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BANKING ON DEVOPS – AN OPPORTUNITY FOR THE CHANNEL SAVINGS THE BANKS FROM THE FINTECH WOLVES

By Iain Ramage, VP channel, Rocket Software.

 

Household banking names are having to face down a number of challenges at the moment. The first is innovation. Let’s be honest, when thinking about innovation, it is not the UK stalwarts like Lloyds, HSBC or Barclays that immediately spring to mind. Instead, fintech start-ups like TransferWise and Revolut are more likely to be perceived as leading the banking revolution. These new players are starting to pose a very real threat to established brands as they chip away at market share. The second challenge is compliance; juggling vast amounts of data and maintaining compliance with a variety of regulations is causing some worried frowns. The only way that banks are going to be able to tackle either of these challenges is through technology, which is good news for technology suppliers and resellers.

 

Never too old to innovate

 With PSD2 (the Revised Payment Service Directive) coming into force this year, customers are now able to use third-party providers to manage their finances. This means banks are obliged to give third-parties, such as Monzo, access to their customers’ accounts and are therefore no longer just in competition with each other.

To combat this, banks need to look at ways to stay competitive. With so many new kids on the block, having a more agile, ‘start-up’ mentality can help, which some of them already have; “Hands up if you belong to a startup company that’s 250 years old,” James McLeod, Software Lead at Lloyds, asked the audience at Github Constellation this year, aiming to dispel the notion that traditional banks are too old to innovate.

 

In order to innovate, banks need to be agile and develop systems that allow them to compete with the fast-moving market. This will mean adopting a DevOps methodology; the closer integration of development and operations staff will enable internal teams to collaborate throughout a project, resulting in shorter development cycles and more dependable software releases. However, changing decades of working practices is a serious challenge that isn’t going to be fixed with an internal memo; it will need something more robust. Banks must equip developers with the right tools for the job, namely, Application Lifecycle Management (ALM) automation.

 

ALM systems streamline all stages of the application development cycle and have always been essential in keeping track of the development process. However, not all of them have kept up with the complexity of new working practices. Many ALM systems still require levels of manual intervention that are unrealistic in an environment where so many people need to be informed of every stage of the process.

 

By automating the approvals and version control, these processes are completely removed from the danger of human error, as every change is automatically recorded, allowing developers to “roll back” to a previous version if something goes wrong. This gives banks the ability to adapt their services faster and more safely. Automation presents a great opportunity for technology providers to help banks become more agile, keep up with the competition, as well as protecting against downtime and customer data loss.

 

Stay compliant

Data security is an area where banks should be using their advantage over the smaller newcomers, as their trusted brands and secure systems are often an assurance of security. When developing new applications, banks must ensure they are documenting the software development processes fully in order to satisfy auditors. Any changes to software that handles user IDs, passwords and other personal information must be treated with particular care in order to stay compliant.

 

ALM automation enables employees to view, manage and report work via an operations portal. The automated programme systematically records and documents all actions taken by developers, including when and why these actions were taken. This makes life much easier for auditors, as all records are automated, kept in one secure location and saved in the same format. ALM automation therefore results in faster – and cheaper – audits. Some banks have even found that once auditors are told that they’ve implemented ALM automation, they can quickly tick things off their list and avoid further investigation of systems, helping banks stay agile and making them a competitive force to reckon with.

 

Regulatory compliance should not always be considered negatively. According to Daniel Schmand, Global Head of Trade Finance at Deutsche Bank, it should be seen as an opportunity to review policies, processes and controls. Looking at regulatory compliance as a chance to improve banking is certainly a favourable approach, especially when taking on the mammoth task of managing data and staying compliant at any time.

 

An opportunity

For technology providers and resellers, ALM automation presents an opportunity that is not to be missed. It’s far more than simply applying a new process to an old system – it’s about helping banks to make the most of what they already have in order to stay relevant, and dare we say – show the newcomers how it’s done. 

 

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Banking

HOW IDENTITY IS SECURELY UNLOCKING THE SME BANKING MARKET

By Mike Kiser, senior identity strategist at SailPoint

 

Have an identification card in your wallet? With a selfie and a few short minutes, you could have access to a business bank account.

Small and medium enterprises (SMEs) have long been the fuel that drives the global economy, representing around 90% of businesses and more than 50% of employment worldwide. Over the last few years, a range of financial services and platforms have arisen over the last few years to support the banking needs of these organisations. They are often digital natives and are innovating to meet the needs of their clientele.

This innovation provides great ease-of-use and rapid access to credit but also demands a careful consideration of their assumed security approach. The aforementioned scanning of an identity and a quick photo to establish a bank account demonstrates the rising importance of identity in both the consumer and enterprise arenas.

The blurring of the lines between personal and corporate identities (in this case, an individual acting on behalf of a small business) is still in its infancy. Combined with the ubiquity of mobile devices, individuals will tire of maintaining different accounts, different personas, different lives for each activity. Usability will demand that identity be reusable, portable, and secure.

This has massive implications for enterprises and the financial institutions that serve them if they seek to prevent cyber-attacks; thankfully, the same element that presents the security challenge also offers the solution: identity.

 

A New Vantagepoint 

Just as individuals desire a single identity to unify their interaction with disparate parts of the world, organisations can use identity to grant them a single, holistic view of an individual (attributes, access, and behaviour) rather than seeing only a fragment at a time. This is particularly important for these new financial institutions—much of their technology stack is cloud-based, which often leads to splintered security approaches. An identity-based approach must be cloud-aware, and able to distil these complex environments into simple and easily governed infrastructure.

This collectivisation also allows security to use identities in the aggregate: to see what groups of similar individuals exist, what access these groups have, and what their usage of this access typically is. All of this contributes to the establishment of what normal is, whether it’s attributes, access, or behaviour. Once the “normal” is established, then the outliers—the potential threats—may be quickly triaged.

 

Adaptability: The New Imperative 

The recent wave of change has demonstrated that financial institutions and organisations must be ready to adapt quickly to shifts in the environment. Portions of IT staff and services have been furloughed, and adjustments to new realities are essential. An identity approach that learns from the evolution of changes in the previously established areas of normality can grant enterprises the ability to see what is coming next and invest appropriately. Much like a view from an elevated position grants the ability to see beyond the normal horizon, basing a security strategy on identity makes it inherently adaptable.

 

Identity: Innovation and Security Intertwined 

Identity, then, is a foundational consideration for financial institutions seeking to provide services for the perennially important small and medium enterprise sector. By eradicating barriers to entry that have historically kept financial organisations and enterprises apart, it is driving rapid adoption and a growing market for innovative banking. At the same time, it shows the path forward to securing those new services in a pre-emptive, adaptable way.

Now if you’ll pardon me, I must go open a bank account for my next start-up—from my mobile.

 

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Banking

OPEN BANKING: ARE CONSUMERS KEEPING AN OPEN MIND?

Last September, the European Union’s regulatory requirement for banks to open up their payment accounts via application programming interfaces (APIs) came into effect. Since then, open banking has taken centre stage within European retail banking and payments. In this blog, Elina Mattila, Executive Director at Mobey Forum, shares insight into how emerging consumer attitudes may impact open banking services in the coming months.

It has been over six months since the revised Payment Services Directive (PSD2) came into full effect and with it, required banks to allow third party providers to access payment initiation and account information. While the regulation was designed to facilitate open banking, the market demand was uncertain. Would we, as consumers, choose to embrace the new services enabled by open banking? And if so, under which conditions?

To understand consumer attitudes, Mobey Forum and Aite Group partnered on a pan-European study to determine the appetite for open banking services amongst 1000 consumers in Finland, France, Germany, Spain, and the United Kingdom. The study, launched in November 2019, revealed many important consumer trends and attitudes, including key priorities and potential barriers for adoption.

 

Consumer appetite for change

The consumer benefits of open banking are largely perceived to be compelling, yet this counts for little if the providers of those services are not deemed trustworthy. This is an observation reflected in the study, which highlighted consumer confidence in service providers as critical to open banking adoption. People want clear visibility of who is managing their finances, and the overwhelming majority (88%) would prefer their primary source of open banking services to be their main bank, as opposed to other banks or third-party providers (TPPs).

Consumers also indicated high levels of trust in their current bank of choice, reflected by 77% preferring to use a financial product comparison service offered by their main bank. By enabling customers to compare the pricing and conditions of a range of financial products on the market, they feel more comfortable that banks have their best interests at heart. This is a welcome trend, and one which should be celebrated in the aftermath of the 2008 financial crisis. For the banking industry to have rebuilt trust levels in this way bodes well for consumer adoption of future innovations.

With a trusted provider, one third of consumers were then either ‘very interested’ or ‘extremely interested’ in integrating open banking services into their financial routine. This applied to specific use cases: account information services (32%), pay by bank (33%), purchase financing (25%), product comparison (35%) and identity check services (35%). Unsurprisingly, consumer willingness to adopt these services relies heavily on providers continuing to prove that they can be trustworthy stewards of personal data.

 

Consumer concerns

For those unwilling to adopt open banking, concerns largely focused on reservations around security and privacy. As open banking becomes more sophisticated, it will be interesting to analyse the nuances around how consumers engage with third parties. Established brands are perhaps more likely to be trusted by consumers than lesser-known online retailers. For this reason, consumers may hesitate to engage newer companies than brands they are already familiar with. In an industry as varied as finance, this creates additional intrigue in the ongoing battle for market share between the newer ‘challenger’ banks and the older, more established European banks.

Consumers might, however, be willing to deprioritise trust and, instead, favour convenience and usability. When questioned over their willingness to adopt a new payment method, for example, 91% of respondents indicated that they could be tempted to switch either by financial incentives or the promise of greater convenience.

 

The path forward

While open banking is still in the relatively early stages of development, it has made significant progress in a very short period of time. Not only is it allowing consumers to share financial data with authorised providers as they wish, but it is set to spark more competition and innovation within the market.

From a business perspective, open banking is expected to create lucrative new revenue streams, particularly for companies which are able to innovate quickly and react to consumer demand. It is prompting consumers to reconsider how they manage their finances and – most excitingly – it’s not even close to reaching its full potential. It should bring a whole new era of service partnerships between banks and TPPs, which will enable a new generation of innovative financial services.

For the industry to truly fulfil its potential, it is vital that stakeholders are able to explore new business models, innovations and changing customer expectations for open banking in a commercially neutral environment. Mobey Forum’s open banking expert group provides exactly this, and we look forward to supporting our members as they shape the future of digital financial services.

 

Where to find out more

The opportunity for open banking is explored in more detail in a report by Mobey Forum and Aite Group, entitled Open Banking: Open Minds? Consumer Appetites for New Banking Services. It provides banks and other financial services stakeholders with a market view on consumer appetites toward new open banking services and explores the possible roadblocks to consumer adoption. It is also discussed in a podcast featuring key representatives from Interac, Erste Group Bank and Strands Finance.

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