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USING ANALYTICS TO CHEAT TO SECURE THE ONE RESOURCE THAT MONEY CAN’T BUY

By Avtar Dhillon, Director, Business Value Consulting, ThoughtSpot

 

“It’s not that we have little time, but more that we waste a good deal of it” – Seneca.

Time is precious. Time lost cannot be regained. There are a lot of sayings about the fleeting nature of time. Right now, time is flying. In a volatile market where enterprises might need billions in revenue just to stand still there is a pressing need to understand how to compete and build back better as we go into 2021. Take the mortgage market. Lenders lost billions of pounds when lockdown stopped the housing market.

A report conducted by the Economist Intelligence Unit found this year that while AI adoption is widely in use by most financial institutions, 86% of banks and insurance companies plan to increase AI-related investment into technology by 2025. The research was drawn from retail and investment banks and insurance companies across Europe, APAC, and the US.

One of the main reasons for this adoption comes down to time. Analytics and AI can support smarter financial industry planning, and shave time off every activity in order to beat competition and extract maximum value from the market where possible. It’s an important consideration as many financial services firms find themselves in an uncertain position post-Brexit and during the global pandemic. The future is uncertain, markets are volatile, and businesses, consumers, and the government have all been adjusting to changing circumstances. AI is held by financial sector firms as the technology with the potential to help them maintain competitiveness in this uncertainty.

The Economist study found that while there is a strong degree of confidence in the benefits of AI, the reality is that the technology is not yet largely in use: More than half of respondents say AI is not incorporated into their processes and offerings, with only 15% saying the technology is used extensively across the organisation. However, the benefits that have already emerged combined with respondents’ plans to double down on AI investment in the short-term show this technology is slated to drive a massive wave of future growth for financial services.

Avtar Dhillon

Banks and insurance companies perceive AI as critical to unlocking new growth opportunities and reducing costs. Respondents were clear AI will transform businesses in a number of ways over the next five years, including spurring new products and services (27%), opening new markets (25%), and paving the way for innovation (25%). About one-third (29%) expect between 51% and 75% of their workloads to be supported by AI technologies in five years.

In addition to driving growth, AI promises significant savings today and in the future: 37% reported that their organisation has reduced operational costs as a result of AI adoption, and 34% predict that AI will lower their cost base over the next five years. When it comes to other benefits, one-third of respondents each reported a greater use of predictive analytics (34%), increased employee capacity to handle workload volume (33%), and enhanced customer service and satisfaction (32%).

 

Investment and retail banks emerge as AI leaders

Investment banks are deploying a higher volume of new AI applications on average when compared to retail bank and insurance peers. They are also the most advanced in the implementation of training programmes: 54% have already implemented initiatives, compared with 46% in insurance and 48% in retail banks. Additionally, investment banks are most likely to use machine learning (63%) and image analysis (52%), whereas retail banks are more heavily deploying predictive analytics (71%) and virtual assistants (61%).

The report also found that banks and insurers in APAC are trendsetters when it comes to adoption, training and measurement. 61% reported that half or more of their workload is supported by AI, compared with North America and Europe (both 41%). Europe’s low usage is partly a reporting problem: Almost 10% either had no metrics to measure AI-application success, or had not been measured for long enough to report on. By way of contrast, all APAC respondents had functional reporting metrics. Notably, APAC prioritises reskilling and training initiatives, with 75% expecting an increased investment in people over the next five years to learn more AI skills and arm them with resources compared to 59% in North America and 37% in Europe.

 

The path forward: Upskilling frontline knowledge workers

Despite relatively slow adoption rates to date, the promise of AI holds clear with 86% of respondents saying they plan to increase AI-related investments into the technology over the next five years. However, greater AI adoption will ultimately be driven by how much financial services organisations invest into upskilling their workforce. This upskilling is required to get real value from democratising insights.

According to the data, the industry is at a halfway point when it comes to upskilling their employees, with 49% of respondents saying training initiatives for employees to better understand AI are currently in place. Another 42% have plans to implement such training.

With cost reduction plans working (for over a third) or forecast (another third) using AI, as the data shows, the way ahead revolves around driving new growth. AI is seen to be the new growth engine, and the key to unlocking its potential requires investing in talent. Financial services companies must lower the technology barrier for ordinary employees to capitalise on the productivity and innovation gains made possible by AI. This is the end goal for most of the financial services industry, and many others – to be able to react at the speed of thought to changing conditions, markets, and information – bringing us back to the point: Making the best use of time, because getting to understanding has not been a fast process in the history of business intelligence.

 

Business

THE EFFECTS AUTONOMOUS DRIVING WILL HAVE ON THE TRANSPORTATION AND LOGISTICS INDUSTRY

Stefan Spendrup, Vice President of Sales Northern and Western Europe at SOTI 

 

‘Big thinking’ articles on how to disrupt industries from retail to healthcare have been so prolific in recent years that you would be remiss in assuming we have moved forward from the digital transformation era. Rather, it is important to think of these transformations as the natural extension of a technologically driven world, in which companies are constantly adapting to meet ever-evolving market demands and customer needs. As the pace of development in technological capabilities has increased, so too has companies’ access to technology. With this comes an expectation that companies remain current with the latest advancements.

 

Following the mobile-first era, the next stage in the evolution of digital disruption is the move toward robotics through the Internet of Things (IoT) and Artificial Intelligence (AI.) Once companies have integrated a comprehensive mobility strategy within their operations, we find them increasingly turning to “what’s next”; solutions that will give them an even greater advantage against competitors and help them stay ahead of the field. Machine learning is poised to meet that market demand.

 

The transportation and logistics (T&L) industry is at the forefront of this trend. An industry that may seem at first to be traditional and unchanged by technology over the past half century, has been among the earliest adopters of disruptive technology.

 

Autonomous trucking is the next frontier for the transportation industry. As larger enterprises move away from traditional practices, smaller organisations can follow and benefit from the mainstream acceptance of autonomous technology. This can be seen in areas such as:

  • Monitoring, information sharing and exchange across remote devices
  • Management of mobile devices, remotely, which can eventually be applied to powering and controlling autonomous devices
  • Remote support
  • Performance data and analysis

 

The numbers make the case. In the UK, 1.44 billion tonnes of goods were shipped via heavy goods vehicles (HGVs) in 2019, which is an increase of 2% when compared to the year before. Global e-commerce sales are set to reach $5 trillion (£3.8 trillion) by 2021, driven largely by lowered consumer costs for online shopping and the ease of ordering online for everything from fruit to furniture. This trend is not likely to decline, especially as many are looking to limit in-store interactions in the wake of the COVID-19 pandemic. It will be difficult for transportation and logistics companies to ignore the financial benefits of automation alone.

 

Evidential benefits of automation within the supply chain and operational practices already exist. This can be explicitly seen in Amazon’s famous robot warehouses. These IoT-enabled robotic devices can sift through packages faster than humans can. They can work anywhere and under pretty much any condition, which is why they have been employed within the supply chain to speed up delivery and enhance the end-customer experience. The Amazon example indicates that as technology advances, adoption is likely to surge.

 

When turning our focus onto delivery services, we are seeing incredible interest in autonomous trucking, which has the potential to deliver faster, more predictable and more reliable service. These benefits do not negate the valuable role humans will need to play in overseeing quality control, providing support and conducting data analytics functions to aid in further innovation.

 

Prior to implementing full-scale autonomous trucking, shippers will need to ensure that the management and assessment of a connected fleet meets jurisdictional and federal legislation in addition to minimising cybersecurity risks. High levels of connectivity often translate into greater security risks, and companies will need to prioritise security to ensure systems are built with cyber resilience capabilities and can respond quickly in the event of a cyber breach.

 

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Business

ACCOUNTANTS HAVE BECOME CRITICAL TO THE SURVIVAL OF BUSINESSES AND THEIR REPUTATIONS DURING COVID-19

Stuart Cobbe, Director of Growth, Europe, MindBridge

 

The opportunity for fraudulent activity to flourish as finance departments operate remotely with less oversight in these extraordinary Covid-19 times is inevitable. Government loans and financial support have been given out with little or no accountability to businesses that are struggling with the change in their trading environment and as a consequence businesses find themselves in financial need.

There is already evidence of corporations handing back furlough grants as HMRC offers a 90-day amnesty, but without rapid data-driven insight and risk stratification, businesses may not know the extent of their exposure. Indeed many businesses face the daunting prospect of repaying loans at the same time as paying deferred VAT early next year in a far from certain trading environment. Stuart Cobbe, Director of Growth, Europe, MindBridge explains that the role of the accountant has now become critical to businesses and their reputations.

 

Unlocking transparency

The Covid-19 landscape is fluid and ever-changing, and businesses require accurate visibility of all aspects of their business in order to plan effectively for the future and to understand their financial position. As the economy continues to recover to a new ‘normal’, companies need to focus on the next 6 months. How many ‘zombie’ businesses are only operating due to deferred VAT payments? How many companies will fail when they cannot repay loans? The role of the accountant is vital in unlocking this transparency to provide data-driven, actionable insights.

After all, there are many questions around how government financing has been used, from grants to loans, furlough payments to VAT deferments. As of the 20th September, the total cost of furlough claims has reached a staggering almost £40 billion, despite 30,000 applications being rejected, with many likely to have been attempts to defraud the taxpayer. Research by economists from Cambridge, Oxford and Zurich universities found that as many as two thirds of furloughed workers continued to work.

For businesses that do not understand the extent of their exposure, they risk facing a HMRC-imposed tax charge equivalent of up to 100% of the grant to which any recipient was not entitled and was not repaid. It is, therefore, interesting to see the number of large organisations now publicly revealing plans to repay all furlough payments. For many, this is an opportunity to boost corporate reputation and demonstrate a commitment to rediscovering business as usual. However, given the huge pressures businesses have been under in recent months, many CFOs and FDs may not have the full visibility they require to effectively manage this without the power of audit.

 

Financial Risks

This is about far more than reputational damage, the potential misuse of furlough is far from the only financial risk. The extraordinary shift in every business’ modus operandi over the past few months has opened the door for opportunistic fraud. New sources of income; staff working from home with limited oversight; the financial pressures – both business and personal – created by the recession. The misappropriation of assets should be a very real concern for businesses of every size.

For organisations that have relied upon grants and loans to survive, an employee exploiting the lack of oversight to syphon funds for personal use could tip the company into failure. Companies must determine how – or whether – deferred VAT payments and loan repayments can be made. Is the company truly solvent or no more than a ‘zombie’ business operating with a balance sheet propped up by short term government finance?

 

Actionable data

Business resilience and reputation is a priority in this era, and CFOs or FDs may be struggling to establish trust across businesses now operating under a whole new range of pressures, from slimmer margins to a disjointed, remote workforce. There is an obvious need for complete visualisation of financial risks, and accountants play a crucial role in unlocking this data.

The rapid identification of mistakes in government support applications, potential fraud and the analysis of which deferred payments and loan repayments can be made and when – whilst ensuring other risk factors do not jeopardise business stability – is essential to futureproof the business, and accountants can assess data to provide this information in a complete and actionable format to lead smarter company decisions. This is the data insight CFOs and FDs need today.

Traditional financial risk assessment models will not be adequate. At best, problems will be revealed months after the fact. Companies need rapid identification of areas of unexpected activity today. This is where accountants and finance departments using sophisticated machine learning and artificial intelligence techniques can deliver real business value by rapidly assessing financial data and surfacing unexpected activity. Armed with this information, finance teams will know where to focus activities, the questions to ask and the remedial action to take. This information will drive departments and remedial action to ensure business success and growth as the nation gets back to its feet.

In short, accountants and finance professionals can provide the answers businesses need today, whilst helping managers to plan for the future effectively, despite the changes in policies and protocols as the pandemic continues to throw curveballs. An audit can quickly identify problems including but not limited to, cash flow, fraud, misuse of grants, loan repayment issues – all whilst offering the guidance and steps to safeguard the business to promote resilience and protect the solvency and reputation.

 

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