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CEO and Publisher M. Murphy Editor Rinkita Gurav

The first edition of Finance Digest brings to you an array of articles from the business world contributed by people holding enormous experience. Finance Digest would be presenting news and opinions by leaders in their field. We hope to keep you updated through our magazine in the future with latest contributions on the website as well. Current issue at the moment is Brexit and its impact on the economy. Uncertainty looms over the world economy as the United Kingdom prepares for their exit from the European Union. Economists all over the world are divided on the future of the economy although most believe that Brexit will have a major impact on the economy especially the UK. Despite the World Bank showing UK’s economic growth rising from 2.3% to 2.7% this year, the outcome of Brexit would definitely be costly. But trade would be affected, making Britain’s exports to Europe exposed to tariffs. With tariffs imposed on British goods at the levels currently paid by non-EU states, industries likely to face the highest duties will be agriculture, forestries and fishing, mining and quarrying and manufacturing. Because of immigration close to 35000 people employed in UK are estimated to move back to Europe. This will impact the manufacturing, agriculture and energy sectors. Executives from banking sector are set to move to cities like Dublin, Frankfurt, Paris, Amsterdam and Luxembourg. We are discussing about alternative investment in oil & gas through the company EnergyFunders which offers more tax advantages than investing in real estate or stocks. Have a look at the interview with the CEO of EnergyFunders, Mr Philip Racusin. Other than this, we have several articles on how technology is impacting the financial world with banks turning to Artificial Intelligence. BNP Paribas discusses with Finance Digest about their venture in Social Entrepreneurship in European Countries. And many more correspondence on latest policy changes affecting the financial world.

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Cloudbusting how the cloud can help keep banks agile Tackling evolving banking regulation


Bankless Banking is ready for its close-up


“Putting the human touch back into banking”


SMEs move to the cloud : new opportunities for bankers


Artificial Intelligence in Banking


Challenger Banks going Digital To enhance customer experience, digital banking is a must.“


PSD2 and banks: Data drain or insight opportunity?


Providing support to Social Entreprises for a sustainable future


The Age of Data


Trump and interest rates not enough to shake investors’ confidence in SMEs


Is your client data fully secure?


AI in Business: It starts with the basics


Overcoming the data avalanche to make better business decisions


A fleet purchasing model for finance directors


5 Challenges to overcome in Governance, Risk and Compliance business decisions


How to Remain in the 10% of Startups that Succeed


Tackling the compliance beast in a new era of regulation


The Urgency of Tax Reform


Brexit might impact our migrant pool.”



Corporate governance and executive pay: why is it so hard if it’s common sense?



Why the financial services industry is banking on the database?


Maximise customer lifetime value in a SaaS based world


Let the Capital do the Heavy Lifting


Two 2016 trends that will impact on financial services in 2017


How much automation can finance processes achieve?


Fintech is changing the face of Asset Finance


Are Digital Asset Arrays the Asset Class of the Future?




Financial trade 0n your finger tips

CFOs are the Roosters


Accounting Firms combining Mobile Apps and Artificial Intelligence


Technology to the rescue of recruitment in financial service


Enterprise Software: An Investment in Disruption


Aligning spreadsheet models systems


The problem with paper


Successfully turning the tide on a wave of fraud in 2017

and enterprise

INVESTMENT Investment:An Alternative Investment 20 Energy Space 54

The UK property market: With competition high, speed is everything


What digital means for the insurance sector What does GDPR mean for insurers?

Blockchain-Bitcoin will revolutionize the retail and loyalty industries 5

What DIGITAL means for the


nsurance companies face many challenges – from market instability to huge catastrophes which they need to protect businesses from, such as earthquakes and tsunamis. But one of the biggest challenges is the adoption of digital technology, which has completely changed consumer behaviour and means insurance companies need to adapt.

to be managed more gradually.

What was clear from the research was how insurers can embrace the digital age. Three key themes emerged: Customer experience is crucial to retain customer loyalty

We only need to take a look at the headlines to see the impact that digital has on financial services. Established brands are now striving to ensure services are as seamless as possible, while customers and businesses are demanding a more personalised experience across a variety of different channels.

59% of consumers cited customer experience as a major factor when interacting with financial services. As such, it’s time for insurers to take heed of the shake-up digital disruptors have brought to the industry as almost half (41%) of consumers now rely on comparison websites when considering insurers.

To examine this in more detail, Fujitsu recently conducted a European wide piece of research, surveying 7,000 consumers, looking at how banking and insurance are evolving and what this means for customer loyalty. The research found that while digital capabilities are hugely important in banking, insurance consumers are at an earlier stage in their development and change will need

Firms could find themselves suddenly outmanoeuvred if they fail to embrace digital innovation and offer consumers new possibilities: one-in-ten (12%) consumers now regard up-to-date technology as a major factor in staying loyal to their current insurer. As such, transformation of the ‘back office’ is the first step that will make a radical difference to consumers in the long term.


There is also a potential to automate this back office to enable lower cost of service and the ability to be able to provide speedier resolution models. In addition, there is an increasing opportunity for insurers to have better data on their customers and to use this to provide better services, improve retention and also to provide more timely and relevant offers. Insurers still do not upsell and cross sell effectively and with more data being held by other parties, the customer proximity is continually being eroded. With the quick pace of change in banking and across other sectors creeping into insurance, it’s only a matter of time before we expect the number of consumers looking at up-to-date technology to stay with an insurer to increase. The need to be secure in this digital age If consumers look to switch insurer, security and up-to-date technology are often the motivating factor. Cyber-attacks

and data breaches are increasingly taking over media headlines, and as a result, security is top of mind for consumers. In fact twothirds of consumers (59%) would switch if their provider suffered a security breach, while more than a third (37%) would leave if not offered up-to-date technology for interactions. As well as this, fraud costs across the industry are rising. There is now a variety of different types affecting organisations, from application fraud, to claims fraud to greater financial fraud. Because of this, it is paramount that the industry does not overlook, or get complacent about security. It’s also important that it doesn’t place it in the “too big to fix” category, and instead take a proactive approach. As part of this, financial services need to be able to spot, react and defend against a breach quickly, by having a threat monitoring/detection system in place. This provides the necessary context to deal with today’s advanced cyber threats. Insurers could also do more to help educate their

customers to be more vigilant of the threats to financial services, such as opening up unexpected emails.

continue to move forward so it’s up to the industry to keep up. Only time will tell what the future landscape will look like

The benefit of an end-to-end digital service also has the opportunity to reduce fraud, as it allows organisations to collect or have access to more information on the client from the point of the original application. Collaborate to innovate Collaboration is essential. There is a huge opportunity to change business models, opening up new revenue streams and increasing value to consumers. Through working collaboratively, the dominant players in the financial services sector can take the lead in the race for lucrative innovation and pave the way to our global digital future: emerging stronger, faster, and more successful. With digital continuing to pave the way in financial services, insurers can no longer afford to be complacent when it comes to digital transformation. Consumers, competitors and technology will only

Mark Boulton Insurance Sector Lead in UK & Ireland Fujitsu References: Financial%20Services%20Survey%202016.pdf





Accounting Firms combining

Mobile Apps and Artificial Intelligence


he use of Artificial Intelligence (AI) to help run accounting firms may sound like something that is straight out of a science fiction novel but now the likes of Amazon, Google and Microsoft are spearheading AI, the world of accounting is likely to be the latest in a series of industries to be affected by its rise. According to a Deloitte report, the impact of cognitive technologies on organisations is expected to grow substantially within the next three to five years. Add to this the Google prediction that by 2029 robots will achieve human intelligence levels and that by 2025, 33 per cent of all occupations will be performed by robots and it soon becomes apparent that AI has already shifted into the mainstream. There is no doubt that disruptive technology is turning the accountant relationship on its head. Advances in mobile technology are shaking up traditional methods of communication and clients are engaging more with their smartphones and expecting fast service responses from their chosen advisors anytime, anywhere. Need is the mother of all innovation and it is this demand for an immediate response that is driving the accounting world to embrace Mobile Apps to connect more directly with their clients in real-time. We have seen the professional service sector quickly come to appreciate the value of having a custom App that delivers the ‘instant’ communication that clients increasingly demand. Since 2013, there has been a massive uptake of Apps and we have now more than 1000 firms globally that have

their own custom App on the MyFirmsApp platform. The App is seen globally as the critical interface between a firm, its’ clients and the software they are using. Apps provide 24/7 access to advice, accounting information, calculators and online systems that help firms become more effective, productive and profitable and they give the impression that the accountant’s expertise and services are always available. It’s time to rethink client services and this is where AI comes in as there are so many things that a machine can do better and more efficiently than a human. Thanks to developments in personalisation and human interaction, AI is already efficiently working behind the scenes in basic text question and answer chats to provide service that is much less expensive for companies. In coming years, a ‘robo-adviser’ could potentially dispense advice and suggestions to clients and these robots will co-exist and thrive alongside other team members. According to Gartner, Intelligent Apps, which include technologies such as virtual personal assistants, have the potential to transform the workplace by making everyday tasks easier and its’ users more effective. In day-to-day terms, this could take the form of prioritising emails and highlighting important content and interactions. However, Intelligent Apps are not limited to new digital assistants, and every existing software category from security tooling to enterprise applications such as marketing or ERP, are set to be infused with AI enabled capabilities.



We have already begun to build AI into our web, mobile and connected-device Apps using the next generation technology platform, Amazon Lex. We have joined a small elite group that has been given the goahead by Amazon to use the technology that powers Amazon’s Alexa, to deliver a better and more interactive experience and build a more conversational user experience for connected devices in the rapidly growing segment of Internet of Things (IOT). Our pioneering development team will be trialing Amazon Lex’s speech recognition and natural language understanding capabilities with the potential to build an entirely new generation of Apps that have human-like intelligence and can see, hear, speak, understand and interact with the world around them. The potential to add a voice or text chat interface to create bots on mobile devices that can help with basic tasks is set to transform how accountants respond to customer requests and make them more productive. AI is an exciting prospect as it will make it possible to effectively add another member to the team that is available 24 X 7 to answer multiple questions and carry out simple tasks. This ‘virtual’ member of staff will help the accountant retain trusted advisor status by appearing to be available at all times. The Deloitte report referred to above cites an interesting example of how the pizza delivery chain Dominos has introduced a function in its mobile App that lets customers place their orders by voice. A virtual character named “Dom,” who speaks with a computergenerated voice, guides customers through the process with the aim of making ordering more convenient. This is not intended as a cost-cutting move but it is expected to increase revenue as Dominos customers increasingly say they prefer to order online or with mobile devices, and those who order this way tend to spend more and purchase more frequently. In line with the Gartner insight, our aim


is to make the App even more powerful and intelligent with the built-in capability to learn, adapt and potentially act autonomously. These are incredibly exciting times and we firmly believe that AI will be extremely helpful in automating administration and augmenting human judgment.

world where AI technologies will soon be able to do the administrative tasks that take up so much time, faster and at a lower cost and we are committed to pioneering AI to improve quality, speed and functionality as well as drive top-line revenue growth in the professional service sector.

Accountants have a golden opportunity to get more connected as wi-fi becomes faster and more available and AI technologies become mainstream. We are living in a time of unprecedented technological progress and

We echo Mark Zuckerberg’s comments entirely and ‘we are working on AI because we think more intelligent services will be much more useful’ for our customers to use

“We’re working on AI because we think more intelligent services will be much more useful for you to use.” Mark Zuckerberg we are still at the beginning of acceleration in the capabilities of information technologies. In our lifetime, our personal and working lives will be changed by incredible spectacular processing power that is set to provide seemingly limitless storage capacity, lightning quick communications, evergreater miniaturisation and rapid decline in the cost of components. It is said that the electrical efficiency of computation will double roughly every eighteen months as it has done for the last six decades. Over the next ten years we believe there will be continued disruption, innovation and change in the profession. It’s fair to assume manual accounting processes will become automated and AI and machine learning will automate manual tasks and complete them faster and more accurately than humans. Bill Gates has referred to the rise of AI as computer science’s ‘holy grail’. It may sound as if we are on the brink of something out of a science fiction novel but the world we describe of robots and AI is already here.

All professions will need to adapt to a

Joel Oliver, CEO, MyFirmsApp

References: issue-16/cognitive-technologies-business-applications. html?id=us:2sm:3li:dup1002:eng:dup:021615:longform



to the rescue of recruitment in financial service


inding the right personnel for any business is rarely an easy task – but most companies would agree that it is one of the most essential. The insurance industry in particular did not, until comparatively recently, have much more of a problem in this area than other organisations, but that has changed in recent years.

As insurance companies are already suffering from a shortage of experienced professionals at all levels, many have been forced to spread their search for candidates beyond the insurance industry. A clear talent management programme needs to be in place that is aligned firmly to business

overtake banking in popularity by 2022. The research shows that business students rank careers in fast-moving consumer goods first (14.44%); banking second (14.41%) and software and computer services third (9.61%.)2.

objectives in order to retain these precious assets once recruited – high turnover of staff is a real issue in financial services.

Unfortunately companies often lose some of the best applicants right at the outset of the recruitment process. Many candidates still have a poor experience when applying for jobs - and indeed throughout the entire recruitment process. A bad experience can damage a relationship with a promising candidate and even an entire brand – candidates are not afraid to share their impressions online. The recruitment experience starts from the first view of the website and the careers page right the way through the entire recruitment process. And while some companies have become

According to a report by PwC, nearly 60% of insurance CEOs believe skills shortages are a threat to growth and nearly 50% say that it’s getting harder to recruit and retain good people in their industry. More than 30% have been unable to pursue a market opportunity because of talent constraints.” Talent in Short Supply The desire to expand into emerging markets, changes in insurance products, the increasing use of technologies such as predictive analytics, changes in demographics and many other issues all mean that finding talent who can add value in a changing industry is becoming more and more difficult. In addition, the insurance industry is often perceived as less exciting for bright graduates to enter than some other professions and the numbers taking more advanced professional examinations is shrinking. Companies who want to succeed need to devise a clear strategy not just to attract but also to retain the right people, as well as developing the skills and aptitudes of those they already have. Too many insurance companies do not get the right quality of candidate applying, or those that do, take up another offer – or else the candidate, once hired, either does not stay or does not live up to expectations.

Banks are also facing similar challenges, according to a recent report from Deloitte, who recently surveyed more than 200,000 business students globally. They found the popularity of a career in software and computer services has risen by 4.1 percentage points between 2008 and 2015. In comparison, banking fell by 4.3 percentage points during this time. Based on current trends, software and computer services will


TECHNOLOGY very effective at communicating well with potential hires throughout the experience, this makes those who are not communicating well look even worse. Good recruitment means of course defining the brief at the outset, but online recruitment systems are now being widely adopted by companies to help manage the process from then on. These platforms normally provide an applicant tracking system (ATS) to promote the role(s) on offer, and the candidate journey should focus on the engagement with the potential employee so that throughout the various stages the corporate brand and the overall impression given to the candidate is a positive one. Such systems automate a great deal of routine work, including personalised acknowledgement of communications from a candidate. Mergers and Acquisitions One way of solving financial service industry issues such as the need to take on board new technologies and enter new markets is through mergers and acquisitions. In its report Insurance 2020: A Quiet Revolution - The Future of Global Insurance M&A, PwC predicts that ‘the next few years will see a quiet revolution in global insurance M&A.’ 3


However, in an M&A scenario, managing issues such as avoiding job duplication and having to make redundancies can be challenging. Restructuring programmes rarely go exactly to plan. Cuts sometimes go too far and at some point, staff may need to be re-hired, perhaps for slightly different roles. Sometimes the people a company wants to retain are the very ones who leave, due to uncertainty about the future, perhaps a loss of morale in an organisation going through significant change and the ease of finding another job elsewhere. There are other employee recruitment and retention factors such as natural churn, early retirement and essential roles that still need to be backfilled. And then there is staff re-deployment. Rehiring, re-training and re-skilling programmes are cheaper and more cost effective that hiring an outsider and a great deal more motivational too. However, re-deploying staff is not very different from hiring externally including assessing candidates for eligibility and suitability, shortlisting, interviewing, sometimes testing, and offer management. In the last four to five years, the way business applications and IT systems are now deployed has been a silent revolution. Many organisations can implement a base system in 7-10 days. This agile approach means that as the system can be implemented very quickly the returns are also very quick.

A business case for an integrated recruitment process using an online recruitment system includes internal and external recruitment process efficiencies, reduction on dependency on agencies and expensive job advertising, improvement in the quality of candidates as the net can be cast more widely and the process is more efficient which means fewer good ones drop out along the way, consistency and alignment to the strategic HR and wider organisational objectives and better management information and compliance reporting.

Some things those considering these systems should look for include:»» Ease of use, quick to implement, agile, requiring minimal training »» Integration with careers pages, Job Boards and Social media to eliminate the need for expensive advertising »» A choice of online application forms or CVs »» Online shortlisting and scoring against essential and desirable criteria to ensure hires are made with no bias, all notes regarding candidates are made online »» Automatic but personalised candidate communications resulting in significantly less manual intervention »» The option of video interviewing »» Integrated background and criminal records checking

TECHNOLOGY ‘Onboarding’ where new starter information is collected, employment contracts generated details posted to electronically to the HR and payroll system and departments notified about the new starter The facility to accumulate a ‘talent pool’ of retained candidates who may be suitable for future roles thus further reducing the time to hire and re-advertise costs. Retail Merchant Services, the largest independent card processing provider in the UK, is an example of a company that has found an online recruitment system very helpful. With over 240 employees, Retail Merchant Services receives more than 15,000 applications every year in addition to 6,000 candidates who are pro-actively approached by its in-house recruitment team. With a fast-paced growth trajectory forecast across the business, Retail Merchant Services recruitment requirements are also set to grow. Prior to implementing the Vacancy Filler system, Retail Merchant Services used a manual process to recruit candidates, which was heavily reliant upon Excel tracking spreadsheets and a hardcopy filing system. As the company has grown, recruitment needs have increased substantially and the manual process was becoming too time-

consuming, particularly with a team of recruiters managing multiple vacancies. The company decided to automate the process, evaluating a number of recruitment software suppliers. Vacancy Filler was chosen because of the functionality, job board integration and customisation the solution offered, and within a week of going live the system managed over 50 candidates. The flexibility provided by the Vacancy Filler software allowed it to be tailored to existing processes, meaning its impact was immediate, negating the requirement for the recruitment team to undergo retraining to be able to operate the new system. Colette Lamb, Recruitment & Talent Acquisition Manager at Retail Merchant Services, said: “We were looking for a solution that could grow with us and streamline our recruitment. We wanted our candidates to be able to get maximum value from our website, and we needed access to reports on advert response, time to hire metrics and candidate engagement.” She continued: “The seamless integration with our existing careers page was one of the main reasons we purchased the Vacancy Filler system. For us, it is critical that the Retail Merchant Services’ brand – something we have spent a long time developing and

nurturing – is maintained throughout the user experience.” The need for a good recruitment and talent management strategy in the financial services sector has never been more vital and will remain key to the success of this industry going forward

Tony Brookes Sales Director Vacancy Filler Recruitment Software References: 1 insurance.jhtml 2 articles/deloitte-talent-in-banking-report-2015.html Talent in Banking report 2015, ‘The sting in the tale – Are banks attracting the right talent?’ 3



Maximise customer

lifetime value in a SaaS based world


n a Software-as-a-Service (SaaS) business, maximising customer lifetime value must always be a top priority. If a SaaS company’s greatest asset to customers is ease-of-management and adoption, its greatest menace to providers is customer churn. And while it’s tempting to justify this outlook by simply weighing the relative expense of winning new customers against the much-reduced cost of retaining them, we’d be remiss to ignore the dollar value of second-order revenue: the profit that materialises when customers recommend us, participate in case studies, provide us with glowing references, or deploy our service at their next job. Success in SaaS is about the lifetime value of a customer, so steps that can be taken to build the relationship beyond the first deal are vital to delivering more value for customers, which ultimately leads to greater revenues. A Harvard Business Review demonstrated the value of customer retention by reporting that a 5 per cent raise in retention rates will increase profits by 25 per cent to 95 per cent for an average business. Much of this value is not immediately apparent in the simple terms of deal values on a balance sheet and only reveals itself when the relationship matures and grows. Healthy customers usually add features or expand 14

their user base year over year, so it’s clear that they can have a massive impact on annual recurring revenue (ARR). With customers holding such multifaceted power over the ways in which we grow, it’s critical to have both the visibility into their experience, and the ability to respond to issues on a moment’s notice in order to ensure the overall health of the business. In other words, we need insight into customers’ engagement with our product – individually and in the context of other customers – if there’s any hope of keeping them happy and renewing. To that end, dayto-day operations at a SaaS company must be literally wrapped with intelligence, where we empower employees with the intelligence to inform them how systems are performing and with the authority to do whatever it takes to ensure customers realise value each and every day. From sales and marketing to onboarding and lifetime support, I would argue that immersion, empathy and engagement are a few hallmarks of healthy customer relationships. This takes holistic and continual service evaluation with visibility across a number of different KPIs. For example, automated notices can alert us when customers might be ready for an upgrade, or aggregated dashboard views that compile


usage and adoption data across customers help us to anticipate needs before customers become aware of them. Moreover, we can stay ahead of complaints when we’re given insight into aspects of the service where customers may struggle. For example, at Lifesize, our “Call Rating” system – which is an unobtrusive one-click survey after each call – will flag low-scoring events, fire triggers to assigned Customer Success Advocates, and allow us to proactively make contact with customers to rectify situations. This subtle relationship management tool helps enrich and solidify our partnership over time.

Ultimately, everyone in an organisation

should have an optic over the various states of customer health: the reds, yellows and greens of our customer-obsessed existence. This naturally drives organisational action, prompting discussions among staff around solving problems and increasing happiness and loyalty. With this insight, we can easily build a product that is driven by what customers tell us is important to them now and in the future. Armed with this data, we’re informed and empowered to deal with the issues right in front of us: an isolated issue will be managed very differently than one plaguing 30 of our top 100 customers. An effective customer command centre lets us relate to customers instead of merely collecting their disparate feedback and filing it for future rectification. Best of all, this degree of visibility allows us to act on an issue before it becomes so prevalent that a majority of our customer base goes sour. All levels of the organisation, from product to engineering to quality assurance, can get on board and rally to make changes in short order. Over the course of a relationship, companies come to know and understand their customers. We engage with them on how to get the most value from our solution, ensuring they have a good experience from the very beginning, and most importantly we stick with them for the long haul, making sure they’re getting maximum value. For example, it’s important to make customers’ lives easy. In the world of technology, it’s easy to think the problem is not ours when a customer has a problem. Maybe the customer’s network has a glitch, maybe bandwidth is insufficient, maybe there’s a faulty cable causing a problem that has nothing to do with our product. Regardless, the fact remains that the customer is having an issue. And to make the customer’s life easier, support teams should be aware that there is no such thing as ‘their problem’. All problems are our problem and we will do what we can, within the realm of possibility, to help customers solve these problems.

Within the context of revenue, it’s easy to see how single percentage points of retention can lead to exponential millions down the line, and it’s the lifetime value of customers that provides big wins in a SaaS based world (I’d argue in any world where there are customers honestly). General wisdom is that if you grow your business to focus on a long-term strategy of putting customers first and realising that the first sale is just the beginning of your relationship with them, the stratosphere is inevitable

Amy Downs, Chief Customer Success and Happiness Officer at Lifesize



Enterprise Software:

An Investment in Disruption


nertia is a powerful thing. Most people prefer the status quo and innately resist disruptive change. It explains why moving house or changing jobs can be such a mental challenge. Companies are no different. The cost and emotional distress of making wholesale changes to business systems regularly can challenge even the most successful firms. Yet, those that don’t evolve and adapt to the needs of their customers usually flounder. Today, even young companies hold legacy assets that have become outdated or obsolete. In many industries, investing in new infrastructure is essential to stay ahead of the competition. Increasingly, that means tapping into


enterprise software. ES is computer software used by governments, large companies, universities and charities, rather than individual users. It allows companies to display, manipulate and store large amounts of data and support business processes with that data. If you’ve ever purchased goods on Amazon or eBay, you’ll have interacted with ES. It drives the backend technology behind the intuitive customer experience. And if you use a computer in your job, you may appreciate the role ES plays in supporting your productivity.

for decades. Many companies wouldn’t exist without the software that keep their operations ticking on a day-to-day basis. Gartner has forecast that total spending on it will reach $201 billion by 2019. Smartphone banking is a rapidly growing area. A Federal Reserve survey found that 43% of mobile phone owners with a bank account had used mobile banking in the previous 12 months up 4% from 2014 and 10% from 2013. Looking ahead, mobile and cashless payments are expected to grow 81% annually to 2020 in the US alone, according to Statista. This will require future investment in tech infrastructure, underpinned by ES.

Industry trends ES has been one of the key drivers of innovation and productivity increases

Several high profile corporate security breaches and a subsequent wave of new regulations have ramped ES up the corporate

agenda. Gartner and Cybersecurity Ventures estimate that over 75% of US Fortune 500 companies have been breached by cybercriminals. The proliferation of mobile devices will only accelerate matters, with companies seeking out more efficient and transparent security solutions. There is also a clear move toward the ‘cloud’, and service-based solutions that surround it. Known as “software-as-aservice” or “SaaS”, marketing, e-commerce and advanced analytics software are the areas expected to see the fastest growth. Cloud-based business applications are being used in recruitment in areas like applicant tracking systems and interviewing and assessment techniques. Businesses are also increasingly using cloud-based

applications in areas like price optimisation, procurement and financial planning.

a workforce with specialised knowledge to handle it.

The value in SaaS, and ES companies in general, stems from continuing renewals of the existing subscriber base, which ensures long-term predictable revenues. But this cashflow sustainability is not without risk and therefore ES firms must invest for the future.

AI is already creating seismic shifts in healthcare and drug development. IBM Watson has designed a program that analyses clinical data and reports to provide optimal treatments for patients with cancer. Elsewhere, Atomwise, an AI company has developed technology that analyses billions of molecular structures in the search for new drugs. It found two drugs that significantly reduced infectivity of the Ebola virus. Such progress used to take months or even years. It took Atomwise one day.

Perhaps the area most set to benefit from investment in ES is artificial intelligence (AI). Bank of America expects global spending on AI to reach $37 billion by 2025, driven by the growth of mobile devices, social media and the Internet of Things, the internetworking of devices and other items. The rapid expansion of data production has also boosted investment in AI. This will increasingly require new ES solutions and

In areas like these, the growth of technology is literally changing people’s lives and we are only at the start of the journey.



Financing future growth ES’ ascendance has been aided by the structure of the software industry. Smaller players with unique expertise are able to cater to a variety of clients are in plentiful supply. Young and fragmented, this part of the industry is ripe for consolidation. At the other end of the scale, some wellestablished companies are divesting divisions to refocus their business. For example, Hewlett Packard, a global technology company is in talks with private equity buyers to sell its software business for $10 billion. In June 2016, US computer giant Dell (now Dell Technologies) divested part of its software business to two private equity buyers for $2bn with the aim of repositioning as an enterprise hardware business. A core skill that private equity management can provide is supplementing the founding management team as the seed of an idea grows. The founders of a business then have access to experienced executives who can help identify a long-term strategy and provide capital for investment in areas like customer service, product development


and innovation, and branding. Venture capital (VC) firms are also taking a strong interest in the technology start-ups, in areas like information security, storage and SaaS. In particular, they can target smaller attractively priced investment opportunities where there is less competition for deals.

Diligent investors who recognise this – and the importance of ES in helping companies adapt to change – are able to reap the rewards.

The unique challenges for VC investors are judging how far to fund a new ES business before meaningful revenues accrue, and which portfolio investments to nurture and which to let go. Significant equity is often required before these businesses turn a profit. So where’s the catch? Well, as with other private market sectors, valuations are high. However, there are many attractive companies in need of funding. In-depth research can uncover such opportunities. Technology and software are evolving at mind-boggling speed. Companies that fail to adapt to social and technological progress will eventually lose out, both financially and reputationally. In business as in life, change should always be anticipated and embraced, rather than avoided.

Alex Barr, Senior Investment Manager, Alternatives, Aberdeen Asset Management

Aafiya TPA Wins ‘Brand Excellence Health TPA Services UAE 2016’

Award at the Finance Digest Brand of Excellence Program The leading Dubai-based TPA services provider Aafiya has won the ‘Brand Excellence Health TPA Services UAE 2016’ award at the Finance Digest Brand of Excellence Program, which honors and acknowledges the business leaders and financial institutions who have achieved outstanding results and excelled within the global financial community. The award was announced by Finance Digest at London, on 10th January 2017.

Mr. Ali Zaidi

General Manager, Aafiya Mr. Ali Zaidi, the General Manager of Aafiya TPA said that being continuously selected as the best insurance TPA at various international forums was a great achievement for Aafiya, a young but fast-growing company. “As our world-class services continue to win us laurels at the global level, we remain committed to deliver the best services for our customers, at the same time determined to make Aafiya a leader in the sector. We are constantly motivated by recognitions such as these, and they help us maintain high standards always,” he said. “Considering that the UAE Vision 2021 launched by His Highness His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai has outlined healthcare as one of six national priorities, the health sector is expected to see tremendous growth. This means greater growth for the health insurance industry. We have planned our strategies accordingly,” he added. Each year, Finance Digest seeks out organizations and individuals that contribute significantly to the

convergence of economies and truly add value for all stakeholders. The brand of excellence program aims to identify and reward excellence wherever it is found in the hope to inspire others and to further improve their own. Aafiya had also won the the ‘Best Insurance TPA’ award at the International Finance Magazine (IFM) Awards 2016, and the ‘Best Insurance TPA Award’ at The Banker Middle East Industry Awards in 2016; the second year in a row. Following its success in Dubai and the Northern Emirates, Aafiya TPA had opened its first branch office in Abu Dhabi in March 2017, marking a significant development in the TPA sector. Elaborating on Aafiya’s strategic plans, Mr. Ali Zaidi said, “We have an ambitious strategic expansion plan, according to which we will soon be opening offices in five new countries in near future: Oman, Qatar, Kuwait, Saudi Arabia and Kazakhstan.”

About Aafiya

Aafiya is a third party administrator of international standards committed to patient safety and a trustworthy healthcare facilitator in the region. Bearing the name which stands for “good health”, it is a specialized integrated service provider for healthcare management. Aafiya is backboned with the same values that have driven the group to its prominent stature, working hand-in-hand with its partners to achieve universal profitability aligned with quality healthcare service. Aafiya offers a complete suite of healthcare management services to meet individual client requirements as well as to provide services beyond administrative support.



Philip Racusin,

CEO of EnergyFunders talks to Finance Digest about investing in the energy industry in the United States of America.



Energy Investment: An Alternative Investment Space

Rinkita: Who can invest with EnergyFunders? Is it available to global investors?

Rinkita: Please tell our readers about EnergyFunders and what makes it unique. Mr Racusin: EnergyFunders is an online investment marketplace disrupting the energy industry by evolving the way capital investment and energy projects come together to generate more profitable commerce. We founded EnergyFunders in 2013 in Houston. The fintech company currently offers professionally vetted oil and gas projects as financial opportunities for accredited investors nationwide and internationally, with the goal to soon opens the marketplace to every type of investor. Our team of experienced securities attorneys and trusted specialists in the oil and gas industry allowed us to develop EnergyFunders as the first platform to offer national and global participation in the $263 billion “small oil” market through equity crowdfunding. As a result, investors are able to buy directly into wells and reservoirs for minimums as low as $5,000. With more than 100 wells as assets under management, EnergyFunders has raised millions for energy ventures, bringing unprecedented access, transparency, and efficiency to one of the most elite and lucrative asset classe

Mr Racusin: Yes. For now, accredited investors are welcome. Everyone can sign up for free. In the near future, everyone will be welcome, whether accredited or not, so they’ll have a head start if they already have a free account.

Rinkita: How many deals do you currently have? Please tell us about the top ones. Mr Racusin: We generally strive to put up one deal a month. Of the many deals we initially review, only a very small percentage of deals make it through to the end. Top deals include multi-well packages in Texas and other oil producing American states, such as Kansas. In some cases, these oil fields were formerly operated by household names in the oil and gas industry using technology that’s nothing like what we have today, and that means up to 80% of the oil can be left in the ground. We are focusing more on projects where reserves are already proven, and it’s even better if there’s existing production. How does funding a well work? Do investors actually own a stake in the well? Can they visit? Yes, investors are welcome to visit. We can help them arrange with the operator to visit the property. The investors own a stake in

the well by owning units or interests in a LLC fund or Limited Partnership fund that owns the oil and gas assets.

Rinkita: What are investors earning? What about future potential? Mr Racusin: In most cases, through their ownership in the fund, they are earning a pro rata stake (according to the amount they choose to invest) in an oil and gas lease with development rights, and pro rata ownership stakes in multiple wells that may be reworked to improve or restart production and wells to be drilled, including the various oil and gas facilities like pumps, tanks, tubing, etc. that is purchased or already in use in the well or on the surface. The fund has a type of mineral ownership known as a “working interest” in the lease, the oil and gas assets and in the facilities. They participate in the appreciation of the assets as well as the cash distributions from oil and gas production. Finally, by investing as a “converting general partner,” which is a way to effectively limit liability while providing them with unique oil and gas tax benefits, they can potentially write off against earned income tax, up to 80% of their investment in year one, and then the other 20% over the next several years, even before a drop of oil has been produced.



Rinkita: Where does your revenue come from? Mr Racusin: Revenue comes from having a carried interest of 10-15% in each project. We are only paid from the project when the investor is paid. In practice, with the leverage gained from purchasing a larger ownership stake in the project such as $250,000 or $500,000, we work hard to negotiate a deal where the carry essentially disappears for the investor--that is, we’re giving the investor a deal that is still better than he could have negotiated on his own. This is because each investor can put in as little as $5,000 in each project and spread his exposure over multiple projects; rather than placing a very large investment into just one project.

Rinkita: What do you see as trends in oil and gas with regards to clean energy? What does that mean for investors? Mr Racusin: The world will always demand the products and energy that are derived from oil and gas. We are working with technology partners and operators that produce clean energy from oil and gas, either because their oilfield production technology is much more energy efficient than traditional methods or the methods of production generate no waste with environmentally-friendly byproducts. When most people hear the term “clean energy”, they immediately think of renewable or alternative energy projects, like solar or wind. The fact is that technological innovations that are little known outside the oil and gas industry are changing oil and gas production from the old “fossil fuel mindset” into clean energy production. With certain environmental regulations tightening across the country and as always, a healthy level of respect for our shared environment, it is more important than ever to work with clean energy leaders in the oil and gas industry. For investors, this can mean potentially earning


a greater return on the basis of clean energy tax credits for qualifying technologies on top of appreciation and cash returns, and being a part of a project that will always comply with regulations now and in the future. What would be your advice for people who are new to oil and gas investment? Especially for those who are hesitant to invest because they don’t really understand how the platform works? If you’re new to direct oil and gas investing, it’s best to educate yourself about this type of investing and what you’re investing in. To that end, we offer educational resources on our website that investors may find helpful. We also offer webinars for each project that involve the operator, and provide explanations and answers to many questions investors have asked or may want to know. There are excellent books for new investors, including Daniel Yergin’s “The Prize” and Raymond and Leffler’s “Oil and Gas Production in Nontechnical Language,” amongst many others.

Rinkita: How do you believe Donald Trump’s presidency is going to impact oil/gas overall and specifically as it relates to investing through EnergyFunders? Mr Racusin: Yes, we believe it will be a net positive for the oil and gas industry and will increase investments in oil and gas technology. This is good for EnergyFunders because it will continue to drive awareness of direct oil and gas investing as an area for consideration within the alternative investment space. Modern wealth advisors are now recommending to their clients to have up to 20% of his or her assets in alternative investments. Alternative investments are generally riskier than investing in a mutual fund, a highly rated bond, or ETF, but can offer unique tax advantages and much higher returns to compensate for risk. Direct oil and gas

investing fits comfortably into this alternative investment space, and EnergyFunders allows investors to spread their investment across multiple projects with low buy-ins. Experts are discussing the possible deregulation of energy in the U.S. What areas of the oil/gas industry would you like to see regulation reform? We’d especially like to see regulation reform in the testing and introduction of safe oil field technologies. We’d also like to see deregulation in the area of energy exportation.

Rinkita: What would regulation reform mean for oil/gas investors? And for operators? Mr Racusin: For operators, it would mean lower production costs for each barrel of oil and MCF of gas produced. This means lower prices for consumers and better returns for investors. Also, it will increase the level of innovation in the oil field as more inventive companies are encouraged to use their technologies to enhance oil production.

Rinkita: How does the United States’ energy regulations compare to the rest of the world? Mr Racusin: Since the United States is one of the only places in the world where one can truly privately own and produce oil and gas from mineral rights without public involvement, it stands to reason that it is more heavily regulated than most of the rest of the world



Aligning spreadsheet models and enterprise systems


he role of the CFO is widely recognised to facilitate and support business strategy so that the organisation can achieve its goals and objectives – be it of profitability, capital, growth or anything else. Shareholders and investors cherish these metrics too. Consequently, CFOs are routinely driving transformation projects via acquisitions, onshoring, off-shoring, financial restructuring and such, to control and improve the business performance of their organisations. Tried and tested controls are proving inadequate Today however, many of the previously 24

accepted tried and tested business controls are failing. The Sarbanes Oxley Act of 2002 (SOX) is a case in point. The Public Company Accounting Oversight Board (PCAOB) is focused on ensuring that spreadsheet controls in accounting and finance processes are followed to eliminate errors and fraud. The PCAOB’s auditing standard 2 expressly demands that controls must include all types of IT used in financial reporting; and auditors are taking it seriously. The latest survey of 109 organisations by research house GRC 20/20 reveals that 78% of respondents note that external auditors are applying hardier standards to ensure compliance with the much tougher PCAOB

control requirements. So, while previously, minimal, typically manual, spreadsheet controls weren’t viewed as a SOX failing, today they are. In addition to having to review and improve existing controls, due to the nature of corporate activity, carefully selected, proven and maintained enterprise systems for operational processes are proving inadequate. This is due to their inflexibility to instantly add new processes or amend existing ones in rapid response to the business needs of users. To overcome the limitations of enterprise systems, there is a large parallel universe of unmonitored and uncontrolled spreadsheets created by


users for varied strategic business processes. Spreadsheets are flexible and offer good capabilities for advanced analytics and financial modelling. At the same time, they also pose a huge risk as finance departments have little control on these applications and their lineages with other data sources. Consequently, CFOs are struggling to offer watertight guarantees that they are completely in the know of the spreadsheet and other data sources used and the level of data aggregation and manipulation that has been undertaken by their finance teams to arrive at the figures they submit to financial and regulatory authorities. The GRC 20/20 survey mentioned above shows that nearly half of the respondents do not have a grasp on spreadsheet risks and controls, which might impact financial reporting. More worryingly, 53% stated that they hadn’t identified and built an inventory of spreadsheets and other end user computing applications that could potentially lead to material misstatements from their use. In fact, they don’t have the controls to address spreadsheet risks; and where they do, the mechanisms are manual, which are error prone, ineffective and lack the agility needed to enforce in such a dynamic and distributed environment.

Aligning spreadsheet models with enterprise systems must become a focus for CFOs Data is a critical asset and the lifeblood of any business. CFOs must align and integrate spreadsheet models with enterprise systems to achieve end-to-end transparency of business-critical processes. This includes everything from the creation of a spreadsheet application by a user, visibility of data lineage between files through to their retirement in the corporate system. This will ensure decision-making based on outputs derived from accurate business data. To achieve the above, new processes are needed. In an IT-led environment, manual processes for change management and control of spreadsheets across the lifecycle of every single, business critical application, are doomed to fail. Not only is it impossible to monitor and control spreadsheets in a timely manner, the whole exercise is supremely inefficient and costly, potentially to the tune of hundreds of thousands of dollars. Additionally, due to the way in which spreadsheets are used, if say 50 spreadsheets are decommissioned, it is highly likely that another 50 new ones are created by users in the same timeframe to satisfy a new business requirement.

errors in business-critical processes based on well-defined controls to ensure data accuracy across the spreadsheet landscape. This is pertinent for SOX and other regulatory compliances that CFOs are responsible for. Technology-driven control over the spreadsheet landscape enables enforcement of policies and rules as a matter of routine, without impacting the benefits of flexibility and agility for data manipulation that users so treasure these applications for. Historical evidence shows that inadvertent misrepresentation of information and acute metrics such as revenue, profitability and sales figures have led to financial and noncompliance penalties, drop in share price, and so on – situations that probably keep CFOs awake at night. After all, it is their neck on the line

Henry Umney, Director, ClusterSeven


Automation based on best practice processes for spreadsheet management is a reliable and safe approach. It mitigates risk by continuously monitoring and eliminating spreadsheets.pdf





Providing support to


for a sustainable future “The support of Social Entrepreneurship is part of the economic responsibility of our Bank. It fosters financing with a positive impact into the society.” – Claudia Belli

Finance Digest spoke with Ms Claudia Belli, Global Head of Social Enterprises and Microfinance, at BNP Paribas to find out about their venture in Social Entreprises.

Rinkita: Can you tell us why BNP Paribas supports the Social Entreprises? Ms Claudia: BNP Paribas wants to participate in building a more sustainable future, the Group thus has included as one of the engagements of our CSR policy to finance and supports projects with a high positive impact and directly contribute in reaching the Sustainable Development Goals of UN. Naturally we decided to support the Social Enterprises, a fast growing and young sector. Social Entrepreneurship (“SE”) lies at the crossroads between sustainable financing for the economy and the fight against exclusion, both of which are fundamental priorities

for BNP Paribas. Social Enterprises share the same primary goal which is to generate a strong and positive impact on society and environment through a sustainable economic model. BNP Paribas provides, now, EUR 890 million support to SE and microfinance, the bulk of it being in Western Europe, under the form of long, medium or short term loans and investments.

Rinkita: Can you tell us more about the unique business model BNP Paribas uses to support businesses? Ms Claudia: BNP Paribas began supporting a first micro-financing institution 25 years ago. Microfinance is a good example of Social Entrepreneurship, since it tackles the problem of financial inclusion through a sustainable economic model. Microfinance Institutions receive loans and investments from BNPP, EUR 250 million at year end, and we indirectly



serve approximately 300,000 microborrowers. We felt that we could expand to other kind of companies (Enterprises, Charities, NGOs, social Cooperatives, etc.) and look at other social challenges. We want to serve them as per our role of banker. In order to provide the best suited banking service for the social Enterprises, we try to be as close as possible to them: do they need working capital? We design specific ways to propose it; do they need to be recognized on their specificities and innovative solutions while they implement a difficult economic challenge? We propose them dedicated Relationship Managers, trained to understand the SE ecosystem; do they need financing? We design a Specific Credit Policy dedicated to this segment so to be able to apply specific analysis; do they need coaching? We create a team that matches the volunteers of the bank who want to provide their skills pro bono and the social enterprise in need. The specificity of BNP Paribas is that we applied this methodology to all our “Domestic markets”, i.e. BNP Paribas in France, BNL in Italy, BNP Paribas Fortis in Belgium and BGL in Luxembourg. And now we are doing the same in other retail markets where BNP Paribas has a full retail banking licence, as in Tunisia through UBCI, Morocco through BMCI, Senegal through BICIS, achieving an outstanding of Euro 643 million of loans

and investments only dedicated to social Enterprises.

Rinkita: How do your business advisors help those with a business creation project? Ms Claudia: The Relationship Managers (RM) trained in Social Enterprises try to help them during all stages. The RMs are in close contact with impact funds, with venture and equity funders and can introduce the SE to them. But we also decided to create partnership with some of the incubators of social Enterprises (as it is the case with the ESSEC’s incubator ANTROPIA) in order to be able to accompany some of them. We work with all actors of the SE ecosystem like France Active, BPI, Sensecube, La Ruche in France, Poseco in Belgium. Also in some countries we have our own post-incubator like the Lux Lab in the Luxembourg and the We Are Innovation (WAI) in France who welcome SEs: The Social Entreprises occupy at least 10% of the space and we also create connections between them and our clients so to help the SE fostering their model thanks to stable clients.

Rinkita: In your opinion what are the biggest challenges facing entrepreneurs? How is BNP Paribas helping meet the challenge? Ms Claudia: Biggest challenges are scaling up and measuring impact. We help on both: To scale up you often need stable long term funds: This comes through impact funds: BNP Paribas Investment Partners recently achieved to manage EUR 1.3bn Impact Funds of which 6% to 10% is invested into Social Enterprises in France i.e. EUR 60 million long term debt (or quasi equity) to 20 social Enterprises. The measurement of the impact of the SE is a fundamental turning point too. It is a strong need of SE. They all know that their end beneficiaries have improved their lives but measuring it is another story. This is why we have implemented a pilot with Investment Partners and we are working now together with the French CDC and Comptoir De l’Innovation to create a common instrument: MESIS.

Rinkita: What types of on-going support do you offer entrepreneurs, SME’s and corporates? Ms Claudia: For example: We offer stable funding through 5 dedicated “Solidarity Based Funds” (Fonds Solidaires) like the “FCP BNP Paribas Social Business France” and “BNP Paribas Social Business Impact France”, or other FCPs dedicated to employees like the Multipar Solidaire Action or Multipar Solicaire Oblig. All of them have the “Finansol” label that qualifies the social and environmental impact. We also are investing through our own capital into dedicated impact funds like into the Oltre 2 done by Oltre Venture in Italy or the NOVESS promoted by CDC in France. These funds help Social Enterprises to grow while providing a standard remuneration but also “Social Dividend” to the investor. In some countries we propose specific conditions to consortia of Social Cooperatives like in Italy (CGM consortium); in Belgium we



Claudia Belli, Head, Social Entreprises and Microfinance, BNP PARIBAS

have a fund that donates a part of the revenues to a foundation (Roi Baudoin) fostering small Social Enterprises and charities: close to 1 m Euro have been served in 2016 to the Roi Baudoin Foundation; in Luxembourg we created the first Microfinance institution who offered its first loans to migrants.

Rinkita: What unique products and services have been created in direct response to customers’ needs and wants? Ms Claudia: I’d like to mention the latest. We just signed our 2 first Social Impact Bonds, innovative structures where we use our structuring and investment capabilities with a social purpose. One in New York for 11 M USD which allows the Department of Children and Families of Connecticut to foster family care for children under 6 years of age and

one in France for Euro 1.3 million: it is one of the 2 first “Contrats à Impact Social” in France, signed with the French Microfinance Institution ADIE which aims at providing a stable job for 320 persons in 3 rural regions of France through an innovative process. Both projects involve the public Authorities that will repay investors only in case of success i.e. a proven social impact.

Rinkita: What are your future plans for development?

this specific strategy. Also we start to deploy the impact measurement to a larger part of our portfolio beyond Investment Partners and soon reach all of the 900 social Entreprises we support. But we also look at other ways to support social Enterprises where we do not have a retail presence. I’m thinking about developing Impact investments in India, in Brazil, in the US, in UK, in Switzerland and then we would like to structure other Social Impact Bonds in France and in other European Countries

Ms Claudia: We are deploying this project now beyond the 4 European “domestic” countries: into Morocco through the BNP Paribas subsidiary BMCI, in Tunisia through UBCI, in Senegal through BICIS, in Poland through BGZ and California through Bank of the West; each time our owned subsidiary will be the one providing loans and implementing



Let the Capital do the

Heavy Lifting An Insider’s Perspective of Equipment Finance and Leasing


quipment finance and leasing can offer a variety of benefits for both small, family-owned companies and large multinational corporations, alike. At Advance Acceptance equipment finance (a Division of First Western Bank & Trust), we work with businesses of all sizes to help them achieve their goals. There are a variety of reasons why a


business may choose to finance or lease, over paying cash. One of the most appealing benefits for accountants and business owners is the ability to maintain working capital. By financing equipment, a business is better able to manage their budget and expenses. A hurdle for smaller businesses and contractors has always been the conservation of working capital between projects and seasonal shifts. By leasing or financing, a business can

spread out the upfront cost of the equipment over monthly, quarterly or seasonal schedules -- allowing additional funds to be used to hire sales staff, market more aggressively or apply it to additional advertising spend. Just because a team has “the latest and greatest,” doesn’t mean that additional capital can be brought in without sales, marketing or advertising.


Another example of why conserving working capital can be beneficial is to hedge against a lean growth year. Many business owners and operators can attest to the fact that it’s better to have reserve working capital to help offset a loss of a large account or contract, the loss of a key staff member or an overall slow growth year. It’s better to be able to keep the lights on, than have a new piece of equipment paid for in earnest. Risk management is another benefit of equipment finance and leasing. Breaking up the cost of a substantial capital asset investment, into payments, allows a business to achieve business objectives – the benefit of time is always an appealing business strategy. Achieve the desired return with the new capital equipment purchase and allow more time to think about the business as a living system. Old and outdated equipment may be costing more than initially suspected in several situations. A pitfall many operations managers run into is keeping old and outdated equipment in service. Continuing to pay to update and repair outdated equipment can end up affecting the bottom line, because there is a consistent stream of funds expended into a fully depreciated asset. Pairing the right equipment with a proficient staff can make all the difference in completing a variety of tasks: repairing a car at a dealership; planting seeds in an agriculture field; or mapping out a piece of land, using the latest survey gear. No matter the business, everyone needs equipment to function, keep a competitive edge and remain profitable. Old and outdated equipment can also detract from human capital as well. By running an outdated piece of machinery, it can be physically and mentally detrimental to employees – ultimately reducing operational efficiencies and causing havoc such as a high employee turnover rate.

Winning a contract without the right tools in the toolbox can be the demise of a servicebased business. Old and outdated equipment can upset customers and ultimately lose businesses substantial capital gains, because the job isn’t completed satisfactorily, on time, or at all. Don’t get caught up with the wrong equipment that will diminish future objectives. Advance Acceptance partners with a variety of equipment manufacturers to offer in-house finance solutions for their customers. Many businesses can take advantage of financing their equipment at zero percent interest from programs specifically created to help the manufacturer sell more inventory. Next to nothing can beat the ability to maintain working capital, manage risk and spread the cost over a longer period of time – all while paying no interest on the equipment.

In conclusion, there are many reasons why a business can benefit from equipment financing and leasing: conserving working capital; managing risk; and having equipment that improves productivity and wins the service contract. The savvy entrepreneur, accountant or operations manager should always keep these benefits top-of-mind, when considering a capital equipment investment of any size or cost. The most important insider’s tip is to always shop around and ask if there is a no interest financing option available from the manufacturer – nothing beats zero interest and extra time to let the equipment begin paying for itself, before you pay it off. Time is everyone’s friend, until there isn’t time left to spend growing the business. Always remember to let the capital do the heavy lifting

A word of advice -- make sure to ask the dealer or sales representative if the manufacturer has a no interest finance program available, before making any capital purchase. In an extreme scenario, it may take a few additional hours of research to track down that once-in-a-lifetime deal of no interest. Oftentimes, taking a couple of hours or another day to shop around can pay major dividends for a business over the long-haul. Don’t be afraid to say no to the first deal, take a step back from the pressure and play the cards in your favor. Another insider tip to the savvy business manager is to wait until a major industry tradeshow or seasonal event arises. Equipment manufacturers will offer no interest finance programs around this time or exclusively at the event. Don’t be afraid to call up someone that operates in the same industry, to see if they have any inside scoops on promotional zero interest equipment finance programs. The equipment dealer may be another untapped resource, that many may overlook or misjudge as too “salesy” or high-pressure.

Conrad Magalis,

Marketing Manager – Advance Acceptance, First Western Bank & Trust



The problem

with paper A

reliance on manual, paper-based processes to store, manage and distribute crucial data continues to hold back many companies on their digital transformation journeys, says Steve Mulroy, Portfolio Marketing Manager, Information at Kodak Alaris Paper is a pain for businesses. Additionally, and perhaps more importantly to CIOs and CFOs, a dependence on paper can have a negative impact on a business’ balance sheet, both directly and indirectly. For example, many organisations have no clear system in place for storing critical documents, leaving them distributed across numerous tools, systems and people, and they are almost always difficult to locate. Employees can spend a large part of their working day wading through paperwork in the hunt for critical information, which can translate to thousands of man-hours wasted per year. 32

This problem will only get worse as the amount of information and data employees receive, continues to increase. In its Digital Universe study, IDC predicted that the amount of data on the planet is set to grow ten-fold by 2020 to 44ZB. And research conducted by EDM Group revealed that 56 per cent of people claim that they now receive more information at work than they did three years ago, with 18 per cent saying they have seen an increase of more than 50 per cent. An obvious misuse of an employees’ time - the financial implications are significant, particularly when that team member could be focusing on other revenue-generating business activities instead. According to PricewaterhouseCoopers, the average cost of locating a misfiled document is $122 and the cost of reproducing a document is $220! While we’re talking about a drain on resources, organisations spend thousands

collecting and storing paper documents each year. Aside from the obvious limitations on office space, the sums can quickly add up, PricewaterhouseCoopers estimates that on average, a company spends $25,000 to fill, and an additional $2,100 per year to maintain, a single filing cabinet. Elsewhere, one of the biggest problems with paper is that gaining approval from multiple stakeholders often takes so long that it delays progress on important projects. Workers are forced to use methods such as email, courier, or overnight delivery, to secure approval on important documents, which again, add significant costs. There’s also the risk that emails are overlooked, lost or blocked by internal firewalls. And don’t forget the sheer waste, and its effect on the environment. A survey conducted by research firm Loudhouse, found that the average employee uses 10,000 sheets of paper per year, and as many as


6,800 of those sheets end up in the rubbish bin. Another problem is that critical business information is often locked in with certain individuals or stored in disparate systems across the organisation. This is a tremendous risk to businesses - without transparent access to critical data, companies can find themselves being held hostage to events outside their control. The Paperless Project cites an alarming statistic that more than 70 per cent of today’s businesses would fail within three weeks if they suffered a catastrophic loss of paper-based records due to fire or flood. Some other indirect costs of paperbased processes »» Siloed, unusable data: Information doesn’t get integrated into centralised systems, and can’t be acted on »» Lost revenue: When paper is lost or misplaced, it prevents decision makers from analysing business performance, slows down the deal closure process and could potentially incur a fine from the Information Commissioner’s Office (ICO) if there is a data breach »» Unproductive employees: Staff spending time looking for information are not being productive and the overall cost to the business is increased »» Poor customer experience: Faster customer on-boarding translates into growth. Manual processes delay communications and customers who have a ‘low-effort’ experience are more likely to buy again While it appears that organisations are aware of the problems with paper and looking to achieve a competitive advantage by capturing information as close to the

point of origin as possible - 41 per cent of respondents to a study by AIIM said that they are using Optical Character Recognition (OCR) in some form - many are still lost when it comes to developing a digital strategy to document management. Only 17 per cent of organisations say they work in a ‘paperfree’ environment. Furthermore, 20 per cent say paper consumption is increasing and a tiny three per cent of companies questioned have a comprehensive multichannel system to aggregate and process information from paper documents, electronic communications and social media. So, what’s the answer? Data capture and robust automated information management can be a lifejacket when you are drowning in paperwork. Where Kodak Alaris excels is in helping organisations to capture information from paper and other sources right at the point of origin. Web-based capture, often referred to as cloud capture or thin client capture, streamlines processes, delivering increased efficiency and overall business value. With thin client capture, businesses benefit from reduced operating costs. IT support can be centralised making it easier to deploy, upgrade and administer with substantial savings, resulting in higher profitability and ROI.

customer responses, while other advantages include increased productivity and improved compliance. When non-digital information, practices and processes are converted into digital formats, organisations see increased agility, improved productivity among employees, better customer service and long-term cost savings. Businesses operating in regulated environments are also turning to technology to assist with compliance. The ever-increasing flood of data is one of the greatest opportunities facing businesses today. How it is managed can have a huge impact on the future of an organisation. Investing in sophisticated information management solutions can be the first step for many on the road to digital transformation.

Wireless scanners enable seamless connectivity through the office network or over Wi-Fi. Equipped with standard drivers, they can be easily and securely integrated within existing and legacy business applications and used alongside cloud- or web-based capture applications. The AIIM study points to the fact that improved search and share capabilities are the primary drivers of scanning and capturing technology investments. 43 per cent of businesses questioned say the biggest benefit of going paper-free is fast

Steve Mulroy Portfolio Marketing Manager, Information at Kodak Alaris



CLOUDBUSTING how the cloud can help keep banks agile


riginally proposed by the European Commission in 2013, for some time, the introduction of the second Payment Services Directive (PSD2) in 2018 has felt like a distant concern. Yet, since the turn of the New Year and the realisation that this major regulatory shift is less than 12 months away, we’re seeing PSD2 hitting the headlines more and more frequently – it’s become the acronym of the moment. Under the new regulation, banks will be obligated to provide third parties such, as fintech providers other banks and merchants, with access to their customers’ accounts via open application programme interfaces (APIs). So, for example, if a consumer were to purchase an item on Amazon, the user wouldn’t need to be redirected to Visa or 34

PayPal to make the payment, but rather Amazon would be able to make the payment for the user. As a result, these third parties will then be able to build financial services on top of the banks’ data and infrastructure and further expand their customer offerings to enhance the experience for the end user. In addition, account information service (AIS) providers, for example, could act as consolidators under the directive. If a customer has multiple accounts, an AIS will use an API to gather all the data on those accounts and aggregate it to offer valueadded features – such as a proactive text, which could suggest that by moving their money to another account, the customer could save themselves £50 in overdraft charges. By monitoring a customer’s spending, an AIS can become more proactive

and provide useful information based on the T&Cs of the various products it has in the market. The open banking rules, proposed by the CMA (Competition Markets Authority), and the implementation, brought about by PSD2, will also require new data protection as, while it’s true that third parties will have access to a bank’s customer data, they will require the specific permission of these customers and will need to make it clear what they are offering. This is where the General Data Protection Act (GDPR), which also comes into force in 2018, can step in. As opposed to PSD2 which focuses on the sharing of data, it focuses on protecting this data – however, what unites the two is that they both put the customer at the heart of their aims. If fintechs and third parties are to access this customer


data, they will need to be explicitly clear in what they are offering in order to gain the consent of the customer. Realistic concerns? This is a fundamental shift in the nature of banking as we know it. This change will ultimately result in much more choice for the customer – the key aim of the regulation. As consumers are presented with more choice when it comes to financial services, there is the fear amongst banks that the once guaranteed loyalty to one financial provider that existed will begin to dissipate. It’s been well documented that as the landscape becomes more competitive fintechs are recognising the opportunity to seize a piece of the financial pie. However,

whilst some more innovative startups are hoping that this will give them the opportunity to ‘Uber’ traditional financial providers, this might not be a realistic view. Given the complexity of data protection, and the undeniable loyalty to established players when it comes to looking after our money, the banks should instead be looking at the opportunity that PSD2 presents as a means of spurring on more innovative thinking. A cause for change Although there are fears that fintechs could ‘eat the lunch’ of the big banks, however attainable or unattainable these may be, PSD2 should be forcing banks to think about how they can provide more innovative solutions and services for their customers to compete with their younger counterparts. If they are to

develop new offerings and speed up the time to market, banks must absolutely be looking to the cloud to achieve both of these goals. Metro Bank is a great example of a bank that is has successfully utilised the benefits of the cloud in order to keep a competitive edge and speed up their time to market with new products. Although Metro Bank was ‘born digital’ and had little in the way of legacy systems, this is the example that other financial institutions should look to lead from. The cloud as an enabler Like Metro Bank has done, banks need to be continuing to look to the cloud to keep agile, using its advanced orchestration and management systems to deliver innovative software to clients quickly and securely. This 35


is where banks should be looking to migrate new projects in an R&D or developmental phase to a cloud environment. Similarly, anything that’s quick to develop, contains minimal viable product, or involves dev ops for products and service is key to success, are logical candidates for consideration during the first tentative steps into a production cloud environment.

need to be careful to ensure they consider the workload and usage patterns of the operation – as this will all play a part in containing the overall cost. By way of illustration, should a system be running 24 hours a day, 365 days a year, vs actually only needing to scale up on a particular time of the day, month or year, the usage pricing model can mean this will ultimately cost more than expected.

Essentially, any standalone products that sit outside core banking legacy systems (even though they may well interface with these systems) could also be potential workloads for migration to the cloud in subsequent stages. This includes innovative applications such as PSP payment solutions, for example, and any new functionality such as mobile payments, omni-channel banking frontends and websites built using standard and widely available software components. This will enable banks to operate their newest service offerings, much like their fintech counterparts, ensuring that their innovative customer facing projects don’t get bogged down in age-old legacy systems.

Security is also a key factor to consider when building a cloud strategy. Public cloud is suitable for workloads that require huge computing power, need to scale at continued pace and have the ability to switch on and off easily, but it can be harder and more costly to secure to the required standard depending on the workloads deployed than private solutions. The latter is consequently more readily used when holding highly sensitive customer data and needing to comply with internal governance and external regulation.

Which cloud is the best cloud? However, there is by no means a “one size fits all” approach to which environment is most suitable for a move to the cloud. Multiple public and private clouds have their place. The key is to choose the best execution venue for each application – and operate these under a single hybrid IT model. It’s hard to disagree that the transparency of cost, flexibility and agility offered by the cloud aren’t beneficial, but there is a highlevel perception in the boardroom that the public cloud is cheaper than traditional managed hosted systems. However, banks


By combining the utility benefits of public cloud with flexibility and elasticity, while maintaining the privacy of a dedicated private environment, a hybrid cloud represents a third way, which offers the best of both worlds. With this, it’ll become increasingly commonplace for banks to require multiple cloud providers, with a strategy encompassing both public and private options. This approach can offer greater flexibility and efficiency, but it will also be a lot for the CIO to juggle. Banks that take on multiple cloud providers should seek to reduce operational headaches by adding a managed service layer and integrated orchestration with a ‘single pane of glass’ approach to ensure the promised savings materialise, and to keep complexity to a minimum.

Preparing for the inevitable It’s widely agreed that PSD2 will substantially increase the level of competition traditional banks will face from digital alternatives, as they’ll no longer be able to rely on their vast customer data as a point of difference. If they don’t find ways of using the data to their own best advantage, they will miss out on a massive opportunity – PSD2 doesn’t only stand to benefit fintechs, but should be forcing banks to find ways of providing more innovative products for the customer. By giving thought now to the types of services and data they want to move to the cloud, the type of cloud they want to move it to, and the steps they need to take to make this happen, banks can begin preparing for the inevitable and ensure they retain the agility they will require once the market widens in a year’s time

Jay Hibbin, Regional Sales Director – Financial Services EMEA, CenturyLink


How much AUTOMATION can finance processes achieve? Dr. Marlene Wolfgruber, product manager at ABBYY explains how datadriven and robotic software solutions can help accelerate enterprises’ journey to digital transformation, streamline business processes and free up staff in the finance department


ompanies are increasingly becoming digital enterprises. With large volumes of information, data is everywhere and companies need to effectively manage, store and access this data wherever and whenever it might be, in order to operate efficiently and boost productivity. It is having this quick and easy access to information, paired with a high degree of process automation that allows organisations to innovate and keep pace with

the competition. Even as organisations start to realise the power of embracing a digital transformation, many are still struggling to implement the relevant automation processes. With the UK sitting one step behind France and Germany, businesses cannot afford to fall further behind on the productivity step ladder. The finance department is a key component of any organisation. Yet manual,



laborious processes are causing a slow-down and dramatic recline in productivity. The benefits of solutions and technologies for finance process automation (FPA) are obvious and have been discussed in theory for quite some time. Yet few enterprises have tackled this challenge and introduced full end-toend business process automation in areas such as procure to pay and order-to-cash. Enterprise Resource Planning (ERP) systems stop short when it comes to automating the data transfer and entry procedure, which initiates the onward process. Therefore, the task of entering invoices and orders into financial systems remains a more manual, error-strewn data entry. Additional items such as travel expense management, are also left to manual processes.


So how much automation is achievable for financial processes? Let’s take a look at the classic accounts payable (AP) process as an example. Automating 80+ per cent of AP operations by intelligent capture and robotic software solutions Manual AP processes are a huge drain on time and money for organisations. The process is long and cumbersome with invoices being sent to multiple touchpoints throughout the enterprise. At best this is a smooth, but time-consuming task. At its worst, these manual processes can see time-sensitive invoices sitting on desks for several days, weeks or even months as

they come up against several stalling issues, including discrepancies and delays. Worse still, it’s not uncommon for invoices to be lost or misplaced, which only causes further delay and could result in a duplicate payment being made to the supplier. Manual AP processes are not only a burden on time and resources but they can often be highly chaotic. AP automation starts with digital transformation. As paper invoices come into the enterprise they need to be digitised before they are ready for automated processing along with electronically received documents, ideally on the same platform. Intelligent capture solutions extract invoice


data automatically using smart capture technology that recognises relevant invoice elements and understand which elements to extract. The validation process also occurs automatically by referencing it against enterprise data and compliance rule-sets, before highly accurate data is delivered to the ERP system where further processes – ranging from invoice approval to compliant archiving – are triggered. In cases where human intervention is required (e.g. for validation of high invoices sums) robotic process automation can further eliminate manual steps by providing guided exception workflows and consequently help to increase productivity of finance processes. Already a vast majority of AP processing steps can take place with little or no human intervention. Based on smart system training and machine learning algorithms, the potential for AP automation unfolds to enable straight-forward processing, allow faster access to data, and free up employees from repetitive, time-consuming and errorprone tasks. Goals of Finance Process Automation Organisations have different volumes of documents and varying types of data. Available resources and environments should also be factored into goal-setting when moving to automated processes in the finance department. Some of the typical goals include: Maximum data quality – Automating the receipt, scanning, extraction and validation of invoice data reduces data entry errors by 95 per cent. It can validate invoices with corporate data including employee directories. This technology should eliminate duplicate invoices, perform purchase order and line item matching, and validate contract rates. High-quality data drives the efficiency and effectiveness of the downstream process. Mobile-enabled automation – Digital transformation comes paired with a strong shift to mobile. Especially for internal processes, such as handing in receipts for travel expenses, more and more documents

are coming into the AP department as photos taken with mobile devices. Implementing automation software solutions should include the possibility to process data from mobile channels. For maximum investment and security, automation solutions should have the capabilities to scale and evolve for roll-out into other finance processing automation areas and enterprise business processes. Transparency throughout the processing lifecycle – The steps documents take throughout their processing lifecycle should be easy to track and be completely transparent. Monitoring tools for process analysis, troubleshooting and accurate reporting enable effective tracking of invoices and orders to help to identify and resolve bottlenecks as well as deliver key performance indicators (KPIs) that inform relevant stakeholders in the organisation.

Achieving enterprise-wide automation Automating finance processes brings an array of benefits to the business. With data-capture driven solutions leveraging robotic technologies and machine learning algorithms, an automation rate of up to 80 per cent* can be achieved for invoice operations. Ultimately finance processing automation reduces costs, strengthens internal controls, enables the optimisation of cash flow and has a positive effect on supplier and customer satisfaction. As a result, finance staff can spend more time on important tasks that bring value to the business

*Automation rate is variable and dependent on overall environment, quality of input and PO matching availability

Optimisation of payment process – Late payment penalties which add to administrative overheads should be completely avoidable. Dynamic discounting (trade financing) is one way that businesses can save more. Scalability for multi-location organisations and finance processing automation outsourcers – Processing large volumes of financial documents from multiple locations on a single platform not only reduces the risk of losing documents, but it also lowers shipping costs and helps to avoid unnecessary delays. Centralising finance process management can also boost standardisation across large, multi-location enterprises which enable outsourcing of classic order fulfilment and invoicing to internal shared services centres (SSCs) or external business process outsourcers (BPOs). Scalability of capture-driven solutions allows outsourcers to easily set up new customers and workflows whilst smart monitoring and reporting functionality enables transparent billing and validation of internal or external service level agreements.

Marlene Wolfgruber, Product Manager ABBYY

References: economicoutputandproductivity/ productivitymeasures/bulletins/ internationalcomparisonsofproductivityfinalestimates/ 2014



Successfully turning

the tide on a wave of fraud in 2017 Roberto Valerio, CEO of leading fraud prevention software company Risk Ident, outlines the threats that businesses will face and the strategies that will keep them safe in 2017.


nline fraud made the headlines for a number of reasons in 2016. We saw a 17-year-old sentenced for stealing 21,000 customer account details , nearly bringing down a UK national broadband provider, and the first pan-European ecommerce fraud operation, culminating in the arrest of 42 professional fraudsters. But these are small victories in the context of the broader fraud landscape. Fraud is now one of Europe’s most prevalent crime, and consumers in the UK are now 20 times more likely to be robbed online than on the street. These trends are receiving huge amounts of press attention and customers are growing more anxious about sharing their personal data. In 2017 it is critical that online businesses protect their reputations and revenue by using effective fraud prevention. Here are my top trends to look out for:


1. Mobile-first shopping A recent Visa report estimated that the number of Europeans regularly using a mobile device for payments tripled between 2015-2016 (54% vs 18%). More than ever, Europeans are making the most of in-person, online and in-app digital payments. However, so are fraudsters. Technologies such as device fingerprinting can detect which devices fraudsters are using and block transactions originating from these sources. Fraudsters will often try to counter this by using multiple portable devices, alongside other masking techniques. These techniques can sometimes avoid fraud alerts but fortunately a combination of device fingerprinting and machine learning can help merchants to access a much more complete map of the fraudsters activities and limit the damage they can cause. 2. Data breaches will intensify In 2016, we saw one of the biggest data breaches in history. Yahoo revealed that sensitive data from more than 1 billion user accounts had been compromised, creating huge repercussions for the business and its reputation. In the UK, telecoms company

TalkTalk was fined a record amount by the authorities for failing to apply “the most basic cyber security measures” for 150,000 customers. Looking to 2017, we can expect to see private and state-sponsored hacking continuing to target private user information, including names, telephone numbers, email addresses, passwords, dates of birth and security question answers. Threats such as these are a matter of survival for online businesses and it is imperative that the industry has the correct measures in place to identify attacks early and minimise the damage caused. 3. Social media weaknesses will come to the fore Today’s internet users have an average of 5 social media accounts, each containing different segments of their lives and crucial nuggets of personal information. Fraudsters have become highly adept at putting together these pieces of information to entire identities which can be easily misused or to break into existing online accounts. Fraudsters often use advanced technologies to achieve this but sometimes little technological expertise is needed, as they can simply take advantage of internet users sharing too many details online. Social


media users need better education on the use to which fraudsters can put seemingly harmless information. 4. Identity theft will feed an account takeover rise An average of five social media accounts spreads our defences thinly but when we look at our wider online lives, the problem becomes far more significant. We have a lot user accounts, each containing our personal details and most secured by a memorable password. The temptation to re-use passwords or simplify them to make them easy to remember is understandable but fraudsters are aware of this weakness and are on-hand to exploit it. For example, shopping on the black market in the dark corners of the web, fraudsters can buy usernames and passwords and use them to try multiple other accounts online. In 2017, we can expect these strategies to evolve, and customers with weaknesses in their online security may find themselves victim to hugely comprehensive attacks. 5. Bots will be a big challenge Smart software is highly effective at generating bots and wreaking general havoc whether that be through generating spam, vandalising information on Wikipedia or influencing opinions on social media. Fraudsters have devised a number of ways to make use of bots. For instance, in the

ticketing industry, bots can order tickets enmasse before selling them on at a hugely inflated price. In 2017, we can expect to see the number and effectiveness of bot attacks increase sharply.

commit fraud with the help of machines; we must do the same to counter them. By constantly feeding artificial intelligence, online businesses can grow a scalable, accurate and consistent defence and ensure their business’s security in 2017

6. Machine learning and artificial intelligence will be even more important More and more businesses are already capitalising on the scalable benefits of machine learning technology. Research into fraud prevention is revealing new uses to which the technology can be put and the difference it can make to online security. As the evolution of artificial intelligence continues, systems will improve steadily and security with it. However, it is important to recognise that technology alone is insufficient. A human being with years of experience fighting fraud can never be replaced by a machine, but a combination of the two entities can produce extraordinarily accurate results. If managed properly by a knowledgeable fraud manager, modern machine learning technology, based on a data science approach, is able to recognise changing patterns and irregularities in datasets. It learns from the data it processes to continually create new models and better, constantly evolving algorithms that help online businesses stay ahead of the fraudsters.

Roberto Valerio, CEO Risk Ident

Increasingly sophisticated fraudsters




Bankless Banking is ready for its close-up


ore than a third of the global population has no access to traditional financial services. “Access to financial services can serve as a bridge out of poverty,” says Jim Yong Kim, President at the World Bank. “This will require many partners – credit card companies, banks, microcredit institutions, the United Nations, foundations and community leaders. But we can do it, and the payoff will be millions of people lifted out of poverty.” Even the United States has unbanked households. 7.7% of U.S. households do not have a bank account according to Urban Financial Services Coalition survey. However, the vast majority of bankless adults live in Africa, Asia, Latin America, the Middle East and India. In India, at least 50% of the 1.3 billion people are unbanked and have no access to the convenience of electronic payments common in the west, making it the largest unbanked population in the world. There are only 182,000 ATMs across India with only 15% of adults using an account to make or receive payments with 72% of bank accounts showing zero balance. While many Indians are unbanked, mobile phone adoption is on the rise. India has about 200 million mobile subscribers and is adding 5 million new users


BANKING monthly. With more than one-third of the world’s population unbanked and more and more people using mobile phones, there is an outstanding opportunity for mobile payment technology to bring the financially omitted into the economic majority. Microfinance institutions are able to offer more competitive loan rates to their users to take advantage of lower costs due to dealing in cash. What are mobile payments? Quite simply, mobile payments are is a form of payment using mobile phones in lieu of cash, check, or credit card allowing a customer can use a mobile phone to transfer money or to pay for goods and services. A customer can transfer money or pay for goods and services by sending an SMS, using a Java application or other mobile communication technologies.

In India, this service is bank-led with Mobile Payment Forum of India, the organization overseeing the deployment of mobile payments in India. Mobile payment technology removes the need for direct access to a bank or credit union. Mobile payments are much less expensive than other money transfer options. The option to tap into the power of mobile payments is readily available on the majority of the devices people own. How is our global banking world affected by large pockets of our population that are unbanked? It is being impacted by the growth in mobile network operators and mobile payment platforms, not classified as deposit-taking institutions, who are acting as banking agents. In Kenya and Tanzania, over 25 million people use the M-Pesa mobile payments platform, operated by Safaricom and Vodacom, with money sent via text message. In India, there are about a dozen mobile payment players in the field including Paytm, Mobikwik, Oxigen, Citrus Pay, Freecharge, M-Pesa, ItzCash, Itzcash, Airtel Money, mRupee and MoneyOnMobile which has serviced over 170 million cumulative unique mobile phone subscribers through over 306,000 retail distribution points across India. These mobile payment platforms provide a financial tool which allows retailers to easily and quickly assist consumers who pay physical cash to complete bill payment and money transfer services. Retailers have a variety of methods from which to generate transactions: using SMS text messaging, mobile application or the web. Bill payments include prepaid/postpaid cell phone time, prepaid television time, utility bills, travel tickets, assisted eCommerce and transit cards. As the industry is being transformed with “fintech” companies disrupting banking, there is uncertainty about the future of the industry and how it will look in the decade. Does mobile money pose a threat to the banking industry? Accenture Consulting “estimates that bringing unbanked adults

and businesses into the banking sector could generate about $380 billion in new revenue for banks.” There’s no doubt that mobile money presents an exciting symbiotic platform for the global banking community. The reality is that the unbanked community is the most natural place for banks to look for their next 100 million customers. As The Wall Street Journal reported, “the ubiquity of cellphones could allow a rapid expansion of financial services throughout the developing world with major implications for growth and credit accessibility, a McKinsey & Co. report concludes.” McKinsey Global Institute’s report found that about 1.6 billion people could gain access to financial services by 2025 without major new expenditures on physical infrastructure. Mobile money provides a democratic gateway to banking which doesn’t care where you live or the amount of money you have. It is a great marketing tool for the banks to uncover people who are using money services but are unknown to the banks. Banks can leverage their regulatory experience, infrastructure and consumer trust to capture the unbanked mobile money market. Mobile money platforms feed cash into banks and act as a virtual branch network without the costs of an actual brick and mortar facility. Deloitte predicts that “cost pressures and the drive toward simplification will create a new organizational paradigm. Reliance on third parties for noncore infrastructure and talent will be a common phenomenon. Banks will be become increasingly connected via a complex network or web of vendors and third parties.” In September 2016, President Barack Obama addressed the United Nations General Assembly and said that, “technology now allows any person with a smartphone to see how the most privileged among us live and the contrast between their own lives and others. Expectations rise, then, faster than governments can deliver.” Governments love mobile money because it allows them to track and tax the commerce



and it is an ideal anti-laundering tool because all transactions can be traced. Governments and regulatory authorities need to work together to ensure that mobile money regulations are safe and secure. Governments around the world are looking at mobile money as a way to distribute subsidies and collect taxes without corruption and loss of funds to graft and pilferage. Women, in particular, are excluded from the formal banking world. In developing countries, only 37% of women have bank accounts, compared to 46% of men reports the Gate Foundation. The global revolution in mobile communications and digital payment systems has created opportunities for women in poor households to gain a livelihood. For example, the Kalighat Society for Development Facilitation in India has trained 75,000 women on the use of Money on Mobile services so that they can take this back to their villages and resell mobile top up and other services to make money. Indian woman at Kalighat Society being trained on digital payment system by MoneyOnMobile. The global smartphone market grew 0.7% year over year in 2016Q2 with 344.8 million shipments according to data from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker. While smartphone sales have stagnated in many mature markets, India’s smartphone sales grew 23% annually according to Counterpoint. With 25% of India’s 1.2 billion residents owning a smartphone, most


analysts predict that India will continue to register strong demand for smartphones and is primed to the next China in terms of consumer demand. Today mobile networks reach more than 90% of the population in developing nations. Ensuring that this population has access to mobile banking requires an organized, multi-party investment in the overall digital payment infrastructure. To achieve scale, mobile money requires the coordinated participation of governments, the banking community, mobile network operators, the private sector and fintech upstarts all working together. Mobile money allows people from all walks of life to transact business wherever they are simply with the touch of a mobile phone screen. With access to this mobile cash digitization network, unbanked consumers can deposit cash and use the cell phone for transactions. By broadening the reach of lowcost digital payment systems, particularly in rural and impoverished regions, we can offer poor and low-income people the opportunity to capture income-generating opportunities and create efficiencies of scale with equal access to financial services providers, government services and businesses. The Gates Foundation believes that “the combined effect of these interventions will accelerate the rate at which people can transition out of poverty and build their financial security.” Digital payment systems can address the needs of individual lowincome households by offering a one-stop

solution to enable the collection of customer payments, buy goods and pay for housing, healthcare, utility bills as well as a way to send money to family, friends and business associates. The mobile revolution can be the catalyst to help people in the world’s most impoverished regions to improve their lives and shape sustainable futures by linking them with digitally-based financial tools and services

Harold Montgomery Chairman and CEO MoneyOnMobile References: articles/banking-industry-outlook.html id=37


CFOs are the Roosters


ccording to the Chinese Zodiac, 2017 is the Year of The Rooster - a male hen renowned for crowing early in the morning, but scientifically proven to crow at just about anything. Rooster people apparently are practical, focussed and resourceful, as well as accurate and precise in their observations. CFOs generally fit the description, and are becoming even more strategic and central to business growth and development, according to EY. Crowing or not, CFOs are among the first in the C-Suite to recognise the importance of the next phase in industrial efficiency – a move to bring together the technological benefits of the Industrial Internet of Things (IIoT), asset management and field service. In simple terms, it’s applying automation, front line visibility and predictive analytics to IoT in order to monitor, pre-empt and predict how your most important infrastructure or assets are behaving. The result is a proficient, lean and intelligent business, capable of maximising revenue through uptime and availability. Whilst reactive and preventive maintenance continue to be a key part of any company with a comprehensive maintenance program, more proactive condition-based and predictive strategies are required for your most critical assets. And this is the real sweet spot of IIoT as it lets you target asset uptime and reliability of any machines or equipment that make you money. For CFOs, the ability to gain an asset-centric view means they can maximise the reliability and availability of their industrial assets, while minimising operational cost and risk. It also transforms isolated, ‘dumb data’ by giving it context – making it valuable and actionable for informed decisions.

At the centre of course is the cloud. This ability to build products and services to solve specific problems within a business knowing that they won’t have to work in isolation is empowering. The data flowing across an

point in time where its products and parts are, where problems are being solved, where people are being used best, where bottlenecks are eliminated across the entire organisation will not only save money, it will become an industry leader. Industry has always preached the importance of efficiency and theorised its way through problems. But only now can it truly realise the vision. With field service engineers, armed with mobile devices feeding back data on key issues from the front line, the circle is completed. Data flowing across all aspects of a business can now propel industry forward. It’s a brave new world where costs from asset management through to manufacturing and even people can be measured and forecast. With an intelligent finger on the connected pulse of business, it’s certainly giving CFOs something to crow about

organisation’s sometimes disparate units can now have huge value if that data can be analysed and organisations act upon it. An example of this is in GE’s Industrial Internet report which reveals how data sharing with people and machines can positively impact a business. Turning physical assets into a competitive advantage is at the heart of this. If companies can create an information and data loop that accurately links manufacturing, logistics, sales, marketing and field support then they are on their way to taking crucial costs out of inventory. An intelligent data layer that provides R&D with common problems to solve, that improves frontline efficiency through accurate product and part delivery, that enables a business to know at any

Rick Gustafson CFO of ServiceMax, a GE Digital Company




Tackling the compliance beast in a new era of regulation Iain Chidgey, GM of international operations at Delphix pinpoints the hurdles hampering compliance in an era of regulatory revolution and proposes actions to effect change


he financial services industry is experiencing the largest regulatory transformation since its inception. Only last week, President Trump indicated that huge changes to Dodd Frank are to come. Yet, in the face of this revolution, firms are scrambling to keep pace with the growing and changing body of regulations and navigate the multitude of updates to their reporting applications. They’re also failing to compete with the compliance wrecking ball of time. Brought about by the unplanned nature of ad-hoc reporting, including Anti-Money Laundering (AML) audits, for example - this leaves only a small window of opportunity for staff to source, secure and deliver the data that is required. Blockages in the road This complexity has led to two major roadblocks in the road to compliance – data delivery and data security. Our recent research confirms that. Over half (59 per cent) of respondents cited ‘data delivery’ as a number one challenge to their day to day operations, with over a third (38 per cent) claiming that high levels of rework due to poor data quality hinders their capacity to deliver on reporting objectives.


When addressing this challenge, it is critical to understand the make-up of today’s banks and their processes for sourcing data. For example, a modern retail or investment bank is typically a consolidation of multiple companies and thousands of applications. So, when tasked with sourcing data, staff are typically dealing with legacy platforms and data stored in disparate and siloed IT systems, which rely on cumbersome manual processes that hinder agility. This in turn drains valuable resources which should be dedicated to revenue generating activity. What’s more, the data delivery roadblock is a catalyst for reporting shortcuts that lead to increased data security risk. More specifically, one in five (20 per cent) claim they are forced to use sensitive data that is not fully anonymised as they take increasing risks in order to meet reporting deadlines. This is exacerbated by the forthcoming EU General Data Protection Regulation (GDPR), which will significantly increase punishments for businesses that fail to implement appropriate protection measures. This is forcing firms to pseudonymise all sensitive data – adding another level of complexity and delay to an already slow and manual process. Alarm bells ringing Already behind in their ability to demonstrate compliance, banks are looking for ways to improve their agility. Not simply to keep up with evolving regulation, but to compete in a fast-paced market that is characterised by its ability to innovate. To do so, teams need fresh and up-to-date data to work with in reporting application test systems. However, in many cases, it still

involves waiting hours, days or even weeks for manual data refreshes to be conducted. This increases the inconsistencies between production and test data, resulting in more errors and more rework. All of this piles on the risk of compliance failure. Additional concerns around the consequences of noncompliance also plague the industry, with


large financial penalties, reputational damage and the possibility of losing banking licenses, all significant fears in the failure to meet requirements. Ticking off the check-list As copying, moving and securing data

for regulatory purposes becomes more difficult than ever, businesses need to consider new ways in which to streamline their operations and reduce the risk of compliance failure. Ultimately, banks must be able to demonstrate to the regulators that the relevant processes and technologies are in place to effectively manage risk. This process needs to start with ensuring that secure data can be delivered on demand, a challenge that can be overcome by inserting a technology called data virtualisation. This virtual data layer removes the roadblocks in traditional data provisioning by automating manual processes and speeding up data delivery. It does this by holding a single continuously updated physical copy of data, and offering up virtual copies via self-service or automation. Data virtualisation shares data in the same way that server virtualisation shares CPU. Using this approach, banks can deliver multiple complete copies of data in minutes. This allows teams to significantly reduce the time taken to set up testing environments for each new regulation or audit change. As multiple test environments can be created at once, valuable time is saved as compliance managers no longer have to wait to access one shared environment. Additional costs can be achieved too, as only 10 per cent of the storage typically needed, is now required. Compliance managers no longer have to forego security with this approach, either. For a smooth compliance journey, teams can combine data virtualisation with data masking and automate not only the delivery of the data but also the security. Data masking is a traditional tool used to replace sensitive data with realistic, irreversible dummy data.

By combining the two processes, subsequent data masking projects can be eliminated and compliance teams can access full, up-to-date and protected data sets within minutes, not months. Turning hope into reality Avoiding banks’ growing list of compliance fears means data agility and security must be a priority for the year ahead. No longer must a new year’s resolution that falls by the wayside, banks take heed of the growing body of regulation that will govern the financial services industry and take steps to drive change. By embracing the technologies and processes that will ensure the consistent availability and quality of their data, banks can meet demand without hampering efficiency or security within the organisation. This in turn will help them to champion a data-first approach to cement their success on the road to compliance and support their growing ambitions for innovation in a competitive market place

Iain Chidgey GM of international Operations , Delphix


AI in Business: It starts with the basics


e encounter stories and predictions about how artificial intelligence (AI) will fundamentally change a variety of industries on an almost day-to-day basis. In fact, it has become such an important topic that late last year the Council for Society and Technology wrote a letter to the Prime Minister advising how the UK could take advantage of opportunities created by the increasing convergence of robotics, automation and artificial intelligence. As more and more industries, including healthcare and financial services, adopt AI technology, we’ll continue to see increased benefits on our society as a whole. It starts with document management Conversations about AI tend to have a scifi vibe: robot personal assistants, self-driving cars, you name it. But the real, day-to-day business value of AI is much less futuristic,

starting with the hundreds and thousands of contracts that keep business deals up and running every day. Unfortunately, many companies have a problem finding and understanding what exactly is in their contractual agreements, which is a huge problem that can cost thousands or even millions of pounds over time. For example, forgotten auto-renewal terms can hurt budgets and company departments often work in silos and unknowingly have agreed to terms that are in conflict with each other. While alternative resources were created to find and house contractual documents (think Contract LiveCycle Management, document repositories, etc.), those options still require manual reviews from in-house legal operations teams or having them outsourced to law firms. The problem with this is they are time-consuming and expensive, and not accurate. Also, manual reviews are rarely up-to-date, meaning when

data or values are extracted in the past, they don’t reflect changes in contracts, and when different data is needed, say for a new event or regulation, the reviews must be done over again. Fortunately, in recent years new technology has been introduced to open up a whole new opportunity for contract discovery and management. Using Machine Learning and Natural Language Processing to “Read” Contracts Combining technology like machine learning and natural language processing (NLP) can automate the extraction and review process; taking the process from tedious and time consuming to relatively painless. Think about it: business users shouldn’t have to contact the legal team every time they have a question about a contract and then wait around for days to get the answer they need. This type of technology allows them to locate and view any contract, at any time.

Not only is this more convenient, but it can also be more accurate. Machine learning technology is capable of seeing patterns in data that even trained professionals don’t always catch. Automating those tasks allows professionals to do their work faster and focus on higher-value activities that their computers can’t do. Machine learning and NLP has opened the door for an ongoing process of automation, allowing business leaders to make more informed decisions based on insights derived from contract data.

aren’t the only ones who can benefit from this type of technology. The business intelligence that comes out of an automated contract data extraction and review process is being used to power decision-making for other levels of the business (c-suite, sales, procurement, facilities, etc.) across a variety of sectors. Contract data includes all of the terms, obligations, incentives and liabilities organisations have with external parties, on the buy and sell side. This data fuels better decisions overall, and can lead to a higher performing organisation.

Legal tech isn’t just for the lawyers When you think about contracts, you might think of the legal department within an organisation or lawyers in general, who are becoming more open to automating data review and management tasks, allowing them to focus their time on providing the high value strategic counsel they’ve been trained to give. But really, the legal teams

Not only is AI a cost saving option for many companies, but the true value lies in the intelligence it provides to the business. Companies now have the ability to make better business decisions, and manage contract data and data in other systems, in a way that they couldn’t do before

Kevin Gidney Co-founder and CTO, Seal Software

References: attachment_data/file/592423/Robotics_automation_and_ artificial_intelligence_-_cst_letter.pdf


Overcoming the data avalanche

to make better



usiness decision making has always been fuelled by financial data, but as data continues to swell exponentially making the right decisions has become dependent on the finance team’s ability to dissect and analyse this tsunami of information. Traditional systems used


by finance teams can often hinder their ability to make informed decisions and recommendations, creating bottlenecks in processes. The same systems may also be restricting finance executives in performing their essential role of providing key information to stakeholders and possibly

hindering the company’s growth. Effective financial data analysis is the lynchpin to informed decision making and as such finance must become more responsive, agile and able in order to act more decisively than competitors.


For UAE finance directors (FDs), the January 01, 2018 introduction of the 5% VAT will add further complexity to their challenge. Not only will there be a steep learning curve for organisations in terms of understanding the business implications of the new tax but as importantly, existing financial systems will need to be evaluated and tested for their capability to account for the new VAT regulations. Unfortunately, many finance professionals are struggling to deliver insight at the rate demanded of them. In a survey commissioned by Epicor Software with Redshift Research Ltd of 1,500 business professionals in 11 countries , 28 per cent of CFO’s interviewed felt that decision making is hampered by an inability to make effective use of information.

fast, on-demand access to the type of information that is key in today’s competitive business landscape. Automation of value-add tasks and producing more accurate reports that can be delivered to stakeholders faster, will inevitably free up resources to develop and support the business with strategy, innovation and growth.

They may be victims of trying to gather data from multiple sources and systems and attempting to make sense of it all with dated or manual reporting systems. The result? No time left to even consider, let alone to integrate a more efficient system that allows proactive and strategic decision making.

Modern tools like ERP should and can deliver the ability to access the information needed whenever and wherever required, 24/7. Whether through web browser, smartphone or tablet, there is no need to wait for IT or finance to create a report, the analysed data should be available on demand, on a self-service basis. Of course, this calls data security into question, but ERP vendors should provide security features such as personalised access rights to control what people see and who sees it.

Microsoft Excel® is still extensively used to download data and manipulate it into something meaningful. In fact, 60 per cent of CFOs interviewed stated that they are still using spreadsheets. Unfortunately, Excel can be difficult to update automatically, so the data may not always be accurate. It also offers little capability for complex analysis and when trying to bring in information from multiple sources or include multidimensional elements, it often falls flat. It comes as no surprise that 44 per cent of CFOs interviewed see mistakes occur as a result of missing or inaccurate information. While Excel is easy to use and intuitive, it does not always have the ability to deliver

Enterprise resource planning (ERP) solutions provide an end-to-end, central source of information - a single point of record where sales data can be accessed and analysed, financial data, operational data and so on. It can optimise the use of Excel and expand on it by adding new functions and formulas that enables users to pull data from a live source.

ERP was once viewed as a tool for the Fortune 500, but today it has been developed as a solution for businesses of all shapes and sizes from blue-chip to start-up. Finding the right ERP solution for a business can give companies the edge, whatever their size or geographical footprint. However, it’s important to take the following into consideration when making a decision: ensure there is a full understanding of the objectives and desired results of a solution before purchase. Confirm whether the ERP

provider understands the industry and whether it has the right tools to support finance in overcoming its challenges? If the business runs internationally or has global ambitions, does the ERP provider have multinational capabilities and the ability to scale and grow alongside these ambitions? What customer support services does the ERP provider offer – can it meet the 24/7 demands of the business? Can the ERP provider support mobile working across multiple devices? Finance executives have a great opportunity to inform the business and drive decision-making, and being able to deliver information that the business needs can prove to be a huge win both personally and professionally. Ensuring finance professionals have the right information at their fingertips at any time will aid in meeting their business growth objectives, by making better business decisions than ever before, boosting their reputation and adding credibility to the organisation

Hesham El Komy, Senior Director, Epicor Software

References: report_Decision_Making_in_Finance.pdf



“Putting the human touch back into banking”


he last decade has seen the financial services industry become transformed by digital innovation, as banks have increasingly embraced the convenience and efficiencies technology can offer both their operations, and customers’ lives. This has had a profound impact on the way customers interact with their banks. A report by the British Bankers Association (BBA) revealed customer bank branch interactions declined from 476 million in 2011 to 278 million in 2016. This is having a direct impact on the presence of high street banks, with Which? revealing that more than 1,000 branches have been shut in the last two years. Customers are choosing to take banking into their own hands instead – quite literally – as the BBA study revealed the use of banking apps increased from 7 million log-ins a day in

2014, to 11 million in 2015. But what has the impact been on the customer experience? Is digitisation always best?

modern consumer, who expects 24/7 service and the ability to speak with their bank via a channel of their choosing.

Customer experience is the new benchmark for success

With so much choice available, customer experience is fast becoming the point of difference; indeed, Gartner reveals that 89 per cent of organisations now expect to compete solely on the experience they can offer. This means banks need to consider the service they offer at every touchpoint, whether on the phone, an in-branch visit or via an app. There is a real risk to the bottom line if this is neglected; an Accenture study highlighted that 52 per cent of consumers have stopped using businesses due to poor digital customer service.

It has of course been right for banks to invest in technology to refresh and transform the service they offer; in the last year alone we’ve seen Nationwide investing in behavioural biometrics which learn and adapt to the user’s behaviour – as well as offering advanced security measures – and Spanish bank Caixabank providing customer services via WhatsApp. This shows how innovation is also being fuelled by the need for increasingly sophisticated security processes and to keep pace with the instantaneous mind-set of the

Keep the human touch in banking I applaud digital transformation and urge all industries to embrace it. But a balance needs to be struck between genuine innovation which enhances the customer experience, and still offering a human service – particularly in banking, where money matters are complex and personal. A Vanson Bourne report found that 91 per cent of respondents agree that there should always be a way to contact a real person. There is only so much help or reassurance a mobile app can offer; people still want to be able to discuss issues with a human being who can offer advice. Human to human interaction will never be completely replaced by machines. Yes, machines will help automate repetitive or



low value tasks. But overall they will increase human productivity and increase the value of personal interaction. Where technology should play a part is in empowering the employee with all the customer information they need (when did they last contact us? What other products do they hold with us?) – to enable a holistic, seamless experience which proves to the customer they are valued and understood. Invest in the right tech for the customer experience Behind every innovative leap forward should be a solid back-end system that contains customer data in a consolidated and easily accessible way. I often find what hinders customer-facing employees is either a lack of access to this data, or access to so many different databases that it becomes a confusing and painful process. Banks need to break out of the silo mentality and think of the customer

experience as one that is consistent across all departments. This means all customerfacing teams (sales, marketing, customer service and so on) need to have the right tools to identify their customers amidst a sea of data. Having complete control of customer data and confidence in how to decipher it will all help to deliver a seamless customer experience. The need for delivering a great customer experience is more important now than it’s ever been – but this doesn’t start and end with technology. Of course, branches are expensive to maintain and banks need to operate efficiently – but they must continue to invest in ensuring their employees are equipped to provide the personal, human service that may well be the difference between keeping or losing a customer

Tanmaya Varma Global Head of Industry Solutions, SugarCRM References: pdf/boldchat-research-effective-mobile-engagementreport-2016.pdf



The UK property market: With competition high, speed is everything


he UK’s property market has long been heralded as one of the most desirable in the world. And the jewel in the crown of the nation’s property sector is undoubtedly London.

Paresh Raja CEO Market Financial Solutions


Nationwide’s House Price Index shows that the average house price in London currently stands at £473,000 – more than twice the national average of £217,000. These house prices are driven upwards by the sheer demand for property in the capital, both from domestic and foreign buyers. Last year Savills named London as the most competitive city in the world when it comes to purchasing property, while Knight Frank’s latest Global Cities report revealed that London ranks second in the world for foreign property investment, with £18.8 billion worth of

property bought by overseas buyers in the year to June 2016. However, with a huge number of investors looking to access the UK property market – particularly in London – a problem has emerged. In the current state of the industry, property buyers are at constant risk of being gazumped at the last minute by rival buyers. Market Financial Solutions (MFS) recently conducted research into this very issue; in a survey of 2,000 UK adults, MFS found that 5% of all people in the country (2.57 million Britons) have been pipped to the post when trying to purchase a property, with the figure rising to 15% among Londoners, showing the ruthless, competitive nature of the city’s real estate market.


There are several significant concerns emanating from the issue of gazumping. Firstly, domestic buyers are losing out on their dream homes , with the equivalent of 1.54 million Brits – 400,000 of whom are based in the capital – said they have lost out on their ideal property after a deal fell through at the last minute. Furthermore, there are also serious financial repercussions associated with being pipped to the post. It is estimated that when a deal falls through at the last minute, property buyers lose on average £2,899 in intermediary fees such as the money paid to solicitors and surveyors. With 3% of all people in the UK saying they have been left out of pocket after a property purchase had collapsed, this means that across the country over £4.4 billion has been lost as a result of gazumping. Worryingly, the highly competitive nature of the real estate market is leading to a degree of reticence among some buyers; over 1 million UK adults said that deals falling through at the last minute have dissuaded

them from trying to buy a another property. Londoners and millennials were twice as likely as the national average to hold this opinion. The MFS research unveiled that speed of finance was a major factor in explaining why so many property buyers in the UK were being gazumped. Over 1.5 million Britons (3% of people) stated they had seen a property deal fall through because they could not access the funds they needed in time – this was a particular problem for those living in London, where 9% of people said they had been undone by this issue. With mortgage lenders applying stricter regulations, thereby slowing down the approval process, delays in accessing finance could become a more common issue. Indeed, this is one of the key reasons why bridging loans have become such an integral alternative in the real estate investment space – the Council of Mortgage Lenders estimates that the total amount of loans issued by bridging providers expanded from less than £1 billion in 2007 to over £220 billion in 2015.

It is clear that the UK’s property market is extremely attractive to investors both at home and abroad. Yet action must be taken to ensure buyers and investors are not losing out as a result of gazumping. Improving awareness of fast and efficient bridging loans as an alternative to traditional mortgages is one such solution, for the Government also needs to take responsibility. In the 2016 Spring Budget, former Chancellor George Osborne pledged that the Government would address the issue of gazumping, stating: “We will publish a call for evidence on how to make the process better value for money and more consumer friendly.” With the 2017 Spring Budget announcement approaching on 8 March, now is an ideal time for the new Chancellor Philip Hammond to implement reforms that ensure more Britons are able to take advantage of the wealth of real estate opportunities on offer




The Urgency of Tax Reform


ith the topic of tax reform in the headlines, the unending debate about the fairest and most beneficial way to collect revenues from citizens and corporations is more relevant than ever. The US and UK both appear to be heading toward significant reductions in corporate tax rates, and will likely require new revenue streams to fill the gap. At the same time, the promises of infrastructure upgrades from President Trump leave even more questions about funding. Switzerland, Argentina, and other countries around the world are proposing drastic tax reform as well, and are struggling to reconcile the various conflicting interests that will be affected by the changes. Efforts to reduce personal and corporate income taxation are certainly moves in the right direction, and would reduce many distortions in the economy. They would also provide much needed income boosts to struggling workers. In fact, there are strong arguments for negative income taxes or income supplementation. However, even with plenty of room to improve government efficiency, spending cuts can only go so far to fund such endeavours. The question remains whether corporate and personal income taxes should be replaced entirely, and whether their replacements would be adequate. The labour force is shrinking as a proportion of the total population, yet most national governments rely on income taxes for a major portion of their revenues. Relying on a shrinking labour force to support an aging, financially distressed population is unsustainable. Rising healthcare costs, 56

underfunded pensions, other entitlements, workers leaving the workforce, and those left unemployed or underemployed as a result of economic disruptions, are placing a growing burden on the remainder of the working population. Even if improving productivity makes it possible to extract more of workers’ output to fund these obligations, it’s both unfair and discouraging to skim off these gains to do so. Income taxation further distorts the labour market and its collective decisions, adding more impediments to supporting the new demographic structure. The recent bout of corporate inversions has highlighted the ineffectiveness of the current corporate income tax regime (except in the case of dividends, which are also taxed in most countries). With the relatively free movement of capital across borders and the current international business environment, larger firms have been able avoid high taxes by relocating abroad and through a variety of loopholes. Smaller businesses have not been so lucky, and often face a higher relative tax burden than their larger competitors. This unfairness is not only detrimental to entrepreneurs, but it also demonstrates the ineffectiveness of corporate taxes as a means to raise revenue for the government. If implemented well, corporate taxation can be a useful tool to create certain incentives for business, by encouraging R&D spending for example. However, typically it is only a tool for special interests to gain unfair advantages at the expense of smaller enterprises who cannot afford to take advantage of loopholes. The best way to fund infrastructure projects is through land value taxation, which is a tax on the unimproved land

value, not the property built on it. As Henry George observed, the value of land increases disproportionately in relation to the infrastructure investments surrounding it. By taxing land value, as opposed to incomes or total property value, the infrastructure investments more than pay for themselves. Tax revenues would rise along with land values as infrastructure is built. Especially if combined with the trade tariff proposals currently being floated in the US, the issues of which can be reserved for another discussion, a national land value tax would allow for an even more dramatic reduction in corporate and personal income tax rates. It would also spur economic growth by creating incentives to utilize underused land, which is a real concern in areas still affected by abandoned and repossessed lots from the 2008 crisis and rust-belt declines. A land value tax is the only nondistortionary tax that can raise significant revenue, and that also has a negative deadweight loss. It does not impact production, and it encourages more effective use of space by adding fire under the feet of land owners. It also prevents land speculation by penalizing owners of land who do not undertake economic activity, while rewarding those who use land productively. It is a progressive tax, as land is a major component of personal wealth, and it is a tax borne entirely by the landowners rather than renters. With infrastructure costs covered by land value taxes, the remainder of government spending can only be fairly covered through consumption and Pigovian taxes, such as a VAT, gas taxes, and pollution taxes. As


every individual is a consumer regardless of their status within the labour force, it is the only sustainable way to fund government administration and social spending as the labour force continues to decline. Even if the demographic balance cannot be shifted, a tax regime of this nature would ensure that government revenues do not face a serious crisis, and that workers are not shouldering an unfair and unsustainable burden. The elimination or reduction of corporate and personal income taxes is feasible and necessary for a sustainable economic system. This can be achieved without sacrificing desired spending, by shifting a nation’s tax burden through more fair and equitable means. The use of consumption and land value taxes to do so is the only reasonable way achieve a sustainable budget in the future, when facing worsening economic and demographic challenges. With the current political climate on immigration, the demographic change will only hasten. The need for tax reform has never been so urgent

Philip Allan, Economic Political Analyst



A fleet purchasing model for finance directors


he vehicle fleet can be a major source of cost for any business, especially as the supply chain is often full of ‘hidden’ margins. Richard Hipkiss, Managing Director of Fleet Operations, offers finance directors advice on how to develop a more robust fleet purchasing model to withstand economic uncertainty and reduce total cost of ownership (TCO). Ongoing economic uncertainty linked to Brexit has raised a number of question marks over the future of fleet procurement. Potential fluctuations in currency markets,


inflation rates and stock prices could combine to hit businesses hard in the pocket when it comes to purchasing company vehicles. Consequently, finance directors are often faced with a thankless task in attempting to control costs while maintaining efficient business operations. But although this challenge may appear significant, it is far from insurmountable. First, it is important to note that there can be substantial variances in lease cost

depending on supplier, a fact that too often goes unnoticed. For example, the price differential on certain models of vehicle can be anything up to £250 a month, which adds up to a huge gap over the course of a typical four-year lease. Headline prices aren’t the only consideration though. It is also important to scrutinise all vehicle-related costs incurred throughout the length of a contract, as well as how service delivery is measured and monitored.


Effective procurement processes should take all of this into account, while being robust enough to withstand possible price increases and threats to the business bottom line. TCO under the magnifying glass

ten companies currently use this calculation as part of their decision-making or analysis. On top of that, it is perhaps surprising to learn that 46 per cent of the companies surveyed admitted they were not even aware of the correct formula for calculating TCO.

vehicle from a number of different suppliers, it is possible to achieve average savings of more than £1,000 per vehicle over a fouryear lease. A false convenience?

This shortage of cost transparency has been accompanied by a rise in actual cost. More than a quarter of companies (26 per cent) said they had seen lease costs rise in the 12 months leading up to the study.

Businesses tend to fall back on the sole supply model due to the perception that it can help to minimise resource and administrative pressures. Busy finance departments may envisage a multi-supplier agreement presenting too great a burden on already stretched resources.

So, rather than focusing solely on leasing and purchasing costs it also includes everything from depreciation, fuel, insurance and maintenance to interest, tax and employer’s NI.

In the face of rising costs, it is essential that finance directors seek to achieve more visibility through scrutiny of the various factors contributing to total cost. Breaking away from sole-supplier arrangements can be the first step in helping to achieve this.

Yet, in reality, it is possible to benefit from the same minimal resource demands with multi-bid leasing if this process is managed by an appropriate outsourced partner.

But despite the value of TCO to the procurement process, research conducted by Fleet Operations has found only one in

By moving from sole supply to a multisupplier procurement process, where the business searches for the best price on every

One of the most crucial top-line metrics for finance directors is total cost of ownership (TCO). This provides a complete picture of each vehicle’s cost impact by taking into account the entire range of contributory factors over the lifetime of ownership.

The drawback of sole supply is that it ties the efficiency of a company’s fleet procurement process to the success of one supplier. In a situation where that supplier is



Richard Hipkiss, Managing Director of Fleet Operations particularly affected by certain fluctuations in the economy, the customer is left more exposed to potential cost rises and less equipped to mitigate the negative impact. Unpacking the sole-supply agreement also provides the benefit of being able to unpack all the contributory costs that add up to the top-line price. Typically, vehicle leasing providers provide a number of services from third-party suppliers, from accident and risk management to maintenance and fuel management, wrapped up within their fees. This situation means the customer is unable to negotiate their own specific terms for each of these services. Looking at service, maintenance and repair, for example, it often seems appropriate to opt for a fully-maintained contract delivered by the leasing provider as a way to accurately forecast and control costs while removing the administrative burden. But considering the more comprehensive warranty packages offered by manufacturers and greater vehicle reliability, it may be more


effective to simply cover maintenance on a pay as you go basis. One of the challenges with a fixed maintenance budget is that the client does not get the opportunity to specify the quality of materials used. When it comes to parts such as tyres, this can actually cost a fleet money in the long term as cheaper tyres may have an negative effect on the efficiency and safety of vehicles. Striving for full transparency By achieving greater visibility in the provision of each of these supplementary services, it is possible to set benchmarks for every area of spend and monitor these over time, giving finance directors the power to negotiate the cost of each from an informed position. Unwrapping these elements also allows businesses to choose suppliers that offer the most appropriate reporting and specialist knowledge to help them address specific issues within their fleet.

Outsourced fleet management providers can help companies to manage all of these relationships. If this option is selected, it is important for finance directors to ensure service levels and KPIs are built around service delivery to drivers and stakeholders, cost control procedures, delivery of data and reporting, accuracy of data, key compliance areas, and timeframes for key processes such as vehicle ordering and vehicle off-road management. Ultimately, transparency is key. By taking greater control of the constituent costs that make up TCO, businesses can put themselves in a better position to withstand any potential fluctuations in the market. Appropriate reporting will enable them to identify when suppliers are not delivering on agreed KPIs and make changes accordingly. The result is a robust procurement process that help to unlock greater operational efficiencies and cost savings from the fleet department



Challenges to overcome in Governance, Risk and Compliance


here is a saying that trouble comes in threes. When it comes to managing the triumvirate of Governance, Risk and Compliance (GRC), many financial institutions would agree. The Financial Conduct Authority (FCA) imposed fines worth £22.2million on banks and other city firms in 2016 for non-compliance. Although this total is a shadow of the blockbuster billions of penalties dished out in 2014, there is no sign that the regulator’s approach is softening. And that’s before adding up the eye-watering costs pertaining to litigation or time spent addressing the actual problem or salvaging a financial firm’s reputation. Traditional, longestablished financial institutions are paying a heavy price whereas new financial disruptors seem to be better placed. That’s because, when adopting GRC strategies, financial heavyweights in particular are facing five main challenges: 1. Organisational: The complex business processes supporting financial operations are often linked to a labyrinth of cumbersome IT systems that are manual and paper-driven, which are both expensive and time-intensive to maintain. Several traditional banks are

still operating their core banking systems on mainframes and associated CRM, HR, or multi-software vendor solutions. As IT organisations are slow to implement modernisation plans, business sponsors have leveraged cloud-based services to better target their customers and gain a competitive edge. But these shadow IT applications are getting out of control. For valid historic reasons, banks also frequently have a multitude of individual product lines and trading systems that feed into specific information silos. The flurry of M&As hasn’t helped either, creating even more trading system fiefdoms and unconnected data silos. New regulatory pressures now dictate that these have to be cobbled together somehow to provide an integrated, consolidated view for reporting purposes. 2. Psychological: There needs to be a change of mindset around GRC strategies. After all, there are two sides to the compliance coin. Rather than viewing regulation simply as an operations constraint, the financial sector has a golden opportunity to profit from getting its data in better shape. By building a single, consistent and persistent

360-degree view of their customers, employees or citizens, financial institutions can gain valuable and potentially revenuegenerating insights into their business processes and customers’ preferences. 3. Financial: The cost implication is the third critical element. Compliance alone represents a huge and rising cost to an organization. Compliance professionals from financial services firms across the world took part in the recent Thomson Reuters annual survey, which highlighted an increase in compliance spending by 60% in North America and 75% in Europe over the course of 2016. These numbers look even bigger when the cost of risk management solutions and data governance platforms is added. 4. Technical: Unlike the financial establishment, new fintech players are not burdened with technology conceived in a different era. The likes of Masthaven and N26. com are the new kids on the financial block. These new modern banks have built flexible technical frameworks, using technology which can nurture their business, as well as keep the regulators happy by coping with an



evolving regulatory landscape across multiple jurisdictions. Regulators are also investing in new technology and talent in order to understand this new tech deal ecosystem and to adapt to regulations and their reporting requirements. It’s perfectly feasible that in the near future being compliant will involve integrating a Regulator API directly into the IT organization of the bank. 5. Political: Political and public pressure on regulators are both crucial considerations. Inevitably regulations will be withdrawn from the market and new ones introduced as the political pendulum swings. President Trump’s desire to dismantle the Dodd-Frank Act is a case in point. Likewise, the change of CEO at the FCA last year has implications for the regulator’s approach – to say nothing of the potential impact of the UK’s planned divorce from the European Union.


To succeed with their GRC projects, traditional banks should not see governance, risk, and compliance as three disparate disciplines. If they do, they will continue to create more organizational and data silos, which in turn are more difficult to change over time. As several financial firms have already discovered, there is an easy way to bring all these silos of data together. Using an operational data hub or Trade Store approach - built on a flexible, enterprise-grade NoSQL database with integrated Google-like search - can pay dividends for data challenges where the data and requests from regulators change over time.

to find that their data becomes stuck. The changing nature, variety, and complexity of trading data for example does not lend itself to the rigidity of a schema-based relational model. With each separate trading system comes a new schema, requiring complex interfaces to reconcile the disparate fields. If anything changes, which of course it always does, at a minimum everything needs to be tested or, more frequently, re-designed. An additional constraint with traditional relational databases is the need to know what queries you will run in the future when you are still in the decision stage. Our experience shows that relational databases are simply not agile enough to integrate mission-critical data across many silos.

Some banks have tried and failed to use their legacy relational databases to build an operational data hub or Trade Store, only

ABN AMRO is using MarkLogic to bring vast amounts of unstructured and structured trade data into one central, easily


manageable operational trade data store. With a consistent, transparent record of every order and trade event, ABN AMRO is able to comply with internal and external reporting requirements in a fast and flexible manner now as well as in the future. Another global investment bank built a Trade Store on the MarkLogic database in just six months even though it connected over 30 trading systems. This Trade Store brings vast amounts of unstructured and structured data into a central repository accessed by many lines of business applications. This approach allows the bank to support various reporting requirements, including regulatory reporting, and helps to protect against regulatory fines.

flipside to the GRC coin. GRC is an enabler to driving business value. Being able to aggregate data from disparate sources is an essential component in today’s regulatory environment. If data can’t be effectively integrated so that it can be easily sourced, searched and analysed, it’s simply not useful to the business. By untangling the knots of data currently segregated in numerous silos throughout their organisations, and applying effective metadata management capabilities to their data lakes, financial institutions can gain valuable and potentially revenue-generating business insights, as well as ensuring relief from the international complexity of ever-changing regulatory compliance requirements

David Northmore VP of EMEA, MarkLogic


There is also a saying that good things come in threes – and there is indeed a


Two 2016 trends that will impact on financial services in 2017


was a year of significant change. It was also a year where predictions, from the winner of the US election to the outcome of the UK European referendum, were proved incorrect. However, this does not mean that we cannot look at financial trends from 2016 and expected changes and developments in 2017 and reach conclusions as to what we can expect.

Data Breaches Whilst 2016 didn’t see a breach of the same scale as those that attacked the Office of Personnel Management, Target or Sony during 2015, multiple attacks targeting personal information, federal agencies, health-care organisations and telecom providers did occur. According to the Identity Theft Resource Centre, there were 522 reported breaches by the middle of July 2016, exposing more than 13 million records. In addition, the likelihood 64

of a material data breach involving 10,000 lost or stolen records in the next 24 months has risen to 26%. Overall, not only have data breaches become more frequent, but their impact has become greater both in terms of the volume of data stolen, and in its sensitive nature. Once a data breach occurs the consequences for the affected organisation can be lifechanging. For instance, IBM’s eleventh annual Cost of a Data Breach Study (2016) revealed that the average consolidated total cost of a data breach for the affected company is roughly is $4 million. Most companies are already embracing the urgency that this scenario presents and how they can better improve their security, but some are sometimes slow to take steps that will delay internal processes or hinder customer experience. Nonetheless, data breaches aren’t going anywhere and we will expect to see more organisations in 2017 implementing more preventive and defensive security methods, as well as new technologies being developed

and implemented for this purpose. Many companies will focus on employing stronger and multi-layered authentication, as encouraged by the Second Payments Directive (PSD2), which will also mean that even if they face some inevitable breaches, access to accounts will be nullified as the stolen partial information won’t be enough to be usable.

PSD2 The Second EU Payment Services Directive will have a significant impact on financial services in 2017. The Directive is more than simply making accessing financial services convenient and safe. It is also designed to make it easier for new entrants to access the market. PSD2 will introduce Access-to-Accounts, which gives Third Party Providers (TPPs) direct access to consumers’ accounts. This also means that consumers’ card details don’t need to be shared online when making purchases.

Banks will have to provide TPPs direct access to Payments for Payment Initiation and Account Information Servces through an application programme interface (API).. They will also need to ensure that they have the appropriate security measures in place to prevent fraud and also to respect consumer confidentiality. 88% of banks agree that security and data protection is a big concern with PSD2. Banks, are of course, nervous about what PSD2 could mean in terms of them retaining market share and client base. Research from 2016 revealed that two-thirds of bankers were concerned about losing control of their client interface . The research has concluded that banks are adopting a nervous “wait and see” approach to PSD2. However, this doesn’t mean that they aren’t getting the technology in place for it. Another 2016 survey showed that 88% of banks see the challenge of overcoming their legacy systems, and the high cost of implementation as a barrier against their

digitization. Only 14% of banks were confident that on ‘day one’ they would have APIs in place to support open access. . Yet, challenges are also opportunities. PSD2 aims to foster innovation through increased levels of competition, essentially providing challenger banks and FinTech’s an opportunities to gain market share. It also gives the traditional banks the opportunity to innovate, to adopt new technologies and new thinking to pursue a truly customercentric vision of retail banking. The banks who get this right and are the first to adopt this new mentality will be the banks who will succeed in the PSD2 shaped landscape. 2017 will be a year of challenge and opportunity for financial services; the challenges of data breaches and their wider security implications and the challenges of PSD2. It will be a year where banks, both traditional and challenger, have to turn these challenges into opportunities. The technology is there to achieve this. All that is needed is a change of thinking

David Poole, Business Development Director MYPINPAD References: Finextra research, Banks rethinking business models as PSD2 looms aspx?newsitemid=27327 Finextra, August 2016 Oracle Financial Services Global Business Unit, Banking is changing…with or without the banks Response to the millennials digital expectations 2015, page 17 Finextra research, Banks rethinking business models as PSD2 looms aspx?newsitemid=27327



Is your

client data fully secure? E

lectronic documentation and e-signatures offer accountants and practices many benefits including time and cash savings. But how do you ensure that your files - and more importantly, your client’s information and data - is being stored securely? Here, Mark Woolley of Reckon Software offers best practice advice on safeguarding your files for optimum security when using electronic documentation. Poor data storage and security is costing UK businesses their money, reputation and time. We’ve seen in recent news, the TalkTalk data breach being one example, that even sizeable companies are not immune to the growing threat of cyber-crime. The General Data Protection Regulation (GDPR), which will come into force in the UK before we leave the EU, will allow accounting clients to claim damages for data loss and unlawful processing. In fact, the UK Information Commissioner has already suggested that up to £5 million may have to be budgeted by some large organisations for compliance reforms. With such high fines at risk and reputations on the line, businesses need to seriously rethink the way in which they store information and data.


So, what can accountants do to ensure they are ready for information and data storage in our digital age? The answer is simple - go electronic. Electronic Document Management (EDM) systems use secure web interfaces that allow better sharing of information, via phone, desktop or tablet. Encryption level security settings, disaster recovery in case of fire, floor or cyber-attack and compliance with EU data protection regulation are all part of the electronic documentation package. But with numerous EDM systems on the market, how can accountants and clients make sure the system they choose offers the level of security needed today? And, more importantly, how do we get the most out of such intelligent software? 1. Trust electronic signatures Remain competitive and invest in a future proofed system that offers an e-signature facility. As electronic signatures become more readily accepted as legal evidence, it’s important for accountants not to doubt their reliability over handwritten signatures. In light of new regulations that became effective in July 2016, the benefits have become text book and electronic identification is expected to fuel e-signature adoption.

TECHNOLOGY For businesses with various office locations, this feature is particularly important and will help to ensure internal as well as external reassurance. Accountants will no longer need to rely on postage to receive signatures, making administrative procedures faster and more reliable.

look for a system which holds a recognised certification. 3. Control in-house documentation Accountancy businesses are just as liable to a security breech internally as well as externally.

2. Encrypt your data securely EDM systems offer the option to encrypt your client and personal data, it is of the utmost importance that users do so to the highest possible level, particularly when transferring information via email. Exchanging documents is even more secure when it’s done via a secure portal. As portals become more popular, transferring data via email will become out-dated. Encryption is key to safeguarding accountancy data and reputation. No excuses, the tools are there and must be used to comply with the law. For the highest possible security level,

It is paramount that data sensitive documents do not land in the wrong hands. To avoid legal implications, businesses can use an EDM system to assign security levels for all staff members accordingly.

Whilst businesses can blame lack of time or understanding, regulations which will come into force in May 2018 will make the task of securing data mandatory for all accountants handling client accounts. To future proof your business, spend time researching the right EDM systems, speak with experts in the field and find a system that is simple to use and complies with the law

4. Ensure that the system meets best practice advice for ICO The Information Commissioner’s Office (ICO) has indicated that sensitive personal data should not be transmitted unless encrypted to current standards. If businesses abide by their recommendation, there should be no room for error or legal liability – something all accountancy firms surely wish to avoid.

Mark Woolley Commercial Director Reckon



Trump and interest rates not enough to shake investors’ confidence in SMEs


hat a difference a year makes: at the start of 2016, very few people would have foreseen Britain voting to leave the European Union (EU), David Cameron being replaced as Prime Minister by Theresa May, and Donald Trump emerging victorious in the US presidential election all in the space of 12 months. Throw in interest rates falling to record-lows and last year will certainly go down as one of the most momentous periods in modern British history. However, while these landmark events stole the headlines in 2016, it is only now that we can start to understand the implications of these developments. To that end, IW Capital recently conducted a nationally representative survey among 1,000 UK investors to see how they were adapting their financial strategies in light of the evolving political and economic landscape – the


results were fascinating. One of the stand-out findings to come from the research was that Brexit is primarily seen as an opportunity by the nation’s private investors; 44% of respondents said they think the UK parting company with the EU will have a positive impact on their investment strategies, compared to 34% who thought it would have a negative effect. The findings come as the Bank of England has, for a second time, revised upwards its forecasts for UK economic growth, raising predictions from growth of 1.4% in 2017 to 2%. Furthermore, the positivity is being reflected in the private sector as a whole – in February 2017, a study by American Express found that 50% of the UK’s SMEs are anticipating that their revenue will grow by at least 4% this year. Interestingly, IW Capital’s survey found

POLICY that in light of the dramatic events of 2016, the equivalent of 2.21 million investors have entered 2017 with a greater risk appetite and are therefore seeking fresh investment angles. What’s more, over a quarter (27%) of investors stated that they believe Britain’s entrepreneurs and private sector business leaders will continue to play a critical part in driving economic growth. Collectively, the results of the survey illustrate a resounding confidence among UK investors in the wake of the EU referendum result, particularly towards the country’s SME community as a key driver of growth. However, the research also uncovered some areas of concern among investors, most notably surrounding interest rates. In August 2016 the Bank of England took the decision to cut interest rates to 0.25% – the lowest they have been in history. Investors have voiced their worries about this decision, with 38% of them saying that they think recordlow interest rates will adversely affect their investment strategies this year. Meanwhile, fears also exist towards the

potential impact of new political leaders in both the UK and the US. More than two fifths (44%) of investors are fearful of how Donald Trump’s presidency will impact their investments – that equates to almost 11 million investors across Britain. Theresa May has evidently not inspired much more hope amongst the private investor community, with a mere 27% of the investors surveyed saying that they have faith in the new Prime Minister’s ability to promote investment value for UK investors as part of a post-Brexit government. It is clear that 2017 will be an intriguing period of transition for Britain and its private sector. As the country prepares itself to officially commence Brexit negotiations, it is extremely positive to see that confidence among private investors and SMEs is high – something backed by the impressive performance of the economy thus far. Yet there are concerns that must be addressed by the UK government. More must be done by Theresa May and her new-look Cabinet to promote faith from investors – the recently launched Modern Industrial Strategy and

Patient Capital Review could prove just the tonic, promoting the role of alternative finance in supporting scaling business growth. As the 2017 Spring Budget and new tax year approaches, however, the PM and Chancellor Philip Hammond must ensure clear and formative action is taken to enable the UK’s investors to act upon the confidence they have, particularly in supporting the country’s scaling businesses

Luke Davis CEO of IW Capital, feature



Fintech is changing the


apid advances in financial technology over the past few years have changed the way we do business. Getting to grips with the disruptive nature of technology has its challenges, but also brings opportunities to those who are brave enough to grab them. A 2016 Economist Intelligence Unit study, which surveyed more than 200 senior retail bank executives, showed that bankers expect the banking environment to be shaped strongly by technology, and non-traditional competitors, by 2020.

A recent survey by the British Business Bank found that around 100,000 smaller businesses have formal applications for loans totalling £4bn rejected by lenders each year, even though smaller businesses are an essential part of addressing the UK’s productivity challenge. And last year, the Treasury said that 324,000 SMEs sought a loan or overdraft, with 26% initially being declined by their bank. Of those rejected, only three per cent sought alternative options. Total bank lending to small business has shrunk in most years since the financial crisis.

The report stated that the ‘scale of disruption is unprecedented, across every market, every distribution channel and every single product line’.

Around 80% of small business loans are provided by the big four banks, while seven out of 10 companies seek finance from only one lender.

As financial technology (fintech) startups threaten to increase their share in the lending sector, traditional banks are fighting back with their own digital platforms offering quick and easy loan applications.

Yet the UK’s economy has continued to perform well in comparison to other developed nations, which is borne out in sentiment among smaller businesses, most of which have stated they remain confident in their own growth prospects.

As a result, fintech is gradually starting to seep further into the growth strategies of major banks, lenders and other financial services providers which had previously taken a more traditional approach to the way they did business. But while the advent of fintech is making it easier for growing firms to access finance, ongoing issues surrounding the availability of finance through the more traditional routes is also causing businesses to look for other ways to fund their investments and growth.


However, Brexit and the ongoing turbulence in global markets aside, one of the biggest challenges facing the UK economy is raising productivity, which currently lags levels across the rest of the G7 nations. Entrepreneurial activity in the UK also remains high, with strong rates of new business formation in recent years. Over 383,000 new business enterprises were registered in 2015, more than at any other time since 2000 (as reported by the

Office for National Statistics). Yet the UK sits near the bottom of OECD tables for the percentage of start-up businesses which grow to more than ten employees within three years. As SMEs employ most of the UK’s private sector workforce, creating a dynamic


face of Asset Finance It’s also clear that, for many businesses, the traditional route to finance through the banks isn’t working and they are having to look at alternative sources of funding to finance their growth and achieve their business ambitions.


To realise that growth, firms need to be able to invest in the latest plant, machinery and technologies to keep the pace.

While other comparison sites divert the user to the funder to tie up the deal once a quote has been provided, Asset Finance Compared’s in-house team looks after the entire process.

Asset finance is one way of enabling them to do so. The sector has grown year-on-year since the end of the recession to the point where, in 2016, lenders provided £118bn of new asset finance, £30bn of which was provided to businesses and the public sector. Last year, lenders financed almost a third of UK investment in machinery, equipment and purchased software. Until only recently, asset finance was arranged by lenders’ direct sales teams, or specialist brokers with in-depth knowledge of the industry. But, as the pace of change is moving so fast, customers want to access finance faster and more easily, and online.

small business sector is key to boosting productivity, which in turn will convert growth into rising standards of living. All of this highlights not only the importance of smaller businesses to the UK economy, but also the clear need for the finance markets to support those growing businesses.

Recognising this, Midlands Asset Finance, a leading independent broker, recently launched a new online digital platform,, which delivers an online quote and a quick credit decision for businesses with an asset finance requirement. The platform analyses information entered by a customer and undertakes various checks and references to data before issuing the best single ‘decision in principle’ on an automated

Identification is verified through the platform too, so the transaction can be handled quickly and remotely.

Asset finance remains an essential part of the UK’s investment recovery and it’s crucial that businesses are supported to increase their capacity to invest. Technology is also evolving at a rapid pace and being able to trade digitally is essential to support business growth and investment plans. So, while fintech is being embraced by traditional banks and lenders, websites like are using it to change the face of asset finance as well.

Dave Chapman Director of Midlands Asset Finance



Why the financial services industry is banking on the database?


here’s no doubt about it, over recent years the financial services (FS) space has undergone a colossal shift thanks to new regulations, a more global customer base and pressure from watchdogs and consumers alike to be more transparent yet secure. As the size and value of the industry continues to increase, as evidenced by the explosive growth of fintech, the challenges facing businesses operating within the space will continue to be shaped by technologies at both the back and front end. Ergo, as banks continue their digital transformation efforts and adopt new technologies, their choice of database is becoming increasingly significant. For a prime example of how technology and regulations are shaping the financial services industry, take the growing issue of fraud. Today, fraud costs the global economy billions; £193 billion in the UK alone year.


As a result, fraud detection has become essential to businesses of all sizes, not only for meeting international regulations but to satisfy customer demand for reduced risks. What do growing digital threats and opportunities mean to IT infrastructure? On the back-end, financial institutions need to support thousands of trades per day, all happening in real-time across the globe. Banks, building societies and brokerage firms must be able to consolidate, distribute and store the data that comes out on these trades instantly. Not to mention scale during particularly slow or busy periods. As a result, the FS industry has found itself having to make huge infrastructure changes to support its modern business requirements. Increasingly, these businesses are finding that traditional database technology is

no longer able to support the real world demands of modern day finance. The volume and variety of data, from countless sources, presents both challenges and opportunities to FS companies as they look to take advantage of digital products and services, and respond to the demands of customers who want to do everything online, on mobile and on the go. The key to success will be how FS companies choose to manage their data. As a result, the selection of the right database has quickly become a decisive factor when it comes to processing, accessing and evaluating structured and unstructured information. While the database is rarely thought of in the same terms as blockchain, P2P lending or whatever the latest en vogue technology in finance may be, it is the cornerstone on which banks can build their digital transformation programmes.


What are the database options? Going back to the issue of fraud, effective fraud detection requires an FS organisation to process a huge amount of customer purchasing data. With the help of detection algorithm rules, customer information, transaction information, location and time of day data, banks can quickly and effectively pinpoint transactions that appear to be outof-character. However, in order to sift through this data, regardless of seasonal peaks in purchasing or time of day, FS companies must have a database with low latency and huge scalability. At the same time, the database is also key in solving issues of replication, content management and real-time availability of big data. Choosing the right database will allow the FS industry to move with the times without the worry of detracting from its core offerings or requirements. Instead, businesses need to support their growing data requirements with flexible and scalable data management solutions to increase and maximise their profits with minimal investment. Banks will always use traditional relational

databases throughout their IT infrastructure, where they can function as valuable systems of record. In a digital economy, however, where the end-customer experience is everything, banks will increasingly look to create and integrate IoT, mobile and AI applications. These apps require a database to match, which can also function as a system of engagement. This is where non-relational (NoSQL) database technology enters the market. Unlike traditional relational databases (SQL), NoSQL is particularly well suited to tasks that require fast access to data, from a variety of sources as well as systems that can adapt to changing market conditions. Not only can NoSQL databases scale out at a moment’s notice they can resolve issues of data management with little cost in terms of time and budget. It all comes back to data and being able to get the most value from it. As such, the ability to perform accurate, real-time analysis has become vital to both compliance and competitive success. In this environment, the winners will be those banks that remain compliant, while ensuring customers don’t want to leave because they receive the best possible experience. Analysing and acting on customer data near-instantaneously will

be critical to providing this, as will choosing the right database, which should be the top technology priority for all banks hoping to keep pace with agile fintech competitors and would-be disruptors

Perry Krug, Couchbase- Principal Architect

References: fintech-survey/report.html


SMEs move new opportunities


he financial sector is no stranger to disruption driven by technology. The industry is once again at an inflection point with structural change driven by a confluence of technology, regulation and changing consumer behaviour. The first wave of what we now call “fintech” looked to be aiming to compete with the banking sector. But, these early fintech companies soon found that gaining distribution at scale and financial strength that the banks have is extremely hard and expensive (with the exception of a few areas like payments). As a result fintech is now in its second wave where partnerships with banks are forming to create value for customers. The fintech companies bring their ability to innovate and build great experiences for customers and the banks bring a huge customer base, brand and balance sheet. In a similar vein, online banking and cloud accounting have been on parallel paths. In the near future, the two will become inseparable. Tech companies - in particular Xero - and banks are working closer together, more than ever before to provide customers with financial management solutions that they have come to expect from the digital age. A big part of this is the evolution of the financial web, which uses high integrity accounting data to help small businesses access the capital they need to grow. The financial web facilitates a circle of transactions - beginning with secure bank feeds where transaction data flows automatically into the small business accounting platform every day. Fully formed, the financial web connects small businesses with financial institutions, government, apps all in one platform so an entrepreneur has a complete view and control over their financial and business data - ideally with an accounting professional to help them along the way. These direct, digital bank feeds have transformed the way small businesses work. Overnight their bank transactions are automatically loaded into their accounting platform in the cloud, and when they need to work they can pick up their phone and, with the tap of a button, mark an invoice or bill as paid creating accounting entries. From the accounting software, these entries are then passed securely onto the user’s online banking system - only the people with the appropriate permissions can check the entries off. When payments are passed securely to the bank and processed through the bank’s payments system, this unique two-way transaction connectivity forms the basis for high integrity accounting. The data hasn’t been touched by 74

to the cloud : for bankers human hands, and a small business owner’s accountant can see, using the data assurance dashboards in cloud accounting software, there have been no manual transactions added or deleted. Accountants can then be very confident in the cash position of the business and, here, there’s an opportunity for continuous certification of the quality of the books. This presents an amazing opportunity for accountants to be a major sales channel for banks. In the majority of situations, a small business owner on Xero is connected to an accountant. Across all these accountants and small business owners, there are hundreds of thousands of conversations about financial services happening every month. Banks need to educate accountants on their services, and accountants are open to this training. Accountants want to know how they can take banking services and add value to small businesses. Cloud accounting software connects a global network and creates opportunities for small businesses. The financial web makes it easier for financial institutions to identify, reach and serve small businesses globally through one platform, at scale - making it easier for small business owners to access capital. It also helps them make better decisions so they can grow, boosting employment and economic contributions in the process. While the use of accounting data to make lending decisions is well established, leveraging new bank APIs to integrate banking into business software, eliminating manual application processes provides a massive opportunity for banking roadmaps over the next 10 years. All this combines to help connect the financial world to small business owners, supporting entrepreneurs, around the corner and the globe

Alex Campbell Managing Director , Xero Asia



What does GDPR mean for insurers?


t’s not often that data protection specialists make the headlines, but with the imminent arrival of the new EU General Data Protection Regulation (GDPR), the spotlight is shining brightly on the data industry. A great deal of my time is now taken up with helping our clients ensure that they can continue to do business post GDPR implementation on May 25th 2018. By way of background, for the last four years each EU member has been adding their ten-penneth to a new data protection act. The aim is to unify Europe in data protection terms and ensure that both the data of EU citizens is protected and that their choices are more respected. Inevitably, any legislative change can be difficult to absorb, but the truth is that the current Data Protection Act is out of date. It has scant regard for digital communications in terms of the rich media and information that is collected in today’s information age

and is essentially not fit for purpose. Add to this the need for organisations to be fundamentally more consumer-centric in their approach; in GDPR we have resulted in a more than passable piece of legislation that should deliver on the objectives of a more positively disposed consumer. The days of purloining data and hoodwinking consumers are over – this just won’t cut the mustard anymore. Successful organisations of the future will be those that have genuinely open and transparent relationships with the both their customers and prospects. What are the biggest issues that might affect insurers? Consent is essentially the permission given by an individual to allow the processing of their personal data, and is subject to strict conditions under the new GDPR. Firstly and perhaps most importantly,

there is no threat to renewal programmes for insurers. Following a great deal of discussion about how long consent should last, the general consensus is six months. It might have been argued that insurers would need to acquire a mid-term consent in order to undertake an annual renewal. However, it is clear that providing that an insurer is undertaking that which is ‘relevant’ to the original purpose and what the consumer would reasonably expect , then no further consent would be required. It is worth noting that it would be advisable to still seek to obtain consent from an individual at the commencement of the policy in a bid to be transparent and avoid any surprises. After all, why hide? Loyalty and relationships with the consumer need to be built on a foundation of trust. If insurers would like to contact previous customers a year after their policy has expired, they will need to renew consent to avoid accusations of storing irrelevant data for longer than is necessary. Profiling is defined by GDPR as any form of automated processing intended to evaluate certain personal aspects of an individual. As so much of underwriting is now dependent on analysis and profiling, insurers will need to be extremely careful not to overstep what is a very narrow path within GDPR. The regulation is very clearly concerned with organisations creating models which corral groups of citizens under one presumption. Under GDPR, insurers will need specific consent from citizens in order to profile them or use their data in the creation of a segment. This needs to be translated to consumers in an unambiguous way, to ensure people understand the benefits of this more



tailored approach to their communications. One of the biggest challenges will involve clarifying the difference between data which can be consensually profiled and analysed, and data which cannot. In the GDPR these differences are explained as ‘profiling with legal or similarly significant effects’ and ‘other profiling without such effects’, which includes most profiling for direct marketing purposes. Anyone who blurs this subtle distinction risks facing serious consequences. Data portability is a concept to protect individuals from having their data stored in “silos” or “walled gardens” that are incompatible with one another. In a world where our governments feel that consumers should be able to switch service provider at the touch of a button, the issue of data portability is heavily enshrined in the regulation. A consumer should not in any way be disadvantaged and should have immediate access to all data which is stored on them, and this be passed on without delay to competitors. Again, this will require some work for many insurers who for many years will have built systems and processes that actually deliver the opposite. You must have read about the ‘right to be forgotten’, now called the ‘Right to erasure’. This is driven by the issue of relevance. Gone are the days of just sitting on piles and piles of data waiting for that illusive rainy day. If companies are holding data which has no specific purpose then it must be deleted. This will have a significant impact on the majority of insurers, who conduct a large amount of their analysis on lapsed and historical data. In principle, citizens should be able to transact with an organisation and when they move to an alternative provider, the old organisation should have no record of that interaction on file. This therefore prevents companies storing information on customers who should not be contacted. We expect to hear more about this closer to GDPR implementation. So what happens if you get it wrong?

Well firstly, this is an EU regulation and as such there is a ‘one-stop shop’ for enforcement. Whilst the individual member state privacy tsars will oversee compliance and police the regulation, enforcement will be carried out by Brussels. This could have something to do with the potential enormity of the fines. A serious data breach caused by anything less than best endeavors is likely to set you back 4% of global turnover. Think Sony or Yahoo - ouch! The foregoing warnings aside, it is difficult to criticise this new regulation. It undoubtedly recognises the need to interact with customers on a more individualistic basis and aims to provide more clarity to consumers around what is going to happen to the data they share. It also sets out to engender more trust between individuals and organisations.

of marketing will have to go, or at the very least change. Insurers will have a lot less data to play with, and consequently should be working on consent today. Every piece of communication to a consumer should provide insurers with the opportunity to become GDPR compliant, now. The work that I am doing with many companies is all about continuing to market ourselves whilst being compliant with this new regulation. It is possible, but takes time. The time between now and May 25th 2018 will go by in a flash, so organisations cannot start soon enough. Pain? Certainly. Radical overhaul of your data and marketing strategy? Absolutely. But, this will result in a consumer that is more trusting, more engaged and more positively disposed. I’m not sure there is any price too large for that

The world is a different place today and if we want loyalty, commitment and support from our customers then we had better make absolutely sure that they trust us, and of course trust starts with doing precisely what you said you would do. Trust is experiential; it is pointless to make bold claims of ‘I want you to trust me’ (more often than not this delivers the opposite reaction). Trust is earned and indeed takes time to acquire. Implementing GDPR will be difficult and regrettably there is no quick fix. Many of the practices that have been the fulcrum

Andrew Bridges, Data Quality and Governance Manager REaD Group







The Age of Data


very single business is inundated with a new challenge, and opportunity, on a daily basis. Yet, businesses often forget that it is arguably the most important task to ensure growth remains consistent, and more importantly, central to the business’ operations. It’s a harsh truth that a business without growth potential will die off quicker than any potential opportunity. Businesses operate in a real-time world that requires real-time information, and with real-time information comes a swathe of data. Filtering this data isn’t the easiest of tasks but it is a necessary one. The emergence of data from nontraditional sources like social media and the wider web has forced the importance of immediacy, and businesses must now use a platform that supports quick decisions and unlocks progression, while also avoiding risk. Data is everywhere and the need to use it to make informed decisions about compliance and credit is a key part of every business. Surprisingly, not all companies embrace this and that is a perception that must be changed. As firms turn to technology for the next step in their natural life cycle, data will become the bloodstream for all successes. The impact of digitally-led services and quick emergence of raw data go handin-hand. Social media information can


hold so much weight now because of its instantaneous nature. If there is breaking news it first goes on Twitter, Facebook or other online streams. Crucially, businesses must recognise the opportunity that this offers. Database information is important for digging into the history of a business, but Twitter might uncover an employee issue within the organisation. If one company is considering working with another, finding out the aforementioned information could potentially prevent a damaging financial decision. If it’s not clear yet, financial leaders really must sit up and understand that data courses through every single good strategy. Blind businesses in a shifting society For years businesses have relied on databases of information that offer the base information and knowledge. The problem with this approach is that it no longer fits the fast-paced, technology-led world that businesses inhabit. Data can, and should, be implemented across the entire organisation – particularly to aid financial decision makers. The pressure to continually succeed is vast and data can be the difference between taking on bad business and identifying new chances to succeed. The modern day financial decision maker must drive a business’ data-led approach. Long-gone are the days where the chief financial officer is tasked to deal with simple balance sheets and the finances of

the business. As data becomes even more accessible firms must recognise the doors it can open. Data leads to growth but only if it is harnessed, and it cannot properly enable business growth without the correct application. Understanding that a data-shy business is a blind business is crucial. The explosion of big data has placed an even heavier emphasis on the need to embrace the digital age. The UK is undergoing massive shifts with the impacts of Brexit, and similar global, politically-driven impacts. Data can ensure that businesses continue to prosper in times of uncertain economic shifts. Figures from November last year compiled through our Brexit study found that the Brexit vote had severely impacted business opinion. 72% of the financial decision makers claimed they were planning for change post-Brexit to manage expected market and business fluctuations. Recent statistics from Eurostat, the official statistical office of the EU, offered positive figures (GDP figures were revised up in the Euro by 0.5% QoQ) but that is simply a testament to the global fluctuating markets and uncertain business sentiment. Striking the perfect balance between traditional and non-traditional data Trade credit – the purchase of goods and services – is a common transaction and businesses must continue to make the right decision. Identifying the smart risk by


drawing insights from data is vital to this. The latest analytics can help financial decision makers access and analyse data to accurately decide how much credit can be extended to potential business partners. Meanwhile, traditional data provides the background information, payment receipts and boardlevel history needed to do this. Digitally-native, millennial businesses will not offer the in-depth background information that some longer-lasting FTSE 100 companies can offer. Calling on nontraditional, programmatic contextual data like premiere news publications, periodicals and online sources from across the globe, social media, top business publications, government and regulatory agencies, blogs and commentary, in-depth industry-specific sources, research and expertise-oriented sources, local and region-specific news to give businesses real-time financial updates based on societal and cultural news will become even more important. Integrating both of these approaches together can help create a single vision of a business, and identify where the growth is.

rules and regulations of industries is not a choice but necessity. Yet, this isn’t always the decision taken by globally operating businesses. Take the example of BHS, the once British landmark chain that went bust and had to be liquidated. The acquisition by Philip Green was touted as a positive move at the time, and in fact it actually was – BHS’ profits grew in its initial years. Fast-forward to the middle of 2016 and the retailer’s fall from grace was a difficult lesson that was preventable. The appropriate deep-dive background checks would have uncovered that Philip Green had been bankrupted three times prior to taking over. So much can fall under the radar and it often takes a microscope to discover the most crucial information. A data-less approach is one that will lead to businesses being the BHS of tomorrow. Preventing this now and implementing a data-led approach is a surefire way of mitigating risk. Glass half-full vs. glass half-empty – perception will play its part in how future businesses operate

cyber security and deglobalisation, among other factors, as top influences in 2017. If businesses are to overcome said challenges, and find the opportunities hidden within, they must recognise that data is the only solution. A merge of non-traditional and traditional data will see the future CFO assess all opportunities and make the necessary bold decisions, in a business world that is becoming increasingly difficult to survive and thrive in

Tim Vine, European Head of Trade Credit, Dun & Bradstreet References:

Data can also mitigate potential risks in the increasingly volatile business world Data isn’t only useful for spotting growth but can also help to ensure that businesses keep on top of compliance. Adhering to the

Every business is unique, and must stay that way if it is to separate from crowded markets and succeed. Simply following what the next best competitor is doing is not the correct approach. Our 2016 global outlook risk report identified blockchain, brexit-survey.html documents/2995521/7844044/2-31012017-AP-EN. pdf/61446dd7-81ce-4345-9848-d568238ec26f



Artificial Intelligence in Banking


rtificial Intelligence (AI) is already a ubiquitous part of our everyday lives. Think of asking Siri a question or having your car automatically manoeuvre to park itself – more of our daily devices rely on AI disciplines to apply interpretation and understanding to give information context, and thereby learn and act. The use of AI is growing and there has been much debate about its use by banks to streamline processes and add value, some of which we are already seeing in the form of robo advisors and big data processors. AI has the potential to address many of the challenges and expand opportunities for banks – reducing middle and back office administration, for example. To better assess the potential application and benefits of AI for financial institutions, we first need to clarify what we mean by artificial intelligence and exactly how it is different from ‘traditional’ technology. Building Blocks AI uses knowledge and computing power to simulate intelligent human behaviour. The complex human abilities of perception, mobility and interpretation are skills that require analysis such as understanding, natural language and vision; these are the building blocks of AI. One such building block is Natural Language Processing (NLP). This enables computers to understand free-form human language, to analyse then act upon this information automatically. Another key discipline relevant to banks is Machine Learning, where experiences and insight can be gained from previous behavioural data without being explicitly programmed to respond in a pre-determined manner.


BANKING By contrast, traditional banking technology is essentially dumb. Processes and services are done through layers of software programmes - from the microprocessor core, up through the various operating and application systems to a customer’s mobile app interface - with each layer designed to perform a very specific and predicable task. AI technology differs in its ability to place context into situation – to mimic the biological processes of the human brain to remember and learn, developing understanding and knowledge - and thereby change behaviour and actions. Banking Challenges Banks can benefit from intelligent knowledge-based and learning technologies.

Natural language processing AI disciplines have been utilised in transaction banking since the 1990s. The subsequent emergence of big-data and cloud computing saw the adoption of Machine Learning capabilities, with Fraud detection being a more recent addition to the practical application AI within the banking sector. There are several challenges facing financial institutions that AI can play a significant role in addressing. The common uses of AI in transaction banking today tend to be task-specific. Where AI has real benefit for banks however, is its ability to solve highly complex and everyday problems in far less time than either humans or ‘traditional’ technology possibly could. This high velocity of ‘understanding’ gives AI strong commercial

advantages in three broad banking areas: compliance and fraud prevention; process efficiencies; and product development. Let us look at each in turn. Tackling Fraud The most recent AI banking and payments implementations have been made by tierone financial institutions in the area of AML sanctions screening and fraud prevention. The growing threat to banks posed by illegal transactions and payments fraud should require no explanation here. It is not surprising that the enormous advantages of applying AI disciplines to compliance and security have been recognised and adopted by some of the most forward-thinking of financial institutions.



The deployment of machine learning and other AI disciplines are proven and powerful AML, Sanctions and Fraud Prevention tools that can provide real-time validation and authentication of payment transactions. This AI approach does not merely respond to past patterns of money laundering or fraud, but deploys context-aware ‘understanding’ and anomaly aware capabilities – detecting and thereby preventing fraudulent transactions in real-time. The Tokyo Stock Exchange has confirmed that it is deploying machine learning AI tools as the market surveillance solution to investigate potential illegal trading practices. In tests, the AI robots have proven highly accurate in assessing potential suspected activity. The machine learning tools employed are able to learn from vast amounts of data and make independent judgments, without the need for compliance staff to have set up hypotheses in advance. This enables the AI compliance system to detect highly complex trading breaches that humans have not even conceived. Similar AI compliance and fraud prevention systems are being utilised today by individual financial institutions and we should expect adoption rates to increase. But there are other banking functions and activities that can equally benefit from the unique strengths of an AI-based approach. Efficiencies Despite significant investments in backend processing and compliance, many banking systems – specifically the areas of payments processing, repair, routing and investigations – remain highly inefficient. It’s not the payments themselves that are changing, but the usage, integration and user interface demands. The context learning and natural language processing capabilities of AI-based payments


systems have over the past two decades been proven to dramatically increase straight through processing rates, enable intelligent least cost routing, and result in the removal of inefficient manual interventions and repairs – though these AI benefits have largely been the preserve of larger transaction banks. In an environment where cost reduction remains a priority and the competitive landscape is changing, no bank can afford to ignore the power of AI to help realise the vision of full automation required to complete the transformation of the payments business in this digital age. Speed to market It is the intensified demands of the 24/7 digital economy that shape the third distinct area of potential commercial advantage. Arguably the greatest opportunities for banks to leverage the capabilities of AI are in addressing the myriad of operational and business pain points experienced in product innovation and time to market. The vast and invaluable amounts of data banks possess on customer behaviour and preferences can be exploited via machine learning technologies. This allows invaluable insights to be gained and new, more relevant products and services, to be created.

channel application. AI will be the new type of user interface and will tremendously enhance the user experience. For example, the recent introduction by a challenger bank of voice-based account management and payment initiation shows how AI innovation can significantly improve the user experience. Banks and financial institutions already using AI-based solutions have been able to reduce, or virtually eliminate, the high levels of human intervention and manual processing that were previously necessary. Other areas also benefiting from AI-based systems include automation of exceptions, investigations and customer retention. Whether utilising the power of natural language processing to fundamentally transform the way customers interact with the Bank, or leveraging the data insights, speed of deployment and increased sales opportunities provided by machine learning technology, AI can enable Banks to achieve lower costs, increase revenue, accelerate processing time and reduce errors across the board. The advantages to banks of adopting AI-based disciplines are proven and can be profound. Can you afford to ignore the benefits of AI?

The use of a knowledge-based approach in combination with the right AI engines can also help ensure time to market is significantly reduced. This will help banks to compete more effectively against the fintech players and new market entrants. AI and banking Looking further into the future, the use rich and intelligent interface technologies like voice recognition and natural language processing will be a powerful combination to increasingly enrich and change the way humans interact with machines with omni-

Parth Desai, Founder & CEO of Pelican


Blockchain-Bitcoin will revolutionize the retail and loyalty industries


et’s examine the main problems with loyalty programs today. Typically, they have very low redemption rates and fall short of increasing client engagement and retention. They also tend to be expensive to implement and operate, when done properly. To put things in perspective, it’s worth noting that even though more than 75 percent of US adults participate in loyalty programs, only 50 percent of the loyaltyaccumulated rewards are ever redeemed. If you examine the reasons for these issues, Blockchain solutions start to look very attractive. A significant cause of such low redemption and engagement rates is that users are inundated with disparate programs that simply confuse them and create an unnecessary cognitive load. Many of these programs lack an intuitive mobile app, altogether, which becomes a major hindrance to their adoption. A blockchain-based loyalty platform provides a retailer with a common and open application development and interlinking protocol, and this allows a much larger pool of third party developers to create and integrate their solutions. For example, a developer could create a mobile loyalty wallet and payment solution with the ability to support and integrate with, not just one, but all loyalty programs on the Blockchain network. This makes it tremendously simpler for a consumer to use and engage with their merchants. Having an open platform also spurs competition and innovation since consumers get the option to pick and choose their preferred application for managing all their loyalty points across several different merchants the best and easiest to use third party solutions will win the market share, not just a handful of providers like mobile device manufacturers and credit card companies, for example.

Additionally, even current payments networks, cannot satisfy as a common interface to loyalty programs in a manner that scales, you need a solution that is automated and runs itself, like Blockchain networks do. To explain this further, the credit card company can act as a common interface either by purchasing rewards in bulk from a merchant to satisfy the demand, or can sell a “last mile” service to a loyalty program provider. This is a rather complicated and hard-to-scale solution that requires a manual process of interlinking individual loyalty programs and payment networks. Therefore credit card companies will only partner with the most successful loyalty program providers. On the other hand, blockchain-based systems don’t suffer from this scaling issue because the system automatically supports any loyalty program on the blockchain network. Lastly, blockchain-based rewards programs have the potential to allow the P2P transfer and trade of loyalty rewards within the blockchain network, without a central organization undertaking legal responsibilities as a middleman. The benefits and incentives this provides consumers are immense, including incentivizing them to

use their points, via transferring, selling or exchanging them on open marketplaces for other loyalty tokens or even cash. What we know is that performing these steps in a federated fashion, where multiple programs interlink with one another, has proven to be prohibitively difficult without the use of blockchains, it would involve many agreements and business negotiations and a considerable development effort to interlink siloed programs. These are some of the major ways in which Blockchain technologies can disrupt and evolve the loyalty industry

Shidan Gouran, Executive Chairman Chain of Points



PSD2 and banks: Data drain or insight opportunity?


t is widely agreed that the introduction of the revised Payment Services Directive (PSD2) will substantially increase the competition from digital alternatives in the financial services space, as banks will no longer be able to rely on their vast customer data as their key competition point. Banks will soon be obliged to allow third-parties, such as tech enterprises and FinTech companies, to access their customers’ accounts through open Application Program Interfaces (APIs). As such, they will have to get smart at using this data to their own advantage, or risk being overtaken. Analysing data is not a new concept for banks. They’ve had to collect and manage customer data long before Big Data was a known term. Banks use a host of data to support with both customer insights and compliance – such as information on transactions, loans, branch visits, call logs, e-mails, and credit card histories The common link here is that these are all examples of structured data, however the best insights are often a little more disordered. Unstructured information, such as call centre recordings and customer care web chats can provide deep customer insights, but this is often ignored by banks, as it is more challenging to record and analyse. Even more opportunities are uncovered when this valuable information is combined with unstructured information from external sources, such as the information coming from social media, the smart grid, demographic

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statistics or even weather reports. Banks are used to neatly recording and analysing their own internal datasets, but they are often daunted at the prospect of this potentially infinite external data, which requires realtime analysis. Prioritise pricing alongside product Data insights provide valuable customisation opportunities, which are a key pillar in the quest to keep clients happy. By understanding customers, banks move away from the risk of becoming a ‘faceless service provider’ to start bringing genuine value to both sides of the relationship: happy customers spend more with their top bank, show loyalty and can even become advocates to attract more customers. If banks are to provide a service that truly matches the experience their customers expect, then the pricing of products needs to be prioritised alongside the product itself. Smart use of data should play a major role here, but a lot of this information is currently trapped or lost in complex core banking technology. Banks need to lift all the product and pricing information out of the bank’s core into a product and pricing middleware platform. The next stage is to consolidate it, and then apply smart analytics to accurately price, target, and deliver one-to-one personal product and pricing to end users, in order to optimise revenue.

Deep data analysis will also enable banks to expand beyond their traditional business models. We can expect to see the smartest banks offering solutions such as budgeting tools and peer behaviour benchmarks, which will enable customers to gain insight into their own spending behaviours in relation to a broader community. In addition to the brand equity this would build, this would also open up valuable cross-selling opportunities for banks. PSD2: The opportunity While PSD2 may appear to some as a burden for traditional banks, the revised legislation also presents a fantastic opportunity for banks to gather more data than ever before. The fact that banks hold the majority of customer accounts gives them a distinct advantage over third party payment service providers (TPPs), when it comes to servicing customers. This will provide banks with direct access to the increased data, set to come from innovative payment technology providers to the accounts, meaning they can become the hub of all customer information. What’s more, they can do this without tackling the long and trying customer acquisition battle that third parties face. The success with which banks capitalise on this advantage and create the new services that will define the post-PSD2 ecosystem, will depend on their ability to collect and analyse this payments data.


How can banks benefit from payments made through third parties? Under current legislation, if a traditional bank customer uses, for example, a credit card with another financial institution, the bank doesn’t see those transactions, despite being the primary account holder. This means banks can only run purchasing behaviour analysis and customer engagement analysis using the data they have. PSD2 will likely mean more and more transactions go directly through the bank account rather than the card providers. This could give banks even stronger insight and greater accuracy and understanding into their customers’ behavioural activity profile – putting them in a powerful position to pre-empt customer behaviour and predict their servicing needs in the future. That said, simply gathering the data is not enough. Banks will need to uncover datadriven insights, as third parties will also have the right to claim access to this data from the banks so the payments data that goes to the account holder isn’t the bank’s alone – unless that bank can also become the customer’s Account Information Service Provider. These new providers, which are set to come into play with the introduction of PSD2, will allow customers to view all of their multi-bank details in one portal. AISPs will be the clear winner from a data aggregation perspective when PSD2 is launched. If banks want to own all the data at the end of the day, they need to establish themselves at the centre of the data flows by “being an AISP” in addition to all the other roles they will play in the ecosystem. They’ll no doubt continue with their normal functions, such as providing customer accounts and processing payments, but if they’re an AISP, they can build personal finance apps that have all the client’s financial information in one place. This will enable them to assess client needs across their entire financial footprint and make offers based on insight, rather than guess-work.

An AISP will have full sight of every line of credit for a customer, their savings or their accounts, regardless of how many different providers are used. As such, they’ll know better than anyone what products best suit the individual customer. By employing smart revenue management technology that enables dynamic relationship pricing, configurable billing and loyalty management, banks can determine what prices the client should pay for each of their products. They can also see what products across the spectrum the client should be offered, as well as seeing where customers might already access these products from competing banks. Finally, banks can make an informed offer to entice the client to use their product. Of course, it remains to be seen exactly how the AISP role will play out and privacy regulation will also be a consideration. If banks want to lead in this new era of banking, they’ll need to embrace the AISP role and the additional data protection compliance that comes with it. Preparing for PSD2 – what actionable steps can banks take today? Stop managing data in silos Banks will need to prepare automated systems that examine and derive actionable insights from the new rush of payments data. Siloed systems that feed aggregated data into other siloed systems will have to be re-thought, so that data from multiple sources can be used to uncover new cross-selling opportunities at the individual customer level. Give customers a next generation technology experience Customers are going to compare user experience provided by banks, not only with FinTech providers, but with best-in-class digital experiences from service providers in other verticals. In order to acquire and retain the privileged position of customer account hub, banks must communicate that they are making good use of the payment behaviour information they are collecting. Banks must deliver excellent user experience design and provide

thoughtful notifications to customers, based on their individual preferences. Open up to collaboration Working hard to maintain a powerful position as the primary account information hub does not mean closing the door to third parties. Banks can’t ignore the growing popularity – or the regulatory shift – towards digital payments providers. Traditional financial institutions must be open to partnership with third party payments providers to ensure they aren’t outmanoeuvred by agile innovators when it comes to customer service. PSD2 will come into play next year, whether banks are ready or not. The impact this has on banks is entirely dependent on how they behave in the next 12 months. Operating in a ‘business as usual’ fashion will not end well for banks. Data must be elevated from a “by product” of a transaction or client interaction, to a critical font of information to be analysed. The winners will be those that are hungry for more and more data, with a view to what can be achieved with this information. It’s time to dig deep, delving into this rich source of intelligence to extract valuable insights, which can inform everything from product to pricing, transforming the relationship with the endcustomer.

Nancy Langer President and Chief Operating Officer, Zafin

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might impact our migrant pool.”

Finance Digest meets Alan Connor, CFO at Cordant Group plc, one of the top 100 largest privately owned businesses in the UK. It has sales exceeding £840m to January 2017 and provides services into the Recruitment, and FM markets. The business has operating divisions in the UK, Ireland, Germany, Switzerland and Australia. Alan is a CIMA qualified finance leader with extensive board experience and a key member of the company’s Executive Management team.



Rinkita: Did you always want to work in finance? Mr Connor: I originally had it in mind that I wanted to work in the hospitality industry, with a particular desire to own my own hotel, as such I undertook a degree in Business and Hotel Management. During a gap year I completed a Management training programme at a large independent Hotel in Bournemouth which saw me quickly gain the trust and confidence of the senior leadership team, resulting in me promoted to Duty Manager within the first few months. I loved the service aspect and interaction with staff and guests alike, but soon found that what interested me was how the business ran. Rinkita: How did you make the transition to accountancy? Mr Connor: On Graduating I moved to London and took up a role with Securiplan, a small independent security company. I initially worked within the payroll department before moving into general finance, and ultimately working my way up to Financial Controller. Given its scale there were plenty of opportunities for me to develop systems and processes, so making a tangible positive difference. To support my development and whilst holding down a full time job, I attended night school to obtain the CIMA qualification. I settled on CIMA for it provided a clear route into Management Accounting, with less of a focus on audit; I qualified in 2003, and at the age of 26 I was promoted to Finance Director.

market leader in the much larger Recruitment sector. This was an exciting time as over the next 3 years we borrowed in excess of £100m and acquired 7 businesses, taking the group turnover from £100 million to over £400 million. Whilst I had been involved in other acquisitions and integrations, this was a massive learning curve for me as I was responsible for leading the business modelling and facility negotiations to support the acquisition strategy and ensuring synergies were realised. Rinkita: What has been the biggest challenge you have faced? Mr Connor: The financial crisis of 2008 required the group to significantly deleverage, so I had to ensure we clearly

impact all of our businesses, from Off payroll working in the public sector, to Living Wage, Pensions and the Apprenticeship Levy, all of which have significant implications on our business. Rinkita: Are you concerned about the impact of BREXIT on the business? Mr Connor: Like all businesses we must plan for BREXIT, but in reality there remain so many unknowns. Employing over 20,000 workers and with most of our activity based in the UK, a key concern is how BREXIT will impact our ability to source, train and supply the right skilled workers to our customers. In the past, much of our labour has been supported by migrants, however, as the labour pool changes (which we are already starting to see), the benefit state evolves to make work pay, base line pay rates increase, and price inflation is factored in, BREXIT will be a very different landscape in which our business must operate. Rinkita: What key qualities do you bring to your role?

Alan Connor CFO Cordant Group

understood our cost and contract profitability drivers, preparing detailed business models that demonstrated how both could be optimised to deliver the desired leverage ratio.

Rinkita: When and why did you move to Cordant?

Rinkita: Do you enjoy your work?

Mr Connor: Following a complete business restructure and significant senior level management changes, in 2005 Cordant was born, and working alongside the CEO we sort to both grow and transform the business beyond Security and Cleaning, to become a

Mr Connor: Absolutely, mainly because of the variety it brings. My role isn’t just about financial accounting; I support and develop the business strategy. Legislation is constantly changing too – this year we are looking at significant changes that directly

Mr Connor: I am extremely passionate about building this business, I’m proud to have been on the journey that has taken Cordant from a small private niche business to a diverse large entrepreneurial enterprise with sales not far short of £1bn per annum. There are clearly always many challenges, but with a clear strategy, a strong aligned operating team, and a desire to always learn makes for a formidable and focused combination. Rinkita: What would be your best advice to anyone reading this? Mr Connor: Enjoy what you do and follow your passion, always seek to push yourself and ensure you learn from mistakes



Financial trade 0n your finger tips



Since being founded in the living room of its CEO Greg Secker 14 years ago, Learn to Trade has gone on to teach over 250,000 people how to trade on the Forex market.


millionaire by his twenties, Secker has gone on to create and run one of the world’s most successful companies that set out a path for the everyday-man to be able to achieve financial freedom. “I used to trade the European section from 5:30am until about 11:30am and then I was done for the day,” he recalls. “In the afternoons, I began to teach my friends to trade – one day there were 19 people in my living room, all with laptops, smoking cigarettes and drinking coffee while they were trading currencies.” Learn to Trade now has established offices in London, Sydney, Johannesburg and Manilla teaching people how to build their wealth either through earning a second income by trading, or learning how to be a trader full time, with various programmes and workshops. Learn to Trade has an international team of over 150 people and is driven by one common goal: to help as many people as possible achieve Financial Freedom through trading. Their company is rooted in a belief that wealth should be accessible to everyone and so their passion for education is what motivates them. They seek to teach their clients the tools of the trade so that each person leaves fully equipped to stand on their own two feet. The company’s passion has seen its coaching institute achieve meteoric success, including being highlighted as a Brand of Excellence Program Winner for Best Forex Education Provider in the Finance Digest Awards 2017. Their programmes offer nothing but the best trader coaches and up to date technology and information to help

you be a trader – efficiently and successfully. Learn to Trade’s programme guides its students through the complexities of the foreign exchange market and teaches them clear end-of-day and intraday strategies with tight risk management, enabling them to generate consistent profits from trading the forex markets. The course comprises a two-day immersion course and subsequent day of live trading with the company’s trader coaches held on their Live Trading Floor. Learn to Trade believes in equipping clients in as many ways possible to succeed in the world of trading, by providing practical and informative programmes, support and guidance from successful and experienced traders. With access to its state of the art Trading Floor clients can be a part of an intimate yet dynamic environment where a personalised trading experience can be enjoyed and embraced.

Learn to Trade’s rise to such meteoric success is a testament to the hard work and expertise of its traders and employees. This is also reflected in the hundreds of thousands of clients who have joined the company to bask in this glory and find the benefits of trading Forex. As Secker so poignantly put it, the desire of so many to enter into the world of trading comes “Quite simply [from the fact that] people have been forced to re-think their financial future… and forced to acknowledge that job security is a thing of the past. People are looking for other ways to take control of their financial future, not to surrender it, and in the long run it will pay off.” The future for currency trading is really very bright. Learn to Trade continue to expand into new regions across Europe, Africa, The Middle East and Asia

Hear from one of their graduates: “There’s an honesty and truth with Learn to Trade that you can’t get elsewhere. The level of contact with your peers and coaching I would never have gotten from anywhere other than Learn to Trade.” Tom Colley, 2015 What makes Learn to Trade unique is its ability to combine classroom teaching of the fundamentals behind trading strategies, with the opportunity to engage in live trades with experienced trader coaches, giving clients the confidence to pay attention to the signals and know what to do. For people who don’t want to spend too much time in front of a screen, there is training on how to set up and run autotrading programmes as well as a hedge fund facility for those who prefer someone else to manage the trading for them.

Greg Secker CEO Learn To Trade




xecutive pay is not a new topic. The Greenbury report published in 1995 recommended best practice in executive remuneration which eventually became part of the UK’s corporate governance code. The debate existed before that, and has not gone away since. Recently, the government’s Department for Business, Energy and Industrial Strategy (BEIS) closed its consultation on corporate governance reform, and dedicated many pages to potential measures to reform executive pay. There is a general consensus that executive pay has increased, has become more distant from the movements of share prices and has risen at a much faster speed. The pay gap between FTSE CEOs and average employees has also risen dramatically. This is evident from the numbers and examples included in the BEIS consultation paper on the topic. Organisations such as the 92

High Pay Centre and Manifest also monitor this trend rigorously and it is frequently reported on by the media. Has executive pay reached a level where something further has to be done? The Government seems to think so, and so do stakeholders including the shareholders. Theresa May talked about the need to visit fundamental ideas around corporate governance prior to being elected as the Prime Minister. A cross-party Parliamentary Committee carried out an inquiry into corporate governance, and executive pay was a leading topic during a number of sessions. A large number of stakeholders from the Trade Union Centre (TUC) to the Investor Association made statements to address the issue. So we must all be determined to do something. Or are we? Despite all the interest and proposals,

I cannot help but notice that there is a distinctive sense of fatigue. There are some notable exceptions among people I have spoken to, especially among institutional investors, who are committed to bringing about change. I also know that people in the business community, whether they are covered by the new proposals or not, have adopted better corporate governance practice and are committed to continuing to improve. But equally, many others are pondering: haven’t we made enough changes already, and why are we continuing to debate this? Some people feel that no matter how many regulatory measures we take, it will not fundamentally change the pay issue. Let us just take a step back. It is fair to say that nobody wants to work for a place where they are paid unfairly and there is no transparency around pay rise and opportunities for promotion. Or to put it more positively, people prefer to work at a


Corporate governance and executive pay: why is it so hard if it’s common sense?

Jo Iwasaki, Head Of Corporate Governance ACCA

place where they feel part of the business goal. ACCA recently conducted research into under 35s in the finance professions which supported this sentiment, and we also conducted a survey amongst our members a year ago which found that more people value recognition at work as a motivator than financial reward (although this was also valued highly– and this is not a contradiction, because financial rewards are a form of recognition). Given an opportunity, people would be happy to share their ideas about how to work better and more efficiently, saving cost, and spotting risks. Ask anyone around you in the office, in the family or in the neighbourhood. We all have ideas to make things better. This is not science – this is common sense. But we don’t always do so, because we are not always incentivised to, or we see practices that discourage us from doing what one feels right. Sadly, many of us can share our experiences on this too: having

good ideas ignored not progressed; issues noted but not actioned. I hate the expression ‘someone else’s problem’, because it isn’t – if it is someone else’s problem, it is our own, too. That’s what an organisation is about. Without buy-in from the leadership right down to everyone else in the business, corporate governance reforms will remain superficial. This observation might sound negative and pessimistic. But the point that I am trying to make is that the problems that we face with regard to corporate governance are too deep-seated to be dealt with by merely changing law and regulations. These problems are rooted in the way individuals and organisations think and behave. I don’t believe that organisations are unable to think and behave because they do: once individuals come together to form an organisation, it takes on a distinctive character that we call ‘corporate culture.’ The company’s rules and structure, in comparison to the culture, play

secondary if not marginal roles. Admittedly, getting company-wide buyin to changing corporate culture takes time and effort. Maintaining a good corporate culture requires just as many resources as effecting change in the first place. However, if an organisation does not address a negative corporate culture, in other words if companies and their leadership fail to take the initiative to change, the effect of government initiatives on corporate governance will be inevitably limited. In order to enlist support and not cynicism, a company’s leadership needs to demonstrate the determination and commitment in practice by changing their own behaviour. This has to go beyond slogans and mere compliance with rules. So culture is important - it has to be a true force of change. It should not be used as an excuse for not doing anything



How to remain in the 10% of startups that succeed


he cold hard truth is that 90 per cent of startups fail. Only 12 per cent of 1955’s Fortune 500 companies are on the list more than 60 years later. Companies lose their edge and falter for various reasons — bad financial decisions, new market trends, obsolete business models, lack of foresight and leadership — the list goes on and on. In today’s fast-paced technology market, business leaders are faced with “sink or swim” decisions all too often. Given my experience as CEO (twice-over) of Lifesize, I’d like to share a few tips on how to swim when your business is slipping into the depths. Pick clear, concrete objectives. Before you begin your business’ transformation, be clear about your goals. Ask yourself a few simple questions: »» What do you want your company to look like in 18 months? »» What are you going to do to get there? »» And most importantly, what are you not going to do? Moving forward with clarity is often one of the hardest parts of the process, and committing to it fully is even harder. Salvage what you can from your current business and capitalise on those things to help accelerate growth. When we initiated our turnaround, we had


to narrow our product strategy to succeed in the long run. At the time, new technologies were disrupting the collaboration market. But with this disruption also came opportunity. Video collaboration wasn’t just for early adopters anymore — it had gone mainstream. If we played our cards right, we could capitalise on the growing need for enterprise collaboration with a fresh delivery model — and we did. We now offer a cloudbased software solution combined with plugand-play HD camera and phone systems to make video conferencing seamless for users and IT Managers.

win. »» Drive relentless innovation – stimulate continuous improvement in all areas of the business. »» Make every day matter – be nimble and committed to daily action in order to react to the various elements that impact the business, such as new trends, competitors’ offerings, and changes to the market. The creation of core values helped everyone in the organisation understand what the company stood for and where the company was headed, and for those who weren’t interested, a chance to opt out.

Prepare for a tough journey — together. The highs and lows of business transformation are better navigated when everyone’s prepared for what lies ahead. Reinventing a company requires an intricate combination of resolution and sacrifice (and, believe me, you’ll see plenty of the latter). As you ready your team for a new era, solidify values for them to rally behind. For instance, in redefining our company culture, we sought input from teams across all functional areas and identified four core values: »» Act with integrity and authenticity – building an environment of trust, respect and transparency creates a place where people want to work. »» Lead with customer obsession – companies that put their customers first,

Get customer obsessed from the core – and get everyone involved. Moving from an on-premises video conferencing solution to a Software-asa-Service (SaaS) delivery model was an immense challenge. At the core of our reinvention was a desire to deliver the best product and service on the market to companies who wish to collaborate more effectively and affordably. A prominent team in this transformation was our Customer Success department, who revolutionised the way we approach our customers. Starting with this team, we implemented strategic changes that allowed us to better hear and act upon customers’ needs and feedback. These changes elevated the voice of the customer like never before in our organisation and allowed us to drive


quality initiatives in the right direction. To deliver best-in-class quality to our customers, we enlisted every part of our organisation – product development, customer service and support, human resources, marketing – you name it. Every team member has a role to play in establishing partnerships with your customers, and ultimately contributing to your company’s long-term success.

new company values, changing business processes or even exiting markets. For us, reinvention meant all of the above, as well as moving forward as an independent company. If it isn’t clear already, I’ve found that reinventing a company is guaranteed to involve a tremendous test of faith and commitment. It was one of the most intense experiences of my professional career — exciting and challenging in equal measure.

Steady the course — fully and fearlessly. No business can be successful without being flexible and adapting to the tech climate. Fear tends to lure you back to what’s familiar and safe, however, you need to get uncomfortable if you want to survive. For a business on the brink of extinction, that means managing serious complexity — perhaps it is adding new leadership, defining

My final point — don’t rush into it, and make sure you have truly thought through the roadmap to becoming successful. Take the time to understand your objectives, rally your team and continue to move forward without fear

Craig Malloy Chief Executive Officer, Lifesize




Challenger Banks going Digital To enhance customer experience, digital banking is a must.


hallenger banks are changing perceptions and practices, but how can they win trust? By Dominic Zammit, Head of Digital at global brand consultancy Industry. Consumers have neither forgiven or forgotten the role of banks in the 2008 financial crisis, as demonstrated in a recent YouGov survey in which 84% of respondents agreed that ‘Bankers are greedy and get paid too much’. Keen to leave the past behind them and meet the changing needs of consumers, major high street banks are investing millions in their digital transformation, but for the most part are simply treading water, weighed down by tradition, bureaucracy and legacy systems. These attributes have provided new challengers with a point of reference from which to juxtapose their offering, cutting through a saturated market by addressing the key pain points of the traditional players. Built for the digital age, unencumbered by size, legacy or expectation, challenger banks are capitalising on the post-2008 new world and are beating traditional players in the race towards true digital banking. Built for its time The attraction of a challenger bank is its unique outlook and fresh approach to delivering a highly-personalised, real time banking experience. Where traditional banking propositions focus on trust, history and stability, the growing wealth of challenger messaging speaks to millennials by focusing on technology, simplicity and automation. Yet they too have pain points. The EY Global Consumer Banking Survey, carried out at the end of last year, showed that a third (33%) of consumers still don’t trust a bank without bricks and mortar branches. So how can 96

challenger banks tackle this problem? Customer experience Put simply, in this new world, trust will be earned through the delivery of a positive user experience rather than through the physical reassurance of a high street branch. The trend in 2017 and beyond will be towards lifestyle propositions; digital challengers need to align themselves more closely to life stages and position their services as integral to living life to the full. This was the premise behind our work with CBD NOW, the Middle East’s first digital only bank, with a strong proposition centred around the joy of living and the empowerment of instant financial decision making. The new brand’s strapline “Love the moment” enshrines both its ethos and customer promise in a fresh and engaging statement that inspires


customers and challenges their perceptions. Living life to the full is no longer something to hide from your bank manager, but rather it is supported by being in complete control of your finances. To effectively challenge an established market, new entrants need to offer either substantively new services, or a sufficiently novel way of delivering existing services. In the case of banking, we have yet to witness anything in the way of new services for decades, and so the point of differentiation lies first and foremost in the way that existing services are delivered. This is where new challenger banks are making headway. By entirely digitising traditional banking experiences, they are shaking up convention and flipping typical banking dynamics on their head by placing power both figuratively and literally in the hands of the customer.

Personalisation Focus is being placed on providing seamless personalisation and transparency across devices, meaning customers can access full financial data and the ability to transact wherever they are, and through whichever device is to hand (or wrist). Investment is also being made into the use of biometrically secured accounting, replacing traditional password protection with finger printing or voice recognition, further streamlining the experience. This provision of real-time, tailored banking provides a tangible and identifiable benefit from which digital challengers can build a lasting brand proposition. But going beyond the expected, digital challengers are starting to carve out elevated positions for themselves by providing datarich predictive intelligence to allow customers to better control their spending. Placing big-data squarely at the centre of customer experience, this machine-led approach to money management challenges not only the traditional bank statement, but also the role of the bank manager and financial adviser. As a consumer the experience will be totally empowering. The bank knows your mortgage payment is about to go out. It also knows your weekly shop is about to happen, taking you overdrawn. It automatically pings up the option to transfer money from another account or take out a short-term loan, helping you avoid punitive overdraft charges. It’s a bank that’s on your side. Communication Digital challengers by their very nature need to adopt a new, simple, more accessible communication style that immediately 97


real-time customer finances sounds like a compelling proposition. It would cut out the grocery middleman, minimising the consumer journey, while providing a welcome additional revenue stream to digital banks. Another model might see banks form partnerships with retailers where they can offer added value perks to their customers in the form of affinity deals and special offers, delivered at the right point in time. After all, the bank knows what you like, where you shop and when you shop.

engages a diverse audience in an impossibly fast digital world. Most digital challengers to date have marked their distinguished style of communication by explicitly drawing out the differences between their organisation and legacy players. They have altered the typical customer-banker dynamic by focusing on collaboration and a shared journey, using words like partner and founder to encourage onboarding of new users. It’s no longer about winning market share, it’s all about building a movement. This shift in perceived ownership exemplifies the underlying premise of digital banking; empowering customers to manage their own finances and to reap the rewards of doing so. Communicating in a pure digital banking world is informal, upbeat, fast-paced and rich in personality. Digital challengers are social-natives and adopt a sophisticated multi-channel strategy for both proactive communication and responding to customer queries and complaints. Traditional banks who try to mimick this are in danger of dad dancing.


There are clear synergies between digital challengers and more typical start-ups; think Uber or AirBnB, now think Monzo or Atom. Even the nomenclature is indistinguishable. In an industry known for being stuffy and old fashioned, an infusion of start-up mentality offers customers a much-needed alternative for managing their finances in the new world. Sector convergence As digitised banking becomes the norm, challengers will be looking outside of the sector for customer value-add and new product offerings. In a bid to monopolise markets and ease the consumer service provider roster, the future may see innovative sector convergence between lateral industries. Just as Amazon targets supermarket shoppers, could Atom set their sights on telecoms and internet provision, or other high-volume markets? We have already witnessed segment creep among the supermarket-turn-moneylenders with varying success. Is there any reason banks couldn’t flip the coin and target grocery consumers? A single platform shopping experience linked directly to

Whatever the future may hold, what is clear is that challenger banks and legacy institutions alike need to build their businesses around a brand that is futureproofed and compelling in an increasingly digital age. Impact is key. They need to be bold and sincere. Serious players must be visible and approachable on the customer’s platform of choice. In 2017 the customer is in charge and is aware of that fact. If they want to tweet their bank, they will, and will expect a personal response. Ignoring digital communication will be the kiss of death for banks looking to the future, and those without a robust brand strategy risk losing out to the new kids on the block.

Dominic Zammit Head of Digital at Global Brand Consultancy Industry


Est. 1996

First Allied, the story so far 20 years ago, First Allied Savings & Loans Limited a wholly Ghanaian financial company embarked on a journey to ensure financial inclusion for businesses with impaired access to credit in the Ghanaian economy. It was a bold but risk-laden enterprise seeing that the SME sector remained largely informal with very little or no financial records upon which to evaluate any credit proposition.


oday, more than 15,000 business units and households have benefitted from credit finance in excess of US$50 million. This unflinching commitment to serving the Micro Small and Medium Enterprise sector has endeared the institution to several businesses across Ghana. The institution’s competitive edge comes from its innovative tailor-made financial products for the sector. First Allied boldly re-engineered the susu concept (a three hundred year old traditional savings collection scheme) as a product for mainstream banking. First Allied transformed the sector by sending out branded and dedicated “mobile bankers” into the field to collect small daily deposits. Rather than paying a fee for the service (as in the traditional savings scheme), clients earned interest on their savings instead. This innovation rapidly transformed deposit-taking in Ghana and has virtually become a flagship product all competitors now offer. First Allied’s regulated status from inception has ensured greater transparency through rigorous recordkeeping and safety of depositors’ funds. First Allied, started business with 24 employees in 1996 from its head office in Adum - Kumasi in the Ashanti Region, from one (1) branch in 1996, First Allied today has spread across almost all economic and commercial centers of the country. The organisation can be found in eight (8) regions in Ghana through its branch network of twenty-six (26) branches.

The branch network is distributed as follows: • Adabraka, Madina, Tudu, Abossey Okai in the Greater Accra Region • Adum, Asafo, Suame, Sokoban, Roman Hill, Obuasi in the Ashanti Region • Nkawkaw, Mpraeso, Suhum in the Eastern Region • Takoradi, Elubo, Aiyinasi in the Western Region • Techiman, Berekum, Nkoranza, Goaso in the Brong Ahafo Region • Cape Coast, Mankessim, Kasoa, Assin Fosu in the Central Region • Tamale in the Northern Region • Bolgatanga in the Upper East Region A recent step in the deployment of digital technology for ease of banking is the introduction of the Allied Agency Banking. The objective of Allied Agency Banking is to offer the basic financial services to First Allied customers at their doorstep or in their neighborhood. Currently, First Allied has over 200 Agents across the country. These Agency Posts serve over 5000 people daily.

Loans | Savings | Investments

Finance Digest_Issue 1  
Finance Digest_Issue 1  

Finance Digest is a quarterly Print and Online Publication providing in-depth coverage and analysis of the global financial community coveri...