Hamzah Almasyabi, co-founder and CEO of the gold-buying platform Minted, outlines the benefits and drawbacks of adopting an investor trading app.
Some of the best-known investment apps, such as Freetrade, Trading 212, Plum and Moneybox, have reported a strong uptick in customer numbers since the start of March, when the UK Government’s lockdown restrictions were imposed. However, in truth, consumers had become more interested in managing their own finances online well before the pandemic. Some platforms have noticed more interest, particularly from younger online investors, who are attracted by the familiarity and gamified nature of the latest investment platforms across a range of asset classes. Equally, older people or more experienced online investors have been exploring ways to make their money go further, sometimes with a view to bringing forward their retirement.
The convenience and simplicity of many new generation investor trading apps is helping to democratise the world of investor trading. It is allowing people to invest in stocks and shares, or precious metals and other commodities, using their mobile phone, while sitting at their own kitchen table. Of course, there are risks but there are also incredible opportunities for people who want to get involved.
When considering investing online for the first time, it makes sense to try out various platforms before starting to invest actual cash. Some platforms offer newcomers a chance to spend virtual money, just to see how their investments might have fared in the real world. Such ‘try-before-you-buy’ services also allow users to test the app’s functionality and make sure it suits their preferences. However, convenience and user-friendly architecture shouldn’t be the main criteria when deciding where to invest for the first time. It makes sense to download a number of options, try them out and compare the terms and conditions of their offer carefully.
When considering investing online for the first time, it makes sense to try out various platforms before starting to invest actual cash.
In some cases, the precise nature of the investment opportunity may not be clear, particularly to the novice online investor. For example, some platforms may appear to be offering a chance to buy stocks and shares, when in fact they are just giving the investor exposure to any movement in the value of the shares. If the investor wants to own shares, this may not be the right option for them.
In a climate of significant stock market volatility, interest in ‘safe haven’ assets such as gold has increased significantly. While there are fewer gold-buying platforms to choose from, there are still some important differences to be aware of. Gold Exchange Traded Funds (ETFs) are popular with some individuals because they provide an easy way of gaining exposure to any increases in the value of gold, whilst still having easy access to the funds if they are needed. On the other hand, gold investors looking to the longer term may prefer to own a physical asset, which has intrinsic value in countries around the world. Buying physical gold can now be achieved without incurring excessive entry and exit costs, making it possible for people with modest amounts of cash to invest incrementally in this luxury asset for the first time.
Before becoming an online investor, individuals should take a step back and consider their personal and financial objectives, taking into account the amount of money they can afford to invest and their risk appetite. These factors will not only influence their choice of asset class, but the features they look for when considering different investment platforms. If any platforms appear to be downplaying risk, over promising returns, or pushing the investor to spend money within a certain timeframe, they should be treated with caution.
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As long as investors have taken the right steps to prepare themselves and understand the potential risks and rewards, online investing can be an empowering and enjoyable experience. What started as a new habit during the pandemic, could have a positive effect on financial wellbeing.
The unsteady nature of this sector pushes banking institutions to stay on top of their game to ensure business continuity and their most important asset – the customer – remains satisfied. In particular, in the last few months the ongoing pandemic has placed unprecedented strain on customers and the companies that seek to support them. As brick-and-mortar locations and offices closed down, or vastly curtailed their face-to-face operations, nearly everyone was doing business from home.
As a result, like many industries, banks had to completely restructure the way they do business, with scores of bank branches either closing or restricting opening hours due to the virus. Therefore, new methods had to be adopted to serve customers and to ensure that the experience they have doesn’t suffer. This is where digital collaboration comes into play. Ryan Lester, Senior Director of Customer Experience Technologies at LogMeIn, examines how digital collaboration can help banks rise to the challenge of meeting customer demands in unprecedented times.
24/7 expectation and frictionless service
At the height of the pandemic, people were encouraged to use online banking, as telephone contact was under increasing strain with long waiting times becoming the norm. According to Fidelity National Information Services (FIS), which works with 50 of the world’s largest banks, there was a 200% jump in new mobile banking registrations in early April, while mobile banking traffic rose 85%.
With branches remaining closed, customers were continuously being urged to limit the amount of calls they made to the most urgent cases and consider whether they could solve their answers through mobile online banking or checking the company website. Although already being adopted in pockets of the industry, this was a real catalyst that spurred banks to up their game on digital channels and with self-service tools.
According to Fidelity National Information Services (FIS), which works with 50 of the world’s largest banks, there was a 200% jump in new mobile banking registrations in early April, while mobile banking traffic rose 85%.
Banks are challenged with precariously balancing customer needs with the cost of personalised support. With the demographic of customers changing over the last few years, customers are becoming increasingly younger and more comfortable with technology. Influenced by the “Amazon Effect”, their expectations have risen to an all-time high, placing record strain on the sector.
Customer experience isn’t just about support anymore, it’s about serving your customer at every point in the journey. Companies have an opportunity to elevate the experience they provide by moving beyond one-and-done interactions to create continuous engagements with their customers. It is starting to become a primary competitive differentiator in the market and one that doesn’t have a lot of variation. Deploying AI chatbot technology will be able to strategically help banks improve customer experience and raise the level of support that agents provide.
Digital collaboration: The best way forward
By emphasising the importance of adopting digital channels and self-service tools like chatbots, fuelled by conversational AI, banks will be able to help serve a wide range of customer queries and ensure they are protected from fraud and scams.
Conversational AI is exactly what it sounds like: a computer programme that engages in a conversation with a human. When it comes to service delivery, conversational AI can be deployed across multiple channels to engage with customers in ways that effectively address evolving customer needs. At a time defined by COVID-19, self-service tools such a conversational chatbots can work around the clock to solve customer queries in a concise and timely way. Of course, self-service tools won’t completely replace human agents in the banking industry, but they will help companies redistribute customer traffic and workflows in ways that enhance customer experience. Self-service tools fuelled by conversational AI can also improve employee experience because service employees can handle fewer, but higher-level service tasks that chatbots might escalate to them.
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Adopting new tools to help facilitate consistent and concise answers and help maintain customer experience is on the forefront of many industry minds. Banks such as the Natwest Group have seen this first-hand and are testament to the benefits that a good digital experience can provide. Simon Johnson, Capability Consultant, Digital at NatWest Group highlights NatWest’s use of digital tools during lockdown, “Over the last few months, we’ve learnt how to use digital tools to help our employees remotely. From a banking perspective, there have been a lot of changes including base rates, waive fees and the best ways of contacting our vulnerable customers, ensuring we keep them protected from frauds and scams.
“By introducing our Bold360 chatbot interface, Ella, we’ve been able to get relevant information out quickly, apply the best practice and ensure that our customer journeys are being developed correctly. Due to the volume of questions, some of our customers were finding themselves waiting longer than usual. So digital channels become essential to helping reduce the wait time. Using Bold360, we were able to mitigate issues and answer questions in a more timely way through our chatbot.
“Moving forward, as we open more digital services, we are analysing our data to see if customer will return back to their usual way of banking, now that they’ve seen what a good digital experience can provide. Either way, with Ella, we are ready.”
AI chatbots and humans supporting each other
Ultimately, banking institutions have realised the benefits that digital collaboration can bring to their industry and how it can increase profits, while holding customer experience at the forefront of their minds. By providing 24/7 service, readily available information, consistent and concise answers across channels with behind the scenes support from member services representatives, digital collaboration will prove to be an essential component to the banking industry which will change it in the long term, for the better. While not every institution is ready to place chatbots high on their priority lists, the potential of its adoption should not be ignored.
Steve Watmore, Payroll and HR Product Manager at Sage, outlines how firms will need to prepare for the end of the government's support scheme.
The Job Retention Scheme, introduced in April, has been a lifeline for many employers and employees facing the harsh reality of lockdown halting business and operations; total figures from HMRC on claims for the furlough scheme top out at an incredible £31.7 billion as of 26 July.
However, the scheme is not an endless pot; its expiration date has been set for 31 October, and this month marks the beginning of increased costs for employers who now must cover National Insurance and pension contributions. In addition, there will be tapering on the government wage contributions for the scheme from September onwards. In this step-by-step guide we will take a look at what your business can do to effectively respond to the upcoming changes to the scheme that has helped businesses across sectors survive and revive through these difficult times.
1. Find out more about the latest changes and how they affect you
The latest HMRC release details the changes for August through to October that will affect businesses across the UK.
Employers need to plan for cost increases of around £300 per employee from 1 August onwards, since the government will no longer cover national insurance and minimum auto-enrolment pension scheme contributions. In September and October, the employer will have to increase their contributions as the government gradually removes support.
Hypothetically, with cumulative costs shown in brackets, an employer with a furloughed employee on maximum contributions of £2,500 will need to first start paying the employee National Insurance costs in August (c. £300), then account for 10% reduction on government wage contributions in September (c. £600), as well as a further 10% reduction in October (c. £900). The employer will then need to take a view after the scheme dissipates to see whether keeping employees on the payroll is sustainable.
Employers need to plan for cost increases of around £300 per employee from 1 August onwards, since the government will no longer cover national insurance and minimum auto-enrolment pension scheme contributions.
With these changes in mind, we advise that your first step should be to reassess financial and internal communication plans, using government insight as a springboard. Direction can first be taken from HMRC which will help delineate the differences between August, September and October payroll.
2. Involve your employees in plans for recovery
The ONS create a weekly report pulling out stats on Coronavirus and its social impacts. Data from 22 to 26 July shows that 54% of working adults reported they have travelled to work in the previous week. So, as businesses look to open their doors returning to some sort of “normal”, and welcome employees back to the office, this is a chance for employees to play a role in reimagining the business going forward.
In order to get employees to participate in recovery, leaders can initiate new business drives or restrategising sessions and shepherd departmental involvement. Sage has researched into the advisory value that different skills and roles can offer – the fourth annual ‘Practice of Now’ report published in 2020 found that 79% of survey respondents are confident about providing business management and advisory services like cash flow management. In addition, 75% are confident about providing industry-specific advice for clients, such as standard profit margins. 73% are confident about providing technology implementation recommendations like AI and automation. While this demonstrates accountancy can add value to services provided to clients, it also shows that it’s important to use some of that keen insight for internal processes.
Employees who have close knowledge of cash flow can help restructure businesses in the coming months and years; encouraging the involvement of employees to advisory roles outside their normal work will help businesses mould themselves to fit the changed contours of the business landscape.
3. Prepare for future uncertainty by investing in technology
Accounting software from a good partner or software supplier helps avoid costly and damaging errors. Awareness of the HMRC guides and rules will be key, coupled with salient use of technology to find the right figures from your payroll and help initiate processes like payment in lieu.
Accounting software from a good partner or software supplier helps avoid costly and damaging errors.
In order to make the right calculations and adjust payments and payroll accordingly, technology can help provide precise accounting. Payroll software can automatically adjust to the changing reclaim values, compensating for the government removing NIC contributions in August, then the reduction of the September government contribution to wages to 70% of normal gross, then finally with October government wage contributions going down to 60%.
Our third piece of advice would be to invest in the right technology for your organisation; it can help improve the efficiency and productivity – especially important in today’s society. Great tech can help to reduce errors within your business and understand your data more to enable you to respond and react better to demands.
Preparation is key and with these growing costs, businesses need to also assess whether they’ll be generating revenue to accommodate shortfall or have enough work for the employees. Payroll and accounting technology can help provide data and estimations on when companies will be back in the black.
4. Organise the HR side of the change
The key to a successful transition involves mastering the behind the scenes of payroll, knowing the letter of the law and ensuring there is a clear channel of communication between employees, managers, and the accounting department.
Employees need to be aware of the JRS claim periods, alterations to employment contracts, where they stand if they are a freelancer following the end of the scheme, how things like holiday pay is calculated and how the tapering of the scheme will affect them.
For many businesses, fixed costs have not gone away. Rent, rates utilities will all have been accrued costs through this time. For some, supply chain issues or increased costs after full lockdown can also have significant impact on operating margins. It is likely that new contingency plans around maintaining the workforce need to be considered, which unfortunately does include redundancy.
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Employees will need clear communication and guidance during this time in order to help them understand how their payroll and payslips may change, and what steps they may need to take. With the weighty impact of the furlough scheme, companies need to be more cognisant of changes to shift patterns, salaries and probation periods; business leaders need to keep a tight control on finances and internal communication now more than ever.
Last, but not certainly least, supporting your employees through these tough and uncertain times is critical. Offer guidance and care to those that have been affected negatively – establishing wellbeing and support systems that will help deal with difficult transition that are to come as the furlough scheme ends.
Looking ahead
The government introduced the Job Retention Scheme to help mitigate the negative effects of lockdown and let businesses freeze operations to play a waiting game.
Now businesses need to get back into gear and plan for the future. The four key steps we recommend taking to ensure your business remains efficient, effective and prepared for the next phase of the furlough scheme are:
- Understand how some of the latest changes to the furlough scheme will affect your business and payroll efforts – you can find out all the information you need by visiting the HMRC website;
- Involve your employees in plans for recovery – distributing a companywide note with separate plans for rallying departmental teams will be key;
- Prepare for future uncertainty by investing in technology – using accounting and payroll technology will provide great overview of financial stability;
- Organise the HR side of the change – taking care of employee wellbeing during these tough times is a must.
Accounts filed with Companies House this week have revealed that Revolut made a loss of £106.5 million in 2019, an increase from the £32.8 million loss it posted in 2018.
The loss comes despite significant growth in Revolut’s business, with its customer numbers rising from 3.5 million to 10 million over the course of the year. These customers held £2.2 billion on Revolut’s cards by the end of 2019, up from £1 billion in 2018.
Revenues also saw an increase of 180% to £162.7 million, but failed to outpace losses.
In an emailed statement, Revolut chief executive Nikolay Storonsky took an optimistic stance on the news, emphasising the past year’s growth.
“While we still have some way to go, we are pleased with our progress in 2019,” he said. “We tripled our revenues, increased retail customers from 3.5 million to 10 million, increased daily active customers by 231% and the number of paying customers grew by 139%.”
“Despite the current economic challenges, we remain focused on our goal of moving towards profitability.”
Revolut is a London-based fintech startup that aims to build a single universal platform for its customers’ financial needs, initially beginning as an app-linked foreign exchange card before expanding into stock and cryptocurrency trading. It is currently one of Europe’s fastest-growing fintechs, and received a valuation of $5.5 billion during a funding round in February.
Revolut also disclosed in its accounts that it has assisted the government during the COVID-19 pandemic by supplying data on how its customers’ spending habits have changed across sectors while lockdown measures have been imposed.
The special purpose acquisition company also listed shared upon completion of the transaction, the resulting company will continue to operate as Paya. It will be listed using its new symbol PAYA on NASDAQ. The combined company, Paya, now has an implied enterprise value of roughly $1.3 billion as a result of the transaction.
Paya CEO Jeff Hack tweeted that the company is excited about the new partnership and hopes it would accelerate their journey of becoming a public company. He also thanked the company’s existing majority equity holder, GTCR for their continued support and investment.
He added that Paya has an impressive track record of “creating differentiated value” for its software integration partners along with their end customers. Hack also expressed his vision for the future of Paya as a publicly traded company, saying that they will continue investing in product innovation, while also focusing on providing their software partners with excellent support. He added that they company will continue to work towards having access to the required capital for more strategic acquisitions.
Paya management team to continue handling growth strategy
The current management team of Paya, led by CEO Jeff Hack, will continue to be in charge of handling and executing growth strategy of the combined company. GTCR, a leading private equity firm, will continue to be the largest stockholder of the company.
GTCR is no new name in the fintech industry. In fact, it is a long-time investor in the industry known for its successful support of fast-growing finance and payments public companies such as Syniverse, VeriFone, and Transaction Network Services.
The current management team of Paya, led by CEO Jeff Hack, will continue to be in charge of handling and executing growth strategy of the combined company.
Commenting on the merger, Managing Director of GTCR, Collin Roche said that the agreement between Fin Tech III and Paya shows the effectiveness of their Leaders Strategy™ approach and its ability to transform various businesses that belong to industries that GTCR knows as well as the payments industry.
They also expressed their excitement to provide continued support to Paya in "this next chapter of growth," adding that the management team has made calculated investments in technology and talent to build a unique, effective, and scalable integrated payments platform in attractive end markets.
Paya shows a hopeful future in trading
Meanwhile, Paya is no newcomer either. It already has more than 100,000 customers and processes a total of more than $30 billion. It can even deliver vertically-tailored payments solutions to its business customers through Paya Connect, an ACH platform and proprietary card. Paya partners with well-known software providers to deliver these solutions to their business customers, many of which are in markets like healthcare, education, non-profit and faith-based, B2B goods and services, and more.
One of Paya's major appeals is that it boasts a seasoned management team with years of industry experience. The team, led by CEO Jeff Hack, has a combined experience of more than 100 years in the payments industry and they have worked with major companies such as PayPal, JPMorgan Chase, Vantiv, and First Data.
Additonally, Paya also has an attractive financial profile. Its impressive KPIs have set industry standards, and includes an average ticket of more than $200. Besides, the company has a proven track record of high cash flow generation supported by a strong operating leverage and historical growth.
Looking at these impressive highlights, Paya shows a promising future in trading as a public traded company.
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Implications of the transaction
Apart from the implied enterprise value of approximately $1.3 billion for the combined company, the transaction has several other implications. Fin Tech III’s cash in trust will find the cash component of the consideration, along with a private placement from a number of organizations.
The balance of the consideration will include shares of common stock in the combined company. Suppose stock price targets – as specified in the definitive merger agreement – are met. In that case, it is likely that current equity holders in Paya will receive an earnout of additional shares of common stock. By rolling over a large amount of equity into the combined company, the equity holders, along with the management team and GTCR, will continue to be the largest stock holders.
The merger is expected to be completed in the fourth quarter of this year. Approvals from FinTech III stockholder as well as regulatory bodies are still pending as of now.
This transaction is likely to have a significant impact in the fintech trading market. While trading, it is important for investors to use only trusted and reliable trading platforms so they have access to reliable knowledge and resources.
Sources:
https://www.finextra.com/pressarticle/83575/paya-acquired-by-fintech-iii
https://www.businesswire.com/news/home/20200803005351/en/Paya-FinTech-III-Announce-Merger-Agreement
APIs allow us to make payments seamlessly, reaching the global marketplace at our fingertips, by transmitting information from one piece of software to another.
But as APIs become increasingly part of our day-to-day transactions, how can we make sure they are the best fit for the service users and that they do not fall into the trap of prioritising style over substance? Finance Monthly hears from Henry McKeon, Innovation Architect at moneycorp.
Banks, fintechs and APIs
For incumbent banks, APIs give the opportunity to expand their customer reach, by offering a more accessible range of services, along with potential partnership opportunities with fintechs. However, due to the business model of the bigger banking institution, they are inherently less agile than their fintech counterparts, meaning they often come up against barriers in the development of their API offerings.
On the other hand, we see a number of fintechs who rush to get their API service to market in order to serve their customer base – who are more likely to be tech-savvy. And while they have an agile business model that allows then to be flexible in adapting customer solutions, they don’t have the heritage and pre-built trust with the general public, along with the years of customer feedback to implement into their systems.
The customer at the core
Fundamentally, a successful API has the customer at the very core. In the first instance, it’s vital that the provider looks at the specific customer requirements and relates those needs directly to the API services. Working closely with end customers helps to provide a better understanding of customer requirements and helps to structure the API offering. In building an API offering, developers should look to engage a number of existing customers to understand their requirements and to offer the functionality that would service clients across a wide variety of industries and needs.
Fundamentally, a successful API has the customer at the very core.
Some customers need efficiency in order to operate at scale; keying payment transactions manually via a web portal doesn’t scale and is error prone. Mass payment file processing provides efficiency and reduces errors but is not always what our high-tech customers are looking for. They want open API services so that they can link their platform directly to payment and foreign exchange services, they want to drive transactions from their own platforms directly. Having the ability to access services via API instead of via files provides the ultimate flexibility.
Building a central set of API endpoints, which provide the core banking on a multi-currency wallet, global and local beneficiary validation, international payment capabilities, peer-to-peer facilities for instant transfers, and 24/7 multi bank dealing and transactional and statement capabilities is part of the core requirement which help service customer needs.
Different industries have different requirements
The diverse needs of the customer journey are put into perspective when looking at invoice factoring customers who service short term debt. They need strong banking facilities for receiving and auto-allocating incoming money. Receiving is a key part of the banking offering, so doing that quickly and across a multi-currency account is a core part of our offering. Having account tiering (Parent-Child segregation) also helps with segregating money and reconciliation.
Invoice factoring companies need efficient pay out capabilities, for paying suppliers (early) and paying back to investors at the end of the agreed term. As a result, the ability for an API to provide speed, global coverage and multi-channel capabilities are crucial. Building receiving information into the API, providing instant access to balancing and received funds, along with the referencing on incoming money therefore becomes a fundamental requirement. This allows customers to understand the source of the money, so they can do checking an allocation on their own platform.
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Freelancing companies are another good use case for APIs. By their very nature, they are collecting and paying consultant salaries and need to be able to capture consultant bank details accurately and securely. In addition, they want to be able to validate these bank details at the point of capture, instead of at the point of payment, in order to avoid any errors or delays. Having the ability to validate local and global bank routing information at the point of entry using an API is a big advantage. Having a validation rules engine enables clients to dynamically configure the capture screens on the source freelancing system. In showing the mandatory banking fields required for each country and currency, it provides clarity on the required fields and validation of the banking details captured as part of the API offering. This functionality fundamentally helps eliminate payment failures, reduce rework and costs in the payment process.
When working with clients running freelancing sites, you’ll often find that they also require FX conversion and payment facilities which need to be embedded into the API to facilitate global pay out requirements. Local payout facilities also help reduce costs of transmission and receipt, as sending through expensive international channels is not always suitable.
This is also echoed in the requirement for shipping companies, that need to be able to pay efficiently for port calls globally. Having access to a wide range of international payments routes and currencies is essential to provide a full service. For example, at moneycorp we have partnered with Inchcape Shipping to provide Smartpay which services the world's maritime industry. Smartpay simplifies the payment process, providing efficiency and transparency and helping to centralize treasury and FX and payment services for the group.
FX providers give substance and style
In the fast-evolving world of API solutions, style is impossible to achieve without substantive attention to detail. This is even more apt in the space of foreign exchange, where achieving speed, efficiency and security can be more of a challenge due to the nature of banking across borders. In this space, to be successful, an API needs the agility of a fintech to evolve to rapidly changing consumer needs but be backed by substantive banking networks and expertise to execute payments securely and quickly across currencies, markets and time zones.
The financial services (FS) sector is under more pressure than ever. Juggling the effects of the pandemic, technological disruption and high customer expectations, coupled with maintaining business continuity, has been a difficult balancing act – and yet these factors are critical to FS. Neil Murphy, Global VP at ABBYY, explores how this has led some teams to butt up against the long-held rules and processes of the sector.
In order to see success, banks and FS firms need to take a long, hard look at how their business really works. This means getting visibility into business processes as they actually behave, identifying variances in them, and discovering how they can better meet customer and business needs.
With the world under unprecedented pressure, finding out how best to manage rules and processes can alleviate the strain and set your business on the path to success. Our recent research found that almost half (46%) of banking and FS workers and 30% of insurance staff rigorously follow the rules – giving the industry a good head start in coping with what’s thrown at them.
But is following the rules always the best route? And what happens when employees break the rules?
Rules – there to be followed?
Banking and financial services staff are working harder than ever before to help customers, keep businesses afloat, and also digitally transform. In such a process-driven industry, honing the many rules and processes could be the key to survival in this economy.
Our recent research found that almost half (46%) of banking and FS workers and 30% of insurance staff rigorously follow the rules – giving the industry a good head start in coping with what’s thrown at them.
At this point in time, it’s vital that banks and FS teams check in on their processes often to see where issues lie, which processes are most problematic, and which are ripe for automating. Following the rules is the cornerstone of achieving the potential of digital transformation, according to a McKinsey study which found that half of the value from digital transformation can be realised from as few as 10-20 end-to-end processes.
What tech brings to the table
While digital transformation is nothing new to most banks and financial institutions, now more than ever, they must rely on technology. It will help them conduct better business, comply with regulations, connect with customers, and deal with an ongoing flood of emergency business issues.
Getting your processes in order before automating them is a crucial step to avoiding failure. Yet many banking and FS staff claim that processes are too complex or there are too many to follow.
This is where technology comes in, and encouragingly leaders are open to helping their staff using technologies that can lighten the burden. According to our research, almost all banking and FS bosses think process mining technologies would be helpful to their business (98%), as did 89% of insurance bosses. These technologies can free up time for finance staff, enabling them to work on more pressing business matters that require the human touch.
Bending the rules
Rigorous rule-keeping is a trait the financial industry needs to uphold, in order to comply with stringent industry regulations. But there is a flipside.
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Key to a bank or financial institution’s success, especially in this digital age, is how they adapt and respond to customer needs. This means that even in a process-driven industry like financial services, employees occasionally break the rules. Sometimes, they have good reason: the most common reason to break the rules is to provide good customer service, which is more critical than ever before. Our research found that 62% of insurance bosses have confidence that their employees break rules so they can meet the needs of customers, and 50% of banking and FS bosses agree.
Relationship-building services like customer care, supplier management, or simply supporting colleagues and staff, can go a long way in benefiting a business and boosting morale. Being willing to bend the rules when it’s better for customers illustrates that rather than financial services staff being solely process-driven, they are driven even more by customer satisfaction.
So where do we start?
Unfortunately, customers are used to delays and layers of processes when it comes to banking. But it doesn’t have to be that way. To better serve customers, while also ensuring staff aren’t straying too far from the rulebook, the FS industry needs to be able to identify the bottlenecks and blind spots in every engagement. They also need the ability to analyse and discover processes using all the data they have.
Process intelligence technologies offer a deep understanding and real-time monitoring of processes. It helps you drill down into the details, explain why processes don’t work and how to fix them, and provides the tools to solve problems a business didn’t even know existed.
Say a customer loses their debit card. They shouldn’t need to go through the time-consuming process of calling various support teams, keying in endless numbers, and being put on hold, only for their account to be frozen as a precaution. By having every process mapped out and every piece of data available on an analytics dashboard, staff are given the knowledge of where customer service bottlenecks lie and why delays happen, so they can resolve issues much more quickly and securely.
Process intelligence technologies offer a deep understanding and real-time monitoring of processes.
But it’s not only useful for directly customer-facing interactions. Take anti-money laundering and anti-fraud compliance efforts. At a time when fraud is more prevalent than ever, nailing the processes that catch odd customer behaviour patterns in your data, and being able to action them automatically, means customers’ accounts are safer and more secure, even with less staff in the office and more fraudsters in the system.
Looking ahead
A clear understanding of your business’ processes will identify inefficiencies that may be impacting the customer experience – that you would never have known about otherwise. Empowering your staff with the tools to analyse less-structured processes, identify opportunities for improvement, and increase both the speed and accuracy of executing said processes, will reap many rewards.
Not only will it ensure businesses are getting the most out of their huge investment in digital transformation – it will also ensure customers are getting the best possible service. Right now, there’s nothing more vital than that.
What are the things keeping senior finance managers and executives awake at night? The COVID-19 pandemic and resulting lockdown have put many finance departments under even greater pressure than before. Mark Vivian, CEO at Claremont, describes to Finance Monthly how the growing demand for financial services can be met using cloud technology.
Organisations are under pressure to grow revenues and cut costs. Businesses need to be more agile than ever before in order to survive and thrive in today’s economy. There’s also the latest finance regulation (e.g. IFRS16) that needs to be adhered to, or legislative changes that need to be made (e.g. HMRC’s Furlough Scheme).
It’s important that the day-to-day running of the finance department can keep going too: invoices continue to be raised, and cash collected. Supplier invoices processed and paid. Employees paid correctly and on time.
Choosing the Right Finance System
When choosing the right finance system, there are number of important considerations businesses need to take into account. This will be largely centred around functionality and whether businesses can find a finance system that is part of a wider set of integrated business applications, such as HR, Payroll, and CRM. Oracle’s E-Business Suite is a great example of this.
As part of their functionality consideration, businesses will also need to consider their specific use cases. For example, is the requirement to have a finance system capable of supporting global organisations working in multiple territories, with multi-currencies and multi-languages, and also local country legislation?
Organisations also need to consider whether they are happy to adopt largely standard “best practice” business processes, which usually necessitates business change, or whether to use customisation to the standard product so that it reflects the way your business works.
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Ground to Cloud
Lots of organisations that we work with have a “Cloud First” strategy, and have “Ground to Cloud” initiatives, moving their key business systems from their own data centres into the cloud. “Cloud” is a ubiquitous term, but it has a number of different meanings. When we are considering choosing the best finance system, there are typically two main choices: cloud-based applications and infrastructure cloud.
Choosing a suite of cloud-based financial applications offers businesses the benefit of streamlining their IT environment and business processes; procured as SaaS, typically over a 3-year duration.
Choosing infrastructure cloud on the other hand allows you to move your on-premise applications from physical hardware to a cloud platform, replacing the typical arrangement of leasing hardware with the rental of infrastructure cloud. It has lots of benefits, not least the fact that under the old model, IT departments had to predict future business activity for the next 5 years and size up and purchase hardware for the next 5 years on that basis.
A move to cloud infrastructure provides a much more flexible arrangement, where compute and storage resources can be flexed up and down in tune with the organisation’s requirements, either in the long term, or perhaps on a seasonal basis if your business volume requires it.
Partnering with a Managed Services Provider
Whichever model you choose to use for your finance applications and services, it’s vital to use it correctly and get the most out of your investment. Using a complex piece of software is a bit like running a Formula 1 car. It requires a team of expert engineers, with differing specialities, working on it in order to optimise it and make it perform at its best. This is where partnering with a managed service provider (MSP) can make a big difference.
Whichever model you choose to use for your finance applications and services, it’s vital to use it correctly and get the most out of your investment.
A managed service provider can work alongside your internal finance and IT teams to do this:
- Firstly, they’ll provide “fix on fail” support through an Incident Management process, and this will typically be against a Service Level Agreement (SLA) for both responding to and resolving the Incidents.
- Next is Problem Management; getting to the root causes of Incidents that are encountered and resolving them so that they don’t reoccur.
- An MSP will also help you with Change Management, dealing with all of those modifications that will come up over time as your business changes, or you have to comply with changing legislation.
- Finally, a good MSP will be proactive, and make suggestions for how you can optimise your financial applications, perhaps utilising new functionality to improve efficiency and save money.
We saw a great example of helping a Managed Services customer with critical and urgent Change work earlier in the year, when The National Trust came to us wanting to take advantage of the government furlough initiative during the COVID-19 pandemic to support their staff and protect their organisations as their sites began to close. We were able to configure their payroll solution to meet their requirements within a very short space of time.
The end product was deployed rapidly, automatically calculating the rebate amount for each employee, gave each employee a professional standard of notification, and required minimal payroll intervention. The first payroll runs of the month began on the 16th April and by the 25th April the National Trust had successfully processed over 14,000 employees through their payrolls.
Bringing it Together
The pace of change is increasing, putting finance departments under greater pressure than before and COVID-19 has presented an extra challenge over recent months. Many organisations are using Oracle E-Business software to run their finance and procurements processes. There are options to replace this with cloud-based applications, or to redeploy it on cloud infrastructure to help meet business drivers. Working with the right Managed Services provider can help you to optimise your existing software and help you to deliver real business benefit.
The coronavirus pandemic has left many businesses scrambling to adapt. The lockdown and social distancing measures now in place – likely to remain in place, in one form or another, for many months to come – are forcing organisations of all sizes and sectors to reconsider how they operate. Ammar Akhtar, co-founder and CEO of Yobota, shares his thoughts on what the newly adapted financial sector might look like.
As we so often hear, we must prepare for a “new normal”; a world where office working, unrestricted travel and regular visits to bricks-and-mortar premises for essential services is going to become increasingly rare. In short, the transition from physical to digital is being greatly accelerated.
In the finance industry, there is a huge amount at stake. Firms that are unable to deliver their services while the physical world is largely closed off from us are at risk of being left behind by their competitors.
Rising to this challenge invariably means turning to technology. Indeed, fintech has been championed as the future of the finance sector for a decade now, but it has taken COVID-19 to bring about a “fintech revolution” in any meaningful sense.
What will this ‘revolution’ look like?
The increasing prevalence of financial technologies has been a common subject in both consumer and business contexts for many years. The so-called fintech revolution promised open access to data, hassle-free banking experiences and fairer deals for customers.
Yet only relatively small steps have been taken towards this vision. Until now we have only really witnessed a cautious adoption of this technology as consumers, regulators and established banks became familiar with what it can enable – and this has still come at considerable investment.
The so-called fintech revolution promised open access to data, hassle-free banking experiences and fairer deals for customers.
Now, though, things are finally changing. Technology is now not just a competitive advantage for financial services firms; it is essential to their very existence.
Today, people must be able to access critical financial services digitally. From taking out a new product (a loan or a credit card, for example) through to managing their finances and receiving advice, this must all be possible from within one’s own home. But more than that, the process of doing so must be fast, painless and personalised as possible.
There are credit marketplaces in the UK which already offer pre-approved loans that can be opened in just a few minutes with minimal clicks. This is possible because the lenders have made progressive choices in the way they develop or utilise technology.
Conversely, many finance companies still have data, systems and processes that are completely reliant on legacy technologies and on-premise servers. Simply put, these firms are under threat of becoming the Blockbuster or Kodak of the financial services sector (that is to say, businesses that were far too slow to respond to technological change).
Interoperability and the cloud
For financial technologies to be successful, two things are essential: interoperability and cloud computing.
Over the past decade firms have too often taken a piecemeal approach to adopting fintech; they have deployed specific technologies to solve isolated problems. That is because fintechs – financial technology startups – are typically created with that very focused mindset.
For financial services companies, particularly banking providers, a much broader perspective is required. Not only must each element of a business’ operations be built around best in class technology, but the technology must also be interoperable – it must fit together to form entire systems and processes that work seamlessly together.
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Take the example of someone applying for a credit card – something that is increasingly common as a result of the economic hardship brought about by COVID-19. There are various different stages that an applicant will need to pass through – identity verification; credit scoring; advice or product recommendation; application and assessment; and, if successful, creating the account.
Using interoperable fintechs on a cloud-based platform removes time, complexity and human interference in all of those processes. Data can be rapidly shared and analysed, allowing for the appropriate products – better yet, personalised products – to be shown to the user. There is no reason that an applicant cannot go from the start of the process to the end by themselves in minimal time; so long as the credit card provider invests in the technology that enable them to do so.
Embracing fintech to its fullest
We are in the midst of what, in ‘business speak’, they would call a paradigm shift. We are moving past the stage of thinking about financial technology as simply being a means of checking one’s account or transferring someone money. The fintech revolution is gathering speed, and it will lead us to a more open, connected form of banking where one can see and manage all their finances digitally, as well as accessing personalised advice and products all from the comfort of their sofa.
In this primarily digital landscape, financial services firms who cannot deliver an exceptional level of service to customers – be it consumers or business – risk losing them to those who can. Now is the time for the sector to embrace fintech to its fullest and build systems that are not just adapted to the new normal, but actually help to shape it.
Last week, news broke that EY auditors refused to sign off on Wirecard’s accounts for 2019, citing a missing sum of €1.9 billion that documents purported to be held in two bank accounts in the Philippines. CEO Markus Braun claimed that the company was the victim of “the victim in a substantial case of fraud,” and COO Jan Marsalek was suspended, later to be terminated. Braun then resigned from the company on Friday.
Braun turned himself over to Munich police on Monday evening after a warrant for his arrest was issued. He is suspected of recording false transactions to artificially inflate Wirecard’s sales, increasing its value in the eyes of customers and investors. Philippine authorities are also investigating the whereabouts of Marsalek as part of a broader probe into the company.
On Thursday, the company said in a statement that it would apply to the Munich district court to open insolvency proceedings as a result of its “impending insolvency and over-indebtedness.”
The company’s shares were suspended from the Frankfurt Stock Exchange before the announcement was released.
Wirecard was long regarded as a star in the German fintech scene – a DAX 30 company which was once valued at €24 billion. That value has plummeted through the floor as the week of revelations continued, though it saw a brief 27% uptick on Tuesday following the news of Braun’s arrest.
Trading on Thursday saw Wirecard’s value drop by a further 76% once news of its insolvency broke.
This AI ‘arms race’ is being driven by two tech superpowers: the United States and China. The US is barrelling ahead, with Washington recently signalling its intentions to promote AI as a national priority. Last year, President Donald Trump launched a national AI strategy – the American AI Initiative – which orders funds, programmes and data to be directed towards the research and commercialisation of the technology.
Government involvement and long-term investment in AI has paid off: US companies have raised more than half (56%) of global AI investment since 2015. China, meanwhile, is catching up quickly and is now vying with the US to become the dominant force in the area. In 2017, it laid out a roadmap to become the world leader in AI by the end of the decade – and create an industry worth 1 trillion yuan (or the equivalent of $147.7 billion). As part of the three-step strategy, China has announced billions in funding for innovative startups and has launched programmes to entice researchers.
Achieving economic and political prowess is the ultimate goal. Indeed, AI is a vast toolbox of capabilities which will give nations a competitive edge in almost every field. However, the question beckons: where does Europe stand in this race, and what is at stake? Nikolas Kairinos, founder and CEO of Soffos, offers his analysis to Finance Monthly.
Europe is falling behind
Thanks to great access to home-grown talent and an inspiring entrepreneurial spirit, Europe is still a strong contender in this race. According to McKinsey, Europe is home to approximately 25% of the world’s AI startups, largely in line with its size in the world economy. However, its early-stage investment in the technology is well behind that of its competitors, and over-regulation risks stifling further progress.
Thanks to great access to home-grown talent and an inspiring entrepreneurial spirit, Europe is still a strong contender in this race.
Early last year, for instance, the European Commission announced a pilot of ethical AI guidelines which offer a loose framework for the development and use of AI. The guidelines list seven key requirements that AI systems must meet in order to be trustworthy; amongst the chief considerations are transparency and accountability.
The intentions behind such proposals are pure, albeit counter-productive. Proposing a new set of standards to be followed risks burdening researchers with excessive red tape. After all, AI remains a vast ocean of uncharted waters, and introducing ever-changing hurdles will only impede progress in R&D. Innovative new solutions that have the capacity to change society for the better might never come to light if developers do not have the freedom to explore new technologies.
Meanwhile, a European Commission white paper recommends a risk-based approach to ensure regulatory intervention is proportionate. However, this would only serve to deter or delay investment if AI products and services fall under the loose definition of being too ‘high-risk’.
Upholding human rights through proper regulation is of paramount importance. However, Europe must be careful to find the right balance between protecting the rights of its citizens and the needs of technologists working to advance the field of AI.
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The risk of ignoring AI solutions
What is at stake if AI development falls behind? The risk of ignoring AI solutions is immense, particularly for sectors like the financial services industry which must keep pace with evolving consumer habits.
AI has given the world of banking and finance a brand new way of meeting the demands of customers who want better, safer, and more convenient ways to manage their money. And with populations confined to their homes for long periods of time in the face of the coronavirus pandemic, the demand for smart digital solutions that allow people to access, spend, save and invest their money has peaked.
Those who fail to adapt by leveraging AI are at risk of losing their competitive advantage. The real value of AI is its automation potential; AI solutions can power more efficient and informed decision-making, taking on the data processing responsibilities that would normally be left to humans. If used wisely, smarter underwriting decisions can be made by delegating the task of assessing loan and credit applications to AI. Not only is this markedly faster than performing manual checks, but the chances of making risky decisions will also be reduced: AI software can be used to build accurate predictive models to forecast which customers have a higher likelihood of default.
Accurate forecasting is needed to ensure the continuity and success of a business. Again, those businesses that utilise the AI toolsets at their disposal stand to benefit from advanced analytics. Machine learning – a subset of AI – is adept at gathering valuable data, determining trends, anticipating changing customer needs and identifying future risks. Those who turn their back on AI risk losing out on sound risk management, leaving their profits and reputation vulnerable.
Accurate forecasting is needed to ensure the continuity and success of a business.
At the heart of any bank or financial firm, however, lies the customer. Traditional bricks and mortar banking is no longer the favoured option when money can instead be managed online. Yet, while online banking is by no means a new phenomenon, AI offers the hyper-personalised services that customers seek. Indeed, a global study conducted by Accenture recently found that customers today “expect their data to be leveraged into personalised advice and benefits, and tailored to their life stage, financial goals and personal needs.” Meanwhile, 41% of people said they are very willing to use entirely computer-generated advice for banking.
There is clearly an appetite for innovation from the consumer side, and financial institutions must step up to enhance their offering. Enhanced, real-time customer insights generated by AI will optimise recommendations and tailor services to each individual. AI-powered virtual assistants that offer personalised advice and tools which can analyse customers’ spending to help them meet their financial goals are just some of the ways that financial institutions can create a better customer experience.
These are just a few of the many incredible applications of AI within the financial services sector. Not only can it enhance a business’ core proposition, but the cost-saving potential and operational efficiency is becoming difficult to ignore.
AI technologies are transformative, and those who fail to invest in new solutions risk losing out on the multitude of benefits on offer. I encourage business leaders to think carefully about the about the outcomes that they want to drive for their institution, and how AI can help them achieve their goals. I hold out hope that Europe as a whole will ramp up AI development in the coming years, and I hope to see governments, businesses and organisations working together to continue to push forward the AI frontier and pursue innovative applications of this technology.
Nikolas Kairinos is the chief executive officer and founder of Soffos, the world’s first AI-powered KnowledgeBot. He also founded Fountech.ai, a company which is driving innovation in the AI sector and helping consumers, businesses and governments understand how this technology is making the world a better place.
This reputation has been particularly prevalent since July 1997, when the region gained independence as a sovereignty and set about establishing itself as a low-tax haven with a raft of lucrative free trade agreements.
In the modern age, however, what is it that makes Hong Kong such an attractive proposition for international investors, and what role does the digital sector play in this?
Accessing a Free Market Economy
The most apt description of Hong Kong was provided by the economist Milton Friedman, who opined that the region was the world’s greatest experiment in laissez-faire capitalism. There can be little doubt that Hong Kong represents the quintessential free market economy, and one that’s built on the principle of lowering trade barriers and minimising corporation tax (this is currently fixed at 16.5% and will not change until 2022 at the earliest).
This is one of the main reasons for the popularity of Hong Kong amongst overseas business owners, who’ll have the opportunity to minimise their operating costs and boost their bottom line profit accordingly.
The low rate of corporation tax is also appealing to forex trading firms, which already benefit from the fact that most brokers don’t charge a levy on currency trading. Not only this, but Hong Kong is now ranked as the fourth-largest financial centre in the world with a 7.6% share of the global forex market, while the region is also home to the second-largest exchange in Asia (behind Singapore). Hong Kong is also renowned for having the fifth-largest stock exchange and largest initial public offering market in the world, and this highlights the appetite for domestic and international investment in an open and prosperous economy.
The low rate of corporation tax is also appealing to forex trading firms, which already benefit from the fact that most brokers don’t charge a levy on currency trading.
The nature of Hong Kong’s economy also contributes to an incredibly influential and cash-rich consumer base, which ensures that firms are able to optimise turnover on an annual basis.
In US dollar terms, one in seven Hong Kong households exist in the millionaire category, and while real estate represents 70% of these assets, there’s clearly an opportunity for international businesses to thrive and target affluent consumer demographics.
How is the Digital Sector Faring in Hong Kong?
Despite the issues that the region has faced in terms of social unrest and angst, it continues to record average annual GDP growth of around 5% in real terms. One of the key factors here is also the rise of digital and web-based businesses, with Hong Kong’s relaxed commercial climate ideal for low-overhead and tech startups who wish to target a vast and diverse marketplace.
The open nature of Hong Kong’s economy also means that it’s easier than ever for companies to invest in advanced technologies and computational infrastructure, creating a competitive and potential lucrative landscape where profit margins are often higher than in developed economies.
Make no mistake; there’s a clear alignment between the values of Hong Kong’s economy and the ambitions of domestic and overseas SMEs, and this continues to build the digital landscape and lead into a far broader economy-wide transformation. Of course, we’ve already touched on the viability of launching a digital forex trading business in Hong Kong, and this is indicative of an economy that’s perfectly suited to online companies and tech-led startups.
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In terms of the best practice, the way in which you open a business in Hong Kong (digital or otherwise) will depend on the sector that you operate in. For example, firms looking to operate in the competitive forex space will need to identify a key differentiator, while also relying on key knowledge and datasets from the Asian marketplace.
The same principle of standing out from the crowd also applies when launching a business in the digital space, with marketing and the ability to target key demographics in Hong Kong also crucial to new ventures.
