by Andrew Foster, VP Consulting EMEA, AppZen
As we enter a new year filled with ongoing change and uncertainty, a few things are still clear. Though digital transformation has long been a familiar story told across the finance sector, businesses are recognising the need to adopt new technologies as a matter of urgency. As a result, 2021 will see a huge shift towards embracing technologies that transform finance procedures.
Anant Kale, Co-Founder and CEO, AppZen, shares his finance predictions for 2021:
The year of accelerated digital transformation
The current pandemic forced companies of all sizes, across nearly every industry, to virtualise their workforce, almost overnight. But in the coming year, finance leaders will be turning their attention to wider digitalisation efforts.
Kale explains, “Last year, the focus was on how to quickly keep up with changing business needs, with CIOs focusing on business continuity in a remote work environment—conferencing and collaboration tools, network upgrades, and so on. As we finally caught our breath, this next year will bring even deeper transformation. Rethinking and reimagining business processes in an AI-first world will keep enterprises agile, efficient, compliant and allow them to scale without relying on adding huge headcounts, which will be critical to the bottom line.”
Consequently, more CFOs will be driving the push for AI-powered programmes to be implemented into finance operations to accelerate digital transformation, streamlining operations across the entire enterprise and ensuring business resilience.
Expanding digital transformation – beyond the basics
Over the past year, the drive to enable remote working across the whole organisation has meant the deployment of a wide variety of technologies. Yet, most of these solutions are not in areas that directly increase the finance department’s efficiency. This year, finance leaders will be prioritising two specific functions that are prime for disruption and enhancement – AI-based invoice processing and expense auditing.
“Increasingly, AP invoice processing decisions will be made in the autonomous zone, where intelligent systems can independently make decisions that don’t require human second guessing or manual review,” said Kale. “With autonomous AP, systems that are capable of evaluating all aspects of invoice entry, matching, accounting approvals and even risk and compliance, AP teams will be able to move from operations to more strategic AP concerns.”
AppZen’s recent survey of top CFOs and finance executives confirms the need for deeper transformation in 2021. Currently, 59 per cent respondents report they still haven’t automated ingestion and extraction of data from invoices. Unsurprisingly then, a notable 43.5 per cent of organisations still take seven or more days on average to process an invoice. Organisations with more proficient automated processes only take 2.9 days to process an invoice on average — a considerable difference that supports the need for increased automation and AI uptake among modern finance teams.
Adapting for expenses in the 2021 work-world
CFOs will need to budget for different types of business expenses in light of the new environment. With an evolving workforce that includes remote, on-site and hybrid workers, they need to rethink their strategies and plan scenarios in ways they’ve never had to do before.
To this point, Kale comments, “Business travel will come back in some form later this year, but more importantly, the nature of expenses that have traditionally been associated with travel and entertainment (T&E) will change. Instituting routine audits and implementing clear expense policies will be critical to avoid fraud and abuse or unreliable financial data, which cost businesses nearly $3B dollars a year—and that was before the pandemic.”
As the spend environment becomes more complex, spend visibility is more vital now than ever. Finance leaders need to have the right tools in place to identify these new types of expenses – such as the number of video conferencing licences acquired, home office equipment, and productivity software – and properly assess spend priorities.
Flexibility is also crucial. In a rapidly-evolving environment, a one-size-fits-all policy isn’t up to standard. “How enterprises create and allocate budgets has been completely disrupted and what worked in the past won’t work in 2021,” declares Kale. “We’ve gone from a relatively certain, predictable way of carrying out business operations to a time where only the unpredictable seems certain, which requires agility, speed, and scale to ensure longevity and continuity.”
Despite challenging times, finance leaders are showing optimism for 2021. This year will require adaptability in the face of evolving global economic conditions in order to meet not only wider company needs, but those of employees as well. Embracing new technologies will continue to transform operations across every level of an organisation and enable business leaders to drive both productivity and profitability despite the uncertainty ahead.
AIRBANK SELECTS YAPILY TO BUILD A FINANCIAL MANAGEMENT SOLUTION FOR SMBS
Airbank, a financial management solution for European startups and SMBs, has selected open banking infrastructure provider Yapily to help its users manage their finances with ease.
Airbank provides a simple financial management solution that aggregates all bank accounts in one place and delivers more control, visibility, and automation to modern finance teams. Startups & SMBs use Airbank to access bank accounts, monitor cash flow in real-time, create reliable forecasts, and make business payments.
Airbank matches bank transactions with merchant and category data to give finance teams complete visibility into revenues and expenses, thus helping make their lives easier with cash flow budgeting, forecasting, and reporting.
Yapily’s API infrastructure provides Airbank users with a smooth, simple way to connect to more than 1,500 banks across the UK and Europe including Deutsche Bank, Commerzbank, Sparkassen, Volksbanken and neobanks. Airbank selected Yapily for its strong coverage in Europe, with a specific focus on Germany, France, Spain, and the UK. Yapily’s European bank connectivity enables Airbank’s customers to scale and grow across Europe, delivering forecast visibility anywhere they go.
The partnership with Yapily alleviates Airbank’s customers from spending time and resources managing their finances – giving them direct access to all the financial and contextual data they need in one tool. Historically, most businesses created budgets and cash flow forecasts in manual spreadsheets which is time-consuming and error-prone. With Airbank, customers save time and costs to focus on value-adding business tasks.
The partnership also enables Airbank’s customers to use its data enrichment platform and transaction categorisation engine to turn the raw data from bank accounts into meaningful and actionable insights. Airbank reconciles account balances, forecasts financials and helps business owners make smarter business decisions every day. Harnessing Yapily’s leading open banking infrastructure, Airbank can accelerate its adoption of digital banking services.
Airbank’s vision is to simplify financial management for SMBs and to create a unified platform that helps its users with the full cycle of financial management from cash flow analysis and forecasting, to accounts receivables and payables management, and more. Airbank has raised $3m seed funding from leading VCs, and counts hundreds of users in Germany, Austria, France, Spain and the UK.
Open Banking has enabled smooth integrations with banks, which we utilize to offer richer banking and payments experiences for our users. We’re building a business banking solution that connects all your financial accounts in one place. Our partnership with Yapily gives users a smooth and simple way to connect to thousands of banks in Europe, unlocking real-time insights into their cash flow. We eliminate the pains of finance admin so business owners can focus on what’s really important — growing their business.
Christopher Zemina, Co-founder and CEO of Airbank
Airbank helps simplify the daily routine of banking and finance management for small and medium sized businesses. By leveraging Yapily’s open banking infrastructure, Airbank can provide actionable insights to businesses – at a time where it’s needed. As a small yet fast growing company, Yapily is committed to supporting the SMB community and we are excited to see how Airbank delivers the benefits of open banking to many businesses across Europe.
Comment by Chris Scheuermann, Commercial Lead DACH at Yapily
AI AND HOW IT’S LEADING THE FIGHT AGAINST FRAUD IN THE FINANCIAL SECTOR
Geoff Clark, Managing Director, Aerospike EMEA
Much like many other sectors financial institutions have accelerated their digital transformation projects since the beginning of the pandemic. Lockdown meant that customers could no longer visit local branches or meet in person with their financial advisor. Financial institutions have no choice but to find alternative ways to serve their customers.
We saw banks quickly adapt and improve their automation tools to interact with their customers online. Technologies that enable chatbots, credit card brokerage, contactless payment cards, digital verification for onboarding, online insurance applications, mobile apps, recommendation engines, robo-investing and robotic process automation (RPA) were just some of the many solutions deployed. Here in Europe, Ernst and Young (E&Y) reported an increase of 72% increase in the use of FinTech apps since the start of COVID-19.
Cybercriminals typically opt for the lowest hanging fruit and as financial institutions clambered to expand their digital services the cybercriminals looked to identify and exploit any weakness in the infrastructure providing the backbone for these technologies. Exploiting the vulnerabilities of financial institutions is not new as they have long been a coveted target for fraudsters. In the main, that’s due to the wealth of sensitive personal and financial information they hold. Throw into the mix pandemic relief funds, increased unemployment benefits, and stimulus payments, and you have the perfect playground for fraudsters.
A recent report found that every dollar lost to fraud costs financial service companies as much as $3.78 — an increase from $3.25 in 2019. But fraud’s impact is much deeper than financial loss. It drains company resources to investigate and prosecute fraud, damages reputations, and puts customer retention at risk. For these reasons alone, it is imperative that the appropriate systems and processes are in place to combat fraud.
The majority of financial institutions still rely on dated rule-based systems to mitigate fraud risk. These systems can consist of thousands of predefined rules that store, sort, and manipulate data to find fraud patterns. For example, a rule could say, if there is a credit card transaction in one state and another transaction in a different state within a 30-minute time frame, then this is likely a fraudulent transaction and therefore it declines the transaction.
Rule-based systems are static, hard-coded, and time-consuming to update, and are often one step behind the sophisticated techniques fraudsters use. When fraud occurs, the typical response is to create another rule that prevents another attack, but it’s often too late.
Fraudsters continue to find new ways to commit fraud that rules don’t capture.
The trend we’re seeing from financial institutions is to replace rule-based systems with AI and machine learning-based systems as they’re more effective. These systems are largely self-learning and there is so much more data available and the more information they’re fed the more effective they can be. Rather than using tens of data attributes with rule-based systems, AI and machine learning-based systems can analyse hundreds of data attributes over enormous data sets and longer time frames to automatically detect with higher accuracy unusual behaviours that indicate fraud. For example, Barclays Bank has implemented AI systems to detect and mitigate fraud improving the customer experience in the process through the reduction of false positives and false negatives.
AI and machine learning-based systems are heading toward explainable AI (XAI), an emerging sector in machine learning that addresses how AI systems arrive at their black-box decisions. Financial institutions know the inputs and outputs of these systems, but they lack visibility into how they reached the results.
Building XAI into AI systems enables banks to understand how decisions are made and create better models to improve their systems by removing bias. For example, suppose a fraud system declines a legitimate customer’s credit card transaction. In this situation the financial institution needs to understand why the false positive has occurred so it can further refine its model.
XAI also has data privacy in its favour particularly when it comes to compliance. Under the European Union’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA)—and with other data privacy laws coming—financial institutions need to comply with specific mandates. They must be able to explain how they use a customer’s personal information and how they came to decision such as declining a credit card transaction. Overlaying XAI on top of their AI systems, ensures they have far great visibility into how decisions are being made by AI/ML systems.
Constructing a Fraud System Architecture
To emulate some of the industry’s more innovative organisations financial institutions must understand and pursue best practices when building their AI-based fraud systems. They should work alongside technology organisations but also work with their line of business managers to understand how fraud is impacting their business, what their greatest weaknesses are, how customer satisfaction can be improved, and how they can incorporate customer fraud/risk metrics into their customer analytics to improve their omnichannel marketing campaigns. Customer data collected and analysed by fraud teams are some of the most robust depositories of customer information making them invaluable to marketers.
When looking to build a world-class system, financial services firms should consider the following steps:
- The fraud system needs to likely consume hundreds of terabytes of data, perhaps even petabytes for the largest firms.
- Data must be continuously updated in real time from many sources such as internal customer and transaction data from storefronts, web pages, and mobile devices, as well as third-party demographic, behavioural, geo-location, identity management, credit bureau, and other data types.
- This data will usually need to be prepared, e.g., cleansed, standardised, and normalised, to convert it into a form that AI/ML models can more easily digest and understand.
- The data needs to move back to the central data platform to be further enriched.
- At this point those financial institutions can fine-tune the model parameters, test and select the optimal machine learning algorithms, feed them with data to learn the underlying patterns, and validate the model’s accuracy to make good decisions using data that was not part of the training set.
After the above steps are completed and they are satisfied the model can be deployed to act in the microsecond moments that are necessary to fight fraud.
As technology evolves at such a fast pace all organisations must aim to implement a fraud solution that can combat the increasingly sophisticated fraudsters while implementing the following key elements
- Large data sets (TeraBytes, PetaBytes) consisting of both internal company data supplemented with third-party data;
- Highly optimised and validated AI/ML algorithms that detect fraud and minimise false positives and false negatives;
- A real-time data platform capable of running these AI/ML algorithms across enormous data sets in sub-millisecond response times to provide customers with the fast customer experience that they expect.
OUTSOURCING YOUR IT SOLUTIONS CAN SAVE YOU FROM COSTLY DOWNTIME
Amir Hashmi, CEO and Founder of leading IT and Cloud services provider Zsah, discusses why you need full-time professionals if...
HOW TRADITIONAL INSURERS CAN USE TECHNOLOGY TO IMPROVE THEIR RELATIONSHIP WITH CUSTOMERS
The customer experience with insurance is anomalous, in that one is only required to engage with their insurer if things...
THE FUTURE OF CLOUD: HOW TO KEEP YOUR DATA SAFE
By Pete Braithwaite, COO of KIT Online Cloud services are inherently scalable, responsive and flexible. They offer huge flexibility –...
ETRADING SOFTWARE AND ARTIS HOLDINGS LOANS ELECTRONIC PLATFORM OPEN FOR BUSINESS
The Bids Wanted in Competition (BWIC) process completes on the WIC trading platform Etrading Software, the independent, global provider...
AIRBANK SELECTS YAPILY TO BUILD A FINANCIAL MANAGEMENT SOLUTION FOR SMBS
Airbank, a financial management solution for European startups and SMBs, has selected open banking infrastructure provider Yapily to help its...
COULD YOU PROVIDE US WITH SOME BACKGROUND ON YOUR CURRENT ROLE WITHIN THE FINANCIAL SERVICES SECTOR?
– Shanker Ramamurthy, Global Managing Partner – Banking at IBM, BIAN Executive Board Member I lead the banking consulting...
IT COST MANAGEMENT: 10 STEPS BUSINESSES CAN’T IGNORE
By Matt Dando, Director, Strategic Business Value Consulting at Serviceware In today’s ever-accelerating digital era, and as we recover...
UNCHARTED TERRITORY: HOW OPEN BANKING CAN HELP BANKS NAVIGATE COVID CHALLENGES
Opinion from Rafa Plantier, Head of UK and Ireland at Tink The last year has propelled banks, businesses and consumers...
AI AND HOW IT’S LEADING THE FIGHT AGAINST FRAUD IN THE FINANCIAL SECTOR
Geoff Clark, Managing Director, Aerospike EMEA Much like many other sectors financial institutions have accelerated their digital transformation projects since...
HOW DIGITAL IS MAKING THE ‘IMPOSSIBLE’ POSSIBLE FOR FINANCIAL FIRMS
By Lavanya Kaul, Head of Customer Success, BFSI, UK&I, LTI Article synopsis: Focused on the digital transformation of the...
DANSKE BANK TO BRING DOMESTIC SCHEME, DANKORT, TO APPLE PAY
Danske Bank, Denmark’s leading bank, supported by Nets, will bring Dankort to Apple Pay Dankort is the preferred means of payment...
TACKLING THE FORGOTTEN PLASTIC PANDEMIC: CLIMATE CHANGE
By Mark Taylor, Group CCO, Waterlogic Last year the COVID-19 pandemic was, quite rightfully, at the forefront of all...
CROWN AGENTS BANK ACCELERATES GLOBAL GROWTH AND EXPANDS INTO NEW MARKETS WITH MULESOFT
MuleSoft, provider of the world’s #1 integration and API platform, today announced that Crown Agents Bank (https://www.crownagentsbank.com) is using MuleSoft to digitally...
THE IMPORTANCE OF ACCURATE AND TRUSTED TIMESTAMPING IN FINANCIAL SERVICES
Richard Hoptroff, CTO, Hoptroff Recent global financial regulations such as MiFID II require that all stock exchanges, credit institutions,...
HOW OPEN DATA CAN HELP FIGHT CLIMATE CHANGE
David Lais, Co-Founder and CPO at Ecolytiq – providing banks and financial institutions with the digital infrastructure for green finance....
NOW’S THE TIME FOR THE INFRASTRUCTURE SECTOR TO GET IR35 RIGHT
Matt Fryer, Head of Legal Services at Brookson Legal The Government’s recently announced £650bn programme of infrastructure works is...
MAKING THE MOST OF RPA TO ENHANCE THE CUSTOMER EXPERIENCE
Standfirst: Capturing and analysing business processes should be a prerequisite for any implementation of robotic process automation, argues Dr Gero...
FINTECHS AND BANKING POST-COVID
COVID-19 has forced businesses and society to adapt to new realities. From big-name Wall Street banks to up-and-coming financial technology...
WHY AGILE TECHNOLOGY PLATFORMS ARE THE KEY TO EFFECTIVE INNOVATION
Sujit Unni,CTO, Paysafe A main reason why platform technology can prove to be so effective for a business is...
DIGITAL TOKEN IDENTIFIER REGISTRATION OPENS WITH ETRADING SOFTWARE
Top 100 cryptocurrencies can now be tracked authoritatively using new ISO standard Etrading Software, through its non-profit division the...