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ENABLING DECISION-MAKING SUCCESS IN THE BANKING INDUSTRY – 3 CONSIDERATIONS

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By Neil Shah, Head of Financial Services, Board

 

The move towards strategic decision-making

Now, with the pandemic restrictions lifting, banks will have to be strategic in their decision-making when it comes to recuperating any lost income, and balancing consumer trust with a focus on growth. The return of the workforce will, of course, coincide with a resurgence of spending and investment from consumers and businesses respectively, so banks need to capitalize on the opportunity they have carved for themselves – becoming an integral and trusted player in the recovery from the pandemic – and look to where positive, long-term changes can be made, in regards to their company purpose, the products they provide and the impact they have on local communities.

Banks need to maximise this positive influence without delaying recovery more than necessary. To walk this tightrope, banks need to implement technology platforms that allow them to model multiple macroeconomic scenarios – demonstrating the impact of each and allowing them to plan and strategize accordingly. Supporting this, banks should have the capability to model scenarios based on both a products and borrowers meaning no scenario is overlooked and their decision-making is robust.

 

Neil Shah

Transparency is critical

The regulatory landscape is also evolving to meet the increasingly digital-centric and consumer-oriented world we live in. Not only are regulatory bodies reinforcing regulations regarding governance, liquidity management, and compliance, they are also turning their focus to cyber security, climate risk and structural reform. More regulations are sure to emerge in the following years, especially as Millennial and Generation Z consumers become more influential.

This means increased accountability for financial institutions – both internally and externally. Banks can’t afford to make any errors or material misstatements when it comes to financial reporting – so there is an increased need for technologies that give them the ability to drill down to minute detail and analyse information in real-time. More importantly, these technology platforms need to give banks much needed transparency and trust in the validity of the data at hand.

Banks need to be confident that the decisions they make are based on complete and accurate data – and this needs to be fully transparent throughout the business, to minimize the risk of incorrect information being cascaded before it is submitted externally.

Stress-testing will also play a key part in meeting changing regulations going forward. Banks need to expand their capabilities to ensure they can stress-test varied scenarios and update their reporting metrics to include climate change, cyber-attacks, and potential data breaches.

To complete these incredibly complex reports and ever-evolving metrics, many banks have turned to standard BI tools – but the need is greater. The information can’t always be accepted at face value; it’s a number without any wider context. The real benefit banks can derive from more advanced tools will be understanding the ‘why’ and ‘how’ of the numbers they are reporting on – meaning data can be interrogated with a deeper understanding, create an analysis, and arrive at an objective and aligned conclusion.

Many banks are hindered by disjointed, cumbersome legacy systems – and this often requires regular support from external specialist third parties, adding extra cost and another layer to a bank’s operating model. At a time when machine learning and artificial intelligence are empowering banks to provide more personalised, meaningful customer-facing experiences than ever before, it’s unthinkable they should have to gain the help of an external player to make changes to or create new internal reports.

 

A low code, no code approach

If banks are to have the ability and flexibility to adapt reports and forecasts at relatively short notice, processes should be increasingly digitalised, helping to ensure standardisation and automation. But there is no point in having a powerful system in place if it is too complicated for everyday users to adopt and operate; in a rapidly changing global market, time can often be an organization’s most valuable resource, and hours spent dedicated to creating a single report is essentially a sunk cost.

Therefore “low code, no code”, cloud-based technology platforms will be the key to success for banks in the years ahead. These provide all the benefits of more complex legacy systems, but without the need for extensive coding.

Platforms that require extensive technical knowledge can be alienating to employees lacking skills and creates silos even within departments. “Low code, no code” platforms instead operate on a drag-and-drop approach that means users need little training, and all relevant employees have instant access to real-time information that they can analyse and interrogate.

Similarly, “low code, no code” solutions enable much better cross-departmental collaboration as the skills barrier to entry is lower and the information is standardized and hosted in a single environment, reducing room for error when compared to spreadsheet-based alternatives. Finally, these platforms can help banks to get new products and messaging to the market sooner by shifting man-hours from back-end support to strategic input, analysis, and planning. Information is hosted in global data houses that control and manage customer data, maintaining privacy and meeting ever-changing compliance requirements.

Going forward, banks must look to technology platforms which empower employees to create financial, operational and/or workforce planning models, forecasts, scenarios and reports with ease and speed. The ability to compare scenarios and weigh the benefits and risks efficiently will allow for more informed, quicker insights and decisions, greatly reducing the need for guesswork in any critical decision making.

These platforms will also provide the opportunity for meaningful insights on customer behaviour, in real-time, and ensure data they traditionally stored in different silos is captured and turned into actionable insights – delivering added value, improving strategic assessments, and enabling a more flexible and collaborative approach to reporting.

Banks now need to think ahead – capitalizing on the trust they have built-up over the last year and opportunities for growth, investment, and innovation, both in the products they offer customers and the way they operate internally. Only then will banks truly have discovered the key to success.

 

Banking

WHY THE TIME IS NOW TO BANK BEYOND BORDERS

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by Lili Metodieva, MD of Monneo

 

As our world becomes more interconnected, so too does the need for banking systems to follow suit. In the past, businesses and individuals were often restricted to banking in a single country, but the rise of borderless banking is enabling both to benefit from greater financial freedoms. In this article, we will examine why this trend is so important and explain how Fintech companies are helping to make it possible.

 

What is borderless banking?

Simply put, borderless banking refers to any bank account, which allows users to spend, send and receive money across different countries and currencies, without incurring heavy fees. The concept has become increasingly popular in recent years, with more people now working in cross-border job roles and with many businesses requiring capital in a different currency than that of their country of origin.

For customers, borderless banking is making cross-border financial transactions more efficient and cost-effective. Through its rise, businesses and individuals can gain easier access to international streams of capital, which is crucial in this current moment of economic uncertainty. In fact, 74% of companies say cross-border payments have helped their business to survive [1].

 

Where do IBANs come in?

International Banking Account Numbers (IBAN) play a crucial role in facilitating borderless banking. The globally recognised system enables cross-border transactions to happen safely, by providing each international bank account with its own unique 36-digit alphanumerical code. On account of this code, financial institutions can quickly identify where funds are coming from, as well as where they’re going to.

More recently, providers such as us have been able to deliver Virtual IBANs (vIBAN). Working alongside a network of well-established European and International banks, we’re able to offer businesses a single platform interface that consolidates the management of all IBAN accounts. In turn, our multi-currency service makes conducting global financial transactions incredibly straightforward.

 

How has Brexit affected borderless banking?

The COVID-19 pandemic has accelerated the growth of borderless banking and services related to it, but other developments, such as Brexit are beginning to stand in its way. Most notably, the drawn-out withdrawal process has seeded a growing reluctance amongst risk averse, larger organisations to settle transactions using UK bank accounts or IBANs, due to unfounded concerns around regulatory complexity.

Despite leaving the EU, the UK remains a member of the Single Euro Payments Area (SEPA), so it’s unclear why these concerns around British IBAN accounts exist. Regardless, this unfortunate development must be addressed quickly as it has the potential to adversely affect the livelihood of businesses and individuals at a time of critical need.

 

What does the future hold for borderless banking?

There’s clear demand for borderless banking and borderless payments, but the discrimination of certain IBAN accounts represents a major obstacle, which could stand in the way of their widescale adoption. Moving forward, there needs to be a push towards borderless IBANs, which will make international financial transactions more reliable. At the end of the day, this is what IBANs were originally created for, so it’s important the current problems are rectified quickly.

To ensure this can happen, the industry needs protection and clarity from regulators. Likewise, it’s now time for membership organisations to stand up on behalf of the sector and lobby for the financial inclusion of businesses.

If the confusion regarding UK IBAN accounts can be sorted in a timely manner, businesses across the nation, as well as those further afield can look forward to a future of more streamlined and effective financial services. With this support, the diverse sector can deliver further access to innovative financial services and products, which improve outcomes for businesses and consumers alike.

As a sector, Fintech has the potential to provide vital assistance to the wider economy, particularly in an era of increased cross-border business. At Monneo, we’re committed to being part of that change and as a part of organisations like ‘Accept my IBAN’, are working towards reporting and ending IBAN discrimination.

[1] – https://www.mastercard.com/news/research-reports/2021/borderless-payments-report/

 

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Banking

IT’S TIME FOR BANKS TO SIT THEIR CUSTOMERS DOWN AND TALK OPEN BANKING

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Eugene Danilkis, CEO at Mambu

 

We are living in an experience economy, and banking is no different. Customers need innovative payment and finance management solutions. New entrants are edging into the landscape and challenging existing players. This should mean users have a better view of their finances and the tools they need to manage their money – but banks are failing to deliver.

Personal finances are a complex beast, emotional pulls are strong, and the worry of financial security is always on the mind. It’s the job of banks to be the shoulders customers can lean on and trust.

Open banking was supposed to take this to the next level, enabling banks to deliver personalised products and services based on improved data sharing and customer insights. But three years on, adoption remains sluggish. So, why is open banking failing to live up to its promise?

 

A missed opportunity

Open banking was introduced to the UK in 2018, but consumers are still mired in confusion as to what it means and how it helps them. According to Mambu’s global open banking survey, 61% of consumers say they’ve never used open banking, despite more than 8 in 10 using one or more mobile banking apps.

Eugene Danilkis

This is a problem for banks and consumers alike. Lack of understanding around the technology is hindering its adoption, despite this being in the best interests of both. By enabling the secure sharing of financial information, open banking creates an improved customer experience. Not only does this minimise friction and make online payments faster and easier, but allows for personalised services and greater automation, enabling customers to take advantage of tools like budgeting apps.

For banks, open banking is an opportunity to build innovative new products that will improve the customer journey, helping them retain accounts and acquire new ones. By collaborating with third parties, banks can hyper-target customers and build services that address specific user needs, increasing customer satisfaction and in turn brand loyalty.

It’s true there’s been a recent spike in open banking users. According to Juniper Research global, open banking users rose from 18 million in 2018 to 40 million in 2021. But this can be traced to the necessities of a pandemic rather than any sudden clarity in communications.

 

Putting customers at the heart of communication

Mambu’s research shows more than half of consumers (52%) have never heard of open banking. COVID-19 may have increased the uptake of the technology, but it hasn’t increased understanding among users.

So, what can banks do to encourage consumers to embrace open banking? Fundamentally, they must better educate their customers in terms they understand. This means talking to them like human beings, using clear and transparent language to simply explain the personal benefits open banking brings and why it’s really just smart banking.

The understanding gap between technology and terminology shows that consumer demand is there, but better communication is needed. Making sure consumers truly understand the tools they’re using, the control they now have over their finances and how open banking improves the customer experience is vital to dispersing the current fog of confusion. It’s the benefits of this technology that banks need to hone in on: customers ultimately care about what open banking can do for them and how it’s going to make their lives easier.

Centering the customer and their needs in this way will allow banks to fully realise open banking’s potential. The technology has already given them the opportunity to develop valuable services for customers that help build brand loyalty. But the industry has failed to put the customer at the heart of their communications and processes, and show them how much better banking can be.

 

Building trust

Key to reversing this trend is addressing consumer concerns around data privacy and financial safety. Yes, banks need to prioritise simplicity and clarity in messaging, but this isn’t an excuse to shy away from important conversations. Just because there’s an understanding gap around open banking doesn’t mean consumers aren’t switched on about tech and financial issues.

Mambu’s survey found nearly three in five customers have concerns about privacy and security in relation to open banking. So, it’s vital that banks provide reassurance and relevant information about data sharing from the outset if they’re to assuage these fears.

The industry can also encourage greater adoption by developing and improving open banking interfaces. Banks are the gatekeepers to how easily end-users can authorise certain actions, manage third-party access and navigate different open banking functions. If the interface is user-friendly, customers will have a better experience of the technology and be more likely to use and recommend these services.

 

Time to get talking

Customer communication is holding the industry back.. The ability of open banking to transform financial services is a concept that industry players are well-versed in. But the feeling isn’t mutual for customers.

Banks are failing to capitalise on the open banking opportunity by engaging with new and existing customers about what the technology can do for them. Debunking  common myths can open the door to increased growth and trust for banks, as they seek to open up new revenue streams post pandemic..

Make no mistake, open banking isn’t going away. But customers will if banks don’t get talking.

 

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