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ACCELERATING THE TRANSFORMATION OF THE FINANCE SECTOR

banks

By Scott Wilson, Director of service at eFax

 

Technological advancements have always played a key role in pushing boundaries and growing capabilities for businesses. Finance is an area that has benefited greatly from digital technology with improvements to tracking, planning, and security, to name a few. With the current limitations placed on usual working environments causing many physical processes to become impractical and fall heavily out of favour, accelerating digital transformation is key for finance sector executives.

Digital transformation is not a new concept for most businesses, but the pace of change has rapidly increased over the last 20 years. While huge digital transformation projects can, in some cases, be costly, requiring a significant financial investment and also a complete cultural change within the business, smart and agile businesses are undertaking smaller projects all the time. As we’ve witnessed over the last few weeks, some flexible businesses already have the tools in place to provide access for remote working and have adapted to the ‘new normal’ with relative ease.  As many employees are currently working from home, other businesses have been forced to adopt digital transformation practices at a far greater pace. The acceleration of transformation has enabled many organisations to operate as normal, even though employees are not in their usual shared working environment.

 

Scott Wilson

Digital communication

Thanks to modern technology, office interactions are now taking place at home and video conferencing has been adopted across the world, as the new norm, for communicating with colleagues. Advances in online connectivity provide workers with the ability to communicate with one another with minimal delay in sound and a clear image. Just as communication has been aided with technological advancement, so has the method of sharing and reviewing documents. In finance, fax remains a vital tool for sharing important documents, as its core properties validate legal authenticity and make it more secure than other forms of transfer.

However, the vast majority of people do not have fax machines at home. So they are forced to seek out alternative means to share documents and data without risk. Cloud faxing has stepped in to remove the need for dated fax machines, increasing the workforce’s ability to be agile because they can fax anywhere via their mobile devices.  Digital faxing is also much safer than its physical counterpart, as fax files are sent directly to an email inbox and high-level data encryption is used to increase security and confidentiality. It also saves companies money, which is hugely beneficial to finance teams that are much eager to reduce costs at a time when the UK economy faces a recession. Digital faxing is much quicker and cheaper, saving on costs of line rental, maintenance, and toner. Cutting costs for businesses is greatly appreciated when performance is not compromised.

 

New beginnings

As restrictions on the workplace begin to lift, thoughts turn to how finance sector leaders will reopen their doors and what the new working environment will look like. Most offices will remain at minimal capacity for the foreseeable future, yet business owners must determine how to keep their employees safe and plan for the new normal. We must not forget the lessons learnt about how we work. Now is a good time for executives to reflect and consider the changes that are working well, since remote working is now common practice, ushering in their digital transformation journey. The digital implementations that were vital to the success of the business must be taken back to the office and old physical processes left behind. It is a time for refreshing the workplace and questioning old habits, asking if it is time to permanently replace them with modern solutions.

The accelerated digital transformation we have witnessed in recent months has changed the landscape of the finance sector and will continue to benefit companies that keep innovating in all areas of business. Technology that was adopted during lockdown to solve the issue of displaced teams away from legacy systems should not be dropped when employees return to offices. This is the perfect time to have a new perspective on the workplace. Old physical processes are easily improvable with the adoption of new digital ways of working, allowing businesses to be as nimble and agile as they need to be.

 

Finance

ENLISTING TECHNOLOGY TO HELP FIGHT FINANCIAL CRIME

By Rachel Woolley, Director of Financial Crime Fenergo

 

Million-dollar properties, private jets and parties on luxury yachts with celebrity friends. Although it might sound like the plot for a new reality series, this is what corruption, illicit funds and political connections can buy at the expense of ordinary citizens.

Following an investigation by the International Consortium of Investigative Journalists (ICIJ)[1], thousands of leaked documents, known as the Luanda Leaks, suggest that the daughter of Angola’s former president, Isabel Dos Santos, acquired her enormous wealth through favourable access to lucrative deals. These activities were often to the detriment of Angola’s poorest citizens.

We’ve also started to see the application of unexplained wealth orders (UWO) in the UK, with the first UWO issued in 2018. The latest UWOs relate to the grandson of Kazakhstan’s former president, Nurali Aliyev[2], is currently being investigated by Britain’s National Crime Agency (NCA) to explain where he got the money to buy a £80 million house in one of London’s most expensive neighbourhoods. It is thought that the funds used to buy the property have criminal origins.

But these aren’t isolated stories. There have been countless examples in recent years of how corruption, fraud and political connections has resulted in billions of dollars being stolen worldwide in countries such as Brazil, Malaysia, Gabon, Russia and many more.

A recent report by Fenergo found that regulators have issued over $36 billion in AML/KYC and sanctions-related fines (and rising) since the financial crisis. This staggering number shows that related financial institutions had inadequate policy, processes, procedures and systems, in addition to poor governance and oversight in many cases.  Interestingly, a similar report found that the vast majority of these regulatory costs were associated with an AML/KYC-specific labour force.

Not surprisingly, the methods used to hide the illicit wealth are pretty similar; invoice fraud, suspicious transfers, offshore companies and complex ownership structures to disguise beneficial ownership of assets and property. Another commonality is the detrimental impact this has on some of the poorest citizens in these countries and the global economy.

But what can we learn from these scandals? And perhaps more importantly, what can be done?

For financial institutions, the importance of leveraging technology to unwrap complex hierarchies, related parties and identifying individuals with political connections cannot be understated. Understanding the ownership and control structure when onboarding entities is critical, along with robust screening practices to enable sufficient oversight of the relationship, accounts and transaction activity. Enhanced due diligence measures must be applied to politically exposed persons (PEPs), their immediate family members and known close associates. Relationship patterns are also significant, as the same service providers are often used, as was the case with Mossack Fonseca in the Panama Papers scandal.

It’s critical that financial institutions are vigilant in the detection and prevention of financial crime before it’s too late.  By automating KYC/AML compliance and leveraging rules-based technology, financial institutions can ensure that internal policies are fully in-line with constantly changing regulations across multiple jurisdictions.  However, human input will still be necessary when red flags are identified by the system.

 

Biography:

Rachel Woolley, Global AML Manager at Fenergo, has over 10 years’ experience in the Financial Services industry having worked primarily in the funds industry and retail banking. She has a strong background in regulatory compliance, particularly in the areas of anti-money laundering and counter terrorist financing (AML/CTF).

Rachel holds a BSc (Hons) Degree in Applied Accounting from the Oxford Brookes University and is an ACCA Affiliate. She currently holds three professional designations; Licentiate of the Association of Compliance: Officers in Ireland (LCOI), Certified Financial Crime Prevention Practitioner (CFCPP) and Certified Data Protection Officer (CDPO).

[1]https://www.bbc.co.uk/news/world-africa-51218501

[2] https://www.theguardian.com/uk-news/2020/mar/10/uk-issues-unexplained-wealth-order-over-kazakhstan-familys-house

 

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Business

CONSUMERS ARE READY FOR BIOMETRIC PAYMENT CARDS

Lina Andolf-Orup, Head of Marketing at Fingerprints

 

We’ve come a long way in the evolution of digital payments. Magnetic stripe cards, chip & PIN and contactless technology have all played a role in dethroning cash as ‘king of payments’, with many countries well on their way to becoming cashless economies. As with all tech innovation, though, consumer readiness is always the deciding factor in the crowning of new payments royalty.

Now there’s a new technology on the block, ready to help contactless offer even more value: the biometric payment card. In recent years, biometric payment cards have been steadily gathering momentum, currently being trialled by over 20 banks across the world, with the first commercial launch announced last year. A mass-market roll-out is imminent.

But with all the noise from the payments world, it’s important to answer the de facto question that’s key to any technology’s success: are consumers ready?

 

Lina Andolf-Orup

Contactless is (almost) king

Contactless has achieved great success globally, and are now seeing a steep increase across the world.

In addition to consumers being frustrated with having to remember a plethora of PINs and passwords, the current pandemic has also brought to light the unhygienic nature of cash and PIN-enabled payments. Now more than ever, consumers are eager to use a secure, convenient, and hygienic payment method. And contactless almost fits the bill.

Although consumers want to use their contactless card more often, security worries, payment experience frustrations, and the limiting payment cap are all preventing the card from reaching its full potential usage.

The missing link

This is where biometrics comes into play: the missing element that can take contactless into the era of worriless and limitless payments, and provide consumers an experience they expect in the 21st century. With consumers clear about what they want, let’s take a look at what’s top of their checklist and how biometrics can fill in the gaps to realize their ideal payment experience.

 

  1. Smarter, safer contactless. Just for you.

Security is a primary concern for consumers when it comes to contactless, with 38% of consumers citing security as the main reason they are hesitant to use the payment method. For older generations, this number rises to almost 50%.Yet with hygiene concerns at an all-time high, many consumers aren’t eager to use PIN-pads to secure their payments either. By moving the authentication onto the card itself, biometrics secure payments in a way that allows consumers to never touch a PIN pad again.

With the rise of data privacy concerns, consumers can rest assured that their biometric data never leaves the card and won’t be shared with third parties or cloud-based databases. Everything remains securely stored on the payment card itself.

 

  1. Let’s talk about UX

Although every generation is keen to use contactless more, millennials are especially eager to take greater advantage of this convenient payment method. 87% of millennials that own a contactless card use it regularly and three quarters are set to use it more often.

Biometrics bring additional trust to contactless payments, while keeping the same level of convenience, allowing consumers to make a secure payment in less than a second. And with a unified experience so you know what to expect every time you pay; not PIN code sometime, contactless another time, it always works the same no matter where you are in the world.

Because a biometric payment card does not need to be charged – it’s powered from the payment terminal in the same way traditional contactless is – there is nothing standing in the way of efficiency-loving consumers embracing this technology.

 

  1. Contactless made limitless

To offset the lack of PIN security, traditional contactless payments are capped. In light of the current hygiene concerns, countries around the world have already raised contactless payment caps in a bid to reduce PIN entry and cash use. But without any additional strong authentication, the limit has not been lifted completely anywhere to date. This is not only frustrating consumers, but our recent research found this was the primary frustration banks felt regarding contactless.

With the touch of a finger, biometrics brings the robust security needed to remove contactless payment limits altogether. Across contactless cards, mobile, wearables – and even future payment options – biometrics can provide a strong and seamless authentication solution to however we choose to pay or whatever contactless form or shape. Limitless payments with a harmonized UX, wherever consumers are, however much they spend, and wherever they pay: the perfect companion in the age of convenience.

 

  1. Tech nation

A less pressing, although by no means trivial matter, is that consumers are simply ready for something new. Over a third of consumers want to use more modern and personal payment cards, and biometrics sits alongside metal cards, tailored designs and other innovations to do just that. Not to mention that the standard contactless card, the last great innovation in card payments, is now over a decade old!

Featuring the latest fingerprint sensors and an advanced algorithm with AI, biometric payment cards not only meet the criteria for a modern and next-generation payment card but offer the most personal touch imaginable. Your fingerprint.

 

  1. Ready to roll…

We’ve arrived at a crucial point in the evolution of payments. With the technology tested and accredited in line with the rigorous standards of the payments ecosystem, the mass market adoption of this technology is just around the corner. But most importantly, consumers have never been more ready to embrace limitless and worriless contactless.

 

 

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