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BITCOIN SURGES PAST $20K – WHY ITS TIME TO RECOGNISE ITS MAINSTREAM VALUE.

Katharine Wooller, Managing Director, UK and Eire, Dacxi.

 

Yesterday’s welcome news that  Bitcoin hit a record price surging past the $20,000 mark was a considerable milestone The ‘why, how, and what happens next,’ is an equally intriguing conundrum.  Since the previous high, in 2017, crypto fans have been eagerly awaiting a much-hyped bull run.

It is important to acknowledge the previous high was hardly a bed of roses for the early investors; whilst 2017 saw bitcoin go from $804 to $19,497 – only to then fall back to $3,242 – nail biting stuff for even the most hardened investor, with some individual weeks seeing swings of between 30 and 50%.  To surpass the previous high, therefore, has been seen as a ’coming of age’, and firmly putting to bed the “roller coaster” years.  More importantly, the crypto investors, who have been patiently waiting for halcyon days, see it as the beginning of a rampaging bull run.

Where prices go next, and how fast, is a subject of much dispute.  Until recently the predictions have varied wildly, and unfortunately come only from those deep in trenches of crypto, who suffer, at best, from a vested interest, and at worst from some serious confirmation bias.  When I read some of the crypto industry press suggesting that bitcoin will reach $1mUSD I roll my eyes – you might as well get a toddler to generate a random number.

Katharine Wooller

More recently, there has been some more considered projections, from the traditional banking world.  A recent report, from Citibank, to its institutional clients, put their flag firmly in the ground with a price prediction of $318,000USD by 2021.  Interestingly, their analysis was via comparison to the gold market of the 1970s.  Wall Street firm, BTIG, is even more positive, claiming that bitcoin should reach $50,000 by the end of next year.

There is much about the current bull market which is markedly different from the previous attempt.  Firstly, there is the potent combination of institutional interest and a huge amount of excess liquidity in the system.

Crypto is, therefore, no longer a niche of an underground subsect of a small number of individuals!  Recent votes of confidence for crypto include analysts at the $631bn investment firm AllianceBernstein “I have changed my mind about bitcoin”, and Chief Investment Officer of Blackrock, with $8tr under management, declaring bitcoin a “durable mechanism”.  The power of this good news, and buying power this creates, cannot be underestimated: Paypal and Greyscale are currently purchasing more bitcoin than is being created.

The data is persuasive; Delphi Digital, highlights that bitcoin’s monthly relative strength index (RSI), a momentum indicator, is about to enter territory not seen since the end of 2016.  Crypto OTC desks are clocking in record volumes.

The retail investors exchanges of choice have seen an uptick. Combined daily volumes for Coinbase, Bitstamp, Kraken, Gemini and ItBit have been $1.5bn, a substantially increase on the typical $488m average.   For many traders, however, $20,000 is the next barrier that needs to be broken, and it is likely that this is predominately psychological – it would make sense once we surpass this some serious gains are to be found.

A lot of the analysis, in my opinion, does not give bitcoin, and the other healthy blue-chip coins Ethereum and Litecoin enough credit.  Over 2020, they have some of the best performing assets on the face of the planet, growing 159%, 353% and 90% respectively.  Not bad for an asset class still at primary school!

I’d expect to see some pullback, potentially of up to 15% – historically there has been correction.  However, we’ve always seen higher highs , and in my opinion, the future is bright for crypto in 2021.

Business

FASTER REACTIVITY TO END-OF-LIFE DEADLINES IS KEY TO COMPLIANCE

Mat Clothier, CEO, Cloudhouse

 

Across global industries, the financial services sector is among the most regulated. Ensuring compliance is an increasingly complex undertaking, and firms have not been short of challenges presented by factors such as Brexit laws impacting on the flow of data between the UK and the EU. The introduction of GDPR in 2018 has also had wide-reaching implications in terms of data security and the resulting fines in the case of misuse of information or cyber-attack.

With financial services needing to adapt to a changing landscape, a rapidly emerging piece of the compliance puzzle is the need to address end-of-life systems and upcoming deadlines for end-of-support. This is particularly crucial in the case of server operating systems such as Windows Server 2012, with an end-of-life deadline currently set for 2023. But why is quick reactivity so crucial in this sector, and what do financial services firms need to consider moving forward?

 

Mat Clothier

The financial services landscape

Up-to-date operating systems such as Microsoft Windows can assist in providing a general safety net of underlying support, which can help financial services firms meet many regulations and provide the foundation for compliant apps. Persistence with an end-of-life system and failure to update or replace it can leave financial services firms falling foul of these requirements, leading to significant fines from non-compliance or a resulting data breach from a cyber-attack on a known vulnerable system.

The resulting loss of critical data can then have further implications for organisations in terms of inadvertently breaching established supplier agreements and obligations, plus the resulting inefficiencies from extended downtime. In the worst-case scenario, this can ultimately threaten the brand and long-term survival of the business.

With a range of risks that can pose serious challenges, the unique nature of the financial industry can be an additional roadblock to compliance. Strong market competition among financial services firms can lead many in the industry to focus on IT investment to differentiate the business in a crowded sector. While understandably necessary as a tactic to compete, this focus can lead to priorities shifting, resulting in failing to address end-of-life dates early enough.

Like many industries, the financial industry has also been forced to tackle the challenges that have come with its employees working from home due to the Covid-19 pandemic, making it easier for the updating of systems to be put on the backburner and upcoming end-of-life dates to be missed during an extended period of crisis.

 

Putting end-of-life at front-of-mind

Financial services firms need to identify upcoming end-of-life dates as soon possible, ideally up to three years in advance in many cases. The key from here is ensuring that well-thought through programme is set up and a pathway to compliance is then established, as it’s commonly the case that the last 20% of projects to update systems is the trickiest to navigate.

Financial services firms need to view these projects as ones driven by business decisions, not technology. What many need to also remember is that there’s no one-size-fits-all approach when it comes to addressing end-of-life. In the case of where a move to a new operating system is needed, some applications can be moved to a more modern platform, but others may struggle due to incompatibility. Tools and expertise can enable firms to determine which apps are likely to successfully make the switch and identify the ones that potentially won’t, and help plan for alternative solutions to be implemented to benefit the business.

There may be cases where fully replacing an end-of-life operating system is not viable for the business, potentially due to cost. The expertise and solutions of an external provider can allow the aging system to be protected and updated as best as possible to ensure it continues to meet the technology and regulatory requirements of the business. This means that organisations can avoid the back-to-front approach of investing heavily in completely replacing a system to a new version just so it can provide the same tools as it did before.

 

Keeping pace with technological change

 The pace of technological change means that patches, feature updates and version updates are an almost constant occurrence across industries. What is new today is legacy tomorrow, so it’s crucial for financial services firms to monitor their systems and ensure that they’re aware of changes in advance of when they happen.

Partnership with the right external expertise can help firms to keep a more comprehensive record of changes that have been made to systems, allowing greater visibility and clarity for regulators, preventing systems from gradually drifting away from their desired state as updates are made. Doing so can also allow firms to have greater clarity of system end-of-life dates, enabling them to remain in control of their compliance with financial regulations and avoid the potential risks of failing to act.

 

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Business

PUTTING TECHNOLOGY AND EMPATHY AT THE HEART OF SMB LOAN SERVICING

Luis Huerta, Vice President and Intelligent Automation Practice Head, Europe at Firstsource

By the end of March 2021, over one and a half million small and medium-sized businesses (SMB) had borrowed through the Bounce Back Loan Scheme (BBLS) – amounting to a staggering £46million. This means 29 accredited BBLS lenders have thousands of new customers to service, as well as a sizable level of debt to collect.

Even when lockdowns lift, the pandemic crisis has been predicted to result in lasting damage to the UK economy. With SMB borrowers finding themselves in highly unpredictable and stressful circumstances, lenders servicing BBLS face a unique challenge – keeping large numbers of anxious customers appeased through uncertain times. To ensure healthy customer relationships, financial providers will need to focus on adequately addressing borrowers’ needs. This is where technology can help. 

Creating room for empathy with AI technology
Because sensitive conversations tend to take longer, lenders are using technology solutions such as robotics and artificial intelligence (AI), as well as integrating digital channels, to support these interactions.

The latest conversational AI can now process and deliver human language more naturally, follow up on queries, and execute transactions than would otherwise need to be handled by an operator. By deploying AI, lenders can fully automate these routine transactional contacts. This frees up staff to focus on the more complex and sensitive interactions, where human touch is key.

Simplifying processes with automation

With more unique BBLS customers to service there will naturally be an increased pressure on resources. Yet recruiting and training additional staff to address this is not the most efficient or cost-effective solution. Here robotic process automation (RPA) can be used to automate repetitive time-consuming tasks.

By leveraging attended automation technologies, organisations can again lessen the burden on operators. For example, automation can be used to create clean, simplified, user-centric interfaces that pull in data from a plethora of disparate applications. These seamless, modern interfaces help agents process transactions and customer enquiries faster whilst bots deal with the complexities of logging-in and navigating various applications and screens in the backend. This approach improves customer services as well as helping to increase job satisfaction. Moreover with fewer screens to manage, onboarding and training time is also dramatically reduced.

Optimising customer communications with analytics

To deliver outstanding services, lenders need to reflect SMBs’ needs through tailored communications. Applying AI and advanced analytics to customer data can support these efforts. For instance, analysing customer attributes such as age, location and service interaction patterns enables organisations to identify and deploy personalised communication across preferred channels. Machine learning-powered forecasting algorithms can also be used to predict ebbs and flows in customer call and chat volumes numbers, helping lenders forecast resourcing needs appropriately.

Importantly, digital channels also offer a less intrusive contact approach to traditional voice calls. By using web-portals, mobile apps, emails and text, lenders can provide customers with the information they need, when they need it, using the channel they prefer. This approach reduces call volumes and lessens the burden on operatives.

Using digital to spot and reduce fraud
At the start of BBLS roll-out banks saw an onslaught of fraudulent activity through false applications and phishing, this is still the case for many financial lenders. Here AI can also play a pivotal role. AI technologies can be used to detect and prevent fraud by drawing correlation between dozens of data points such as physical location IP addresses, web and app behaviour, etc.

For example, one major UK bank saw business accounts becoming fraud targets following the BBLS rollout. To combat social engineering attempts, the bank brought in Firstsource. Following thorough data analysis, they introduced more ID checks, red flags awareness training and updated questioning to detect possible scams. This resulted in the bank being able to identify more potential victims of fraud faster – leading to a 62% reduction in fraud losses in just four months and a positive uplift in quality assurance performance.

A golden opportunity

With the UK emerging from lockdown, we can hope that the economic outlook is about to improve for the SMB community. However, when it comes to BBLS repayments, these customers will still need empathy and guidance from lenders as they navigate the return to ‘normality’. By using tech to remove pressure from customer services, free up agents and drive strategic engagement, lenders will advance customer satisfaction and increase potential growth.

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