Global Banking & Finance Review Issue 20 - Business & Finance Magazine

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Chairman and CEO Varun Sash

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Editor Wanda Rich email: wrich@gbafmag.com Web Development and Maintenance Anand Giri

Dear Readers’ I am pleased to present Issue 20 of Global Banking & Finance Review. For those of you that are reading us for the first time, welcome.

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For businesses around the world 2020 has been a difficult year. In this edition, Mohamed Chaudry, Group CFO of FoodHub explains how CFOs can hope to navigate through the financial fallout from COVID-19, and successfully guide their businesses to the other side. In the latest article from Krishnan Raghunathan, Head of Finance & Accounting Services at WNS, he explores how a digitally transformed finance department can give enterprises the ability they need to improve cash flow and revenue through better use of data and improved analytics-driven.

We strive to capture the breaking news about the world's economy, financial events, and banking game changers from prominent leaders in the industry and public viewpoints with an intention to serve a holistic outlook.

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CONTENTS

inside...

BUSINESS

BANKING

14

How banks can take on Google in the race for AI talent Nicola Sullivan, solutions director at candidate engagement tech firm Meet & Engage

22

The New Resiliency Stress Test: Culture in Banking

Maria Gendelman, Chief Culture & Experience Officer, ConnectOne Bank Elizabeth Maggenis, Executive Vice President, Chief Lending Officer, ConnectOne Bank

30

Banking’s Next Technological Challenge: Innovation, Not Competition Falk Rieker, global VP, global head of IBU banking at SAP SE

49 56

The battleground for banks is not digital vs traditional: it’s the race to be customer-first Ross Sleight, chief strategy officer at Somo, a digital product agency

The rise of nomadic work: how to turn your remote team into a creative force

18

Paige Erickson, EMEA MD, Workfront

Diversity & Inclusion: An Urgent Priority for Financial Institution Innovation

32

Amy J. Radin

Supply Networks: The Future of Procurement

38

Sean Thompson, EVP of Network and Ecosystem, SAP Procurement Solutions

52

Skilled Trades Lead the Way in the Pandemic with Digital Experiential Learning — Other Industries Should Take Note

Doug Donovan is CEO & Co-Founder of Austin, Texasbased Interplay Learning, the leading global provider of online and VR training for the essential skilled trades.

The Bank is Where the Heart Is

Nick Barnes, Practice Director, Financial Services & Customer Success at JRNI

14

38

Issue 20 | 5

CONTENTS

inside...

FINANCE

INVESTMENT

26

Why investing should be treated like healthcare

8

Qiaojia Li, co-founder and CEO at the award winning wealthtech company, Rosecut

54

Has the pandemic triggered society to re-think later life planning?

Digital Finance: Unlocking New Capital in Disrupted Markets

Krishnan Raghunathan, Head of Finance & Accounting Services, WNS

10

Barry Floyd, who is the Managing Director of Golden Leaves Funeral Planning

How CFO’s can Help Their Businesses Successfully Navigate The Financial Fallout From COVID-19 Mohamed Chaudry, Group CFO of FoodHub

12

Payments’ Darwinian Future: Lasting change may be defining legacy of 2020

Fawn Hudgens, VP of Global Content at Money20/20

44

TECHNOLOGY

24

The Future of Software Supply Chain Security: A focus on open source management

Emile Monette, Director of Value Chain Security at Synopsys

42

How ISO 20022 migration is changing the landscape in payments Paul Thomalla, Global Head of Payments at Finastra

46

Asset-based lending is often called ‘working capital finance’ for a reason…

Alex Beardsley, director at ABL Business.

Why financial services brands need to plan for the three phases of AI innovation James Hobbs, Head of Development, Great State

26

6 | Issue 20

44

FINANCE

Digital Finance: Unlocking New Capital in Disrupted Markets Krishnan Raghunathan, Head of Finance & Accounting Services at WNS, explores how a digitally transformed finance department can give enterprises the ability they need to improve cash flow and revenue through better use of data and improved analytics-driven visibility.

Businesses everywhere are scrambling to recover lost revenues and protect cash flow. But as countries globally grapple with a dreaded second wave of the pandemic, imposing far more stringent localised lockdowns and new restrictions, it is set to be the hardest winter in living memory for many sectors.

The likelihood of winter peaks, so often the saviour of sectors such as travel and hospitality, benefitting businesses is diminishing rapidly. While many have pivoted to a greater or lesser degree, few have been able to offset the impact of falling revenues on cash flow. Even retail, riding an e-commerce boom in many regions, is finding itself in choppy

8 | Issue 20

waters, with 17 percent of consumers1 switching brands due to the economic pressures and changing priorities caused by the pandemic.

As one McKinsey article notes2, “With some companies losing up to 75 percent of their revenues in a single quarter, cash isn’t just king – it’s now critical for survival”. Where then do businesses find new sources of cash to sustain their operations through the coming months?

Tapping Overlooked Cash Opportunities For many, the answer could depend on whether they have digitally transformed their finance department.

Why? Because many organisations are sitting on unidentified opportunities, funds that could be vital in shoring up businesses over the next few months or plugging the gap between operating costs and government bailouts. Yet those that have been slow to start their digital transformation journey are at a

disadvantage;. At the same time, it is possible to identify these hidden seams in an analogue organisation, the process is time-consuming, manually intensive and, without the right digital tools, prone to human error.

Where deploying digital tools helps is by bringing speed, automation and reliable data to the fore. Connecting them with digital finance and accounting systems can give businesses clear insights into how money is being spent, where wastage is occurring, and where opportunities for optimisation exist.

It might be something as simple as automating the accuracy checking, issuing and chasing of invoices and late payments. This could reduce errors and invoice disputes and ultimately lead to faster payments. Accuracy and organisation are also important in billing – better records enable faster billing for work completed, and in turn, should deliver quicker payments.

FINANCE

It could also be around having the ability to review the supply chain and procurement data and identify where a supplier is subsidising a larger customer’s product line through drawn-out payment terms, or where a variety of vendors are on different terms across the business.

Using that data and overall knowledge of the business to negotiate better terms that work for both supplier and customer can create new opportunities. It could even be to identify late-paying customers, determine the reason for late payments, and use that intelligence to develop products or financing solutions that continue to support those customers (and improve loyalty) without increasing the burden on the balance sheet.

Generating Reliable Insights for Faster Decision-making To do any of these manually would take months, generating data slowly that would quickly go out of date. But digital finance departments have evidence they can trust to inform business decisionmaking. That’s because old, manual processes built around Order-to-Cash lack the flexibility and agility that businesses require in today’s markets.

The fact is that even before the global pandemic crisis, the pace of digitisation across all sectors was demanding new approaches to finance and book balance.

The opportunities are significant – from cognitive credit and improved forecasting accuracy to enhanced customer analytics. All use similar tools, based on artificial intelligence and quality, trusted data. Cognitive credit can be deployed to quickly make decisions on whether to advance or restrict credit, based on individual company positions and available data. Doing so enables businesses to either capitalise on opportunities (for instance, agreeing

credit for a supplier that has run out but is a supportive and integral partner) or avoid risk (in the cases where a business might be in administration).

With more accurate forecasts, businesses can better manage their currency purchases and deposits, selling currency that is not required or buying more where predictions identify an upcoming demand.

It is the same with customer analytics – with a greater understanding of customer needs, businesses can make decisions based on the right mix of the product (and how it meets demand) and supply chain suitability (such as production costs and location in relation to customers).

Krishnan Raghunathan Head of Finance & Accounting Services WNS Krishnan Raghunathan is the head of Finance & Accounting (F&A) practice and operations at WNS. He also leads the international delivery locations in China, Costa Rica, Spain, Sri Lanka, Romania, The Philippines, Poland and USA.

In many ways, the events of the past year have accelerated the process. In doing so, the problem is the pandemic has also accelerated the speed at which failure to act can lead to obsolescence. Therefore, it is vital that businesses, and more particularly their finance and accounting departments, kick start their digital transformation. This will enable them to deploy the tools and analytics that is needed to capture data, generate insights and drive fast, accurate decision-making to uncover previously untapped sources of cash and reverse revenue degradation.

Prior to this, Krishnan was Chief Capability Officer for WNS, in that role he headed Horizontal practices across Finance & Accounting, Customer Interaction Services and Research & Analytics, Transformation & Process Excellence, Program Management (Transitions) and Solutions development.

He has more than 27 years of experience across Finance & Accounting, Business Process Management, Sales Solutions and Capability functions including 7 years in Accounting practice.

Before joining WNS in 2013, Krishnan led several challenging roles at Genpact, supporting strategic deals and consultative selling. In addition, Krishnan was also the business leader for a number of industry verticals at Genpact, including hospitality, transportation, logistics, media and professional services

The Importance of Digitally Enabled Finance Teams Forward-thinking CFOs have already begun the process of digitising their departments, but for those that have been slow to start, now is the time to push forward. It is only through digital tools and analytics that finance leaders can identify both the internal and external opportunities to recover revenue and improve cash flow. Whether that’s releasing working capital, minimising revenue loss and accelerating revenue recovery, reducing total cost of ownership or enhancing customer retention – only digitally enabled finance teams will be in a position to capitalise and, ultimately, bolster business performance during what will be a trading period like no other.

Krishnan is a Chartered Accountant, a Certified Six Sigma Green Belt and a trained Six Sigma Black Belt

1

https://business-reporter.co.uk/2020/07/08/retailreimagined-rapid-revenue-recovery-in-action/

2

https://www.mckinsey.com/business-functions/strategyand-corporate-finance/our-insights/the-cfos-role-in-helpingcompanies-navigate-the-coronavirus-crisis

Issue 20 | 9

FINANCE

How CFO’s can Help Their Businesses Successfully Navigate The Financial Fallout From COVID-19 2020 has been one of the toughest years in recent memory for business. There hasn’t been a sector left unaffected

by COVID-19, whether negatively or positively. We’ve been in recession, out of recession, then teetering on the edge of the infamous double-dip. Which, at the time of writing, looks impossible to avoid. For CFOs, the financial rudder of any business, the trials have been significant. Many businesses have found themselves unprepared for the pandemic and left floundering in its wake, with the prospect of a potentially lengthy financial downturn to traverse. So, how can CFOs hope to navigate through the financial fallout from COVID-19, and successfully guide their businesses to the other side?

Strategies to Help CFOs Traverse the COVID-19 Recovery Period The role of the CFO has evolved in recent years, moving from pure financial management to technical implementation, futureproofing, and strategic analysis and planning. And they are all integral to surviving a

10 | Issue 20

protracted recession. And the focus should be on five key areas.

Scenario planning vs Forecasting Who could have seen the pandemic coming 18 months ago? Who would even have considered that the disruption caused by a virus would have such overwhelming worldwide consequences a year after it was first detected? It’s the rare business that will have put adequate protective measures in place. But now that we are all well aware of the damage COVID-19 has wreaked, it would be remiss to fail to plan for ongoing and upcoming eventualities.

Right now, CFOs should be scenario planning for the length and route the pandemic might take. Which industries are likely to recover first? And which countries will be first to come out of the recession?

CFOs need to be crisis planning.

Developing strategies to preserve cash, streamline expenses, manage

working capital and secure short-term funding. But stratagems also need to be put in place to defend against loss of critical talent (accounting for staff sickness), bolster IT developments, and manage risk.

“Wind Tunnelling” business strategy through each potential scenario will reveal the most robust tactics to carry your business through all potential developments and forecasts.

Bolster liquidity Liquidity management practices vary from business to business. But at a time of crisis, monthly actions are no longer enough. Liquidity requires daily attention.

Working cashflow needs to be generated for the coming months. To do this, CFOS should be: •

Looking to secure short-term funding to ensure a cash buffer

•

And cashflow modelling with an aim of preserving current resources

FINANCE

Cost Cutting

M&A

The previous point feeds directly into this one. Cutting costs is always a necessary component of recession navigation. But there are ways of doing it without swingeing cuts. No matter how tight a ship you think you’re running, there is always room for operational improvement, from supply chain to asset optimisation. Bolstering productivity in your workforce, whether through new tech implementation or streamlining processes, can reduce lost hours. Noncore business units and overheads usually present an easy option for painfree cost reduction. While negotiating better pricing and credit terms from suppliers can be an easy step to enhanced cashflow.

Mergers and acquisitions are an inherent part of any recession. But 2020 has seen a significant fall in M&A activity. This will partly be due to potential buyers waiting to snatch a bargain. But if you’re in the market to increase your portfolio through the acquisition of competitors, look for those that are fundamentally sound, but are facing cashflow issues at reasonable valuations.

The important thing to remember is that cost cutting should never be a knee jerk reaction. And overly aggressive strategies can be detrimental. You still need to be investing more than rivals to ensure that post-recession, you’re able to put your foot back on the accelerator and be ahead of the competition.

If cashflow has become a weighty concern for your business, merging can also be worth considering. Despite the loss of autonomy, mergers can present a wealth of opportunity, if they are handled correctly. And it’s better than facing full closure.

Mohamed Chaudry Group CFO FoodHub

Creating scalable growth is the best way for businesses to weather any financial crisis. But in the meantime, battening down the hatches and taking adequate precautions is a sensible option for CFOs looking to steer their businesses through the COVID-19 fall

Issue 20 | 11

FINANCE

Payments’ Darwinian Future:

Lasting change may be defining legacy of 2020

Like many other industries, 2020 has been an incredible year for payments.

While those with exposure to e-commerce have seen volumes soar, those tied to the physical economy and cross-border transactions have had a tougher time. With struggle comes adaptation, however, and this year will undoubtedly shape the nature of the industry for decades to come. While it is impossible to predict the exact longterm impact that the year’s events will have on payments, it is likely to be a catalyst for two key trends.

First, efficiency will be key. Whether it’s defined by return on equity or unit cost economics, businesses big and small are being reassessed for how well they contribute to cashflow. Second, a new wave of disintermediation is coming.

New means of making payments have the potential to upend the how of payments in a way not seen since the arrival of the card rails.

Urgent efficiency In 2020, businesses that make money survive. Those that don’t, don’t.

This had led to an urgent refocus on profitability over growth across

12 | Issue 20

payments fintechs. Fintech firms that rely on interchange fees for a large portion of their revenue have suffered through 2020 as personal spending dropped, while those that have more diverse or revenue that is less reliant on consumption were still able to profit, according to research

by FXCIntelligence. The result is that fintechs have had to rethink their product - and in some cases, platform - structure in terms of revenue generation.

Next wave of disintermediation

For incumbent banks, the threat to payments revenue has been known for some time, but 2020 has refocused executives. Those that have already begun to modernise their payments services have reaped the rewards while those who had simply been exploring through accelerators and Proof of Concepts are aggressively trying to find solutions. It’s worth noting that in strained economic times, especially where interest rates remain historically low, banks’ search for return on equity means innovation centres that do not impact the bottom line may be under threat. Turning innovation efforts into efficiency gains is a must for banks going into 2021.

New rails

A few years ago, payments and payments processing was considered by some to be a relatively dull industry: modest profits and modest growth.

This couldn't be further from the truth now. The first new payment rails in a generation and the advent of Central Bank Digital Currencies (CBDCs) are bringing real change to the way payments get made, both for consumers and for businesses.

In B2B payments we are seeing a significant push for new payment rails.

While lagging behind other jurisdictions, the US Federal Reserve’s encouraging moves toward a real-time payment system is a major development given the nearly US$13 trillion size of the domestic market. An important layer of this evolution is not just the potential replacement of existing rails but enriching existing ones. The ISO 20022 standard has emerged as a potential tool for increasing the amount of information contained in a payment.

This gives a major boost to alternative credit models in consumer payments

FINANCE

Fawn Hudgens VP Global Content at Money20/20 Fawn Hudgens is VP of Global Content for Money20/20 (previously Content Director

and a big boost to achieving straightthrough processing for B2B payments.

CBDCs The biggest long-term development, however, is certainly CBDCs. While Facebook grabbed headlines with the Libra initiative, countries are quietly beginning to roll out digital versions of their currency, in some cases to facilitate interbank payments and in others, for use by consumers. This is a seismic shift for the payments industry, as payments and the use of the current account underpin the business models of most incumbent retail banks. If, for example, The People’s Bank of China chose to continue their method of directly putting their digital currency into the digital wallets of Chinese consumers, banks stand to lose a major source of cheap funding. What’s more, as digital wallets have been adopted in Asian markets, consumers have still typically relied on transfers to and from established banks to fund and withdraw from digital wallets.

The National Bank of Cambodia has just launched its own digital currency, Bakong. As smartphone penetration has

for APAC), where she is responsible for

outpaced bank accounts, the central bank took action to enable unbanked smartphone users to move into the digital economy. These may be an entire cohort of Cambodians that no longer see a need to open a formal bank account.

the creation and oversight of content and campaign strategy across the brand, including regional shows.

In her pre-fintech life, Fawn was an entrepreneur, retail insider and brand builder in her roles at 82nd & First, World Retail Congress, Unwired and EMAP (now

What we’re seeing is the beginning of a sea change in the payments industry.

Efficiency will be the medium-term priority for the industry as both fintechs and incumbents alike weather the pandemic-induced recession. However, the long-term changes brought by new payment rails and spreading CBDCs will create the type of opportunities and challenges that have made the payments industry exciting for a long time to come.

Ascential). She holds a BA (Hons) in International Relations and an MA (Dist) in Intelligence & International Security from King’s College London.

She is a self-confessed political geek, avid reader and travel junkie.

1

Webber Thursday, Daniel. Unit Economics of Digital Banks Revolut Monzo. 20 Aug. 2020, www.fxcintel.com/research/analysis/ the-unit-economics-of-the-digital-banks-revolut-monzo-vstransferwise.

2

“From Concept to Reality, B2B Payments Get a Real-Time Reality Check.” Money20/20, www.money2020.com/moneyfest/event/ from-concept-to-reality-b2b-payments-get-a-real-time-realitycheck-e15-42544.

3

Kharpal, Arjun. “China Hands out $1.5 Million of Its Digital Currency in One of the Country's Biggest Public Tests.” CNBC, CNBC, 12 Oct. 2020, www.cnbc.com/2020/10/12/china-digital-currency-trialover-1-million-handed-out-in-lottery.html.

4

Limited, Bangkok Post Public Company. “Cambodia Officially Launches Digital Currency Backed by Central Bank.” Https://Www. bangkokpost.com, www.bangkokpost.com/tech/2009915/cambodiaofficially-launches-digital-currency-backed-by-central-bank.

Issue 20 | 13

BANKING

How banks can take on Google in the race for AI talent The events of 2020 have made the battle for AI talent more ferocious than ever. In a volatile landscape where innovation is key, multinational firms are rolling up their sleeves for the inevitable scrum ahead.

For incumbent banks, the stakes are intimidatingly high. In one corner stand the fintech startups: the likes of Revolut and Monzo, who are snapping up AI-literate graduates while laying down pressure for capacity in exactly that area.

recent study by AI firm Peltarion, 83 percentiii of AI decision-makers agreed that a deficit of deep learning skills was seriously hampering their competitiveness. But, with the global impact of AI on financial services companies set to hit $140 billioniv in productivity gains and cost savings by 2025, banks need to find a way to break ahead and secure the AI talent they need. Here’s how: Fish from a wider talent pool

In the other corner, we find the Silicon Valley contenders of Amazon, Facebook and Google, who have phenomenal pay packagesi – not to mention glamour and visibility – on their side. And technologists with a finance background loom firmly in their crosshairs (Facebook employs hundreds of ex-banking recruitsii).

We tend to think of AI in relation to a very niche set of qualifications. Yet in reality, it’s a fast-moving sphere that also requires a host of soft transferable skills such as problem-solving, agility, great communication and a sound analytical mind. In short, it’s less about what a candidate knows/does, and more to do with what they could know or do.

This unsettling picture is intensified by a chronic tech shortage: in a

It’s worth thinking about whether you are being open-minded enough in your

14 | Issue 20

interpretation of tech talent. Do the AI roles you’re looking to fill need specific skills and criteria, or are they better suited to people who are inherently curious, intelligent, and quick to learn?

Depending on the answer, you may want to expand your search from the bright young things of MIT or Berkeley to other related careers or older candidates with transferable skills. You may even want to look internally for the next generation of tech talent.

For example, if a bank’s customerfacing roles are declining but AI supply is not keeping up with demand, maybe this is a problem that could fix itself. The bank in question could run a two-week internal virtual AI internship to test interest, with the aim of rechanneling internal talent and avoiding redundancies. If AI is as critical as all forecasts suggestv to the future of finance, investing in a more comprehensive approach like this may make a lot of sense.

BANKING

Then there’s also the question of underrepresented groups. The proportion of black or Latino people at major tech companies remains depressingly lowvi, while women make up only a quarter of computing rolesvii.

Tracking System. You have to actively woo them and get them on-side with your vision and community. This is especially important for millennials and Gen Z recruits, who are more purposedrivenx than their predecessors.

As well as driving equality, this issue of diversity is also a market gap that could be used for competitive advantage by banks. But doing so requires a deep-seated strategy that addresses the root reasons why candidates from these groups are turning away from tech. Issues such as lack of career developmentviii and accessible educationix need to be solved at ground level from the insideout; an effort that begins before, or in tandem with, recruitment.

Live online chat sessions hosted by highprofile speakers across the business is one tactic our banking clients have seen great success with here. For example, a shortlisted group of technologists get to meet with a bank’s CTO or Chief Human Resources Officer via a group chat (which they can join anonymously if they want to), to ask questions and find out more about a company’s technology roadmap and cultural ethos.

Make your recruitment process personal and transparent When you’re fighting for top AI candidates who have the world at their fingertips, it’s not enough to bundle them through a generic Applicant

This is a rare opportunity to give candidates real takeaway value; even if they’re not thinking about leaving their current job, few will turn down the chance of time with the person who runs cybersecurity at a major bank. And this person will invariably be able to communicate a much better sense of culture than a third-party recruiter can.

Visibility is also important here: if you want to attract more BAME or female candidates, you need to have led BAME or female technicians as a vocal part of the recruitment process, showing what success in your company looks like. If you don’t have people to fulfil these roles, you need to go back and address that rather than making empty statements.

Opening the doors to your company in this way is a winning strategy for tech candidates: it’s a “wrapper” to put around them and make them feel wanted, welcome and motivated – even when a recruitment process lasts a little longer than you’d like.

Talk like yourself but walk like a tech expert Part of the openness needed to recruit key tech talent is about being authentic, too. There’s a tendency among some finance incumbents to “get down with the kids” and appear more like their disruptive competitors than they truly are.

Issue 20 | 15

BANKING

Nicola Sullivan

If you are a long-established brand in the banking world, with a good track record of developing careers, that alone is enough to attract AI technologists – you have a lot to offer, and you don’t need to put on a guise.

Equally, if you do have work to do in being more accessible to potential candidates, focus on real progression rather than image. This may mean putting through measures to build awareness and role modelling around recruitment diversity or enhancing employee wellbeing.

With mental health issues on the risexi in the workplace, a co-managed wellness programme of fitness and community events can make the difference between which way a candidate sways in a roomful of enticing options. This is especially true since banks – for all their boardrooms traditions – have a reputation amid technologists for a better, less brutal work-life balancexii than Silicon Valley.

Lastly, banks need to walk the walk when it comes to tech-enabled recruitment. However hard you try to make it personal, most candidate enrollments will involve a degree of automation at some stage – and it’s important to make that process as quick and slick as possible. For a candidate with consumer-grade tech experience, first impressions count: they want to know that this is a place that will recognise and nurture their skill set. So instead of a long, clunky application process, maybe consider a virtual assessment centre or a sophisticated chat bot, which can capture essential information in a fast, engaging way.

Recruiting the world’s top tech talent isn’t a question of magic or even necessarily a huge pay cheque. Instead you need to weave together these “micro-moments” that signal your bank’s character, integrity, and technical ambition. Do this, and you stand a good chance of persuading leading AI candidates to skip the queue and come directly to you.

16 | Issue 20

Solutions Director at candidate engagement tech firm Meet & Engage

1

Metz, C. (2017, October 22). Tech Giants Are Paying Huge Salaries for Scarce A.I. Talent. Retrieved October 27, 2020, from https://www.nytimes. com/2017/10/22/technology/artificial-intelligence-experts-salaries.html

2

Butcher, S. (2020, March 05). Facebook is coming for banks' technologists.

Retrieved October 27, 2020, from https://news.efinancialcareers.com/uken/3003318/facebook-jobs-new-york-city

3

UK businesses in chronic need of deep learning skills. (n.d.). Retrieved October 27, 2020, from https://www.techerati.com/news-hub/ukbusinesses-ai-skills-talent-gap-shortage-deep-learning-2020/

4

Fuscaldo, D. (2019, December 20). AI's Promise: $140 Billion In Productivity Gains for Financial Services Firms. Retrieved October 27, 2020, from https:// www.forbes.com/sites/donnafuscaldo/2019/12/19/ais-promise-140billion-in-productivity-gains-for-financial-services-firms/

5

Scammell, R. (2019, April 12). AI in banking to be worth $300bn by 2030, but millions of jobs at risk. Retrieved October 27, 2020, from https://www. verdict.co.uk/ai-in-banking-worth-300b-2030/

6

Why are Black and Latino people still kept out of the tech industry? (2020, June 25). Retrieved October 27, 2020, from https://www.latimes.com/ business/technology/story/2020-06-24/tech-started-publicly-takinglack-of-diversity-seriously-in-2014-why-has-so-little-changed-for-blackworkers

7

White, S. (2020, January 23). Women in tech statistics: The hard truths of an uphill battle. Retrieved October 27, 2020, from https://www.cio.com/ article/3516012/women-in-tech-statistics-the-hard-truths-of-an-uphillbattle.html

8

Majumdar, A. (n.d.). Why women are turning away from tech careers.

Retrieved October 27, 2020, from https://www.2xmtechnology.com.au/ news/why-women-are-turning-away-from-tech-careers/43613/

9

Empowering BAME talent in tech will help close the widening skills gap. (n.d.). Retrieved October 27, 2020, from https://digitalagenda.io/insight/ bame-talent-in-tech-close-skills-gap/

10

Bailey, A., Bhalla, V., Strack, R., Dosik, D., & Oh, J. (2019, September 16).

Organizing for the Future with Tech, Talent, and Purpose. Retrieved October 27, 2020, from https://www.bcg.com/publications/2019/organizing-futuretech-talent-purpose

11

Mental health statistics: Mental health at work. (2020, January 16).

Retrieved October 27, 2020, from https://www.mentalhealth.org.uk/ statistics/mental-health-statistics-mental-health-work

12

Butcher, S. (2020, January 23). Goldman Sachs could move half its London technology jobs to Birmingham. Insiders are ok with that. Retrieved October 27, 2020, from https://news.efinancialcareers.com/uk-en/3003049/ goldman-sachs-move-technology-jobs-out-of-london

Another feather in our cap!

We are the

BEST CORPORATE BANK PHILIPPINES 2020 in the 10th Global Banking & Finance Awards

Taking renewed inspiration from this recognition and its feat as Best Green Bank Philippines 2019, the Development Bank of the Philippines reafďŹ rms its mandate to influence and accelerate sustainable economic growth, providing resources for the continued well-being of the Filipino people.

We give back the honor to our partners in development!

fb.com/devbankphl

www.dbp.ph

BUSINESS

18 | Issue 20

BUSINESS

The rise of nomadic work: how to turn your remote team into a creative force During the first stage of the lockdown in the spring, almost half of Brits worked remotely, causing businesses to completely rethink their working structures. Employees too have re-examined the traditional working day and now as many as 72 per cent of UK employees want to continue working from home, at least part-time. They state that working remotely helps them increase productivity and offers a better work-life balance. This sentiment from workers coupled with strong financial motivation for companies to continue to support distributed workforces, it seems unlikely we’ll ever return to the office in exactly the same form as before Covid-19.

support a now-remote workforce. How, when and where we work changed, making maintaining productivity on the right work in this new environment incredibly difficult.

In fact, for many, the office nine-to-five is already in the past. Instead, the pandemic has accelerated the trend of “nomadic work”, where a healthy percentage of employees can work from absolutely anywhere. This helps workers find the balance that works for them, whether that’s sometimes in the office, a couple of days from home or even working while travelling.

We need more than just communication tools

Covid-19 has proved that where we work isn’t as important as we thought. Instead it is how we work, and the outcome of that work, that’s critical.

Realigning on what it means to be productive – and how to measure that productivity – is now essential for companies. The notion of a structured, on-premisis workday where activity could be observed and continually calibrated is a thing of the past. And yet, in order to navigate the current and future state to positive business outcomes, this new distributed workforce must function as an interdependent web that consistently generates not just output, but focused and strategic outcomes.

For some businesses the move to remote working was a new concept, and they experienced a sudden, greater dependency on technologies they had not typically used before. Zoom, Teams and Slack have become defining tools amid the pandemic, with many individuals using them both to continue business operations and socialise with colleagues they otherwise could not see physically. It was a fast and simple way to connect colleagues who were suddenly working in isolation.

A moment of shock-change for business The pandemic has thrown companies into a moment of shock-change, as they have had to determine nearly overnight how to

When the pandemic struck, the question most leaders focused on was simply: “how do we keep everyone talking?” And while that was an important first step, the fact

Issue 20 | 19

BUSINESS that the workforce could communicate didn’t necessarily mean they had the support they needed to engage fully in the right work.

Strategic work needs more than just communication, it requires constant connection between the day-to-day work (wherever it happens), and the prioritised objectives of the business.

Keep working towards the same outcome Present and future work requires that companies meet employees where they are, with the right processes and technologies to support them in becoming, and staying, engaged with both each other, and on work aligned to strategic objectives.

Collaboration technologies have seen a huge surge in uptake as leaders look for ways to keep their newly nomadic workforce productive. And while most collaboration tools can help teams coordinate and complete tasks and projects, without broader connectivity to systems, teams and departments across the rest of the business their impact is limited.

Tasks and projects themselves do not exist on islands. They require budget and personnel data from financial and human capital management systems to properly allocate and manage

resources. Many projects require compliance oversight from legal and regulatory departments. Work also happens in specialised applications such as Jira, ServiceNow and Adobe.

Unless collaboration tools can integrate with the data, and processes happening in those and other applications, work stays siloed, and employees and leaders have limited context and visibility into why and how work is – or is not – progressing toward the right outcomes.

Work management engages your team, wherever they are Work management practices and platforms are fundamentally different to collaboration applications. Instead of focusing solely on connecting people and teams, they are designed to connect strategy to delivery. This shift in approach absolutely requires that nomadic workers are outfitted with the right communication and collaboration support, and then goes several steps further.

Harness the creative spark of your nomadic workforce The pandemic meant businesses had to take a deep look at the way they work and operate to support their workforce from home. Now that we know nomadic working is here to stay, organisations must think beyond just the digital systems they need to get staff talking.

It’s time to rethink the best way to build a truly nomadic working structure for your enterprise.

We’re in a time of workplace transition.

ERP systems previously transformed how enterprises manage corporate resources and CRM solutions helped businesses find value in customer data. Now, work management platforms are set to transform how companies manage work -- including nomadic workers -- to become creative forces and give enterprises a competitive advantage.

Enterprise work management platforms also integrate work and data across people, systems and departments, providing context and connection for frontline workers, and visibility and navigation for leaders. Wherever they’re working, each person has what they need to do their best work, and the assurance that their work is making an essential contribution to a larger whole.

Paige Erickson EMEA MD Workfront

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CONFIDENCE IN TOMORROW Euler Hermes provides trade credit insurance, surety, and collections services around the world through a strategic presence in over 50 countries. Its strength comes from the trust of our customers, partners and employees.

Best Trade Credit Insurance Company Asia Pacifi fic c 2020

BANKING

The New Resiliency Stress Test: Culture in Banking Uncertainty is the word that describes the 2020 experience in a nutshell.

We entered January with a strong economic foundation. Many banks were beginning to execute on strategic initiatives, expand on technology and attract new talent. Our plans, however, quickly shifted in March when COVID-19 entered the United States and began to spread. We immediately had to rethink how our businesses would operate during a pandemic, how we’d serve clients, and keep employees safe and secure, all while being forced into a quarantined state.

In the chaos of a new and unpredictable environment, growing cases and operating in a new remote state, we responded to one of the largest stimulus packages our country had seen and America’s Banks served as the conduits to get our businesses the funds needed to keep their staff employed.

While our investments in technology, communication tools and digital channels played an instrumental role in allowing us to serve our clients through these times, there was really one investment that proved paramount for ConnectOne’s ability to navigate the pandemic – our culture.

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Investments in culture, once hard to quantify, can be directly correlated to business impact today. Our culture was the primary reason we were able to expedite and deliver some of the first PPP loans to customers, processing more than 3,000 applications, delivering $474M stimulus loans and saving more than 45,000 jobs. Even in times of uncertainty and economic hardship, our bank was able to not only do the right thing by meeting the needs of existing clients, but also still find opportunities to grow markets and a new customer base.

The pandemic served as a microscope separating true culture from culturetheatre. In these ever-changing uncertain times, it has become a necessity for banks to remain operational, innovative and seek longlasting sustainable growth.

In order to cement a culture for the long-term, we believe the following: Hire for Culture, Train for Skill: There are so many banking professionals that have the right skillsets to fit your hiring criteria, but few that fit with your bank culture. Start identifying culture-fit at the hiring process and change the dynamic and the employee engagement from the start.

BANKING

Define Culture & Over Communicate: In order for employees to understand a bank’s culture, leadership needs to define the specifics of culture and make it a part of the institutional core values. At our company, we always look for professionals that embody entrepreneurial, dynamic and flexible behaviors, all critical attitudes in managing change and transformation.

Every company should define what culture means inside their individual institution.

Innovation Culture is Baseline for Banks: The pandemic has taught us how capable banks are at accelerating digital change, but it also showed how crucial a culture of innovation is for the long-term. A bank’s measure of innovation culture was tested and quantified by how quickly they were able to shift to a virtual economy and how efficiently they were able to deliver stimulus to consumers and business owners amid the pandemic.

The financial services industry has been forced to adapt to the new normal brought on by the coronavirus pandemic. It’s never been more clear that the shift to a digital and virtual world made the case for a strong culture even more critical. Banks and financial institutions will continue to face pressures to accelerate digitization in an environment with more uncertainty ahead, and culture will serve as the barometer for a bank’s perseverance, growth and ultimate success. As we move into further unchartered waters in 2021, culture will remain one of the most important factors that contribute to a bank’s longterm success.

Maria Gendelman Chief Culture & Experience Officer ConnectOne Bank

Elizabeth Maggenis Executive Vice President Chief Lending Officer

Issue 20 | 23

TECHNOLOGY

The Future of Software Supply Chain Security:

A focus on open source management Software Supply Chain Security: change is needed

The risks of open source software for supply chain security

Attacks on the Software Supply Chain (SSC) have increased exponentially, fueled at least in part by the widespread adoption of open source software, as well as organisations’ insufficient knowledge of their software content and resultant limited ability to conduct robust risk management. As a result, the SSC remains an inviting target for would-be attackers. It has become clear that changes in how we collectively secure our supply chains are required to raise the cost, and lower the impact, of attacks on the SSC.

The 2020 Open Source Security and Risk Analysis (OSSRA) report states that “If your organisation builds or simply uses software, you can assume that software will contain open source.

Whether you are a member of an IT, development, operations, or security team, if you don’t have policies in place for identifying and patching known issues with the open source components you’re using, you’re not doing your job.”

A report by Atlantic Council found that “115 instances, going back a decade, of publicly reported attacks on the SSC or disclosure of high-impact vulnerabilities likely to be exploited” in cyber-attacks were implemented by affecting aspects of the SSC. The report highlights a number of alarming trends in the security of the SSC, including a rise in the hijacking of software updates, attacks by state actors, and open source compromises.

This article explores the use of open source software – a primary foundation of almost all modern software – due to its growing prominence, and more importantly, its associated security risks. Poorly managed open source software exposes the user to a number of security risks as it provides affordable vectors to potential attackers allowing them to launch attacks on a variety of entities— including governments, multinational corporations, and even the small to medium-sized companies that comprise the global technology supply chain, individual consumers, and every other user of technology.

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Open source code now creates the basic infrastructure of most commercial software which supports enterprise systems and networks, thus providing the foundation of almost every software application used across all industries worldwide. Therefore, the need to identify, track and manage open source code components and libraries has risen tremendously.

License identification, patching vulnerabilities and introducing policies addressing outdated open source packages are now all crucial for responsible open source use.

However, the use of open source software itself is not the issue.

Because many software engineers ‘reuse’ code components when they are creating software (this is in fact a widely acknowledged best practice for software engineering), the risk of those components becoming out of date has grown. It is the use of unpatched and otherwise poorly managed open source software that is really what is putting organizations at risk.

The 2020 OSSRA report also reveals a variety of worrying statistics regarding SSC security. For example, according to the report, it takes organisations

an unacceptably long time to mitigate known vulnerabilities, with 2020 being the first year that the Heartbleed vulnerability was not found in any commercial software analyzed for the OSSRA report. This is six years after the first public disclosure of Heartbleed – plenty of time for even the least sophisticated attackers to take advantage of the known and publicly reported vulnerability.

The report also found that 91% of the investigated codebases contained components that were over four years out of date or had no developments made in the last two years, putting these components at a higher risk of vulnerabilities.

Additionally, vulnerabilities found in the audited codebases had an average age of almost 4 ½ years, with 19% of vulnerabilities being over 10 years old, and the oldest vulnerability being a whopping 22 years old. Therefore, it is clear that open source users are not adequately defending themselves against open source enabled cyberattacks. This is especially concerning as 99% of the codebases analyzed in the OSSRA report contained open source software, with 75% of these containing at least one vulnerability, and 49% containing high-risk vulnerabilities.

Mitigating open source security risks In order to mitigate security risks when using open source components, one must know what software you’re using, and which exploits impact its vulnerabilities. One way to do this is to obtain a comprehensive bill of materials from your suppliers (also known as a “build list” or a “software bill of materials” or “SBOM”). Ideally, the SBOM should contain all the open source components, as well as the

TECHNOLOGY

versions used, the download locations for all projects and dependencies, the libraries which the code calls to, and the libraries that those dependencies link to.

Creating and communicating policies Modern applications contain an abundance of open source components with possible security, code quality and licensing issues.

Over time, even the best of these open source components will age (and newly discovered vulnerabilities will be identified in the codebase), which will result in them at best losing intended functionality, and at worst exposing the user to cyber exploitation.

Organizations should ensure their policies address updating, licensing, vulnerability management and other risks that the use of open source can create. Clear policies outlining introduction and documentation of new open source components can improve the control of what enters the codebase and that it complies with the policies.

Prioritizing open source security efforts Organisations should prioritise open source vulnerability mitigation efforts in relation to CVSS (Common Vulnerability Scoring System) scores and CWE (Common Weakness Enumeration) information, along with information about the availability of exploits, paying careful attention to the full life cycle of the open source component, instead of only focusing on what happens on “day zero.” Patch priorities should also be in-line with the business importance of the asset patched, the risk of exploitation and the criticality of the asset. Similarly, organizations must consider using sources outside of the CVSS and CWE information, many of which provide early notification of vulnerabilities, and in particular, choosing one that delivers technical details, upgrade and patch guidance, as well as security insights. Lastly, it is important for organisations to monitor for new threats for the entire time their applications remain in service.

Emile Monette Director of Value Chain Security Synopsys

1

“Breaking Trust Archives.” Atlantic Council, www. atlanticcouncil.org/breaking-trust/.

2

“[Analyst Report] 2020 Open Source Security & Risk Analysis (OSSRA).” Synopsys, www.synopsys.com/software-integrity/ resources/analyst-reports/2020-open-source-security-riskanalysis.html?cmp=pr-sig.

3

“[Analyst Report] 2020 Open Source Security & Risk Analysis (OSSRA).” Synopsys, www.synopsys.com/software-integrity/ resources/analyst-reports/2020-open-source-security-riskanalysis.html?cmp=pr-sig.

4

Synopsys, Inc. www.synopsys.com/. “The Heartbleed Bug.” Heartbleed Bug, heartbleed.com/.

Issue 20 | 25

INVESTMENT

Why investing should be treated like healthcare For many people, the process of investing can seem opaque and impenetrable, and filled with jargon.

They can see the potential benefits, but they can also see the Financial Conduct Authority (FCA) risk warnings.

Despite - or perhaps because of - this, the long-term trend suggests that more individuals are open to investing.

One set of statistics suggests the percentage of individuals investing in stocks and shares in the UK grew nearly three per cent between 2010 and 2018.

Here are four steps for sensible investing:

•

Figure out why you invest, ahead of everything else

The key here is knowing what the overall goal is.

It is a constant source of amazement that when it comes to investing, few people stop to consider why they are actually doing it. Whether they have £100 or £100,000, many do not think about how their approach should be dictated by their overall goals.

For instance, someone looking to buy a house in the next 12 to 24 months should not be looking to dive into the world of bonds and equities, because they have a short-term target which requires reasonably fast access to cash. Tying their resources up in different funds and stocks will not only limit how quickly they can get their hands on their money when it comes to putting down a deposit, but they will not see the return that they would expect due to the short term price fluctuation of these assets. They would be better using a Cash ISA and enjoying the tax-free allowance.

On the other hand, if they have spare cash lying around that they won’t need for the next 3-5 years or longer, or they want to get a headstart on earning their retirement or long-term financial freedom, investing into financial markets is the way to generate compound return. That will give them a chance to beat inflation and, in all likelihood, it will give them a higher return than real estate would.

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It is like any big project – determining the overall goal informs the strategy, which dictates the tactics. In the world of investment, this means management. Yet even deciding what goals they are working towards can be challenging for some people – they might have overinflated ideas or be too conservative.

This is where independent, objective, and knowledgeable financial planning comes in.

By giving an individual’s finances a thorough check-up – much like visiting a GP – a qualified and experienced financial planner can consider circumstances, wishes and constraints. Only when this has been completed can they assess how feasible a client’s goals are, and the client can start considering how they should invest.

It needs to be a bespoke diagnostic and prescription process, in much the same way that a trip to the doctor requires the practitioner to have an understanding of any contributing factors and your medical history.

•

Seek professional help

If you were going to buy a property, you would look for a capable and qualified property lawyer instead of reading legal textbooks and undertaking training.

The same logic applies to other professional advice, such as accounting, medical treatment and tax.

Strangely, though, when it comes to investing, many people attempt to teach themselves.

INVESTMENT

While this approach is to be applauded, and there is certainly a huge amount of information readily available within a couple of clicks, the intricacies and vagaries of asset classes and funds, opposing investment styles, individual savings accounts and a hundred and one other terms can be overwhelming.

Forging ahead without professional guidance is a bit like having a pain in your hand and deciding to do a bit of exploratory surgery based on watching medical documentaries – there is only a slim possibility everything will turn out fine. This is why 99% of people have lost money by DIY-ing their own investments. It is a risky learning curve that, frankly, is better outsourced. Learning how to find a good investment provider can be a more efficient and less risky use of your time.

•

Do not trade

In the report quoted above, there is an alarming line: “Investors are now holding onto their shares for 0.8 years on average before selling them. In 1980, the average was 9.7 years, representing a decline of 91.75%.”

The proliferation of trading apps brings convenience and lowers barriers, helping people to access financial products, but the user friendliness of the technology often encourages over engagement at a real financial cost.

On an individual basis, each time you buy and sell any financial product (not just shares, but funds too) you lose a tiny slice of your capital, even if you can trade for free - this is due to “spread” which, put simply, is the price difference between purchase price and sale price. As you trade, this quickly adds up and eats into your principal, which you need to earn back before seeing any profit. This is a direct cost, in addition to the time you invest, checking the share price several times a day, the sleep you lose during volatile days, and the potential for developing an addiction, which is a common result of trading. Take a look at your work pension investment report if you have any - there is a reason why professional investors don’t buy and sell frequently.

On a collective basis, crowd trading behaviour drives more “boom and bust” cycles of financial markets, which has happened many times before and will continue to happen in the future. It is a more pronounced characteristic of less developed financial markets where there are fewer professional/ institutional investors to stabilise the market for everyone’s benefit.

•

Diversify globally, meaningfully

Sensible investing requires a skillset that is the opposite of most professional careers or entrepreneurship. In the latter, one strives to become an expert in a chosen arena in order to command the highest possible pay or profit margin. A wise investor, meanwhile, needs to be a generalist rather than a specialist, and investing is about hedging all possible risks before seeking a return. One of the biggest principles to reduce risk is to diversify on various levels: •

Your holding currency - for example, GBP has lost more than 15% in value against USD compared to the pre-Brexit high of five years ago, so it is a bad idea to hold all your assets in GBP only

Issue 20 | 27

INVESTMENT

28 | Issue 20

INVESTMENT

•

•

•

Your country/geography exposure - for example, you can buy GBP priced US assets, or USD priced US assets, such as S&P 500 tracker, to have a slice of US economy growth. We strongly encourage people to consider a globally diversified portfolio, for the reason that different economies go through business cycles and are at different stages at any given point of time. With a globally diversified portfolio, you can always benefit from the growth of some country, somewhere, at any given point of time Asset classes - If all your money is in London real estate, for example, you are likely to have felt some value depreciation since 2014. You take a risk if you tie your financial future to a single city’s economic cycle and potential rise and fall.

Industry allocation - as a former banker I never bought banking stocks or bonds, simply because my job and salary were already tied to the UK banking sector, and owning a piece of banks is like doubling down in a casino - not wise for risk mitigation. This is an often overlooked risk - people like to invest into companies and sectors they know well, typically from professional exposure and “inside knowledge” but this leads to blind spots and concentration risk.

Investing should be part of one’s long term financial strategy hence there is no one size fits all recommendation that I could give here. A simple step by step guide is: 1. Save a good portion of your monthly income, that allows you to enjoy your current life but also prepare for the future 2. Shortlist 3 financial planners (include Rosecut as one option) and pick one that you feel you can trust and who is cost effective to lay out your big picture and future plan 3. Invest regularly into a globally diversified, professionally managed portfolio that fits with your future goal and then make minimal changes. Ideally you should only even consider changing on an annual basis 4. Learn from this loop, iterate and optimise, ask many questions along the way!

Qiaojia Li Co-Founder and CEO at the award winning wealthtech company, Rosecut Rosecut is a financial planning partner and investment manager, giving access to the knowledge you need to plan for the future you want.

Issue 20 | 29

BANKING

Banking’s Next Technological Challenge: Innovation, Not Competition Well before COVID-19 shook up business practices and upended personal lives, the banking industry was heavily focused on digital transformation and digital disruption.

Experts warned that banks should prepare for everything from startups providing 24x7 services to fintechs and pure technology companies disrupting the financial services market. Without this preparation, how could these firms compete with other banks?

using intelligent technologies such as machine learning, artificial intelligence, and blockchain was highlighted.

Now, catalyzed by the global pandemic, banks need to refocus. Concerns about digital disruption and non-traditional competition are no longer the priority.

Future success will be determined by how well banks innovate and stay ahead of the technological curve.

Brainstorm problem-solving possibilities

At the recent SIBOSi conference, there was a lot of talk about the need to embrace innovation. The importance of the cloud for financial services companies who want to innovate

30 | Issue 20

And bank leaders are beginning to take note. A recent SAPii & Oxford Economics research studyiii found that 83% of leaders are prioritizing innovating on existing products and services.

But banks must also look ahead, brainstorming and adopting visionary methods to apply the technology.

For example, how can intelligent technologies help banks break down long-established internal silos? We see many examples where a customer is trying to communicate with a bank about some need or problem. Perhaps the customer tries the chat feature but doesn’t get a helpful answer. Maybe there are multiple interactions with a call center agent, or it takes an entire lunch break to resolve a simple problem.

Could AI technology be used to monitor these negative customer interactions and identify where service is subpar? What if AI provided real-time information to the bank agent, guiding the agent to a quicker resolution for the customer? Not only would banks have happier customers, but they could lower wait times and improve the efficiency of the call center. With seamless connectivity and end-to-end process integration, the bank could reduce the friction experienced by customers.

But that’s just the beginning. Banks are becoming digital platforms. They will have the ability to offer non-banking services alongside their banking services. Their cloud-based, open platform will allow them to easily plugin any third party services. Given that, what if next-level technology and a commitment to innovation could make customers’ lives better?

BANKING

This pandemic is creating extreme financial stress for many customers, who are struggling with layoffs, reduced income, and a lack of government assistance. Yet some customers might hesitate to call the bank to say that they lack the funds to pay their mortgage this month. What if the bank could use AI or machine learning to identify customers who need assistance and then proactively reach out to those customers to offer help? The right combination of processes and intelligent technologies could help the bank become a trusted advisor to its customers, increasing loyalty and making people customers for life. Some advanced technologies can help companies analyze customer tone of voice or sentiment, which could allow them to quickly understand and respond to service or product issues. The resulting insight would help enable tactical closedloop follow-up, increasing customer satisfaction and loyalty.

Apply intelligent technologies in new ways We’re already beginning to see some banks prioritizing innovation as a way forward. Some firms are turning to intelligent technologies such as AI and machine learning to ferret out fraud signals from the noise of other transactions coming through the banking engine. With their unprecedented speed and processing power, these technologies excel at rapidly identifying incidences of fraud and data patterns that indicate suspicious activity.

For example, Lloydsiv developed a new tool that uses AI to sniff out fraudulent activity before victims’ accounts are compromised. Using biometrics, the technology identifies the patterns of

how a customer typically uses Internet banking, with details such as the time needed to enter personal information or patterns in user movements around the screen. If a fraudulent user attempts to access the account, the software freezes access and contacts the customer. The bank estimates that this innovative technology already prevented fraudsters from illegally acquiring more than £4 million.

Another example is Coöperatieve Rabobank U.A. (Rabobank)v, a European bank that created a straight-through processing (STP) lending factory that reduced loan processing times from weeks to hours. Leveraging intelligent technologies such as machine learning helped Rabobank achieve an STP degree of 97%. Rabobank is also using conversational AI for=- invoice handling. The bank’s AI-enabled chatbot Billy is designed to handle repetitive questions from suppliers about invoices. Billy, which is available 24x7, went live while the Netherlands was gripped

by COVID-19 and had gone into lockdown. It was perfect timing: By freeing staff from the effort of looking up standard invoices, Billy enabled workers to address a growing number of specific questions during that period. With the chatbot taking over repetitive tasks, both employee and customer satisfaction increased. And Billy has been able to manage 100 to 150 conversations every day.

Other examples include financial services companies that use contract intelligence solutions, which rely on machine learning, to execute hundreds of hours of attorney effort in just seconds. And according to a recent article by Imtiaz Adamvi, startup payment service Face++ allows

consumers in China to use the Alipay mobile app to transfer money using just their face.

Stay ahead of the curve Like these companies, your bank can begin taking action. But don’t limit your vision to what other financial services providers are doing. Instead of viewing innovation as a means of keeping pace with your competitors, try to envision what your customers and employees want and need – and then figure out how to use intelligent technologies to deliver that experience.

You can innovate to lead. The best time to get started is right now.

A recent McKinsey studyi reported that 90% of executives “believe that the COVID-19 crisis will fundamentally

Falk Rieker global VP, global head of IBU banking at SAP SE Falk Rieker is the Global Vice President and Global IBU Head for Banking at SAP, a global tech leader that provides engineer solutions to fuel innovation, foster equality, and spread opportunity across borders and cultures.

Issue 20 | 31

BUSINESS

Diversity & Inclusion: An Urgent Priority for Financial Institution Innovation

change the way they do business over the next five years,” and 85% “are concerned that the COVID-19 crisis will have a lasting impact on their customers’ needs and wants over the next five years.” Yet, only 21% “feel confident that they are prepared to capture new growth opportunities” – which we know are arising from changing customer needs, preferences and expectations. These changes contain the seeds of product, service and customer experience innovations and are the bases for institutions to thrive into the future.

Innovation – creating viable new solutions to solve people’s real problems – will be essential to financial institutions’ ability to leverage these new opportunities and address this year’s intensified business challenges. These data suggest that while executives see innovation as essential, they do not feel well prepared to move towards a future that is no longer in front of them. The future is unfolding daily, right in front of us.

32 | Issue 20

Consider the business impacts of the digital acceleration of digitally enabled consumers, and concurrently the widening digital divide for the millions lacking the connectivity that contemporary financial institution digital experiences presume. These are just two examples of how the routine business model for retail banking, which has been under pressure for years, now faces the heightened threats of changing technologies, demographics, and distribution of wealth, along with a near zero interest rate environment and other macro issues.

Innovations that adapt to and anticipate contemporary market opportunities and challenges will not be discovered, developed and scaled by groups of like-minded people of similar background problem-solving skills gathered around whiteboards.

Solutions will demand new levels of diversity and inclusion. Executives will have to take a fresh look at how they:

1. Define what “diversity” means for their organization, redesigning processes and the metrics to implement and manage progress, 2. Act and engage personally to embed inclusiveness in the culture, with relevant metrics and clear incentives, and 3. Leverage the linkages between a diverse and inclusive culture and creating innovation outcomes to accelerate and improve performance.

Too many conversations about innovation prioritize technology as the major driver. Technology is just one element of the complex execution puzzle for a breakthrough financial services innovation to come to life and scale. Technology is abundant and can be bought. Diversity – not simply defined as gender and racial representation – and Inclusion – the culture and environment where all members feel respected, valued, and heard – are core to building and sustaining an effective innovation pipeline. Diversity and inclusion cannot be bought; they must be created and nurtured organically.

BUSINESS

Diversity Must Be Broadly Defined, Sought and Measured

Executives Must Personally Engage to Create a Culture of Inclusion

Read any articles on current practices and priorities in corporate diversity and you will find an emphasis on race and gender; you may hear, off the record, a focus on age as well.

Korn Ferryii identifies five qualities of the inclusive leader. They:

Reality is that while increasing gender and racial representation are essential to having a diverse organization, these characteristics are insufficient on their own. A gender and racially diverse organization will not be assured of innovation success. Also required in the composite profile: diverse life experiences, education backgrounds, and people who have come to the institution along different paths, bringing their different perspectives and knowledge to the innovation process. When this is the view of what diversity means and it is acted upon in talent decisions, an organization will make headway on achieving business impact from their innovation efforts.

1. Are open and aware, i.e., they adapt their behavior to meet the needs of their diverse team members 2. Advocate for diversity 3. Lean into difference, creating psychological safety for all team members 4. Leverage differences, understanding that these differences are the source of greater insight 5. Drive results, knowing that it is their success at fostering a diverse and inclusive environment that creates success What else is required to build an inclusive culture? Especially for those in transition, being inclusive also means being able proactively and constructively to surface and root out exclusionary behavior. It means rewarding inclusive behaviors and taking a zero-tolerance stand on those that are harmful to the target culture.

Founder Marcia Tal, who built and led Citi’s Global Decision Management unit, is the creator of The Bias Index, part of the PositivityTech Intelligent Platformiii. Marcia is optimistic that financial institutions already have in hand the data assets – their own employee and customer narratives – to which analytic tools can be applied, as she describes, “to identify situations where there is both a high probability of potential bias, even if it hasn’t taken place yet.” She also sees a data-driven culture which can “tune out the noise” as essential to building a diverse organization and inclusive culture. “When you use data to drive decisions, the culture of the organization is built on facts instead of myths that threaten diversity and inclusion,” says Tal. “It also drives an organization to seek facts and data as an essential element of their culture, which in turn supports inclusion.”

Implementing such an approach according to Tal means innovating how diversity and inclusion efforts themselves are managed and led. It means a multidisciplinary approach

Issue 20 | 33

BUSINESS

engaging data and analytics experts, learning and development experts, along with the traditional cadre of HR professionals, to listen to and understand employees at a much deeper level than historical methods have imagined or enabled. Getting to this understanding requires diverse perspectives able to look at new data sources in new ways, and help the organization move from data to insight to action and results.

There is much focus in the financial services sector on becoming more customer centric, and on aligning the customer experience with the expectations we have all set in our digitally centered lives. It is only with a diverse organization thriving in an inclusive culture that any financial institution can hope to: •

Understand customers as human beings with lives that have context well beyond their financial relationships – context that must be understood to innovate

•

Develop empathy to build enduring and mutually valuable customer relationships where both customers and employees feel respected, valued and heard

•

Anticipate customer needs with speed and depth of insight – innovation must-have’s given the macro forces affecting the sector

•

Address near and present diversity risks, e.g., the loss of mid-career women with children and/or aging parents from the organization, because their careers are being marginalized by the dual roles of professional and caregiver/ distance learning supervisor.

Recognize the Linkages Between Diversity and Inclusion, and Innovation Discovering, developing and scaling the innovations that will allow financial institutions to adapt to the forces of change they face, and improve their ability to anticipate whatever will come next, can only happen persistently and sustainably within a diverse organization and inclusive culture.

It is only through deep executive commitment and engagement to a diverse organization and inclusive culture that financial institutions can realize their innovation potential.

Executives see the severity of the challenges arising this year. They can build confidence in their organization’s readiness to respond by broadening their definition of what diversity looks like in their organization, personally engaging in creating a more inclusive culture, and leveraging the connection between diversity and inclusion, and their organization’s ability to act upon the many innovation opportunities the sector can capture.

Amy J. Radin

34 | Issue 20

1

https://www.mckinsey.com/business-functions/strategy-andcorporate-finance/our-insights/innovation-in-a-crisis-why-it-ismore-critical-than-ever

2

https://focus.kornferry.com/leadership-and-talent/diversity-2-0the-inclusive-leader/

3

https://positivitytech.com/

Amy is the author of the awardwinning book The Change Maker’s Playbook: How to Seek, Seed and Scale Innovation In Any Company. She is a director, startup advisor and keynote speaker, and has held executive digital, marketing and innovation roles in Fortune 500 consumer financial services, payments and insurance companies.

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2020

BUSINESS

38 | Issue 20

BUSINESS

Supply Networks: The Future of Procurement No supply chain has been spared by the impact of the coronavirus. Some parts of the world are indeed seeing businesses slowly look toward recovery and a gradual move to a ‘new normal’. But we cannot ignore that small shops and multinational corporations alike will continue to face challenges with regard to their manufacturing, distribution, logistics, and demand functions, as well as their overall financial well-being and that of their business partners.

A contributing factor to this disruption is the traditional, linear supply chain model, where each step is dependent on the one before it.

Inefficiencies at one stage result in a cascade of inefficiencies down the line. And when the buyer and supplier are located at either end of the chain, it’s easy to see how collaboration breaks down and end-to-end visibility is nearly impossible.

The resulting reactive and uncoordinated response makes it challenging for procurement teams to know exactly which suppliers, sites, parts and products are at risk, and therefore, extremely difficult to secure new sources of supply in a timely manner.

Fostering the Partner Ecosystem As businesses grapple with the ramifications of COVID-19, they must learn key lessons as they look to recovery. At the crux of this is rebuilding and restructuring resilient supply chains for a better future. This means moving beyond the traditional linear supply chain model to the implementation of a dynamic, collaborative supply network.

Unlike traditional supply chains, supply networks shift away from singular, point-to-point processes to a many-to-many structure that enables 360-degree visibility. Once an organisation is connected to a network, they become both a buyer and a supplier and gain broad visibility into the interconnected operations of their trading partners. Beyond allowing companies to identify emerging trends or issues more easily, access to a network also enables them to collaborate with new partners, improve cash flow, develop new products and accelerate sustainability.

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Connecting to a network that includes producers, vendors, distribution centres, warehouses, transportation companies and retailers contributes to a businesses’ overall ability to move with agility, respond more quickly to demand and address unforeseen circumstances like those we’ve seen this year.

Building the Business Pillars of the Future The global COVID-19 pandemic has suddenly accelerated the need for organisations to transform and respond to the unplanned and unprecedented. As a different world takes shape, longer term strategies for supply chains and operating models need to be re-assessed and prioritised in order for an organisation to advance in the following three key business pillars of the future: resiliency, profitability, and sustainability.

40 | Issue 20

Digital transformation will play a major role for an organisation to withstand future disruptions and help pivot them toward recovery when disruptions do occur. In turn then, supply networks offer a holistic approach that enables greater transparency between trading partners and help organisations make decisions in real-time. Unlike linear supply chains, supply networks optimise operations and break down functional silos to enable organisations to realise the untapped potential of existing capabilities and achieve higher performance as well as greater value.

Indeed, this is demonstrated by recent data from Bain & Company, which reveals how companies with resilient supply chains grow faster because they’re able to move quickly when market demand shifts.

When it comes to an organisation maximising its profit margins, resiliency and profitability go hand in hand.

Businesses that run reliable, automated supply chains generate increased revenue because digital supply networks can smooth over any friction, and in turn, maximise the output. With automation and transparency in place, the ROI handles itself and the network becomes a profitability-driving tool.

Finally, businesses should always consider their sustainability goals; not only across their organisation, but within their supply network too.

Beyond the need for creating longterm value, sustainability can foster innovation and encourage new ways of thinking that can ultimately lead to increased revenues, stronger customer relationships and improved brand perception. One way this is often addressed is by looking to reduce carbon footprints as a result of operations. However, sustainability exists deep within supply chains, like modern slavery and single-use plastics;

BUSINESS

these need to be addressed in equal measure too.

The use of technology can help spot inefficiencies and risk so that today’s business leaders can instil long-lasting change and dig into the supply chains of their partners and suppliers, prioritising those who are also making sustainability a priority too.

It’s a New Dawn Transforming from a supply chain to a supply network should support a business’ total digital transformation strategy. By taking advantage of the latest digital tools, businesses can remain resilient and scale at a rate that creates a competitive advantage.

An example of this done successfully is demonstrated by the Danish manufacturing company VELUX Group, which automated 64% of its 20,000 monthly order lines after digitally transforming supply chain operations and streamlining supplier collaboration. Now, the VELUX Group seamlessly conducts transactions with more than 200 vendors and enjoys improved processes, accelerated delivery dates and more time saved.

Digital supply networks are built to anticipate disruptions and mitigate risks. They leverage technology and data analytics to provide a continuous flow of information which allows business leaders to gain a holistic insight to all areas of the business. While moving to a supply network requires fundamental changes to many aspects of an organisation’s planning – from strategy, to business processes, to IT – the ability to keep up with fastmoving market dynamics is essential in today’s business environment more than ever.

Sean Thompson EVP of Network and Ecosystem SAP Procurement Solutions Sean Thompson is executive vice president of Network and Ecosystem, SAP Procurement Solutions. In this role, Sean leads the procurement solution supplier strategy for network and payments, including Ariba Network, and oversees the growth of the application extension ecosystem. Previously, Sean served as the chief revenue officer of SAP’s SMB cloud ERP business.

Before joining SAP, Sean was CEO and co-founder of Nuiku, a leading-edge, natural language processing and artificial intelligence company that brought voicedriven user interfaces to enterprise applications and home automation domains. Nuiku was sold to Nortek (NASDAQ: NRTK) in 2016.

Prior to heading up Nuiku, Sean spent 10 years at Microsoft, where he worked in a variety of roles including director of product management within the Server and Tools division and managing director of strategic partnerships (Accenture and SAP) in the Enterprise Group. He also served as a member of Microsoft’s senior leader bench program.

Previously, Sean worked at several technology startups, including drugstore.com, where he was part of the preIPO team and director of venture integration, and Nimble Technology, where he was vice president of sales and services.

Sean spent the first decade of his career at Deloitte Consulting, where he managed service line delivery in areas such as ERP (SAP), business intelligence, process reengineering, risk analysis (audit), and M&A advisory (tax). He was also a member of Deloitte’s Senior

1 Schatteman, O., Woodhouse, D., & Terino, J. (2020, April 27). Supply Chain Lessons from Covid-19: Time to Refocus on Resilience.

Retrieved October 23, 2020, from https://www.bain.com/insights/ supply-chain-lessons-from-covid-19/

2

VELUX Group: How Can Digitalizing Spend Processes Facilitate and Optimize Supplier Collaboration? (n.d.). Retrieved October 23, 2020, from https://www.sap.com/documents/2019/09/f481b367-647d0010-87a3-c30de2ffd8ff.html

Management Advisory Committee.

Sean received his Master of Business Administration from Harvard University and his Bachelor of Business Administration with high honors from Gonzaga University. Sean is also a CPA in the State of Washington.

Issue 20 | 41

TECHNOLOGY

Why financial services brands need to plan for the three phases of AI innovation Digital transformation is accelerating in many areas of business, but with people forced to stay at home and social distancing likely to become a long-term feature of daily life, it is the interaction between services and people that is accelerating fastest.

In the first few months of the pandemic, use of online and mobile banking channels skyrocketed and this level is expected to continue far after it subsides. In fact, up to 45% of consumers are expecting to cut back on branch visits following the end of the crisis.

As consumers use digital banking services more, they also expect more. In many ways, digitisation is creating an expectation economy – brands who meet or pass expectations in the delivery of digital services will perform well. The benchmark for service delivery and communication expectations is rising – pushed up by digital native brands free to innovate fast. It is entirely natural that people will expect more, better, and faster interactions and will compare performance and delivery across different sectors.

42 | Issue 20

We’ve seen this already in the financial services space. Digital challenger banks such as Monzo and Starling have disrupted the landscape, bringing these services to market quickly.

Deploying technology that uses artificial intelligence to enhance performance and innovation is an increasingly important aspect of service delivery. It is already an important ingredient in digital transformation - optimising the performance of people, processes, and data.

But the AI space is complex and often misunderstood. AI technology is not close to delivering a unified intelligence capable of thinking or solving multiple challenges, rather it is fragmented and focussed on learning how to improve performance in specific areas. Broadly speaking we can think about the evolution of AI in three overlapping phases.

We are in the first one now which is the use of off-the shelf technologies that can be used across business to optimise simple processes. We are also plunging into the second phase which is

TECHNOLOGY

investment in bespoke AI to tackle specific challenges within a business to enhance performance and gain competitive advantage.

Beyond this, we might look to a third phase which could deliver gamechanging innovation. A hint of what this might mean can be seen in the OpenAI project work to explore and create intelligences that can outperform humans for example in the creation and understanding of written content. The implications are not yet clear – but they could have profound socio-economic consequences.

In the meantime, what will AI change in the financial services space?

AI means Human + Machine A challenge for institutions is how to consistently offer high-quality advice at scale. That means providing personalised recommendations to clients that are relevant, suitable, timely and actionable. Achieving this in an impactful way requires an understanding of each consumer’s individual needs to offer an experience that supports both digital and integrated human interactions.

With AI, banks can automatically extract previously unknown insights from structured and unstructured data based on predictive patterns and connections. For example, it could give the workforce critical insight into the social styles and preferences of the consumer using natural language processing and tone analysis before they’re even introduced This enables banks to identify and act on recommended actions for improved competitive advantage.

As such, AI is providing valuable resources as well as intelligence throughout to improve the entire customer journey.

Process(ing) efficiency One of the more valuable applications of AI is its ability to remove inefficiency.

Historically, banks have been hindered by poor data quality, evolving regulations and legacy IT structures which contribute to making many processes more complex and time-consuming.

As a result, institutions are redesigning the workplace environment for employees and customers by automating the simplest tasks. Using AI to eradicate repetitive, monotonous work opens opportunities for skilled and experienced staff to focus on higher-value, creative pursuits. In the long-term, this means more personalised services for customers.

Broadly speaking, AI will create a more seamless customer experience. Through dynamic analytics, banks can ensure more processes are revolutionised by intelligent automation. For instance, voice recognition can assess if a customer is becoming frustrated with a robot and connect them with a human to guarantee frictionless interaction across products and applications.

companies and electoral registers to decide based on a customer’s real time data. It could then direct the customer towards the appropriate product for their requirements.

Breaking down data siloes and accessing data in a more dynamic and creative way will help make banks the standout financial services providers in an increasingly fragmented industry.

For many banks, ensuring adoption of AI technologies is no longer a choice, but a strategic imperative. If they don’t keep pace with technology, they risk being left behind in this competitive landscape.

AI provides an opportunity for financial services to transform the way they organise, run, and grow the business.

Using AI to push digital transformation will enable a more agile proposition that provides improved experiences for customers and employees alike.

Insightful Data Banking providers harbour huge amounts of data. While ethically, they have a responsibility not to abuse this information or their customer trust, customer sentiment is leaning towards a willingness to let banks use their data. If it means a better service and experience.

It provides a unique advantage. It can offer insights into the more individual aspects of customers lives such as their wants, needs and desires. Most importantly, this data can feed the analytics which guide the development of ever more bespoke services for customers.

Take credit applications, for example. With Open Banking and cloud data storage, machine learning algorithms could instantly draw on multiple sources such as utility

James Hobbs Head of Development Great State

1

Biswas, Suparna, et al. “AI-Bank of the Future: Can Banks Meet the AI Challenge?” McKinsey & Company, McKinsey & Company, 28 Sept. 2020, www.mckinsey.com/industries/ financial-services/our-insights/ai-bank-of-the-future-canbanks-meet-the-ai-challenge.

2

OpenAI. OpenAI, OpenAI, 1 Sept. 2020, openai.com/.

Issue 20 | 43

FINANCE

How ISO 20022 migration is changing the landscape in payments The ISO 20022 standard is a catalyst for change in digitalisation and payments. The current edition of the standard was published in May 2013, and it’s been clear since then that the standard represents the future of payments messaging. This is due to the rich information, process automation and interoperability it enables. What started off in the Automated Clearing House world with the Single European Payments Area is increasingly becoming the de-facto standard for instant payments and for high-value payments worldwide.

In fact, we estimate that all major payment systems and currencies will have moved over to ISO 20022 by the end of 2023.

Banks, meanwhile, will be able to get closer to their customers and offer better services. As this happens, the nature of the entire payments supply chain will change: there will be no one owner. Instead, consumers, corporates, banks, software vendors, fintechs and other stakeholders will all play a part.

44 | Issue 20

Migration to ISO 20022 is moving at pace with one of two adoption models being taken. In the first approach, a ‘like-for-like’ migration occurs, which means data fields and messages are gradually moved over in compliance with the new ISO 20022 standard. However, the bank and client aren’t reaping the potential of the new standard as no further action has been taken. ‘Going native’ is the second approach. This allows extensive data sharing between banks and corporates unlocking a range of benefits including deeper insights into customers and partners, better accounting and financial data and more efficient payment processing. Datarich messages can provide corporates with all the information they need to automatically reconcile transactions the moment they happen.

Banks deciding which way to move forward must remember that corporates have been waiting eight years for this new ISO 20022 functionality and if their bank is not able to deliver the promised benefits, they could decide to take their business elsewhere.

Planning the migration process Deciding which approach to take is the first step in the migration process for banks. The main transition models being deployed to the market are: the ‘like-for-like’ translation model, or; for an ‘ISO-Native’ approach – either the complete overhaul model, or the hybrid model.

The translation model approach translates incoming MX messages to the SWIFT MT format and vice-versa for outgoing messages. This model is less disruptive and has a lower upfront cost. However, it involves high dependence on third parties resulting in less interoperability with fintechs and no new customer insight.

The complete overhaul model allows organisations to execute a wholesale architecture transformation. This approach gives access to leverage rich data across the business including new insights on the market and customers.

One negative aspect of this approach is the fact it is disruptive and requires a large upfront investment. Finally, the hybrid model works well for global

FINANCE

banks where translation is needed across the board. This approach offers flexibility and the ability to localise strategic response, however it adds a level of complexity to users. The leading model is unclear, but banks must remember to align their payments operations with their chosen model.

That’s not to say that the adoption of ISO 20022 will be plain sailing.

One challenge is that the standard describes an asynchronous messaging process. For banks which currently rely on return messages to confirm the successful completion of a payment transaction, this will cause significant upheaval, and is a change that underscores the need for everyone in the payments ecosystem to get ISO 20022 migration right.

Banks will need to overhaul their business processes and operations to adapt to asynchronous messaging.

This will in turn require new systems, such as Confirmation of Payee and Request to Pay. The new format requires a fundamental change to the payments world, so the decision on which transition model best suits their needs isn’t to be taken lightly. Internal and external considerations will help banks determine next steps to successfully implementing ISO 20022. Internally, banks must ensure they have the right people to deliver this transformation, have processes in place to easily review and adapt back office functions and have the correct technology required for the migration. Our approach at Finastra has been to build a payments hub that is ISO 20022 native from the start – ready for widespread adoption across the industry. Banks must also look at external factors like customer impact, market share, competitors and regulatory constraints.

Benefits across the payments value chain The adoption of ISO 20022 allows for additional, enriched data to be transferred within the payment instruction. The new format has more granular and better organised data elements as well as a consistent data dictionary across the payments chain to speed processing and improve compliance. This prevents misinterpretation and expensive manual interventions. All of this will facilitate improved processing and allow all agents in the payment to make more informed compliance decisions.

Paul Thomalla Global Head Payments at Finastra

In the short term, including additional party and remittance information will help reconcile transactions. For example, QR codes are being used more widely on invoices, clearly identifying the beneficiary and facilitating automation in the back office. Looking at the medium term, institutions will be able to limit the resources they have to dedicate to exception handling and one-off investigations due to missing information or unstructured input that cannot be easily integrated into automated workflows. And finally, the benefits of ISO 20022 in the long term mean data that is properly structured and adhered to will support better regulatory compliance practices and financial crime monitoring.

The rewards of ISO 20022 make any temporary disruption more than worth it. We’re excited to enter a new era of payments messaging that will drive collaboration, innovation and efficiency through interlinked partner ecosystems.

Issue 20 | 45

FINANCE

Asset-based lending is often called ‘working capital finance’ for a reason…

At the start of lockdown, many businesses went into panic mode, wondering whether they had enough cash in the bank to meet their obligations in the unpredictable future.

Thankfully, the raft of government support helped to ease much of the immediate cashflow woes, however, this exercise alerted many CFOs to the need for a more robust way of managing their working capital — both now and in the future.

Prior to the beginning of 2019, I wonder how many businesses had “potential global pandemic” as an immediate threat to be prepared for and managed in the latest iteration of their business plan.

With poor working capital management being the number-one reason cited as cause of business failure around the globe, managing risk via robust working capital facilities should be high on the agenda of any business hoping to ride the current economic storm.

46 | Issue 20

Thankfully, UK Finance may have found the answer to the question: “How do businesses bolster their working capital facilities post-pandemic?”

UK Finance conducted a study throughout the lockdown period that reviewed the facilities of 20,000 businesses (accounting for 5% of the UK GDP) in the UK using Asset Based Lending (ABL) and Invoice Finance (IF) as a way to manage their working capital. In the context of the lockdown period, much of the focus was on the availability of vital funds, with the government were under pressure to provide quick access to finance to keep the economy afloat.

The results of the study were surprising, stating: “At the end of March, IFABL clients were using 70 per cent of their available funds to support their cashflow, three months later this had dropped to just 45 per cent. In real terms, this indicated the ‘average’ IF/ ABL client had headroom of over £250k within existing facilities.”1

This shows that government grants, the Job Retention Scheme, and Government Backed Loans (CBILs and BBLs) provided the working capital breathing space that businesses needed. But more importantly, it shows that the businesses that had working capital facilities in place prior to the pandemic had more headroom in their facilities and were less likely to be in desperate need for cash.

If this isn’t enough of an incentive for every CFO to review the current facilities — and consider the benefits of — Asset Based Lending (ABL), here are some other reasons why it should be considered as a working capital management tool: •

With ABL, you get a higher availability of cash compared to traditional lending facilities

•

ABL provides revolving working capital on a constant basis, meaning the availability of working capital will increase inline with the growth of your business

FINANCE

Alex Beardsley Director ABL Business

•

Usually, ABL facilities carry a lower cost of capital from lenders due to the high amount of security they have over the business assets, and therefore can be a more costeffective way of borrowing

•

The facility provides more than just an injection of cash at a specific point in time that is then to be repaid out of working capital, further hitting access to cash.

A better way of managing working capital lies in both knowledge of what is available in the market for businesses, and also the particular attitudes towards using finance within a business.

A study in 2014 by Lloyds Bank Commercial Banking highlighted that there was £770bn of untapped assets nationally — which at the time equated to 48% of GDP. Could it be that working capital management is suffering because UK businesses are unaware of the options available to them when it comes to structured finance, or is it that they are reluctant to use finance at all?

Many businesses refer to the bank for support when it comes to providing working capital facilities — or any finance at all — but in the last few years the alternative finance market has proliferated. There are now a range of specific ABL providers that are more commercial and open to risk than the high street banks, meaning that there is now more choice available to businesses seeking support for working capital management facilities.

Following the pandemic there is going to be an increased amount of debt on the balance sheets of UK businesses and a reluctance from the banking and financial institutions to lend without significant security.

Now more than ever, it is imperative that businesses and CFOs assess all of the options available to them when it comes to using finance within the busines to help with working capital management.

Having the right finance facilities in place before the business runs into working capital issues is a sure fire way to ensure that a business always has the cash on hand to meet their financial obligations — minimising the risk of insolvency by being able to meet current liabilities.

No one can deny that the risks to lenders have increased. Before Covid-19, the likelihood of a 'pandemic' was not on anyone’s radar — now it will be the first thing lenders and businesses think of going forward when it comes to making decisions.

1 https://www.ukfinance.org.uk/data-and-research/data/ business-finance/invoice-finance-and-asset-based-lending

Issue 20 | 47

AMERICAS INTERVIEW

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BANKING AMERICAS INTERVIEW

The battleground for banks is not digital vs traditional: it’s the race to be customer-first Digital transformation in finance is not new or a nice-to-have – it’s table stakes for growth. But the question now is how fast banks should transform and how digital they should be to best serve their audiences.

traditional banks could finally catch up with the convenience and ease of the challengers but with the added bonus of reputation and loyalty, if they’re smart.

These decisions are fundamental.

Challenger banks have accelerated transformation of the banking sector over recent years. The disruption the digital-first banks created was immediate yet fairly simplistic as it concentrated on reimagining customer experience – the teams looked at an industry standard customer journey that hadn’t changed fundamentally in decades, identified the obvious pain points and customer barriers and thus created an attractive digital experience that saved customers time, effort and energy. This, often combined with either market leading interest rates or savings, a modern technical stack with little if any legacy and debt, and exploiting the lack of trust in traditional banks, appealed to a whole new digitally-literate audience with high expectations and gave traditional financial businesses a much needed wake-up call.

Banks must understand that it’s no longer about ‘traditional’ or ‘digital’, but ultimately what the needs and wants of their audiences are. This should dictate the transformation strategy rather than the legacy mentality of ‘how do we keep our original business model as a bank and continue to try and cross sell products?’, which is the business model today.

Those with a clear understanding of changing consumer behavior will find ways to create products around the new needs of the customer rather than pushing a more traditional model based on minimizing risk and maximizing returns to the benefit of the bank – and this should be done through a combination of traditional and digital channels. With COVID resulting in a massive 50% surge in mobile bankingi now 6% of US adults consider a digital bank to be their primary bank which is a 67% jump from January 2020ii -

The challenge for challengers

Yet, challenger banks have also faced problems and continue to do so. Research we conducted at Somo

outlined in our white paper ‘Are digitalonly brands the future of financial services’ iiishowed that only 1 in 5 consumers were getting salaries paid into their digital account and so challengers need to find a way of becoming the primary account rather than the secondary one.

Although research shows that digitalonly banks are expected to grow exponentially over the next four years - 19.8% in the US according to an October 2020 forecasting report by Business Insider - simply holding a large number of savings or current accounts is not hugely profitable for these challengers. Therefore, it’s no surprise we are already seeing challenger banks seizing COVIDrelated opportunitiesiv owing to the larger institutions offering fewer new business accounts because of the huge backlogs. Additionally, according to the Bureau of Labor projectionsv, the portion of gig economy workers will increase to 43% in 2020 in the US. A gap is emerging that needs to be filled with banks that can evolve and cope with income volatility in customers and hold a completely different customer-first offering.

Chime in the US, for example, currently has 9.5m account holders and this is expected to increase to

Issue Issue 20 20 || 49 87

BANKING

19.4m by 2020, according to the October 2020 forecast by Business Insider. The bank’s growing product suite proves they understand the changing needs of customers - such as settings that automatically transfer 10% of wages into a savings account or early wage access for those living paycheck to paycheck.

The next stage of challenger banks is the creation of product marketplaces through banking as a service.

They should be providing multiple offerings from other brands, moving further away from the siloed system of traditional banks only offering their customers their own financial products such as savings, loans and insurance. Whilst margins will be lower for marketplace products offered in comparison to own-brand products, set-up and risk is also outsourced and customer satisfaction should rise as they have a curated choice of market offerings rather than a single-branded offering.

50 | Issue 20

The traditional’s struggle This approach is trickier for traditional banks to adopt. Gartner researchvi shows that in the US 69% of retail banking brands rank average or below in digital performance. Currently, most are only selling their own branded products developed and delivered on their own technical infrastructure regardless of the customer needs.

Traditional banks have the ability to use their branch network to increase customer digital and financial literacy as well as a customer service triage point (an area that most challenger banks have been poor at focusing on) - because people still want to talk to people at a bank as they make their financial choices.

So what’s the answer?

Traditionals have the advantage of albeit costly physical branches and are hamstrung by inflexible legacy

systems, technical debt and expensive time consuming transformation programs whilst challenger banks have proven to be able to develop customer experiences that fit audience needs, yet have an issue with ensuring they are the customer’s primary bank and then selling additional products to achieve profitability.

COVID has added to this inflection point and accelerated the need for strong strategic vision as it has exposed traditional banks that had pressed the snooze button on modernization.

When branches were immediately closed, banks had to provide a good end-to-end digital service and this exposed weaknesses in traditional bank customer journeys to all.

For banking to properly adjust to what customers want and need, especially in recent times, companies need to adopt a hybrid approach to deliver the best parts of the traditional and digital models - the loyalty, service

BANKING

and financial literacy education of the branch in traditional through to the needs-based product and experience of the digital. The key for both in the route to market is to start relearning who their customers are and what they need – and to prioritize helping them over selling to them. Banks that don’t solve this problem risk their survival and this must be their number one priority.

Developing a customer experience and products that meet the needs of their particular customer base is critical.

Building emotional engagement Banking is one of our oldest services and there is a belief that customers with traditional banks do not want change. This isn’t the case – in fact, people expect change now more than ever. We have been made to question modernization across all walks of life without any choice, and so customers expect to see movement that now matches with what they have come to enjoy from other services.

But banking is not the most engaging sector for customers; they are like utilities where our engagement is low and based often only on a monetary exchange. Therefore, getting people to switch is incredibly difficult because, behaviorally, we often see more potential worries about a switch in comparison to the benefits we receive from switching. For many, the thought of having no ties to a traditional banking system worries them, which proves the need to emotionally engage with customers and offer assurance over practicality and function. We are already seeing digitals capitalizing on traditional bank failings and slow movement since the pandemic, but they also will struggle to cost effectively scale acquisition due to the inherent worries of switching from

traditional banks. Building an emotional engagement that helps address these customer worries and helps them through the process rather than simply trying to get them to sign up to an account should be the key focus here.

The time for change When Somo meets with traditional financial institutions, we preach the value in modernizing and transforming the technical stack to enable a more efficient system and provide the foundation for the development of engaging customer journeys and products. The primary issue to address is not the transformation itself but the pace of transformation to keep aligned with the particular audience needs. We help clients through identifying and prioritizing audience needs and support internal teams to deliver at pace and scale against these.

Ultimately transformation is a C Level ownership and focus - the speed of this transformation is dependent on the vision, the agreement of the shareholders and the funding of this ongoing journey.

Despite rapid changes, a conception sprint validating a particular journey and identifying key user pain points can be done in as little as eight weeks, feeding into the subsequent rapid design and build of Minimum Loveable Product (MLP).

Where there is no quick fix, for banks the priority should be building a culture with an adaptive and agile mindset that recognises new customer behaviors and employee needs. This will lead to a deeper embedding of transformative thinking led by the C-suite and across the organization to develop a strategy for sustainable growth that can withstand the pressures of the ‘new normal’ and carve out a roadmap for successful digital transformation.

Ross Sleight chief strategy officer at Somo digital product agency

We know that digital transformation has shot up the priority list in boardrooms across industries as digital uptake has accelerated at an unprecedented rate over recent months. As documented in Somo’s new white paper ‘Digital Leadership Priorities for 2021’ companies that sped up their plans now have a stronger chance of surviving and forging forward whilst those that did not prioritize change are finding it tougher.

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Skilled Trades Lead the Way in the Pandemic with Digital Experiential Learning

— Other Industries Should Take Note

It’s been a well-used adage over the years, but “necessity is the mother of invention” — the idea that when you need something you have no option but to find it — seems particularly appropriate when it comes to the current COVID-19 pandemic.

From working remotely to the transformation of office life and greater automation, COVID-19 has changed the world we live and work in today, and the way we deliver products and services.

This is especially true in the training of skilled trades — occupations such as HVAC, plumbing, electrical, solar and facility maintenance. Other industries can learn from these trades, specifically in the area of technology.

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A Growing Skills Gap — Moving Training Off Site Few industries have been impacted as much by COVID-19 as the skilled trades, where more often than not, the workers must be in a physical location performing what is considered an essential service, whether it be electrical, plumbing or HVAC. This on-the jobfocus also manifests itself in training, where skilled trades apprenticeships can take between one and six years, and often require months and sometimes years of on-site experience. With COVID-19’s continuing impact, there is a possibility that apprenticeships might now take even longer.

The skilled trades industries cannot afford any delays with a perfect storm of growing demand and fewer people joining the profession. According to HR consulting firm Adecco, more than twice as many skilled workers are retiring than entering the U.S. workforce — a pattern that is being seen worldwide.

Never has it been more important for companies, the industry and the country as a whole to have these essential skilled tradespeople job-ready within weeks or a few months.

Because of this, technology innovation is coming to the rescue, recalibrating skilled trades learning for the COVID-19 era.

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Virtual Reality — The Growth in Immersive and Digital Experiential Learning Nowhere is this better seen than with virtual reality (VR) training — a form of immersive or Digital Experiential Learning (DEL) where participants access head mounted devices and hand controllers to interact within a virtual 3D environment and simulate hands-on training.

Professional services firm, PWC, estimates that VR learning will contribute $294 billion to the global economy by 2030.

Initially the domain of industrial and heavily capitalized industries, such as aviation and the military, the skilled trades industry has now fully embraced VR, making training safer and more efficient, while reducing the time to full certification — without compromising quality.

A More Complete Learning Experience There are clear learning benefits to VR platforms. A June 2020 report by PWC found that “V-learners” complete training four times faster than classroom training, are 3.75 times more emotionally connected, and 1.5 times more focused than classroom learners.

VR’s flexibility is ideal when learning pathways need to be changed quickly, as is the case in the unpredictable environment we live in today. Take the HVAC sector, for example, where technicians will have to make new modifications to mitigate the spread of viruses and be trained accordingly.

The scalable nature of VR enables this to be done quickly with its design and characteristics encouraging collaboration and creative problem solving.

Additional benefits of moving training to online, on-demand platforms utilizing 3D simulations and VR include, reducing costs and barriers to entry, and increasing safety by eliminating the need to be on site for in-person training — not only during apprenticeships, but

also for reskilling. Digitization and VR delivers safer, more accurate, faster and more efficient skilled trades operations, training and education.

Attracting New Entrants A final benefit of technology such as 3D simulations and VR, is that it’s likely to attract more tech-savvy digital natives to a profession that is struggling to find new recruits. It’s only by making it easier and quicker for young people to acquire skilled trades expertise, as well as making the industry more attractive, that a sustainable future awaits.

Major Corporation Adoption At Interplay Learning, software engineers, game developers, instructional designers and subject matter experts have developed 3D simulations and VR training that allow skilled trades practitioners to practice hundreds of in-the-field scenarios online and on-demand. This has led to a number of major corporations accelerating their plans to educate thousands of their skilled trades employees through this platform in 2020.

Rheem Manufacturing Company, a U.S. privately held manufacturer that produces residential and commercial water heaters and boilers, as well as HVAC equipment, plans on training 250,000 new technicians by 2025 through the use of Interplay’s VR and online solutions.

Sharing Best Practices How can VR be applied to other industries? Take financial trading, for example, where VR could create the vibrancy and energy of a packed trading floor without the need to leave home — a totally immersive environment. Experiential, VR-based learning can also be adopted across insurance, investment banking and consumer banking where staff can learn to mitigate risk and build customer relationships via VR. The potential is endless.

There are significant indications that COVID-19 will transform many aspects of everyday life for the long term.

Learning is likely to be one of them with skilled trades leading the way. It’s only a matter of time before others follow.

Companies and organizations, which have implemented Interplay’s training solutions recently in response to COVID-19, include: • The Home Builders Institute (HBI) • HVAC specialists, Carrier

Global Corporation • Trane Technologies Inc, a

manufacturer of HVAC and

building management systems

and controls • Efficiency, controls and

automation specialists,

Johnson Controls • Hunt Military Communities, the

U.S.’s largest military housing owner • Luxury apartment specialists

Edward Rose & Sons

Doug Donovan CEO & Co-Founder Austin Texas-based Interplay Learning, the leading global provider of online and VR training for the essential skilled trades.

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Has the pandemic triggered society to re-think later life planning?

The world has been talking about the Covid-19 pandemic, and the effects of it since March 2020. Eight months on, the predicted second spike is now a reality, and the death rate is still on the increase. As a nation, we are not renowned for talking openly about our demise and subsequently, the planning of it, but as the subject of death has become a daily news item, are people starting to think differently about later life planning?

What do people actually plan for?

For the majority of the over 50’s, the inevitable subjects of life insurance, will writing and funeral planning become more prevalent but are relatively undersubscribed. However, taking the time to commit to any of these, significantly reduces any cost burden on your loved ones, and it therefore makes sense to consider your later life plans.

Of course it is natural for us to want to avoid the concept of ‘the end of our life’ and for many, we will only purchase a funeral plan or a will when we are either struck down with grief following the loss of a loved one, or because we are going through life changes.

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Panic buying a funeral There has sadly, yet inevitably, been an unprecedented increase in demand for funerals over the last eight months, and whilst the country was up in arms earlier this year due to the panic buying of essential supplies, innumerable people were also having to ‘panic buy’ a funeral. These consumers were those who needed to buy an ‘AtNeed’ funeral, where all the arrangements are made and paid for at the time of death, rather than a funeral plan where all the costs have already been paid in advance.

The majority of those who were buying “atneed” were most likely to have been at their most vulnerable emotionally and many of these consumers would also have been financially vulnerable as there would have been no planning and saving for this eventuality and maybe no available funds, which means that the individual arranging and paying for the funeral is usually left staring down the barrel of taking on considerable debt to fund the service.

These consumers have not been able to shop around or have the luxury of time to be able to think clearly about the purchase they are making. People buying a funeral after a shock or sudden death in

INVESTMENT

the family are, overall, too emotionally weak to truly assess the best deal for the funeral they now find themselves organising. They are under a great deal of stress to buy and it is highly unlikely they will rationally compare prices or providers, typically choosing the business located closest to them geographically. Additionally, many of them no longer live in the same area as the deceased and have consequently lost all local knowledge of which local business services to commission.

Why don’t more people buy a funeral plan?

Pre-Covid, funeral plans were not generally seen as a ‘distress’ purchase and for the majority, were pushed aside as an avoidance to facing a stark and unpleasant reality. For many, this will still be the case, but has the pandemic changed the triggers that prompt people to think about the security and value of the funeral plan product?

Consumers will of course have reservations about buying a funeral plan. This may be a combination of them feeling both overwhelmed with the variety of products available and/or their opinion of the industry, which has likely been tainted by negative press stories in circulation. The funeral world is constantly under the spotlight for what was deemed to be the systematic overcharging of consumers, and the nature and frequency of these stories will undoubtedly leave an element of lasting mistrust. The purchase of a funeral plan provides the perfect solution to this concern, as it protects the consumer’s next of kin against expensive funeral costs, so there are no nasty financial surprises at the end.

UK unemployment set to soar While the pandemic may have forced more of our over fifties to consider their mortality, and consequently the value of planning their funeral in advance, it certainly hasn’t assisted in their ability to fund their potential purchase. By

December 2020, the unemployment rate in the UK is predicted to exceed 3.5 million. Most of this statistic will be looking to find money from every available source and may cause them to cash in what they can. This may result in those who have already taken out funeral plans, or any other plan or policies they have bought in to, to cancel so as to release cash and reduce monthly expenditure. Although understandable in the short term, this will, by no fault of their own, leave them and their loved ones in a vulnerable position later in life.

The majority of people who buy funeral plans are in the 60-80-year age group.

Individuals over the age of 60 will almost certainly find it difficult to secure new employment if they face redundancy which means that the fallout from Covid may well force this group into a financial resilience problem.

A new dilemma This pandemic, therefore, may be the paradox that manifests itself as the catalyst for a fundamental shift in attitudes towards funeral planning. It could make people realise that there is clear sense and prudency in putting plans in place to minimise the stress and financial impact for loved ones after their own demise. Or will the economic uncertainty caused by the pandemic, mean that people will protect the cash they have and shelve later life planning until the economy, and their own situation, has stabilised? With the pandemic illustrating the fragility of life, the former is probably the most sensible approach.

Either way, the devastating effects of Covid-19 have highlighted that if individuals have the resources, it really does make sense to re-think your later life plans more than ever before so that you are removing a financial burden from your family and next of kin. The alternative will potentially leave them in a very uncomfortable financial position when having to pay for your funeral service.

Barry Floyd is the Managing Director of Golden Leaves Funeral Planning

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BANKING

The Bank is Where the Heart Is When unexpected events occur, people turn to their banks to provide a sense of trust, security, and stability.

They need to be available anywhere, anytime, and from any device. As it’s a business based on trust, one-on-one communication is key.

Adapt or fall behind

With the world still emerging from the COVID-19 crisis and endeavouring to avert a possible second wave, every country, state, and region has their own unique requirements. Plus, every customer or member has their own demands. Experts and pundits have discussed a new normal, but what’s normal for now involves keeping customers and employees safe while also providing the same sense of stability as before.

Finances are a highly personal topic, and often, illogical or emotional. Will I have enough? Will it be available when I need it? It is always a hot topic of conversation, but especially during a pandemic when unemployment rates are rising, and the economic landscape is unsettled. In the past, a customer could walk into the bank, have a reassuring conversation with a representative and move on.

For banks, building societies and credit unions, the main concerns include how to maintain personal relationships amidst social distancing; how to be available at any time on any device; and how to provide a sense of calm and security amidst the chaos.

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Customers are quickly learning which of their service providers are adapting best to this new world. Are financial services providers like banks and credit unions adapting, or falling behind?

So, how can banks help their customers through tough financial times during the current crisis, when in-person communication is nearly impossible?

One solution is to provide helpful, personalized customer service through digital channels.

While in-person assistance will remain important after COVID-19, customers are looking for assistance now. Banks are turning to remote video and voice appointments to boost customer satisfaction and meet customer expectations.

3 reasons to use remote appointments 1. To comply with social distancing Our Modern Consumer Banking Report last year showed that when consumers visit branches, it’s primarily to talk face-to-face and ask questions/get help. Research from Bain reinforces this, and emphasizes that “many retail banking customers think it’s easier to purchase through a human channel, or prefer to speak with an employee before buying a product.”

Due to social distancing measures, branches cannot be customers’ primary way of managing their finances during this pandemic. However, this doesn’t mean that customers aren’t interested in personalized attention that can be made available via video and voice.

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2. To meet new demand Although spending habits may have changed, consumers are still making critical financial decisions during the COVID-19 pandemic.

Individuals: The financial effects of coronavirus are drastically different from one customer to the next. While some are counting down the days to receipt of their unemployment check, others may be taking advantage of low-interest rates to buy a house.

Ultimately, banks and credit unions need to address each customer segment with a unique message and way of providing assistance.

Small business banking: Countless small businesses around the world have been forced to close their doors.

Whether they’re needing loans, payment deferrals, or advice, small businesses are looking to their bank as a guide, and a comfort.

Investment management: A recession is upon us, and with that comes a new approach to investing. Financial advisors are fielding questions, providing recommendations, and staying up to date on the market.

Beyond this, many are building entirely new strategies for their clients.

Regardless of customer type, it’s clear that each subset of customer needs help from their financial institution at this time.

3. To boost customer retention Financial institutions cannot afford to lose customers during the pandemic, so customer retention is crucial. Great customer service boosts customer loyalty, and research from Bain shows that loyalty is key to retention: •

Customer loyalty increases revenue, and loyal customers are less likely to switch to a competing bank.

•

Customers who are a bank’s “promoters” recommend the bank to others as much as six times more than “detractors.”

•

A bank’s “promoters” spend one-quarter more than detractors on their primary credit card.

Ultimately, being able to connect with a customer in need using video or voice can give customers peace of mind and boost loyalty. Delivering personalized financial services without interruption is crucial.

Initial results from video banking show that consumers consider the service valuable. Phoenix Synergistics’ survey from December 2019 found that 17% of customers polled had used video chat through a website or app with their financial institution. Of those that had used video chat, 89% found video chat valuable.

Some suggestions for banks using remote video or voice appointments would be to: firstly ensure your solution is secure and doesn’t expose personal information outside of the conversation; secondly create a culture of consultation to alleviate outstanding fears; thirdly leverage appointment setting to allow customers to pre-schedule consultations and enquiries; finally include remote appointments as part of a wider suite of ‘touchless’ offerings.

The dos and don’ts for bank branches Forty-three percent of banking customers have expressed their desire to change the way they bank due to the pandemic. As with retail and hospitality, several key customer segments have doubts about visiting physical locations and are transacting more remotely.

The challenge for banks is to make services available wherever customers want to bank – be it by phone, online, or in branch – and when it comes to any transaction, the key is to make customers feel cared for, heard, and secure.

With social distancing parameters in place along with other health and safety measures, there’s significant focus on the need to retool the branch experience. Here are a few suggestions as we move into that next stage of business and interaction:

DO: Have a plan.

Think about how customers will enter and exit each location. Plan for increased space between people in line, how to attend to at-risk customers, properly spaced lobbies, and waiting areas. Consider your employees and what they need in order to stay safe including break rooms with increased space between lounging areas, removal of shared snacks, availability of hand sanitizer and masks.

DO: Make sure you can effectively manage footfall.

Overcrowding will create fear and loss of trust. Make sure you have plenty of directional signage, crowd control measures, and staffing.

Solutions including people counters, occupancy managers, and pre-booked appointments both allow for the throttling of traffic, and the ability to build in cleaning time.

DO: Hire the right team and staff adequately.

Being courteous and in control will be the most important ingredient to success. Have enough staff, you will need the extra hands to ensure that all staff is properly trained and ready to enforce new protocols.

Some customers will be understandably anxious going into branches, and some will want to feel that everything has returned to normal, so staff may need to be very firm and well-versed in a new operating style.

DO: Offer customers the ability to bank when and how they prefer.

We’re not suggesting that you remain open for 24 hours, but the goal is to make it easy for the customer. Adding

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the ability to set an appointment with a wealth manager or an advisor online will enable customers to bank from home, and will enable banks to provide the personalized service customers have come to expect.

Leverage online appointment confirmations to remind customers to have key documents available if they need them. Virtual solutions position the bank to serve as an advisor rather than just a financial institution.

DO: Demonstrate your commitment to a safe environment.

Use clear signage to convey the measures in place to ensure customer and employee safety. Make hand sanitizer or wipes available throughout the branch, and in all high-touch areas.

Ensure cleaning supplies are visible, around doorways and near greeters to provide customers with an added sense of security. And make sure that employees are following every measure required of customers.

DON’T: Lose customer confidence.

If you are not prepared, it will show, and it will be very hard to gain back customer confidence once compromised. Social media will not be your friend. Forrester Research reports that 52% of US online adults prefer to buy from companies that demonstrate how they are protecting customers against the threats of COVID-19.

DON’T: Overcrowd or fill your branch to capacity.

Consumers are being trained to avoid crowds, so failure at the branch to comply could result in losing their business. Most physical locations are operating with fewer staff and accommodating 10 – 25% of the traffic once allowed. Keep in mind that you only have one opportunity to make a first impression on customers, and they’re looking to trust you have their best interests in mind.

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DON’T: Understaff.

You will need to expect the unexpected and having more hands-on deck will prove to be beneficial in the long run. Having the wrong staff, or those that don’t take the time to learn new operating procedures or feel comfortable telling that customer who won’t keep a mask on, may not be the best fit.

DON’T: Make it difficult for customers to do business with you.

With the constant threat new restrictions in response to COVID-19 outbreaks, banks will need to take a long view on how they enable the operational flexibility that will be needed to adapt to fast-changing conditions.

As people prepare to live more riskaverse lives, banks will need to go the extra mile to ensure customers feel less wary about visiting in person whilst also offering a seamless experience for those customers who prefer to remain in the safety of their homes. Those that manage to do so will emerge from the crisis with a sustainable advantage over their competitors.

Social distancing introduces a number of disruptions to the way you’ve traditionally done business. So limiting options to customers – providing no ability to bank online or via phone, not having a live customer service voice or chat option – is not going to help. In addition to making sure the services are available, it is imperative to communicate all options to customers.

DON’T: Assume someone else will do it.

Bank staff need to show that the branch is being tended to, cleaned between visitors, and before opening each day. It is important that staff jump in to help move customers safely through the branch, ensure their questions are answered and overall, take a proactive approach to service without assuming that a sign or another staff member will take care of it.

Customers will come to the branch, but gaining their confidence is everything.

Don’t lose it by not being prepared. It will be very hard to win it back.

Nick Barnes Practice Director, Financial Services & Customer Success JRNI

1

Modern Consumer Banking Report 2019. (2019). Retrieved October 23, 2020, from https:// www.jrni.com/resources/modern-banking-2019

2

Toit, G., & Cuthell, K. (2020, July 02). As Retail Banks Leak Value, Here's How They Can Stop It. Retrieved October 23, 2020, from https://www.bain.com/insights/as-retail-banks-leakvalue-heres-how-they-can-stop-it/

3

Toit, G., & Cuthell, K. (2020, July 02). As Retail Banks Leak Value, Here's How They Can Stop It. Retrieved October 23, 2020, from https://www.bain.com/insights/as-retail-banks-leakvalue-heres-how-they-can-stop-it/

4

Bill Streeter, E. (2020, March 26). Will the Pandemic Catapult Mobile Video Banking Into the Big Time? Retrieved October 23, 2020, from https://thefinancialbrand.com/94345/ coronavirus-covid-mobile-video-banking-branch/?edigest

5

Appointment Scheduling Software for Enterprise. (n.d.). Retrieved October 23, 2020, from https://www.jrni.com/appointments

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