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HOW DATA VIRTUALISATION CAN BRING DIGITAL TRANSFORMATION TO BANKING

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Charles Southwood, Regional VP – Northern Europe and MEA at Denodo

 

The financial industry is no stranger to disruption and change, but there’s no doubt that right now, it is more disrupted than ever. Indeed, the Capgemini Research Institute’s recent World Retail Banking Report sums up the current banking landscape as volatile, uncertain, complex and ambiguous. Underlying this disruption is the desire and need to digitally transform.

In recent years we’ve seen a boom in the sheer amount of data and personal information that financial services (FS) firms have been collecting and accessing. The data insights available have also become more complete. For example, with COVID19 driving the market to cashless payments for almost everything, the data on our payment patterns is now far more comprehensive. This data has the potential to unlock a raft of new growth opportunities, from increased revenue to enhanced customer services. But it also presents some challenges, which need to be addressed before financial companies can reap the rewards.

 

Overcoming data hurdles with data virtualisation

The era of open banking is well underway, making digital capabilities the foundation of success and elevating the importance of quality data management architecture. With FinTech start-ups and challengers muscling into the market with digitally native services and disrupting incumbent institutions in the process, there is now a pressing need for financial firms to revolutionise the delivery, integration and utilisation of their own data, harnessing it to drive better business outcomes and customer experiences. It’s never been more important for FS firms to capitalise on their data. But the disparate nature and large fast-changing volumes are making this ever more difficult to achieve. That’s where data virtualisation comes in.

Many of the challenges associated with digital transformation in the FS sector are to do with either establishing or improving the ability to effectively manage data and allowing agents to both access and understand data in order to stay competitive, whilst still protecting their customers from data privacy breaches and complying with shifting industry regulations.

Data virtualisation is a modern approach to data integration. It provides a single, logical view of all data no matter where it originates or resides, which reduces the need to replicate data, and grants financial institutions early, high and accurate data visibility, helping to bring the digital transformation requirement to fruition. Unlike traditional extract, transform and load (ETL) solutions, data virtualisation does not move and copy the data, instead it leaves the data in the source systems. This brings major advantages in agility and timeliness. Rather than replicating, it simply exposes an integrated view of all the data to the data consumers. As business users access and navigate reports, data virtualisation fetches the data in real time from these underlying source systems – delivering speed, agility and accuracy through the seamless connection of data.

 

The future of finance is data-driven

The amount of data generated from every transaction and interaction is now simply staggering. It’ also not something that is set to change any time soon. In fact, IDC predicts that global data levels will increase to 175 zettabytes by 2025, a rise of 61%. As such, effective data management holds the key for FS firms looking to unlock new, agile ways of working and ultimately to achieving ongoing success.

Against this backdrop, data virtualisation is empowering FS firms to improve the overall performance and efficiency of their operations in a strategic manner, thus reducing costs and shrinking the cycle time for new projects, alongside the ongoing enhancement of business decisions through the provision of granular real-time insights.

Many organisations around the world are already realising these benefits. For example, the Johannesburg Stock Exchange (JSE) has a data landscape made up of over 180 disparate data sources and requires the harmonious operation of over 120 different applications to function successfully and ensure accurate settlement of transactions. Many of these are small in data volumes but of high complexity, making data integration a top priority for the Exchange.

Previously, this data had to be sourced from a diverse array of data systems before being integrated to serve the needs of various business functions. The JSE used traditional batch oriented ETL processes, but with the amount of data flowing through their systems, this was becoming a cumbersome and inefficient way to manage it. In high-speed trading environments, as we know, anything less than 100% accuracy, 100% of the time is not acceptable.

In order to rectify this, the JSE implemented the Denodo platform, with the aim of consolidating its intricate data landscape and aggregating data in real time to build a logical data layer. This platform is a data integration and management solution built on the principles of data virtualisation. All relevant information from the JSE’s various systems is compiled into base views using it. The Exchange has built over 1,700 base views on top of these data sources, which are processed by transformation rules to produce derived and interface views. Now, the JSE’s data integration layer processes about 2 billion rows a month.

As the digital transformation of the financial industry continues to gather speed, banks and other financial institutions must make sure to harness data management architectures such as data virtualisation to enable the insights that help to instil pace and agility of operations to stay ahead of fierce competition. The ability of data virtualisation to generate significant ROI is demonstrable and not to be ignored in an industry context where the margins between success and failure have never been thinner. The message for financial leaders is clear: data virtualisation is key to fulfilling the digital transformation in banking.

 

Banking

WHY THE TIME IS NOW TO BANK BEYOND BORDERS

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by Lili Metodieva, MD of Monneo

 

As our world becomes more interconnected, so too does the need for banking systems to follow suit. In the past, businesses and individuals were often restricted to banking in a single country, but the rise of borderless banking is enabling both to benefit from greater financial freedoms. In this article, we will examine why this trend is so important and explain how Fintech companies are helping to make it possible.

 

What is borderless banking?

Simply put, borderless banking refers to any bank account, which allows users to spend, send and receive money across different countries and currencies, without incurring heavy fees. The concept has become increasingly popular in recent years, with more people now working in cross-border job roles and with many businesses requiring capital in a different currency than that of their country of origin.

For customers, borderless banking is making cross-border financial transactions more efficient and cost-effective. Through its rise, businesses and individuals can gain easier access to international streams of capital, which is crucial in this current moment of economic uncertainty. In fact, 74% of companies say cross-border payments have helped their business to survive [1].

 

Where do IBANs come in?

International Banking Account Numbers (IBAN) play a crucial role in facilitating borderless banking. The globally recognised system enables cross-border transactions to happen safely, by providing each international bank account with its own unique 36-digit alphanumerical code. On account of this code, financial institutions can quickly identify where funds are coming from, as well as where they’re going to.

More recently, providers such as us have been able to deliver Virtual IBANs (vIBAN). Working alongside a network of well-established European and International banks, we’re able to offer businesses a single platform interface that consolidates the management of all IBAN accounts. In turn, our multi-currency service makes conducting global financial transactions incredibly straightforward.

 

How has Brexit affected borderless banking?

The COVID-19 pandemic has accelerated the growth of borderless banking and services related to it, but other developments, such as Brexit are beginning to stand in its way. Most notably, the drawn-out withdrawal process has seeded a growing reluctance amongst risk averse, larger organisations to settle transactions using UK bank accounts or IBANs, due to unfounded concerns around regulatory complexity.

Despite leaving the EU, the UK remains a member of the Single Euro Payments Area (SEPA), so it’s unclear why these concerns around British IBAN accounts exist. Regardless, this unfortunate development must be addressed quickly as it has the potential to adversely affect the livelihood of businesses and individuals at a time of critical need.

 

What does the future hold for borderless banking?

There’s clear demand for borderless banking and borderless payments, but the discrimination of certain IBAN accounts represents a major obstacle, which could stand in the way of their widescale adoption. Moving forward, there needs to be a push towards borderless IBANs, which will make international financial transactions more reliable. At the end of the day, this is what IBANs were originally created for, so it’s important the current problems are rectified quickly.

To ensure this can happen, the industry needs protection and clarity from regulators. Likewise, it’s now time for membership organisations to stand up on behalf of the sector and lobby for the financial inclusion of businesses.

If the confusion regarding UK IBAN accounts can be sorted in a timely manner, businesses across the nation, as well as those further afield can look forward to a future of more streamlined and effective financial services. With this support, the diverse sector can deliver further access to innovative financial services and products, which improve outcomes for businesses and consumers alike.

As a sector, Fintech has the potential to provide vital assistance to the wider economy, particularly in an era of increased cross-border business. At Monneo, we’re committed to being part of that change and as a part of organisations like ‘Accept my IBAN’, are working towards reporting and ending IBAN discrimination.

[1] – https://www.mastercard.com/news/research-reports/2021/borderless-payments-report/

 

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Banking

IT’S TIME FOR BANKS TO SIT THEIR CUSTOMERS DOWN AND TALK OPEN BANKING

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Eugene Danilkis, CEO at Mambu

 

We are living in an experience economy, and banking is no different. Customers need innovative payment and finance management solutions. New entrants are edging into the landscape and challenging existing players. This should mean users have a better view of their finances and the tools they need to manage their money – but banks are failing to deliver.

Personal finances are a complex beast, emotional pulls are strong, and the worry of financial security is always on the mind. It’s the job of banks to be the shoulders customers can lean on and trust.

Open banking was supposed to take this to the next level, enabling banks to deliver personalised products and services based on improved data sharing and customer insights. But three years on, adoption remains sluggish. So, why is open banking failing to live up to its promise?

 

A missed opportunity

Open banking was introduced to the UK in 2018, but consumers are still mired in confusion as to what it means and how it helps them. According to Mambu’s global open banking survey, 61% of consumers say they’ve never used open banking, despite more than 8 in 10 using one or more mobile banking apps.

Eugene Danilkis

This is a problem for banks and consumers alike. Lack of understanding around the technology is hindering its adoption, despite this being in the best interests of both. By enabling the secure sharing of financial information, open banking creates an improved customer experience. Not only does this minimise friction and make online payments faster and easier, but allows for personalised services and greater automation, enabling customers to take advantage of tools like budgeting apps.

For banks, open banking is an opportunity to build innovative new products that will improve the customer journey, helping them retain accounts and acquire new ones. By collaborating with third parties, banks can hyper-target customers and build services that address specific user needs, increasing customer satisfaction and in turn brand loyalty.

It’s true there’s been a recent spike in open banking users. According to Juniper Research global, open banking users rose from 18 million in 2018 to 40 million in 2021. But this can be traced to the necessities of a pandemic rather than any sudden clarity in communications.

 

Putting customers at the heart of communication

Mambu’s research shows more than half of consumers (52%) have never heard of open banking. COVID-19 may have increased the uptake of the technology, but it hasn’t increased understanding among users.

So, what can banks do to encourage consumers to embrace open banking? Fundamentally, they must better educate their customers in terms they understand. This means talking to them like human beings, using clear and transparent language to simply explain the personal benefits open banking brings and why it’s really just smart banking.

The understanding gap between technology and terminology shows that consumer demand is there, but better communication is needed. Making sure consumers truly understand the tools they’re using, the control they now have over their finances and how open banking improves the customer experience is vital to dispersing the current fog of confusion. It’s the benefits of this technology that banks need to hone in on: customers ultimately care about what open banking can do for them and how it’s going to make their lives easier.

Centering the customer and their needs in this way will allow banks to fully realise open banking’s potential. The technology has already given them the opportunity to develop valuable services for customers that help build brand loyalty. But the industry has failed to put the customer at the heart of their communications and processes, and show them how much better banking can be.

 

Building trust

Key to reversing this trend is addressing consumer concerns around data privacy and financial safety. Yes, banks need to prioritise simplicity and clarity in messaging, but this isn’t an excuse to shy away from important conversations. Just because there’s an understanding gap around open banking doesn’t mean consumers aren’t switched on about tech and financial issues.

Mambu’s survey found nearly three in five customers have concerns about privacy and security in relation to open banking. So, it’s vital that banks provide reassurance and relevant information about data sharing from the outset if they’re to assuage these fears.

The industry can also encourage greater adoption by developing and improving open banking interfaces. Banks are the gatekeepers to how easily end-users can authorise certain actions, manage third-party access and navigate different open banking functions. If the interface is user-friendly, customers will have a better experience of the technology and be more likely to use and recommend these services.

 

Time to get talking

Customer communication is holding the industry back.. The ability of open banking to transform financial services is a concept that industry players are well-versed in. But the feeling isn’t mutual for customers.

Banks are failing to capitalise on the open banking opportunity by engaging with new and existing customers about what the technology can do for them. Debunking  common myths can open the door to increased growth and trust for banks, as they seek to open up new revenue streams post pandemic..

Make no mistake, open banking isn’t going away. But customers will if banks don’t get talking.

 

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