for the purpose of divesting ownership in these companies will be permitted until 11 November 2021.
“China is increasingly exploiting United States capital to resource and to enable the development and modernisation of its military, intelligence, and other security apparatuses,” the order said.
It is not yet clear how much impact the order will have. The affected companies do not appear to include publicly traded Chinese tech giants, while several other tech firms (including Huawei) do not trade on the stock market. Some of the firms said to be affected are state-owned companies with no foreign stockholders, such as China Electronics Technology Group, though others – such as CRRC Corp – do have foreign investors.
According to investment strategist Andy Rothman of fund manager Matthews Asia, US investors own around 2% of the value of the companies traded on the Chinese stock market, meaning that the order is unlikely to be greatly consequential to the Chinese economy.
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As the order allows ownership in the listed companies to be retained until 11 November, there is a significant possibility of the incoming Biden administration rescinding the order before it can affect US shareholders.
ByteDance, the Beijing-headquartered owner of TikTok, is set to meet its advertising revenue goal for the year, which will place it firmly as the second-largest giant in China’s digital advertising market.
According to Reuters, the tech company is on track to make at least 180 billion yuan (or $27.2 billion) in annual advertising revenue, making up the bulk of its $30 billion revenue goal for 2020. In terms of ad revenue, it is beaten only by Alibaba.
Though TikTok is ByteDance’s flagship product internationally, the social media app contributes little to its parent company’s overall cashflow. Of ByteDance’s ad revenue, nearly 60% comes from Douyin, the Chinese version of TikTok. A further 20% comes from ByteDance’s news aggregator Jinri Toutiao, and less than 3% from its long-form video platform Xigua.
These final numbers will be adjusted by the end of the year, as many of the company’s most important campaigns – including year-end sales – have not yet been officially launched.
ByteDance continues to struggle with an order from the Trump administration ordering it to divest its US operations of TikTok by this Thursday. While a deal between ByteDance and Oracle appears to have been settled, the company lodged a petition with a US Appeals Court late on Tuesday challenging the administration’s order and seeking an extension to the deadline.
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Outside of TikTok, ByteDance is looking to other avenues of growth, with plans to invest 10 billion on its Xigua platform next year. The company intends to increase Xigua’s count of daily active users to over 100 million, while its Douin eCommerce platform is expected to reach roughly 150 billion in gross merchandise value by the year’s end.
Tenable's Adam Palmer, Chief Cybersecurity Strategist, and John Salomon, FS-ISAC Director, Continental EU, Middle East, & Africa, explain the benefits of CFOs and other executives involving cybersecurity in their roles.
A commissioned study conducted by Forrester Consulting, on behalf of Tenable, found that currently only four in ten UK business leaders can confidently answer the question, “How secure are we?” There is a disconnect between business leaders, financial teams and security leaders in how they manage and communicate cyber risk. As such, cybersecurity needs to evolve as a part of the business strategy.
The Cybersecurity “Communication Gap”
Most mature businesses understand how to perform a basic assessment of the wide range of risks that impact their organisation. Cyber risk is often the exception. Cyber risk management is well established. However, business leaders, such as CFOs, don’t usually “speak” security, and techies don’t often know how to quantitatively measure, or explain, the degree of exposure to cybersecurity threats in a business context. As a result, the link between cybersecurity and the business can be lost in translation. Security is often seen solely as a cost to the business, rather than a means of preventing losses, or even a driver for increased revenue and overall success. Aligning the security programme to financial objectives improves understanding of value and drives support for corporate policies that support effective cyber risk management.
Cybersecurity Awareness – a Two-Way Street
Responsibility for ensuring effective cybersecurity risk management does not belong entirely to the CISO. Success depends on the rest of the organisation making an effort to also understand cybersecurity risk. This is not to say that a CFO must be a cybersecurity expert, as the onus is on the CISO to “speak the language of business.” Rather that financial leaders should at least have a fundamental grasp of cybersecurity. Using car ownership as an analogy, a driver does not have to know how to assemble an internal combustion engine. It is reasonable, though, to expect a competent driver to understand how to change a flat tire, check the oil level, and most crucially, when to listen to a professional mechanic.
Responsibility for ensuring effective cybersecurity risk management does not belong entirely to the CISO.
Most importantly, the infosec organisation must not be seen as a necessary evil. Rather than treating the CISO and their team as expensive alarmists, a CFO must make an effort to comprehend some of the basic concepts of cybersecurity, and the ramifications to the organisation’s finances of not having a capable, empowered security organisation. Furthermore, the cybersecurity organisation can only do its job effectively if their security risk assessment activities are backed by unambiguous, strong policies.
Seeking Clear Answers from the Security Team
The CISO must distil the highly complex topic of cybersecurity into concise, relevant messages without “dumbing it down” for business and finance leaders. While the CISO should present a measurable view of the organisation’s cyber risk exposure using internal and external comparative benchmarks, the CFO should ensure they understand the basics around:
- Where are we exposed?
- Where should we prioritise based on risk?
- How are we reducing our exposure over time?
Describing the target state of the security programme should be based on an understanding of risk, not blindly applying capability maturity levels. Organisations need the ability to identify and quantify their level of risk and exposure. This should be done in collaboration with the C-Suite. Cross-functional collaboration will turn the organisation’s security strategy into a “living” strategy, and ensures business alignment on priorities, costs, and needs.
Is compliance the end goal?
Many organisations will look to regulatory standards to determine their cybersecurity goals or “target state.” While there is value in meeting these baseline requirements, checking a box doesn’t necessarily equate to appropriate secure practices or addressing financial risk. Minimum, compliance-based security is not adequate security. Instead, organisations should work to really understand their critical assets, identify the vulnerabilities that affect them and create a security programme that addresses this.
By adopting a quantifiable approach to security that benchmarks internally and externally, and is aligned to business and finance objectives, it becomes much easier to define a target risk state and measure overall effectiveness. This also allows a firm to get a head start on meeting their regulatory requirements and improving communication with regulators.
CFOs need to work with CISOs in order to gain an understanding of their company’s security risk including the financial costs associated with it - both from a risk perspective, but also where technology investment might be needed. While finance can’t be expected to understand the technology or how it works, it is important to understand why it matters, including the role each new investment plays in closing the cyber exposure gap. To provide the level of detail needed to determine and reduce risks, the CISO needs to be able to determine, understand and report the following information to senior management:
- See: Complete visualisation of the entire modern attack surface allows anyone, from analyst to executive, to quickly understand and explore the organisation’s risk profile. This helps underpin the reasoning for taking action
- Predict - Advanced analysis and risk-based exposure scoring that weighs asset value and criticality, against vulnerabilities with threat context. This provides clear guidance of what to focus on first.
- Act - Exposure quantification and benchmarking enables effective comparisons of internal operations, and also allows this to be tracked against peers. This identifies areas of focus and suggests actions needed to optimise security investments.
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Stronger together
Historically, cybersecurity initiatives are seldom aligned with business and finance objectives, but that must change.
Security leaders are challenged to prioritise where they focus effort — not just when it comes to vulnerabilities, but their entire cybersecurity strategy in general. By placing cyber risk management as part of an overall risk framework, business and financial executives can more easily assess whether best practices are being implemented effectively.
To do this, the CFO must work with the CISO to align cost, performance, and risk reduction objectives with business needs. This means providing a holistic understanding and assessment of the entire attack surface, with good visibility into the security of the most business-critical assets. The CFO should seek defined metrics and benchmarking processes, tied to business performance and process improvement from the CISO. Adopting this transparent, quantifiable approach will help the business understand cyber risk clearly, predict new threats, and act effectively.
The result is business-aligned security leaders that ensure their strategies are in lockstep with financial priorities. This collaboration with the CFO not only develops effective strategies and communicable metrics, but actually works to support organisational goals.
US automaker General Motors plans to hire 3,000 new employees to strengthen its engineering, design and IT divisions, the company announced on Monday.
The hiring is expected to take place from now through to the first quarter of 2021 and will be largely focused on software development. GM’s stated aim for the hiring drive is “to increase diversity and inclusion and contribute to GM’s EV and customer experience priorities.” The company also said that it plans to include more opportunities for remote work.
“As we evolve and grow our software expertise and services, it’s important that we continue to recruit and add diverse talent,” said GM President Mark Reuss in the release. "This will clearly show that we’re committed to further developing the software we need to lead in EVs, enhance the customer experience and become a software expertise-driven workforce."
Ken Morris, GM Vice President of Autonomous and Electric Vehicles Programs, said in a call with reporters on Monday that GM has accelerated the development of at least two upcoming electric vehicles following the debut of its GMC Hummer EV, which debuted in October.
“We’re moving as fast as we can in terms of developing vehicles virtually, more so than we ever have by far,” Morris said, adding: “We are doing things virtually, more effective than we ever have.”
Earlier this year, GM said that it planned to invest $20 billion in its new generation of electric and autonomous vehicles by 2025.
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Shares in GM reached $39.72 ahead of the announcement on Monday, a 52-week high. The stock rose 5% in early Monday trading following investor optimism over a promising COVID-19 vaccine and President-elect Joe Biden’s supportive policies on electric vehicle development.
Steven Cox, chief evangelist at IRIS HR Consulting, offers Finance Monthly his advice on how financial services firms can improve their teams' skills during uncertain times.
One crisis seems to beget another. Regarding the recent drama from the pandemic, which has become a health, economic and social crisis in one rapid, unfortunate development, companies are feeling pressured to anticipate, if not respond to, sweeping change.
Nowhere more is this prevalent than in the financial sector, where harmony must be struck between long-term investment and sustainability and quicker short-term targets. Likewise, a nationwide economic recovery has been, for many, a growing point of focus and alarm.
Financial service firms must keep pace - not only at an organisational level, but also in how they upskill their people. The trouble is that these investments will not mature until long into the future, which does not resolve the urgency of short-term financial targets that ensures the routine running of many private firms.
Is upskilling and cross-pollinating timely skills the best immediate solution for private firms in the financial sector?
Skills need to be developed and shared. With swift economic changes afoot, the firms that are more capable of navigating the crisis seem to be those willing to embrace new skills, especially those that relate to digital technology. Only 17% of CEOs in the financial services sector believe their organisation has made significant progress in areas such as improving workers’ and leaders’ knowledge of technology, according to the PWC’s 23rd Annual Global CEO Survey.
Traditionally, when an employer wants to upskill their workforce, they offer training as a means to reinforce existing skills, while introducing new ones. Rather than seeing the workforce as something fixed, firms are relearning how to flexibly embrace and nurture new skills when they need it most. New ideas about collaboration – such as academic partnerships – are less effective than instilling the required skills in your full-time workforce.
With swift economic changes afoot, the firms that are more capable of navigating the crisis seem to be those willing to embrace new skills, especially those that relate to digital technology.
Upskilling does not have to feel out of reach for many firms. A willingness to listen and learn about new strategies could be the difference between a firm that flourishes and one that flounders. Yet, with certain key tips, your firm could learn to cultivate a culture of success both in the office and beyond it.
1. Micro-learning for those who are time-poor.
Those eager to upskill will likely face the trouble of time, or lack thereof. Is your team already busy, making upskilling a riddle for a fully booked diary?
Micro-learning is a digestible way of intaking new skills without requiring the larger allocations of time. This form of learning enables your employees to pick-up new skills at their own pace. Training is delivered in smaller, manageable slots of time, so that employees can test and acquire new skills in-between the gaps of their diaries.
Encourage staff to make the most of their existing breaks, or gaps in the scheduling, and use this time to pick up and learn new skills that could shape the outcomes of your firm.
2. Empower mentorship to spread skills.
One of your most powerful means of spreading skills across the workforce is to evaluate and embrace the existing strengths of it. This is one of the easiest, most reliable, and cheaper forms of upskilling – and it embraces the resources you already have access to. Encouraging cross-pollination in the workplace can generate impressive results: it means passing on wisdom, key knowledge, and skills that help reach shared goals.
This format of upskilling is especially helpful for new hires or arrivals into your business, where an employee can pick-up your brand through a cross-pollination of skills, knowledge, and wisdom much more easily through a mentorship programme.
A willingness to listen and learn about new strategies could be the difference between a firm that flourishes and one that flounders.
In fact, ideas of mentorship are a growing preference for many young professionals eager and willing to absorb new skills.
3. A collaborative culture is a productive one.
A resourceful business is one that understands the capacities, as much as the limits, of its own workforce and tools. Many professionals underscore collaboration as a critical ingredient in successful culture of work, but it represents a spirit that is not easy to capture, much less to harness.
A collaborative culture can ensure that skills pass around a team of any size with minimal regulation. Involve your HR team in this strategy, or consult a third-party HR consulting expert, and render information (company policies, for example) accessible through the local intranet, or shared storage, so that employees can thrive in an information-rich setting.
4. Listen to the experts.
Physical meetings where knowledge is gathered and shared, like public lectures, are all migrating online, and are now accessible through apps. The greatest benefit of this kind of exposure to new skills and ideas is how portable and accessible training has become. There is a wealth of expert platforms to draw skills from, depending on your desired learning outcomes.
Sometimes the expertise can come from within. Encourage staff to trade and exchange their skills locally and through sharing platforms – like its intranet. As with mentorship, encourage those with the desired skills to make them accessible to others across your business. Your HR team can facilitate this process by encouraging teams who do not normally contact one another to connect through new platforms and share their skills and ideas.
5. Develop one skill at a time.
Identify the strengths you would like your business to absorb and plan a roadmap to achieving this new skill expansion. A strategy is an effective vehicle for mobilising skill across larger workforces, where the likes of progress monitoring can ensure that skills are being absorbed and applied at the right pace.
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Upskilling should always be a focused effort, taking careful priority that skill retention is not sacrificed for expediated learning. Managing your skills expansion into digestible learning opportunities can ensure the effectiveness of each employee’s training.
For an expert way of managing this, trial objectives per employee that acknowledge new skills and give them opportunities to apply these new skills around the office (and within their own workflows).
Matt Cockayne, CCO of Yapily, outlines what embedded finance is and the role it plays in modern business.
“Embedded finance” could very easily become the next overused hype cycle. Another phrase that gets bandied about, over-hyped by the press and industry talking heads alike, but that ultimately fails to meet the weighted expectations placed on it.
Embedded finance is already happening. And what’s more, it will only continue to improve the experience for both consumers and businesses across multiple industries, not to mention keep the fintech ecosystem growing in the coming years. As with any new concept, however, there are a number of misconceptions surrounding embedded finance - what it is, what it isn’t and the role it will play in the coming years.
What embedded finance is, and isn’t
A decade ago, financial services was an industry in and of itself, along with the likes of education, commerce and healthcare. Fast forward to 2020, and financial services is the ultimate enabler - one that touches almost every single industry as they look to incorporate financial products and services into their native offerings.
More and more we’re seeing non-banking players launch their own financial services to open up new revenue lines and improve customer experience. Apple launched a credit card. Amazon offers loans to merchants who have “stalls” with them online. It’s this native integration of financial services into any non-traditionally financial app or service offering that characterises embedded finance.
Embedded finance in action today
As such, embedded finance can take on myriad forms. The simplest would be your local take-away or pub enabling you to order and pay for your favourite Chinese or tipple online from the comfort of your home. Something many in fact did during lockdown. But it can also go much further. Tesla, for example, offers its own car insurance to would-be EV owners during the sales process itself.
Sticking with insurance, gig-economy workers, like Uber drivers, often need extra insurance beyond their standard cover for when they’re actively working for specific companies. To help bridge that gap, Uber and other companies now provide various levels of cover to the temporary workers they employ. As we see even greater uptake of gig work post Covid, this type of service will only grow.
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Never mind the buzzwords
This is all well and good, though we’ve seen time and again new technologies and trends fail to meet expectations. But embedded finance is here to stay. Not simply because evolving customer expectations and a global pandemic have created the perfect petri dish for a radical reimagining of how and where the key functions of finance are delivered. There’s big money here too - the VC firm Andreessen Horowitz predicts it will increase the profitability of a customer five times over the original revenue stream.
Added to this, while Big Tech is currently leading the way, the most effective way for both banks and other fintechs to survive and emerge as winners in the coming years will be through partnerships. And the success of embedded finance is predicated on developing mutually beneficial partnerships across multiple industries.
As a lender, you can’t embed payments options for your customers online - thereby making it easier and more reliable for them to make repayments and enhancing their overall customer journey with you - without having a solid payments partner. One that has the best technical infrastructure and APIs that you can rely on to provide the quality payments service you want to give customers.
In the coming months and years we will see more partnerships emerge that facilitate embedded finance. Partnerships that will help the fintech ecosystem thrive in the coming months. Opening doors for new technologies, innovations and collaboration at the exact moment when it’s needed.
Neil Murphy, Global VP at ABBYY, examines the shifting role of CFOs and a new way in which they can bring effective transformation.
With the speed of digital transformation ever increasing, businesses and financial organisations are working hard to keep up. When they do, transformation often means expanding the responsibilities of those in charge – but it’s not all about the CIO, CTO, or even CEO. Nowadays, the Chief Financial Officer (CFO) is at the centre of this change. As such, the role of whole finance team will evolve, as they are placed at the strategic heart of the enterprise.
The CFO is in a unique position to bring intelligent solutions to the enterprise. Gartner predicted that by 2021, 85% of all customer interactions will be managed without a human. By introducing technology, businesses will be empowered to forecast how competitors will react, how customers will respond, and where risks will emerge. Nowhere is this level of competition more fierce than in banking and financial services (FS) – as such, the FS industry has become a battleground.
If they want to come out on top, finance teams will need to do more than just engage customers online. They need to strategise and map out their battle plan to attract and onboard new customers digitally, while creating a speedy and secure digital experience for existing ones. They need to invest in digitising their back-office systems and processes to enhance front-line interactions. Where better to gain a broad, accurate view of their organisation and processes than a ‘digital war room’?
Why a war room?
In many firms, including in banking and FS, the CFO and their team rely heavily on data that comes in from customer-facing operations, so they can link predictive analytics with customer behaviour. The sheer volume of data can be cumbersome, but with better management, financial institutions can anticipate the needs of customers, make banking easier, and pursue the right partnerships to increase capabilities and scale.
If they want to come out on top, finance teams will need to do more than just engage customers online.
Enter the digital war room. Here, CFOs can get visibility into every single process in their business as they actually behave. They can see variances, bottlenecks and delays, and put all this data to good use, mapping out how to better meet customer and business needs.
Process analytics can help to deliver insights from data that already exists within a financial organisation. With trends and customer needs constantly changing, it’s important that CFOs and banks stay ahead of the curve by capturing meaningful insights. In fact, 98% of banking and FS bosses agree that technologies (like process mining) would be helpful to their business. An example of this is delivering personalised services based on the customer profiles that banks have. They can use the data on customer preferences, buying history, demographics, and behaviour to better understand their needs.
A C-suite seat for process intelligence
Setting up your digital war room is only half the battle. The real challenge is about knowing which technologies to use in it. Whether it is account opening, loan applications, payment processing, or any of the thousands of other possible processes, the right technology is the missing link – a sure-fire way to win new customers and keep existing ones.
Attempting to automate your processes without first knowing which work well and which don’t is a losing battle – you’ll only make bad processes bad faster. This is where process intelligence comes in as a critical component of any digital war room. Right now, only 55% of banking and FS businesses we surveyed said they frequently use tech to assess business processes. This means almost half don’t have visibility of their data and can’t spot bottlenecks and blind spots in customer interactions – not to mention in their back-end processes. This might be causing more problems than the CFO realises – and could be the key to solving some age-old dilemmas.
Using the right technologies in the right setting is critical in helping finance teams nail the processes that trip them up. The war room can empower the CFO and its staff with oversight and control over the processes they work with every day. This means they can ensure that customer experience remain a priority – as this is critical for revenue generation – whilst making better business decisions than ever before.
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Digital transformation has blurred the lines between organisational change and technological. To keep up, CFOs will need not only to lead digital transformation efforts both big and small, but to quickly learn the strategic skills to create a war room – and win both the battle and the war.
