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TECHNOLOGY TRANSFORMING THE FINANCIAL SERVICES INDUSTRY

Stephan Fabel, Director of Product at Canonical

 

Which industry is leading the way in the adoption of emerging technologies and why?

A recent report from 451 Research, commissioned by Canonical, found the financial services industry is looking at emerging technologies at a higher rate than organisations in other sectors.

 

Established financial services organisations are being pushed to transform by the entry of cloud-native disruptors such as’ Monzo and Revolut which have altered the industry landscape with heightened customer expectations. These digital-only startup banks and payment providers employ services from ‘tech giants’ such as Amazon and Google, to achieve more agile business models which allow them to rapidly innovate.

 

 

Stephan Fabel

Accenture expects that these new businesses models will impact nearly 80 percent of existing bank revenues by 2020. As a result, finserv companies urgently need to undertake a digital metamorphosis to grow and compete with these challengers.

 

This means throwing off the restraints of legacy systems, striking a balance between innovation and bankers’ natural and understandable risk aversion, and committing to emerging technologies such as artificial intelligence and blockchain.

 

Which technology do most financial institutions expect to implement?

Cloud computing is the best bet for financial services companies to achieve this transformation. The research shows that, for the most part, they are ahead of other businesses when it comes to cloud implementation. In fact, over half of the companies surveyed say that they will have cloud technology in place within a year.

 

However, they still show a preference for private cloud infrastructure, most likely due to security and compliance concerns. The best way to overcome these obstacles is to take a hybrid or multi-cloud approach, while using modern, container-based application architectures. By partnering with third-party managed service providers, financial services organisations can rely on these partners to fill any skills gaps.

 

In fact, 60 per cent of financial services companies surveyed by 451 Research said they expect to use a mix of clouds in combination with one another – slightly higher than the number for other businesses (58 per cent). This will allow the financial services industry to execute workloads in different environments which meet their business requirements, achieving both agility, cost efficiency, compliance and support.

 

Are there any other emerging technologies which financial institutes are prioritising?

As the financial sector transitions towards delivering enhanced customer service and greater insight than ever before, these companies will need to investigate container and container management technologies to support new cloud-native applications and the re-engineering of legacy apps.

 

This modern approach – adopting multi-cloud, being heavily containerised – creates the ideal platform for financial services companies to explore emerging technologies such as AI and blockchain. This is something recognised by 62 per cent of the sector’s IT managers, who believe multi-cloud will allow them to improve application performance and availability demands.

 

AI and machine learning represent a huge opportunity for the wider industry to automate manual processes and gain greater insights around customer behaviour than ever before, all while operating on reduced IT expenditure. Likewise, blockchain has the capacity to transform the way that transactions are conducted, impacting how financial institutions interact with each other. With blockchain-enabled transactions, companies such as MasterCard can create a digital ledger of transactions without the need for a central authority to manage these, making this both a swift and secure process. All of these technologies offer traditional businesses a chance to innovate and adapt at pace – putting them on par with disruptors.

 

What challenges are facing the FSI in its transformation?

Security and compliance are frequently touted as the biggest challenges to financial institutions adopting emerging technologies, yet 43 per cent of executives within the sector expect multi-cloud to help satisfy the granular compliance and security requirements.

 

The primary concern for financial institutions trying to implement new solutions is the acute skills shortage in relation to cloud platform expertise (46 per cent), information security (41 per cent) and machine learning / AI (37 per cent). This combination of demand for innovation coupled with related skill shortages will result in many businesses turning to managed services.

 

How is open source simplifying the adoption of these technologies for the financial services industry?

With a skills deficit the biggest challenge facing banks – particularly when attempting to deploy increasingly complex multi-cloud environments – open source will be key in enabling devops teams to access and fine tune software more effectively, while minimising disruption. New waves of innovation, particularly with emerging technologies such as AI and machine learning, are being powered by software that builds upon a collaborative effort.

 

As such, open source will be essential to financial services organisations striving to keep pace with the fast-moving nature of cloud, and realising the benefits of a continuous integration/continuous development (CI/CD) approach. Open source is not only cost effective, but also the key to faster and more reliable innovation, allowing the financial services industry to scale its infrastructure to meet enterprise needs. This will be crucial to competing with disruptors.

 

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Interviews

A PROPTECH FOUNDER’S BEGINNING, THE START OF KLEVIO AND HOW ACCESS-TECH IMPROVES FACILITIES MANAGEMENT

KLEVIO

An interview with Klevio’s CEO and Co-Founder, Aleš Špetič 

 

What is Klevio? 

Klevio is a smart intercom that allows individuals to enter a building using a mobile app, providing digital access and removing the need to use a key. Teams or individuals can manage access rights from our dashboard or the app, understanding the usage of their buildings better, whilst cutting costs and improving efficiencies. As well as Facilities Management (FM) professionals, Klevio’s technology has been implemented across numerous sectors including short-stay lets and longer-term property management, a recording studio that manages room bookings and a London pub which allows temporary access to delivery professionals via its solution. Klevio is also popular with private homeowners.

 

How did the idea come about? 

The founding of the team and the products we worked on came from several influences along our journey. I was still working on CubeSensors, a company I founded that created miniature sensors for both the home and offices, feeding back data on temperatures, noise, light, humidity and the likes, something of a Fitbit for the room.

Aleš Špetič

My co-founder and now Chairman, Demetrios Zoppos, was involved in the creation of Sherlock, the digital entry system that went on to be the underpinning technology for Klevio. When Demetrios exited his previous company, onefinestay, he held onto the intellectual property (IP) of Sherlock, knowing that there was a future for this technology elsewhere.

We quickly came to the conclusion that my IoT experience and history with physical products for consumers and offices, and the IP he had kept for Sherlock, meant that it would be criminal not to pool our experiences and so Klevio was founded.

 

How do you compete with the other access solutions on the market? 

We have merged the new and the old. Keys have been around for thousands of years in some way or another, so have been ripe for a digital upgrade. With our competitors, although there is some amazing technology, most add confusion or annoyance to the process. There are smart-lock providers whose technology normally requires the changing of locks or at least the installation of an ugly and not always user-friendly pin-pad at the door.

Other options require magnetic cards and in many larger establishments receptionists are paid to ensure that someone enters their email for data capture, further adding to huge setup costs. With Klevio you do not need an extra key, token, or card. Everything is on your phone, similar to Apple Pay.Klevio is installed inside the building and is connected to the existing lock.

For office spaces, co-working and other large blocks, key cards are just one more item that can be shared and lost. With Klevio there’s no need to provide a keycard to anyone and it can be connected to an existing system. Many access systems do not have this benefit, and for offices this means you can change the access to your own unit without affecting the rest of a building.

 

What are the main challenges for your business? 

Changing a mindset. People have used and trusted keys their whole lives. Getting them to accept a simpler alternative isn’t an easy thing to do.

The other difficulty is hardware, especially when it comes to security and people’s offices and homes. With software, if you make a mistake or something doesn’t quite work, you can patch it and update things. If a hardware product has a fault, a product recall is going to be a huge undertaking, and no startup will have the budget to ride the storm like a Samsung or a VW Group. We invested a huge amount of time to make sure that Klevio performs well.

Customers need to build confidence and trust in your offering, rushing to deliver and make a splash can backfire in a huge way.

 

What trends in tech do you see shaping the future of offices and homes in the next five years? 

In the IoT space things are moving fast with the world’s largest companies like Amazon, Apple, Google and Facebook all vying to be the centre of the interconnected home and office. There are hundreds of startups carving out their own little corners too, so the next big shift will be consolidation. The industry leaders are already making moves to buy or partner with interesting startups to get ahead on IP and reach.

On a consumer level, people want smart solutions but are increasingly aware of their rights and privacy. Products that offer that on-demand feel, making lives easier and smoother, without taking too much data, will provide that personal touch consumers want and slowly start to manage the offices and homes of the future.

 

What is the one piece of advice you would give an organisation when looking to digitise its processes? 

Do your research – don’t rush to find a solution. There are companies out there that will be able to make your place of work run more smoothly. You just need to find the one that suits your systems, colleagues and budget.

 

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Interviews

OPPORTUNITIES IN FINTECH: LEVERAGING CROSS-BORDER PAYMENT SYSTEMS

As the world becomes increasingly global, the necessity for cross-border payments grows.

An interview with Aron Schwarzkopf, CEO and Co-founder of Kushki, a payment platform tailor-made for Latin America. 

What are some of the biggest challenges in the fintech sector, specifically related to POS payments?

There is a lack of standardization in the way that payments are handled in different countries, and this presents the most significant challenge because it complicates the process of connecting them all across borders. We’re working to address that by adding some standardized connecting processes and using artificial intelligence to help mitigate these complications and make smooth cross-border payments a given.

Why are cross-border payments becoming more of a necessity?

As the world becomes increasingly global, the necessity for cross-border payments grows. People and businesses are expanding their scope and reach and therefore need to be able to operate in different countries. Part of being functional is the ability to make those cross-border payments, and so the demand for better options for those payments will continue to grow.

What are the key opportunities for cross-border payments?

There are four main opportunities that I see for cross-border payments. The first is facilitating fast and direct payments, cutting down on the extra steps required, but still maintaining the security of the transactions. From this, follows the need (and opportunity) to centralize recurring payments. Smart links are also an area of opportunity, letting people make mobile payments through different platforms using personal payment links. Lastly, expanding the opportunity to store payment information, like card numbers, and using tokenization to facilitate recurring payments.

With several fintech startups launching recently, how can you tell which are valid?

One common mistake is to assume that just because a startup has built something innovative that it is going to be useful. Instead, the most important thing to evaluate is whether the company is offering a solution to a significant pain point or just offering a minor improvement. I recommend comparing the startup to the most established version of its product. Which is less expensive? Which is easier? Which is resolving a larger challenge? If the startup is doing well on both counts, they’re probably on to something.

 

What are the security concerns surrounding POS payments?

The authentication process for credit card transactions is different in different regions due to different technological infrastructure. This inconsistency can generate confusion and concern about the security of various transactions and makes it hard to verify and understand the different fraud management and security processes in place.

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