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Banking

DO WE STILL NEED BANKS? YES, BUT INDUSTRY-LEVEL DIGITAL TRANSFORMATION IS CRITICAL

As the banking sector returns to work after the Coronavirus crisis, the ability for individual firms to thrive will be reliant on better connectivity and efficiency across the industry as a whole, writes R3’s Charley Cooper.

 

During this crisis we have learned that the world is capable of going digital quickly in an emergency. The sudden and dramatic pace of change can be seen across the world. As of today, countries are accepting “alternative arrangements” for original paper export certificates, New York is allowing notary services by video, and global banks are accepting “original” documents and acceptances by email.

As we emerge from the pandemic, we will see this digital transformation extend from individual use cases and firm-level deployment to entire industries. And perhaps in no other industry is this more critical than in financial services, where the role of banks continues to be challenged because of the inefficiencies they face as a result of decades of siloed technology deployment.

While unquestionably an improvement over reliance on manual processes, regular “digital transformation” as implemented by a single bank has limited benefits. These typically include greater automation of business processes, acceleration in adoption of electronic channels, elimination of manual processes, standardisation of non-value-adding business practices and a focus on driving up data quality and speed of information flows.

Now consider achieving digital transformation at the level of the entire market, rather than on a bank-by-bank basis. Whilst a digital transformation project for a single bank might automate a business process between a front and back office, a digital industry transformation project might optimise the trading and settlement of the asset between buyer and seller and their custodians too.

Charley Cooper

Of course, such things have been attempted before. But there have been many failures and the successes are notable by how they have resulted in new dominant centralised providers – for example for market data, messaging or settlement. The advent of blockchain architectures showed us there was a new way to tackle the problem, one that worked with the grain of existing markets.

Done right, the prize is a huge “productivity dividend” as entire markets are unshackled from their analogue histories.

 

Tackling interbank reconciliation at the industry level

The Italian financial services industry provides a pertinent use case of digital industry transformation. 32 banks in Italy recently went live with one of the first real-world deployments of enterprise blockchain technology in interbank financial markets, with further institutions scheduled to go live in the coming months. Built by the Italian Banking Association, ABI, the Spunta Banca DLT app on R3’s Corda Enterprise platform tackles the market-wide issue of interbank reconciliation.

The traditional reconciliation process for interbank transactions in Italy—formerly governed by the “spunta” process— is notoriously complex. Resolving mismatches in transactions is a labour-intensive process, hampered by a lack of standardisation, fragmented communication and no “single version of the truth.” The Spunta Banca DLT app automates the reconciliation process and enables banks to pinpoint mismatches in interbank transactions quickly by sharing common data in a secure way.

Connecting such a large and diverse group of banks in a live environment to tackle a shared problem is a major milestone for digital transformation in the Italian banking sector, providing a glimpse into a brighter, more efficient and interconnected future for all financial markets.

 

Changing mindset

The current crisis has accelerated the launch of digital technology for many use cases across a diverse range of sectors, but those that stand the test of time will be developed with an industry-level mindset, not firm-level. Banks must adapt to this new way of thinking about technology if they are to retain their critical role in the global economy.

Against this backdrop, it is clear that the age of inter-bank optimisation is over – the path forward from this crisis will be paved by software that focuses on adding real value for entire markets, connecting banks to overcome the biggest challenges they share as an industry.

 

Banking

ADVANTAGES OF OFFSHORE BANKS: WHAT THEY HAVE TO OFFER MILLENIALS

Contrary to popular belief, offshore banking isn’t just for the super-rich, nor is it illegal.

In reality, and with professional advice, the average person can open a perfectly legal offshore bank account within a matter of hours – ideal for busy, on-the-go millennials.

 

For the generation facing increasing financial challenges, it is more important than ever for millennials to acquire savings sooner, rather than later. With climbing house prices, higher relative costs of living, and the need to save more money for retirement, many millennials are planning their futures’ by setting up savings accounts in overseas institutions. But is this the most secure way of holding your hard-earned savings?

 

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James Turner

While the answer to this question is largely dependent on individual circumstance, there are many potential benefits to banking offshore; from earning higher interest rates and tax benefits, to having the ability to bank in foreign currencies. Offshore banking can be particularly beneficial for those who regularly travel overseas for work, as it allows you to receive multiple currencies without the need to pay for exchange fees. As such, there’s no risk of you losing out on exchange rate fluctuations.

 

Banking with confidence and having more security is a significant factor for people choosing to bank offshore. It can offer greater asset protection against possible future threats, such as divorce lawyers, creditors and legal action – which is essential for millennials with substantial amounts of money. This makes offshore banking a secure solution for managing your money well. However, it is worth noting that the security of your savings will depend on the regulations of where your bank is based.

 

For an added level of reassurance, many jurisdictions also offer strict, financial privacy and confidentiality agreements. This means that your personal information will not be passed on to any third parties, so your assets are shielded to safeguard your individual or company information.

 

At Turner Little, we offer privacy-assured banking to suit your bespoke needs. Whether you’re an individual or a business, our services include arranging bank accounts and credit cards with both UK and offshore institutions. So get in touch with us today and see how we can help you prepare for your future.

 

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Banking

CODAT PARTNERS WITH VISA TO GIVE EUROPEAN BANKS ACCESS TO SME FINANCIAL DATA

Codat – a London-based technology company that connects the internal systems of small businesses to banks, fintechs and other financial institutions, allowing business data to flow back and forth in real time – has formed a strategic partnership with Visa.

 

Via a single API, Codat enables financial service organisations to integrate with a wide and growing range of accounting, banking, and commerce integrations platforms. It means banks and lenders can get a holistic financial profile of a small business in a matter of minutes rather than days, allowing credit risk to be assessed faster and more accurately, and speeding up time to decision for the applicant.

 

The partnership agreement is tied to the launch of the Visa Fintech Partner Connect program in Europe – a new marketplace where Visa is partnering with a roster of carefully selected fintech businesses. It will provide Visa’s clients with access to a suite of next-generation digital banking solutions and capabilities from across the financial services spectrum, helping them to quickly bring new solutions to market.

 

Working with Codat, Visa’s clients will be able to create a fully digital journey for their SME customers, from onboarding, to underwriting, to account and portfolio management, with a single point of connectivity between their customers’ accounting platforms and data sources. Codat’s connectivity to an SME’s financial data will form the most up-to-date picture of a business’s financial health.

 

Through its commitment to integrating with a wide range of data sources, Codat ensures Visa and Codat clients will always be offered the broadest and richest access to key business financial data.

 

“This is a major stamp of approval and validation of the quality, security and scalability of the platform our team has built,” said Pete Lord, CEO at Codat. “Visa has recognised that we address a universal pain point in SME financial services: the manual, slow, and limited exchange of financial data between businesses and their service providers. Our modern API technology provides the means to do this better, giving Visa’s clients the ability to offer SMEs a suite of improved and more agile products and services, as well as reduce their own operating costs.”

 

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