Financial Operations magazine Winter 2014

Q4 Winter 2014 • Canada’s Independent Magazine

Financial S Payables | Receivables | Collections | Data | P-Cards | ECM | Technology

Credit and Collections Report Gary Tannyan

A look at how to boost AP metrics and data analytics for lending

Octacom – Profile of an electronic Top Five Reasons to Automate The Risk of document management company Your VAT Compliance Process Data Insecurity PM40050803

Contents

Q4 WINTER 2014 Volume 1 Number 4

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4 News 23 Insurance Report 25 Events 26 industry Update Features 8 Credit and Collections Report Boosting AP metrics; Data analytics for lending

Gary Tannyan

16 COMPLIANCE

The top reasons for automating VAT compliance

20 Profile

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Octacom: From mainframe and microfiche to bleeding edge technology

Also Publishers of

Advertising Sales Mark Henry mark@financialoperations.ca

Publisher and Editor-in-Chief Steve Lloyd steve@financialoperations.ca Editor Karen Treml karen@financialoperations.ca Creative Direction / Production Jennifer O’Neill jennifer@financialoperations.ca Photographer Gary Tannyan

For subscription, circulation and change of address information, contact subscriptions@financialoperations.ca Subscriptions available for $40.00 year or $60.00 two years. ©2014 Lloydmedia Inc. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without the prior written consent of the publisher. Printed in Canada. Reprint permission requests to use materials published in Financial Operations should be directed to the publisher.

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NEWS Cisco, IBM speed data center transformation As cloud, big data, and the Internet of Things drive the modernization of the data centre, Cisco and IBM have announced the availability of an integrated solution that combines the innovation of Cisco UCS Integrated Infrastructure with the efficiency of the IBM Storwize storage system.

Available through qualified business partners globally, the VersaStack™ solution is designed to deliver high levels of ease, efficiency, and versatility for cloud, big data, and analytics, and mobility deployments. Over time, the platform will be optimized for IBM business applications, while integrating Cisco innovations such as Cisco® Application Centric Infrastructure (ACI) and Cisco Intercloud Fabric.

CIOs looking for solutions that offer fast deployment and management options are increasingly turning toward integrated systems in which the full stack of data center technologies is combined into a pre-tested and supported system that is designed to operate and be managed as a whole. As a result, the popularity of integrated infrastructure solutions is growing fast. According to IDC, total worldwide spending on integrated systems is growing at 32.8 per cent annually and will reach approximately $14.37 billion in 2017 (up from $5.4 billion in 2013).

“Organizations today require IT infrastructure to be easy, efficient, and versatile,” says Satinder Sethi, vice-president, data center solutions, Cisco. “VersaStack will help our mutual customers streamline deployment and operation of their IT infrastructure. It will also provide a foundation for innovation between Cisco and IBM – from mobility and data analytics to Intercloud and application centric infrastructure.”

“As cloud, mobile, and big data continue to challenge and transform data centers, more organizations are turning to innovative solutions, like the VersaStack, for help,” says Laura Guio, vice-president, business line executive storage systems, IBM. “For its part, IBM Storwize is designed to help clients ease management and improve data center performance through virtualization and the automatic movement of data to the most strategic storage tier.”

Cisco and IBM have collaborated for more than five years, delivering combined solutions to more than 25,000 customers around the world. Today, Cisco and IBM collaborate around numerous customer opportunities, including big data and business analytics, cloud, collaboration, data center, Internet of Things, and software defined networking.

Chubb Insurance launches eDocs Chubb Insurance Company of Canada has launched eDocs, a standard developed by the Centre for Study of Insurance Operations (CSIO) for transmitting documents within the insurance industry.

The eDocs standard will allow Chubb to quickly transfer personal insurance policy documents directly from the company’s system to various supported broker management systems without the need for manual intervention.

“At Chubb, we seek to continually improve our brokers’ experience and embrace initiatives that make it easy to do business with us,” says Tanya Eyram, vicepresident of personal insurance operations at Chubb Canada.

“We’re excited to partner with CSIO and support eDocs for our brokers across Canada. Sending electronic policy documents for all personal insurance lines of business will save time, money and effort through more efficient processes.”

CloudOps, Canada’s fastest growing hybrid-cloud company CloudOps, an award-winning hybrid-cloud company and managed-services provider is the top ranked application-centric cloud company on Deloitte’s Technology Fast 50™.

“We are proud to be named among Deloitte’s top 50. At CloudOps we strive to create a distinct competitive advantage in a high growth market”, says Marc Pare, CloudOps VP of sales and marketing.

“While this award positions CloudOps as a

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Canadian leader in hybrid-cloud solutions, we recognize that a public cloud solution may not be the right fit for all organizations.

Therefore we are offering cloud.ca, a virtual private cloud platform that addresses the economics and on-demand capacity of a public cloud yet behaves like a private cloud with strict segregation and control of customer environments.”

Deloitte’s prestigious award is an annual

ranking of the fastest growing technology companies based on levels of growth, innovation, market attractiveness, and competitive advantage. With a 236 per cent revenue growth over a five-year period, CloudOps surpassed hundreds of nominees to be named among the fastest growing technology companies in Canada.

For breaking news and in depth news features, visit our website at www.financialoperations.ca

Financial Operations | WINTER 2014 | www.financialoperations.ca

NEWS FSI elects three new directors The Financial Services Institute (FSI) has elected three new directors for its board for 2015. The board also elevated two of its directors to new leadership positions. The FSI board stands at 16 directors.

The three new members of the FSI Board of Directors are: • David Knoch , president, chief operating officer, 1st Global • Joe Himelick, managing and founding partner, Himelick Financial Group (financial advisor) • Tony LaJeunesse, founder, TL Financial Group (financial advisor) “We are very pleased that our already strong and diverse board is adding three more industry leaders to its roster,” said FSI president & CEO Dale Brown. “Our advocacy agenda benefits firms and advisors of all sizes and business models – and our board of directors reflects that diversity. Our directors volunteer their time, resources and expertise in support of our mission of advocacy for a healthier, more business-friendly regulatory environment for our members and their clients to thrive.”

In addition to the new directors, FSI also elected Adam Antoniades, president of Cetera Financial Group, as the chair of the board, where he will serve a one-year term. In addition, FSI elected Amy Webber, president of Cambridge Investment Research, to serve as vice-chair of the board in 2015, and chair of the board in 2016. Clive Slovin, president & CEO of The Strategic Financial Alliance, was elected to finance committee chair. Richard Lampen, president and CEO of Ladenburg Thalmann, will remain the FSI PAC board chair in 2015 and Mike Mungenast, CEO and president of ProEquities, will serve as immediate past chair.

Continuing on the board: Rick Carlson (financial advisor, Carlson Advisors); Steve Chipman, Foothill Securities; Scott Curtis, Raymond James Financial Services, Dean Harman (financial advisor, Harman Wealth Management); Seth Miller, Transamerica Financial Advisors; Robert Moore, LPL Financial; Tim Murphy, Investors Capital; David Stringer, Prospera Financial Services.

Highest user adoption

Rolling off the board: Joseph Russo (financial advisor and immediate past chair); Jim Herrington (financial advisor).

“Joe and Jim have been critical in our success over the past years,” Brown says. “While we will miss their leadership and vision on the board, we look forward to continuing to work with them in the future, continuing to build our nationwide network of grassroots champions.”

The Financial Services Institute (FSI) is the only organization advocating solely on behalf of independent financial advisors and independent financial services firms. Since 2004, through advocacy, education and public awareness, FSI has successfully promoted a more responsible regulatory environment for 37,000 independent financial advisors, and 100 independent financial services firms who represent roughly 160,000 affiliated financial advisors. We effect change through involvement in FINRA governance as well as constructive engagement in the regulatory and legislative processes, working to create a healthier regulatory environment for our members so they can provide affordable, objective advice to hard-working Main Street Americans. For more information, please visit financialservices.org.

Nelnet drives efficiency and enhances customer service OpenText™, a provider of Enterprise Information Management (EIM), has announced that Nelnet, a provider of educational loan servicing, payment processing, education planning, and asset management, has implemented OpenText Process Suite.

Serving as the process management platform for Nelnet, OpenText Process Suite enables the capture, processing and management of student loan borrower correspondence for Nelnet.

Nelnet selected OpenText Process Suite to drive a more

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Financial Operations | WINTER 2014 | www.financialoperations.ca

iWay Software

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automated process, allowing for more control and consistency when dealing with customers, better end-to-end visibility of the process, digital data capture and the ability to continually improve processes, something that was becoming increasingly difficult with the old paper-based processes.

Mike Randash , executive director at Nelnet Diversified Solutions, commented, “OpenText Process Suite has helped Nelnet to focus on what’s important, removing the barriers and challenges associated with servicing student loans today. The OpenText solution helps us to focus on the customer, prioritizing work quickly and accurately, resulting in a better overall customer service experience and higher customer satisfaction levels.”

Nelnet’s deployment of Process Suite has benefited the organization in a number of distinct ways. Student Loan information received through the mailroom is now 100 per cent digital – allowing for improved information quality and traceability. Digitizing the information also allows Nelnet to assign more appropriate and effective task categories, leading to quicker and more accurate decision making, better workflow and automatic assignment of tasks. Additionally a sophisticated case management approach allows work to be routed to the properly qualified team members.

Finally, Nelnet now has access to much improved reporting and analytics data, enabling better management and monitoring of ongoing tasks, up-tothe minute information on completed vs. outstanding tasks and improved visibility to customers on application progress.

Mike Randash continued, “Life without OpenText Process Suite would be unmanageable. Without it, our Enrollment Processing team would need to be double the size it is today, such are the efficiencies and productivity gains we have realized.”

BMO DepositEdge™ launches in Canada BMO Financial Group has launched BMO DepositEdge™, giving business customers seamless and secure cheque scanning with remote deposit capture.

The solution allows businesses to improve operational efficiencies by depositing cheques wherever and whenever it’s most convenient – providing greater control over the entire cheque handling process while saving time and reducing costs.

“For many organizations, manually processing cheque payments can be a hugely expensive and time-consuming daily process, eating up resources that should be invested elsewhere,” says Andrew Irvine, senior vice-president and head, North American Treasury & Payment Solutions, BMO Financial Group. “To thrive, businesses need around-the-clock access to cheque depositing – along with enhanced security and automation – and BMO DepositEdge gives them exactly that.”

Through its easy-to-use desktop scanner and web-based software, BMO DepositEdge enables businesses to capture cheque images securely and make deposits to BMO business accounts 24/7 – giving businesses faster access to cash.

Additionally, BMO business customers gain: • Increased security and efficiency: Automating the cheque depositing process dramatically reduces errors and the risk of fraud by reducing manual touch points.

• Time and money savings: With BMO DepositEdge, Treasury professionals can make deposits on their own schedules, without trips to the bank – allowing them to spend more time on more strategic tasks. Additionally, the solution eliminates the need – and costs – of cheque deposit slips.

• Fewer bank deposit adjustments : In the majority of cases, cheques are automatically converted to image transactions without user intervention, while any remaining manual keying is validated by the system.

BMO Financial Group has been providing online cheque scanning solutions for business to U.S. clients since 2005; and now with the launch of BMO DepositEdge

in Canada, businesses that bank with both BMO and BMO Harris Bank N.A. can deposit cheques for both their U.S. and Canadian operations.

For more information, please visit bmo.com/depositedge.

Accounts Payable Automation Solutions • Digital mailroom services • Reduce AP invoice processing costs • Improve business processes and efficiencies • Enhance controls and visibility • Eliminate document storage costs

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Credit and Collections

Beyond Tracking: How to Boost AP Metrics

Building an effective accountability process

By Andrew Simpson

AP metrics Procurement departments are proving their worth as value-added assets by tracking key performance metrics. While it is commendable to be tracking these metrics, you have to ask, “Is tracking them enough?”

With pressure on AP departments to add more value to the organization and prove it with accurate statistics, how can businesses implement a model where the metrics count and are being improved?

The Accounts Payable News, ‘Accounts Payable Survey 2014i’ identified that some of the top metrics being tracked include: 1. Days Payable Outstanding (DPO) rate 2. Early settlement capture 3. Supplier spend trends 4. Duplicate detection 5. Cost per invoice 6. Exceptions rate Most companies in the survey measured at least two key metrics quarterly. With one of

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Financial Operations | WINTER 2014 | www.financialoperations.ca

the most common metrics being the level of duplicate detection, it begs the question as to why the business is detecting duplicates after the fact and in most cases engaging in a recovery process.

Getting to the root of the metrics Businesses should be looking at more of a proactive model that will allow them to: 1. Identify activities in the business that may adversely impact their metrics; 2. Collaborate with relevant personnel to remediate the issue; 3. Facilitate action and assess the root causes, and 4. Improve the underlying business process to minimize recurrence.

This will guarantee continued improvement in the metrics without getting obsessed about them. For example, a duplicate payment can be caused by several deficiencies in the AP process, so many organizations will do

Credit and Collections

Determining what controls in the AP process impact the metrics can be a good mechanism to assess and improve metrics. There is general consensus that not all internal controls are equal. So that is the reason for risk assessments and the documentation of controls. However, one thing that is often not considered is the concept of inter-related controls. At times, companies consider their key controls to be those that prevent them from losing money or being in the press for all the wrong reasons.

If you consider the number of controls that fail after a segregation of duties violation, it is surprising why companies don’t pay more attention. The ‘Accounts Payable Survey 2014’ states that “most supplier and employee fraud starts with master supplier file anomalies which are either exploited by suppliers and staff, or have been created by them.”ii Some argue that it is the payment to the fictitious vendor that caused the problem but they fail to recognize that the payment was made possible because the AP manager had access to create a vendor, create an invoice, and approve the payment.

The payment is the end result of all the other controls failing and so when you are next assessing risks and controls, be sure to consider what controls cause significant ripples in the business process.

One company that took this approach is Coca-Cola Amatil in Australia. They wanted to set an organizational tone of integrity and identified the need to monitor their finance systems – mainly purchasing cards, accounts payable, and payroll. They embarked on a continuous monitoring project as a solution to perform root cause analysis and improve their key AP metrics.

By focusing on root causes behind the metrics they experienced a significant change

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Inter-related metrics

Fig. 1 Main Areas of Operational Difficulties

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duplicate invoice detection. Solid approach, but that should be the first of four steps.

Once the duplicate is detected it is critical that the organization collaborate to address the issue but also determine why the problem occurred. Addressing the ‘why’ creates a great opportunity to not just stop this particular occurrence but also similar issues in the future. Many companies approach this simply from a recovery standpoint and so every year they continue to chase the money after it has left the building.

in culture within nine months with significant reduction in some expenses. Ray Armstrong, group manager, security and fraud control stated that, “This was one of the catalysts for the policies and new procedures which ultimately led to the behavioral changes we needed to implement.”

Improving Metrics So we have talked through the need to not be obsessed about the metrics and focus more on the root causes; but what is a pragmatic way to do this? Technology provides some solutions but a more significant requirement is to have the right tone at the top and a commitment to doing things right. Presenting last month at an IFO Breakfast in Toronto, ON, the audience talked about the challenges with organizational tone and the ‘flexibility’ required by senior management.

The good thing about the AP process is that improvements tend to provide a significant ROI. So start with the area where you are hurting the most and implement the following using a mix of technology and process improvements: 1. Track the metrics most important to your department.

2. Determine what controls in the AP process impacts the metrics.

3. Extend the analytics to monitor these controls continuously.

4. Implement a strict remediation process that ensures that the exceptions are acted upon immediately and consistently.

5. Capture the root causes and optimize

the business process to minimize recurrences.

In addition to the above, you will need to reassess the effectiveness of the controls environment periodically.

Above are some of the pain points you may want to consider.iii

Measuring and improving operations We should always be measuring how well we are doing and AP metrics are useful for this.

But rather than focus on the metrics, a better approach is to look at what controls in the process determine the value of the metric. By monitoring these controls continuously, taking necessary actions to keep them effective, and addressing root causes, the business will see ongoing improvements in the key AP metrics.

Andrew Simpson, MBA, is the Chief Operating Officer at CaseWare Analytics. He has close to two decades of experience in the information systems audit and security business – specifically data analytics, interrogation, and forensics.

He previously worked with Ernst & Young as an IT security specialist and is also the chairman of Symptai Consulting, a 15 year-old IT audit and security consulting firm. He has an honours degree in Computer Science and Mathematics from the University of the West Indies and earned his MBA in Banking and Finance at the University of Wales and Manchester Business School. i. http://www.basware.com/sites/default/files/restricted/accounts_ payable_survey_2014.pdf ii. http://www.basware.com/sites/default/files/restricted/accounts_ payable_survey_2014.pdf iii. http://www.basware.com/sites/default/files/restricted/accounts_ payable_survey_2014.pdf

Financial Operations | WINTER 2014 | www.financialoperations.ca

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Credit and Collections

New Data, Big Data: The Brave New World of Analytics

By Naeem Siddiqi

T

he art of lending isn’t new – bankers have been using the same principles of capacity, collateral, condition, and character to gauge credit worthiness for centuries. The idea is that these principles indicate whether a person is willing and able to pay back their loan, and if conditions and collaterals are necessary to help guarantee both of the above. About half a century ago, the advent of computers enabled the use of statistical algorithms to do the same. Since then, banks and other lenders have relied on predictive modeling techniques such as regression and decision trees to analyze repayment behavior and predict how likely a person is to pay back their loan.

In recent years the industry has been affected by two major changes (other than the regulatory changes, which aren’t trivial by any means) – namely access to new data sources and ‘Big Data’.

For both originations and ongoing behavior scoring, most lenders have traditionally used data such as demographics, credit bureau information, payments and purchases with credit cards, and debit/credit transactions from checking/savings accounts to gauge credit risk. More recently, there has been keen interest in using social network data to do the same. Companies feel that the quality of people you know, the number of people you are connected to, and the professional affiliations you have are all indicative of your character, and hence your willingness to service your loans. In Canada, SAS Institute, in partnership with Transunion, has used Social Network Analysis to predict various types of fraud.

In addition to who you know, your character is also reflected by the tweets you send and the comments you make in

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social forums like Facebook, for example.

In one extreme case, an Asian lender even threatens to tell your friends if you miss your debt payments. In North America and most of Europe however, this is a path that mainstream lenders are treading with great care. In the U.S., using social media data is almost certain to run afoul of the Equal Credit Opportunity Act. In other countries, consumer protection laws, privacy acts, and reputational risk considerations usually stop the larger institutions from going down this path.

One alternate data source that does show promise is unstructured internal bank data such as collector or adjudicator notes. Text mining on such data can be used for several things including: • Better classifying override reasons from adjudicator notes. Monitoring performance by reason can then be used to determine which ones are useful.

• Classifying occupations from freeform text entered in the ‘other’ category (due to the limited pre-defined choices available for occupation on most banks’ application forms, between 60-80 per cent end up under the ‘other’ category).

• Identifying address characteristics for potential fraud.

• Using collector notes to build better collections models to predict who is most likely to repay their loan, or most likely to respond to a particular collections treatment.

• Using customer service and collector notes to build models that will help in deciding whether a credit card holder should be allowed to go above their credit limit, or make purchases after they have missed payments.

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• Building better rules and models for fraud through analyzing lost/stolen credit card reports.

For the majority of lenders, the use of traditional structured data has produced adequate models thus far. But a bank looking for a competitive advantage should consider new untapped data sources. For collections, for example, this could mean the notes collectors make when talking to debtors. In the past, these notes have been inaccessible because of technology limitations and practical issues. The notes are freeform and contain many abbreviations, code words, and internal jargon that require higher intelligence to decipher. However, technology has since improved to the point where text mining algorithms in software such as SAS Enterprise Miner can easily recognize the presence of certain words, and use the number of times they occur to better predict repayment behavior.

The algorithms work by first pre-processing text data into its constituent parts. This means separating out articles, prepositions and conjunctions, determining if a word is a common noun, adjective, adverb etc., identifying specific names of places, holidays products etc. and consolidating synonyms. It then uses different algorithms to determine how many times a certain word occurs and whether that has any relationship to increased likelihoods of events such as fraud or missed payments occurring. This data can then be combined with traditional structured data to build better models.

Each time you use your credit card, make a cell phone call, or click on a website, data is generated. Given the millions (and in some cases, billions) of such transactions, it’s easy to

Credit and Collections understand how banks, retailers, and phone companies end up with massive databases.

This should help in two ways – the amount and depth of data collected should enable better models and analytics; and increased computing power should enable more frequent uses of such models.

A major caveat here is of course, data quality. Data quality has a far bigger impact on model development and analytics than any other factor. Collecting large amounts of bad data only stretches the phrase ‘garbage in, garbage out’ to ‘big garbage in, big garbage out’.

Another consideration for the industry as a whole is the benefit of more processing power.

In the past, collections scores were obtained monthly or bi-weekly at best. Monthly billing cycles for credit products led to credit scoring information being updated once a month.

Due to a lack of computing power, banks were unable to score their entire customer base in one night, so the job was split up over a number of nights, so the scoring cycle took an entire month. With the advances in software and hardware technology around

Big Data, these scores can now be produced en masse on a daily basis. There is no longer any reason for a bank to use month- or weeksold intelligence when technology allows them to generate predictions in near real time. Better, more recent collections scores will allow collections strategies to be updated more frequently which should generate higher returns through better targeting of debtors with the appropriate collections strategy.

The same holds true for ongoing behavior scorecards for products such as credit cards.

While many banks still use outdated behavior scores for their credit card authorizations and credit limit increase strategies, some banks now score their credit card customers on a daily basis. Each customer’s score can change based on the purchases made on that particular day. Big Data also allows for such models to go further than previously possible. Retailers can use information on what customers are buying to gauge ongoing credit risk. Similarly, banks can use data on where their card holders are shopping.

Information such as the types of merchants, geographical variety, and the frequency of

shopping can increase the predictive power of behavior scorecards. Again, caveats similar to the case of using social network data apply here. While using where you shop in models may be considered acceptable, using what you buy may be far more controversial. Given the increased scrutiny over the loss of privacy and what may be seen as too much intrusion, lenders would be advised to consider these new techniques with caution. The idea that ‘correlation doesn’t necessarily mean causation’ would apply.

Technology has enabled us to become more efficient, but we would do well to remember what this is about – capacity, collateral, conditions, and character. While new sources of data and increased computing power has undoubtedly changed how we do things, it should not change what we do.

Naeem Siddiqi is the author of ‘Credit Risk Scorecards: Developing and Implementing Intelligent Credit Scoring’ (Wiley & Son, 2006), and has advised and trained bankers in more than 20 countries on the art and science of credit scoring. He is currently Global Product Lead for Banking Analytics Solutions at SAS Institute.

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Insurance Report

Commercial L Insurance Report Pricing and personal interaction have the biggest impact on satisfaction among risk professionals

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Financial Operations | WINTER 2014 | www.financialoperations.ca

arge business commercial insurance customers (risk professionals) are significantly more satisfied when 11 key performance indicators (KPIs) – best practices that have the most influence on customer satisfaction – are met by brokers and insurers, according to the ‘2014 Large Commercial Insurance Report’ by J.D. Power and RIMS (the risk management society™).

There port provides an independent and objective measure of overall satisfaction levels among large business insurance risk professionals in the U.S. and Canada. The full report, slated for release in February 2015, examines industrylevel performance metrics among large business commercial insurers and brokers, and highlights best practices that are critical to satisfying large business insurance risk professionals.

The 11 KPIs focus on three core areas: limiting customer-reported billing errors and renewal issues; understanding the customer’s business; and communicating effectively.

The report measures risk professionals’ satisfaction with commercial property, workers’ compensation and auto insurance providers based on five factors: interaction; program offerings; price; billing and payment; and claims. Satisfaction with insurance brokers is also measured, based on four factors: ease of contacting; reasonableness of fees; advice and guidance in selecting program offerings; and timeliness of resolving contact.

Overall satisfaction is highest for brokers (854).

Satisfaction with property insurers is second (821), followed by auto (811), and workers’ compensation (746).

Billing and payment is the lowest-scoring factor in the auto and workers’ compensation indices, and is among the lowest-scoring in the property index. However, billing and payment satisfaction is significantly lower among workers’ compensation customers (725) than among property (808) and auto (793) customers.

“Whether the results of the survey were surprising or expected, we hope that it encourages a meaningful dialogue and actionable performance initiatives,” says Mary Roth, RIMS executive director. “The primary objective is to foster improved customer satisfaction throughout the large commercial insurance industry.”

Enterprise risk management (ERM) is

Insurance Report becoming a more prevalent risk management function at many organizations, with nearly 40 per cent of risk professionals indicating that ERM falls within their area of responsibility. Risk professionals who are not responsible for their organization’s ERM function generally are more satisfied with their insurers/broker than those risk professionals who hold ERM responsibilities.

Overall satisfaction is lowest among risk professionals who are responsible for their organization’s enterprise risk management (541).

“The report findings suggest that risk professionals who are responsible for ERM are underserved by insurers and brokers in this area,” says Timothy Bebout, commercial insurance practice leader at J.D. Power.

“There is an opportunity for insurers and brokers to provide greater support and resources to customers in organizations that use ERM practices.”

Key Findings • Price is the leading factor driving satisfaction among auto customers.

• Interaction is the second-most impactful factor driving overall customer satisfaction with insurers across product lines, accounting for nearly one-fourth of the overall model used in each of the product line indices.

• Claims frequency influences overall customer satisfaction levels. As the frequency of claims increases, customer satisfaction decreases. Claims satisfaction is lowest among workers’ compensation customers, among whom 94 per cent have filed at least one claim with their current primary commercial insurer in the past 12 months.

• Flexibility in designing and implementing insurance programs is a KPI for which there is relatively low compliance at 56 per cent for property and 50 per cent for workers’ compensation. Overall satisfaction erodes by 138 points and 316 points respectively when this KPI is not met.

• Ensuring that an insurance representative, such as an engineer or underwriter, is involved during both the

service interaction and claims processes are two KPIs that drive satisfaction among property customers. Overall satisfaction erodes by 100 points when an insurer is not involved during a service interaction.

• Providing at least two in-person interactions is another critical performance metric for brokers. Eightyone per cent of customers indicate they have had at least two in-person interactions with their broker. Overall satisfaction declines by 73 points among customers who didn’t have at least two in-person interactions.

The report is based on responses from nearly 1,000 risk professionals or employees of an organization that provide oversight or are members of their organization’s risk management team. Organizations included in the report have at least $100 million in annual revenue or operating budget, and have purchased a commercial property, workers’ compensation or auto policy with a profiled insurer or broker.

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COMPLIANCE

Top Five Reasons to Automate Your VAT Compliance Process Automation will increase overall efficiency, accuracy, and consistency within the reporting cycle

By Casper Winkelman

C

ompanies that conduct business across international borders often need to submit Value-added Tax (VAT) returns to multiple taxing jurisdictions.

This means that they need to gather relevant reporting data, reconcile, analyze, and validate the data, prepare and submit returns, and remit payment to the appropriate taxing authorities for each VAT reporting period (which often occurs on a monthly basis).

When this process is required for multiple taxing jurisdictions, it can be tremendously challenging to manage manually and in-house.

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The VAT reporting cycle The VAT reporting cycle needs to be completed within a very short timeframe.

Typically, a business can only start the process after the close of a reporting period in their accounting systems and would need to finish before the first legal submission and/ or payment deadline. This can mean that a business may only have a couple of working days to complete the work, while attempting to provide accurate information to avoid interest payments, penalties, assessments, and damage to their reputation.

Financial Operations | WINTER 2014 | www.financialoperations.ca

A complicated process such as this can put a strain on a business’ resources, while increasing audit risks. In particular, when a business performs this process in-house with the use of excel spreadsheets, manuallyinputted formulas and multiple reports coming from various sources, they increase the likelihood of errors and a resulting audit.

In a world with increasing regulatory pressure on risk management and control, and increased attention to VAT by taxing authorities and auditors, manual VAT compliance processing is no longer sufficient.

COMPLIANCE The top five reasons why you should automate your VAT compliance processes are outlined below:

1. Reduce actual processing time Time can be saved in every step of the compliance process. A business can substantially save on the total actual processing time by automating these steps.

This additional time can be used to re-focus on higher level VAT work and/or improve the VAT staffing plan (see reasons 4 and 5).

Data gathering and reconciliation The biggest time savings can be realized by automating the data gathering portion of the process.

Businesses need to have sufficient and detailed transactional data in order to: • Reconcile tax returns with general ledger VAT and revenue accounts • Analyze and validate the VAT determination applied to transactions • Complete tax returns accurately This step can be very time-consuming, especially when performed manually.

Typically, the data would need to be gathered by running reports through multiple information sources (ERPs, legacy systems, logistics partners, etc.). These reports often do not contain sufficient detail and, therefore, need to be completed manually. Performing this function even within one ERP alone can already be challenging due to the multiple reports needed.

Additionally, statistical data needs to be extracted from the logistical models of an ERP and VAT data needs to be extracted from the financial models of the same ERP. Trying to reconcile these two reports alone is a daunting task in and of itself.

By automating this process, data can be extracted from multiple sources and/or models and combined into one single report.

Funneling the VAT, financial, and statistical data into one single report can greatly speed up the process because the purchase and/ or sales transaction is available on that one report. Automation avoids the necessity to run various reports from multiple models and sources and it prevents the need to manually input missing data.

Analyzing data This detailed extraction report also enables

the increase of the number of analyses that can be performed (i.e. the more that is known about a transaction, the better it can be analyzed and validated). Analyzing the transactions manually is very labour-intensive, whereas the automation of running the analyses saves a lot of processing time.

Completion of returns and listings The completion and submission of tax returns and listings can also be accelerated by automation. A business can avoid the need to manually complete tax forms (using formulas in an excel spreadsheet) and then eventually inputting the data onto taxing authorities’ unstable web environments.

The completion of listings can also be a cumbersome task. In particular, when doing business with many companies (VAT numbers) in EU countries, automation can help avoid the need to list VAT numbers one by one.

2. Increase accuracy and consistency

automated solution provides updated forms that can save time, money, and resources.

4. Re-focus on higher-level VAT work Many valuable tools and lessons can be gained from executing a VAT compliance process accurately – in particular, identification of possible areas of improvement within the process.

For example: • Necessary training for certain users • Reconfiguration of the VAT set-up within the ERP • Correction of erroneous invoices Discovering the areas that need attention in order to determine where resources should be redirected can help alleviate future setbacks.

Reducing the processing time through automation will break the cycle and shift the focus from merely process execution to process improvements.

5. Improve staffing plan

A crucial component to VAT compliance is the analysis and validation of transactions.

Aggressive deadlines to avoid fees and penalties often dictate stringent timelines that can prevent sufficient assessment for accuracy and consistency, especially when processed manually. Quality assurance largely depends on the knowledge and expertise of the individual performing the work, and oftentimes details are overlooked even by the most experienced employees. Human error is unavoidable and at the conclusion of the analysis, there is still no guarantee that all checks have been performed thoroughly.

Through automation, analysis can be configured to a business’ precise needs and can be applied to all transactional data of current and past periods, ensuring accuracy and consistency of all pre-defined analyses.

3. Stay up-to-date When operating in the ever-changing VAT landscape, it is important to remain up-todate on VAT rule changes and implement those changes in a timely manner. Staying informed of these changes as they happen and understanding their implications are crucial to VAT compliance. Dedicating time to the research and implementation of new VAT rules can drain resources and add an extra level of manual work that can be challenging to undertake. However, an

The more a business performs its VAT compliance process manually, the more it will need to depend upon the skills and experience of its staff. The staff will need to understand every step of the compliance process, the business flow, and the systems in place as well as have an in-depth comprehension of VAT. In other words, businesses will need to invest in experienced and specialized staff to successfully manage its VAT compliance to keep the function compliant and in-house.

With automated solutions in place, the VAT compliance process is simplified. Users would merely need to follow a user guide.

This creates opportunities for entry-level staff with little to no VAT experience to be able to acquire new skills, while enabling senior level staff to focus on higher-level functions that contribute to the company’s overall growth and success.

Casper Winkelman is co-founder and managing director of VAT Resource, a company recently acquired by Taxware. He is a tax lawyer with more than 17 years of experience in VAT. Casper has gained international VAT experience as a consultant at Arthur Andersen in Amsterdam and in the industry as VAT Director at KPNQwest in the Netherlands, a Pan-European telecommunications company. Since 2002, Casper has assisted many international clients in streamlining and managing their VAT compliance processes. In this respect, Casper has gained unique practical expertise by working with various types of organizations and financial systems and has been involved in several VAT technology solution projects.

Financial Operations | WINTER 2014 | www.financialoperations.ca

17

Taxation

Taxed Out Streamlining for an efficient financial architecture

By William Olders

C

anada’s system for taxation, particularly commodities and services-related taxation, is in dire need of change.

According to the Fraser Institute’s most recent report on the subject, annual tax administration costs are approaching $7 billion a year. Tax compliance costs for Canadian business are floating around $18 billion a year. All this serves to chew about 1.4 per cent from our annual GDP (or $16,000 for each and every Canadian business).

In a 2011 white paper, Anthony Ariganello, then president and CEO of the Certified General Accountants Association of Canada, stressed how unsustainable this has become: “On an international scale, Canada’s tax system is among the most complex in the world – this hurts our economy and adversely affects small- and medium-size enterprises as well as individual taxpayers.”

Few, if any, business owners would disagree.

The rise of web-based and mobile payment technologies has only compounded the situation, as transactions routinely cross borders and tax jurisdictions.

What is the fix for Canada’s tax system?

• We need to streamline by taking advantage of cloud-based services and a proven and efficient financial architecture. The goal would be to create a standards-based, open source

18

adaptive technology platform that I call ‘OnePassTax’.

• This technology is available today, and it has already proven itself in the enterprise space with the world’s largest banks, insurers, and credit card companies. These are organizations that securely and efficiently manage tens of millions of transactions each day.

OnePassTax would strip away the multiple layers of calculation, collection, remittance, and regulatory compliance that result in the waste and inefficiency of our current system, at the point of sale.

It doesn’t matter if the transaction is completed in person with cash, with a debit or credit card, processed with a credit card reader connected to a smartphone, or through an e-commerce website.

OnePassTax’s open-source software could be incorporated into any retail payment processing system by means of a downloadable application called a ‘Tax Agent’, or a mobile app, both of which would be regularly updated over the Internet.

This component would calculate, collect, and remit all appropriate taxes for a specific good or service at the point of sale. Any applicable tax rebates or incentives could also be applied and settled at the point of sale.

This means businesses are freed of most of the paperwork they must shuffle to keep their tax filings up to date.

Financial Operations | WINTER 2014 | www.financialoperations.ca

Components of OnePassTax The system would be rules-based, a common system design philosophy made popular by its efficiency and simplicity.

To make such a system work, a few things need to be identified and put into place – tax classification codes, a hierarchy, and configuration.

A tax classification code: This would be a standardized table or tables from which businesses would assign unique codes to individual products and services.

International standards already exist that could serve as the basis for this system. These include the Harmonized Tariff Schedule, which about 160 countries use to classify about 26,000 goods, and the United Nations Standard Products and Services Code (UNSPSC).

A hierarchical jurisdiction: This distinguishes the levels of authority within the OnePassTax system, and which tax authorities are subordinate to another, through a web domain that would use standardized templates and a common interface. In the Canadian context, the federal government would top this hierarchy, followed by provinces/territories, and then municipalities.

Each level in this hierarchy can ‘authorize’ the one below it. This would allow, for example, for changes in federal tax law, which apply to all tax jurisdictions, to be implemented with the push of a button. The agent component that resides on point-of-sale

Taxation devices and as part of web-based payment platforms would be automatically updated over the Internet.

Configuration: The rule sets define how a particular tax authority can customize OnePassTax to best suit its needs and policy objectives.

So how would this work?

Say you are a merchant. Your payment processing system contains the OnePassTax Tax Agent. Once your customer has approved a transaction, your financial intermediary (such as a bank or other trusted third-party) enters the picture.

Your Tax Agent communicates with the Tax Server resident at the financial intermediary, using secure digital encryption.

The two systems determine the applicable taxes (and any applicable tax rebates) based on the classification codes of the products or services being purchased.

Your Tax Agent calculates and collects the tax and performs the necessary financial clearing functions. In addition to a formal acknowledgement of the tax due, a reference number that can be used for audit purposes will be passed back.

The Tax Server receives the audit information as well as control totals to verify the integrity of the system. The Tax Server is also configured to aggregate commerce information. Tax administrators and policy makers can use this wealth of data for tax planning purposes.

A practical example Let’s look at a hotel stay in a municipality that is collecting a destination-marketing fee that is used to market the city as a travel destination. Depending on the province or territory in which the hotel is located, GST or HST

will also apply to a stay.

With OnePassTax, the federal GST/HST would be collected and remitted at the time of payment to federal tax authorities. The destinationmarketing fee would be collected and remitted, at the same time, directly to the municipality.

But it doesn’t end there.

There are various rebates for the GST/HST paid on hotel room stays and related meeting and convention services, for meeting and convention professionals.

To claim these rebates, industry professionals must file paperwork with the Canada Revenue Agency. The OnePassTax solution, however, could be configured to allow for these rebates to be applied and settled at the time of payment.

Pain relief for merchants and other businesses Aside from saving billions in administration and compliance costs for government, think about how this would give Canadian businesses a big break in terms of time and money that could be better spent on growth and innovation: • A huge reduction in paperwork and administration for businesses of any stripe.

• Businesses don’t have to worry about complying with changes in tax policy. These are directly administered by tax authorities and implemented automatically by the OnePassTax system.

• Since the collection and payment of taxes is automated, a business won’t be at risk of multiple audits.

If a taxing authority wishes to audit a merchant for tax compliance, it only needs to audit that the OnePassTax Tax Agent is properly installed in the merchant’s retail and purchasing

system.

• In sales tax jurisdictions where the merchant receives tax credits for sales made to entities other than end customers, OnePassTax can greatly reduce the cost and effort of dealing with this “reverse taxation.”

Small steps to start Admittedly, this is a wholesale change of our current system that requires commitment from big stakeholders. It would take political will to make this happen.

But there are small steps we could take. If the federal government, for example, endorsed a pilot, this would incent the participation of major players in financial services and payment processing. In fact, a pilot would be necessary to test the scalability of the system.

Another point for the plus column is the rise of e-commerce and micro-businesses that handle all their transaction processing through e-commerce platforms and mobile apps. These merchants could easily become OnePassTax early adopters and provide proof of concept.

We have the means, now we just need the political will to modernize our taxing governments.

William Olders is the co-founder DataKinetics, a leader in business information systems optimization for Fortune 500 companies. He is a published authority on Table-driven systems architecture – the same architecture he envisions for the OnePassTax solution. He spearheaded development of DataKinetics’ flagship product, tableBASE, and led its deployment with several of the largest banks, credit card companies and insurers in the world.

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19

Company Profile - Octacom

Sheila Lindner, president of Octacom, and John McNamee, CEO.

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Financial Operations | WINTER 2014 | www.financialoperations.ca

Company profile - Octacom

Photos: Gary Tannyan

By Karen Treml

Octacom:

A Company That Has Found Its Niche

M

ainframes and microfiche.

That is where Octacom began. It was 1976 and at that time, computer output to microfilm services was bleeding edge technology. As a storage system, microfiche was smaller, less expensive, and easier to store than traditional paperwork.

In 1999, Sheila Lindner, president of Octacom, and her partner, John McNamee, CEO, purchased the company. The former

owner was retiring and it was a natural progression of management, says Lindner.

“At the time, the management structure was fairly simple. We had 20 to 25 employees; today we have around 85.

Much of the growth of Octacom came as a result of the company venturing into document imaging. The business changed a lot when it started into the document side and it became a really big growth area, says Lindner.

The impetus for going into the document side of the business began with one client – a large bank. Lindner explains that the bank had about 1,000 boxes of student loan records. They needed to have the records converted over to electronic files, and Octacom provided that service for them.

Kicking, screaming “I often joke that we went kicking and screaming into the document side of the

Financial Operations | WINTER 2014 | www.financialoperations.ca

21

Company Profile - Octacom

By creating papers in an image format, Octacom provides value for its clients.

business because after that project, I didn’t want to see another 1,000 boxes of anything again in my life,” says Lindner. “We were dealing with a fairly small employee base and we were used to dealing with data. That is a lot different than dealing with boxes of paper.

It really changed our world. We needed more people with different skills – people to pull staples, remove paperclips, scan the documents, etc. – a very manual process.”

“From that experience though, we realized that we could take the technology base and the skillset we had in data processing and marry it to the needs of companies to get some value for them out of their boxes and boxes of paper. Previously, they would spend incredible amounts of money and time handling papers and searching for the information they needed. By creating those papers in an image format, and providing the software and IT resources to house the documents we added some value for them.”

As the document side of the business grew, the focus was on the departments and industry areas that could derive value. The one that really came to the forefront was accounts payable, says Lindner. At the time, every invoice a company received came by

22

Octacom manages all types of electronic information and image data for its clients.

mail. People had to handle the mail, pay the bills, and file the paperwork. A great deal of time was spent in and out of those filing cabinets and there were high costs involved.

“Initially, we got quite a few clients that needed document scanning and archiving and it really grew from there,” says Lindner.

“Today, we are providing end to end invoice automation services, and it is a really strong market for us.”

The progression Lindner talks about the progression and says it has been interesting because, although technology has changed so much, at the end of the day they are still managing information and still providing the same types of solutions – but with different technology.

“Our client base has stayed very much the same – larger businesses, Fortune 1000, high

Financial Operations | WINTER 2014 | www.financialoperations.ca

transaction businesses. Whether its invoice transactions, accounts receivable, or financial reporting, we manage all types of electronic information and image data for our clients.

We have also moved into the healthcare market, managing healthcare records.

With progression, also comes challenges and Lindner says one of the biggest challenges in growing the business has been finding the right people. “We work hard at identifying and acquiring the right people. We also work hard to retain them. It can sometimes be very challenging to manage people – especially when the work is very clerical.

And with people comes the topic of security as well. Information has a lot of value to people so Octacom is very focused on making sure that it not only has physical security but also informational security. “We don’t bond employees because that doesn’t

Company profile - Octacom protect against what we need to be protected against. We start with making sure we hire the right people. We do background checks for criminal and credit records. Each background check and reliability status is completed by the RCMP for Controlled Goods and Protected Level B reliability status. And we have a zero tolerance policy.

Lindner also identifies competition as being a challenge but says they have essentially found their niche in the marketplace. “We like to think we are very boutique in a way – we’re not the biggest company, and we’re certainly not the smallest, but we approach the market differently – we really focus on quality. We are not going to be the least expensive, but we provide a lot of value to our clients. We have clients that have been with us almost for the life of the company – large multinational companies that we’ve grown with and that we’ve gone through many different layers of management with. It’s good to see that and to see how long those client relationships have been there.”

When it comes to competition, the company is very unique in the industry, says Lindner. “We do have a history in data processing and we created a really unique service offering because we took our history and our foundation that is very geared

towards data processing and IT, and we married that with the manual processes that are required for some of the document type applications such as AP, health records, and HR files. Essentially we’ve taken a blend of technology and people and created a service that you don’t really see in our competition.

And that makes us unique.

We love technology One thing that is not at all challenging is technology, says Lindner, adding that they love technology. She does say that the company has to be very flexible because the nature of the work these days requires the use of such things as mobile and electronic data, as well as dealing with all the different types of documents or data coming from anywhere.

She explains that this requires an umbrella system to which the client has easy access – the client doesn’t want to have to worry about how to access the information.

“All in all, I don’t think that what we are doing in terms of what we are solving, or the service we are providing, or the benefits we are delivering, has changed. But, there are a lot more choices out there as to what we can offer – from how the client sends the information to us (paper, online, EDI, email) to how the data is accessed. It started with

CDs and DVDs and then on to the Internet, the cloud, and mobile.

“Certainly the technology is a lot more varied but we are continuing to provide the same thing for our clients – making their business more efficient. And for that, the outsourcing model is a good model for companies because we are making the investment in technology – they don’t have to. The reasons for outsourcing are more true today than they ever were – companies want to focus on what they do well and not get too watered down.”

“Over the years, we’ve always grown organically and our growth has been steady.

Our customers have always brought and continue to bring us challenging document management problems. We work with them to create innovative solutions and process optimization that result in increased productivity and reduced costs. Over the years, we’ve created some very cool applications and business processes. We own our own technology and are able to customize at a reasonable cost because much of it lends itself to cross-adaptability between various applications. And once the technology has been created, we can also often adapt across industries and maintain cost-efficiency for our clients.

Financial Operations | WINTER 2014 | www.financialoperations.ca

23

2015

ISSUES & EDITORIAL THEMES Issue  Q1 2015 AP/AR Report

A look at the issues and key factors impacting the AP and AR space.

We will explore the technology, processes, and best practices within AP and AR. EDITORIAL DEADLINE: February 13th

Issue  Q2 2015 Data and Documents

A look at the capture, collection, use, and allocation of data and documents and how evolving technologies are impacting them. EDITORIAL DEADLINE: May 22nd

Issue  Q3 2015 Technology Report

The rapidly evolving world of technology has strong impact on the back office. This issue looks at the trends in technology and the resulting effects and influences on financial operations. EDITORIAL DEADLINE: August 17th

Issue  Q4 2015 Credit and Collections

From approval to billing to account management, implementing a successful cycle of credit and collections involves effective strategies. This issue looks at best practices, resources, and tools to enhance the credit and collections function of your finance department. EDITORIAL DEADLINE: October 19th

Plus…

Each issue includes regular editorial columns such as our technology report, compliance, risk, and business intelligence, as well as industry updates, news, events, and more ...

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EVENTS NOVEMBER November 2-5 Association of Financial Professionals AFP Annual Conference 2014 Washington, DC www.afpconference.org

DECEMBER December 7-9 Members Meeting Smart Card Alliance Coral Gables, FL www.smartcardalliance.org

JANUARY 2015 November 4-6 Comexposium CARTES & Identification Exhibition 2014 Paris, FR www.cartes.com November 12-14 BAI BAI Retail Delivery Conference 2014 Chicago, IL www.BAI.org

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Visit us online www.financialoperations.ca/events.html Financial Operations | WINTER 2014 | www.financialoperations.ca

25

Industry Update

The Risks of Data Insecurity

By Willie Wong

E

ighty-one per cent of Canadians are concerned about the loss of their financial or personal information that is held electronically by organizations, says a survey by Vision Critical, on behalf of IBM, which evaluated Canadian awareness of data insecurity.

Interestingly, of the 81 per cent of Canadians who are somewhat or very concerned about their data being stolen, only 61 per cent feel ‘somewhat’ or ‘very knowledgeable’ about data risks. And alarmingly, one third of Canadians are not aware of any incidents in the last two years where personal data was jeopardized – including the institutions they deal with personally. That’s an interesting statistic when in the past 12 months, 60 per cent of Canadian organizations have experienced significant downtime due to natural disasters or security breaches. This represents an increase of 10 per cent from 2012. With the almost daily news of breaches occurring, this is a clear indicator that more work needs to be done to educate Canadians regarding the value of data security.

Perhaps the most valuable information from the survey for organizations, including financial officers, is most Canadians (86 per cent) are somewhat or very likely to switch to a new organization if their personal or financial information is lost. With breaches becoming all too common, and customers saying they will switch organizations, senior management cannot afford to ignore the value of protecting the data they have been trusted with. They not only face direct cost of the breach but also a loss to their reputation.

The annual length of downtime continues to hover in the 3.5 to four hour range and the cost is climbing – totaling, on average, over $2.5 million dollars for large (1,000+ employee) businesses.

26

In fact, the average cost of a security breach is $11.6 million and can take up to eight months to detect. In that time customer confidence is lost with a significant possibility it will never return. How would your organization rebound from that – or would it?

What is the return on investment (ROI) of insecurity? Some sectors may not realize that the need to increase security includes them.

For instance, boards, committees, and many senior executives may feel that data security wouldn’t impact their organization directly.

But if you stop and think about it, almost every type of industry or institution, even those with a stand-all structure or monopoly, would see pressure if personal data was breached and it would force a management shuffle or loss of reputation from negative media coverage.

So where do you go from here? Make it a priority to put risk mitigation plans in place in order to be ready, because analyst reports and industry facts indicate the odds are high of a security breach and/or an availability issue occurring in your organization at some point in the future. Next, speak to a trusted security expert and put a plan in place so your organization’s ROI regarding data protection is a solid one.

Delivering secure, reliable, and flexible access to information is a key challenge many organizations face today. Having a wellconstructed approach to security to avoid data compromise and costly security breaches is the best preventative way to maintain customer loyalty and protect your brand for the future.

Financial Operations | WINTER 2014 | www.financialoperations.ca

Willie Wong is Market Manager, Security and Mobility, with IBM Canada

Other survey findings: • Over a third of Canadians are not aware of an incident where people’s information was compromised by an organization’s failure to protect the data • Of all the people who were aware of an incident, only 12 per cent of those people thought they were personally affected. Which means, eight per cent of all Canadians believe they have been affected by such an incident • With age, the number of people saying they are very concerned goes up (three in ten 18 to 34-year-olds say they are very concerned, while half of 55+ yearolds are very concerned) • Over one third of respondents feel they are ‘not very’ or ‘not at all’ knowledgeable about the risks of data security in organizations • If Canadians have the sense that they might lose personal or financial data or their concerns are realized, most Canadians are ‘somewhat’ or ‘very likely’ to switch to a new organization • On the other hand, about half of Canadians would overlook a minor security breach and be ‘not very’ or ‘not at all’ likely to switch because of it (perhaps only because the consequences of minor security breach are not known) • Half of Canadians would be ‘somewhat’ or ‘much more’ likely to get involved in an organization if they showed that they are taking extra steps to protect personal and financial data.

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