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PEOPLE, TECH AND THE RIGHT MIND-SET WILL FUEL INNOVATION IN THE FINANCIAL SERVICES INDUSTRY

Olivia Law, Commercial Director, Pollen8

 

Innovation that is born out of people and technology can transform banking and finance organisations, benefiting all stakeholders. Olivia Law outlines the most effective ways to embed and deliver innovation, from facilitating employee-led ideas to collaborating with the sharpest tech start-ups

 

People, tech and the right mindset will fuel innovation in the financial services industry

Innovation is far more than a buzzword in global finance. FinTech is radically reshaping the sector with new products launched almost daily, from API testing platforms to digital identity solutions. Traditional banks are deploying strategies to compete with incoming digital players. Dutch financial giant ING is marketing itself as a powerful innovator, tactically positioned for the future.

Meanwhile as core derivatives markets continue to reform and digitise, there are still areas of potential innovation and expansion. The developing cryptocurrency markets are today viewed as a fertile opportunity for greater use of derivatives – or a disaster waiting to happen – depending on your personal view.

 

Olivia Law

Finance will thrive on the right kinds of innovation

Shrewd choices around innovation will be essential to secure a sustainable future in finance and business. Organisations know this, but many struggle when it comes to surfacing the best ideas, implementing change, and enabling innovation to bear fruit. Often, they do not have the corporate culture or internal communications framework to support this.

With ‘innovation’ listed as one of the five essential skills for 2025, according to the Future of Jobs Survey, (published by the World Economic Forum in October 2020) there is a real risk of financial organisations losing competitive edge if they don’t build innovation into long-term strategy. Amazing things can happen when people at all levels of a business are empowered to progress their ideas, supported by technology that eases the journey towards implementation of new processes.  But where do you start?

 

Ensure there is clear alignment between innovation strategy and corporate strategy

Without an embedded model for innovation, financial services businesses will only benefit from ad hoc acts of innovation. There will be an inconsistent language around innovation and a lack of clarity regarding how it can drive growth and shift the needle on strategic priorities and inefficiencies.

In order to win efficiencies and unlock opportunities for growth, it’s essential to define an innovation strategy that ladders up to the wider corporate agenda. For example, it makes complete sense for a bank’s innovation framework to align closely with the organisation’s over-arching digital strategy.

This joined-up thinking enables faster buy-in from leadership and helps mobilise the organisation towards shared goals. The approach also helps prioritise the most important problems to solve, for both the organisation and its clients. Innovation can feel difficult because the handover points between company strategy and innovation programmes are hard to coordinate. But this challenge can be overcome when the right tools and framework are deployed.

 

Bring greater inclusivity through employee-led innovation

Individuals working in banks, insurance groups, investment firms and credit card companies are closest to everyday problems experienced in the organisation. These tend to be the richest source of potential. By providing structure and a central hub to collaborate, colleagues can surface these problems, so that the innovation agenda begins to take shape and have meaning for everyone.

If your innovation processes are too ‘lightweight’ you’ll see high engagement but it’s unlikely to unlock meaningful value. You won’t inspire your people to think differently and challenge the status quo. At Pollen8 we have devised a platform and methodology that allows processes, people and tools to work together, while we measure and optimise the system over time.

Surfacing problems from the grass roots allows you to break down silos and duplications of effort. It’s essential to ascertain from your people: Which are the most difficult tasks and painful processes? What slows the team down? What do customers complain about? What feels repetitive across business units?

Don’t start looking for solutions too early. Build trust by being transparent about how the process will run and how you’ll get to solutions down the line, that will make life easier. When ideas are surfaced, evaluate and shortlist the most promising. Provide feedback at scale and in a tone that continues to encourage people to participate. Remember to showcase and celebrate successful ideas, and you will drive true engagement.

This process is best enabled by using technology that allows you to capture data at every step of the way. A focused, structured and organised system to track the progress of all innovations during development and implementation will shift the mindset from innovation being solely based on gut instinct, to being based on hard facts and figures.

 

Tackle your core business improvements before launching into radical, H3 innovation

Due to the ongoing impact of the Covid-19 pandemic, there is added pressure to pivot and adapt the way financial services are delivered. In this climate of uncertainty, we’re seeing less appetite for big strategic investments – what McKinsey refers to as Horizon 3 radical innovation – in favour of rapid improvements of the core business.

With a backlog of quick-win, Horizon 1 ideas already in the business, organisations can surface, prioritise, develop and track the impact of these incremental innovations, without needing significant investment. This means rather than investing in one ‘big bet’, it’s possible to execute on hundreds of 1% gains. When grouped together these present a low risk business case for continuous improvement.

 

Collaboration with start-ups can scale ideas for faster impact

Once ideas have been surfaced, it’s vital they don’t just sit there. What’s needed is a framework for leadership and teams to develop, manage and measure ideas in a structured and impactful way.

Much can be achieved by internal teams using an innovation platform to incubate and scale ideas. But there are also powerful benefits from collaborating with energetic, highly-skilled start-ups. This can lead to faster, more cost-effective product launches.

Often corporates won’t have all technical capabilities in house. By bringing in new people and new technology you’re opening yourself up to a wealth of expertise and fresh opportunities. If a 5G mobile payment app is required, for example, a start-up with success in payment app development would be an obvious choice.

The key to succeeding with collaboration is engaging with external developers / start-ups early, and bringing them on the journey with you. This should begin at the start of the process, when you’ve surfaced the problems and are prioritising opportunities, based on your commercial assessment.

Collaborating with an external tech team in this way will also give them oversight of the backlog of opportunities. It will allow them to direct the type of data they need from idea owners within the business, and marry up the technical assessment with the commercial assessment. They can work through a backlog of opportunities at once, speeding up innovation, spreading risk and fixing problems in the business at scale.

 

Emerge stronger despite unprecedented disruption in the financial services sector

There’s no denying that digitalisation and innovative technologies are driving unprecedented disruption in the banking and finance sector. The rate of change will only accelerate. Today financial services companies face crunch decisions as technology shifts customer expectations and changes the regulatory landscape.

Isolated innovations implemented across a large organisation won’t be enough to succeed.  What’s required is a deep-rooted culture of innovation, combined with smart technology tools and specialist partners, to power the business forward. Embarking on this journey, it’s possible to emerge from disruption as a future-proof financial services leader, with employees committed to staying on board.

Technology

PASSWORDS, BIOMETRICS AND BEYOND

By: Hicham Bouali, Pre-Sales Director EMEA of One Identity, a specialist in identity and access management

 

At any given moment, millions of acts of authentication are performed around the world. Most often, by entering a password. More and more, however, are performed with biometrics or with the help of a unique object, specific to the user. And it’s not only humans who authenticate themselves: machines are doing it on a massive scale, too.

 

How did it all start? And where does it lead us?

In its simplest form, authentication is about proving a user’s identity. And the easiest way to do this is, of course, to agree on a “secret” shared between the user and the machine. This is the principle on which the good old password is based on, and the technique that was implemented by the first multi-user machines installed in universities (the first microcomputers, considered as single-user, obviously did not need this).

But quickly, the password showed its limitations. What happens when it is stolen? How can we be sure it cannot be easily guessed? Why do we do when users choose weak passwords or forget them?

To overcome these limitations, a whole market of dedicated tools has developed, from the password safe (which allows to store passwords on one’s computer in a secure way) to HSMs (electronic boxes that generate highly random passwords), through SSO (connecting to different applications with a single password). Organisations started adopting these tools and developed their own policies around passwords.

As long as this remained limited to the walls of the company, it was still possible to manage a wide range of support solutions. But when the Web opened the floodgates, things became more complex: millions of users were able to access tens of thousands of online services asking for a password. Databases containing several million passwords could be stolen and identities could be usurped. And criminals were very quick at realising that, for the sake of convenience, Internet users sometimes reuse the same identifier, which accentuates the problem.

In short, the Internet has clearly shown that the reign of the password is coming to an end.

The end, really? Not exactly… Because the password still maintains two great advantage: the ease of use and its relative ease of implementation.

However, the Internet ecosystem has started to look for alternatives. With the advent of social networks, a few web giants have notably tried to propose a common authentication standard, which would allow anyone with an account on a social network to authenticate on other websited (the principle of federating identities using standards such as OAuth). It doesn’t quite solve the problem, but it does benefit ease of use.

At the same time, multi-factor authentication, which is still considered one of the most effective means of strengthening passwords, has emerged. By sending the user a very short-lived validation code (OTP : One time Password), by SMS for example, we ensure that even if the password has been stolen, the attacker will not have access to the associated phone and will therefore be unable to complete the authentication process. This worked until we realised that text messages were never designed for this, and the industry now turns almost exclusively to validation codes based on time synchronization with the server, generated on a hardware device such as RSA SecurID or a software device via a smartphone application.

Smartphone manufacturers have also (finally) managed to make biometrics authentication available and usable by anyone by introducing fingerprint and face recognition. This made it possible to equip a large part of the population with a second, truly powerful authentication factor. The password is thus still present, but solidly reinforced by biometric authentication or a single-use validation code. Progress has been made…

But in all this history, the industry has mostly adapted on a case-by-case basis, trying to overcome the weaknesses of the password. What is still missing is a true modern authentication standard that is easy to use, reliable and accessible to all. This standard could well be FIDO (Fast Identity Online), developed since 2012 by a consortium of tech giants including Amazon, Google, Facebook, Paypal, as well as Visa and Wells Fargo.

FIDO’s objective is not to make the password disappear (it is understood that it will always be useful) but to raise the other means of authentication to the same level of simplicity of deployment, in order to allow easy switching from one to the other. FIDO supports the use of passwords as well as biometrics (facial and digital), voice recognition and physical keys. Today, FIDO solutions enable strong authentication on a website or application at the touch of a button on a USB key inserted on the computer, while at the same time authenticating the service itself to protect users against phishing attacks.

Why is it so important to make all other authentication methods as easy to deploy as the password? Because during all this time, things were changing incredibly rapidly: applications were increasingly migrating to the Public Cloud, the perimeter was gradually disappearing, employees were increasingly working from unsecured networks with unsecured devices… So, it no longer makes sense to have to choose a single authentication method. Companies must be able to adapt dynamically to the authentication context (by taking into account the user’s identity in a broader risk analysis) in order to choose the right method at the right time.

The future of authentication is no longer in the methods themselves: the industry has made peace with the good old password and no longer intends to make it disappear at all costs, provided they have the choice! Rather, the future lies in the dynamic management of identities and authentication processes at the enterprise level, in a pragmatic way. Because yes, the password still has its use).

And that’s a new frontier!

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

As one McKinsey article notes, “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

Krishnan Raghunathan

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.

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 decision-making. 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).

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.

 

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.

 

 

About the author: Krishnan Raghunathan

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.

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

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

 

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