Connect with us

Finance

FINANCE PREDICTIONS 2020

Jayakumar Venkataraman, Partner, Banking, Financial Services and Insurance, Infosys Consulting

 

1. 2020, the year of the Ecosystem Approach and the API Economy

“In 2020, we will see the rise of the ecosystem approach in creating new propositions and delivering banking and financial services to customers. Globally, open banking and PSD2 have enabled newer players to enter the market and gain access to customers’ data that was previously the sole preserve of the banks. This has given rise to many third-party providers (TPPs) that are developing more exciting product propositions for customers, particularly in personal financial management, using customers’ financial data from the banks.

“We will see this approach growing significantly in the world of Trade Finance. As well as this, banks will bring together multiple players such as shipping companies, local chambers of commerce and insurance companies to create richer product and service propositions for their customers. We will see blockchain-based solutions continue their pivotal role in helping bring a digital ecosystem’s players together.

“All of this will be underpinned by rapid growth of the ‘API economy’, where banks and the other players in the ecosystem are exposing APIs for all their key capabilities, using this to integrate and orchestrate new products and services for their customers.”

 

2. In 2020, data will drive more customer insights than ever

“In the last few years, we have seen a significant rise in digitalisation and the amount of data that is collected on customers and their preferences, transactions, and market and industry data.

“In 2020, we will see the emphasis shift to using this data to drive a much richer understanding of customers, predicting and responding to their needs and transactional patterns. This will generate much greater insight into their lifecycle stage, and help create personalised offers that address their needs. Equally critical will be the use of this good quality data in risk assessments, compliance and fraud monitoring, to deliver safe banking services to customers.

“For commercial customers, banks will bring together the vast amounts of transactional data across multiple product lines – such as lending, trade finance and payments – to create a much richer understanding of transactional patterns, business seasonality and the resultant impact on their financial needs. This means that they too can proactively engage their customer with tailored propositions.

“To make this intensive, customer-centric approach to data work, we will see more banks adopting AI and machine learning technologies across their businesses to make sense of all their data. These initiatives are currently constrained by the availability of good quality data, which does not help in building models that are robust and yield correct decisions. In 2020, we will see banks scale their investment in data initiatives that focus on improving the comprehensiveness, availability and the quality of data, so that AI and ML can be used effectively and reliably.”

 

3. Operational resilience needs the right technologies

“Operational resilience is emerging as one of the top agenda items for senior executives in banks – and also for the regulator, to avoid the threat to their individual and organisational brand. Certainty and continuity of service availability is very important for customers, so it is important for regulators too. Operational resilience relies on tightening controls and governance around business and IT operations, while continuing to invest in the infrastructure for the future.

“Modernisation and transformation of the IT infrastructure in banks – in particular the adoption of cloud and migrating the hosting and delivery of key capabilities in the cloud – is emerging as a major strategic direction. As well as eliminating the costs from maintaining their own data centre operations, migration to the cloud also offers resilience, agility and flexibility, advanced analytics, and innovative applications that are built on a cloud-first approach. All of this significantly improves integrated working and removes some serious challenges.”

 

4. Fintech acquisitions on the horizon for banks

“The trend of fintech firms disrupting the way banks and financial services players deliver products and services to their customers is here to stay. The way banks think about the fintech players has also undergone a significant shift. While they were once seen as fringe players, this year, banks will be looking at using fintechs to fill gaps in their own offerings, giving much richer propositions to their customers.

“Banks are acting as investors, incubators, collaborators and strategic partners. Banks have set aside formal bandwidth to engage with the fintech community to identify the upcoming stars, to understand how their capabilities can be integrated into their product propositions, and to ensure they don’t fall behind their competitors. In some cases, banks have also bought out the fintech firms outright, as a move to gain competitive advantage over their competitors. Santander’s acquisition of ebury is one such example, and we will see many more acquisitions of fintechs by banks in 2020.”

 

5. Regulatory compliance and the growth of Regtech

“Regulatory compliance will continue to be a top spend area for banks, as the need to comply with existing and emergent regulatory and industry initiatives continue. There are plenty on the agenda: FRTB, EU Anti-Money Laundering Directives and other industry initiatives such as ISO20022 adoption and IBOR Transition, as well as a slew of other national and regional requirements. With all of this, banks will have their hands full in 2020. Banks will be looking to be efficient about how they approach these initiatives, to then structure their programmes of work so as to minimise duplication and rework in their efforts.

“The emergence of RegTech firms is a key development that can aid the banks in their compliance initiatives. Estimates on the size and the growth of the RegTech industry vary significantly, but we know that this sector is set for rapid growth. Regtech firms are focused on developing solutions in data collection and reporting, decisioning, predictive analytics and risk identification and management. Like with fintechs, we expect banks will co-opt these firms to aid their compliance initiatives.”

 

6. New ways to reduce costs

Given the recent trend of results posted by the banks, cost reduction and rationalisation will be an important focus for 2020.  As opposed to outsourcing and offshoring of work to lower cost locations, and the adoption of automation and RPA to drive costs down, in 2020, cost rationalisation will focus on a more fundamental operational transformation.

“This will involve a radical rethink of the way banking processes are designed and delivered, and the adoption of an automation-first approach. This approach will be supported by a much smaller team of multi-skilled expert operations teams that oversee business processes, and can jump in to manage any exceptions or incidents with expertise.

“As well as a radical redesign of operations, we will also see banks drive operational costs down through the monetisation of assets and mutualisation of costs. Banks will carve out operations and technology capabilities to a strategic partner that also offers such services to other banking clients. We have already seen some of these deals executed, and we will see these conversations picking up scale in the coming year.”

 

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Finance

HOW TO MANAGE YOUR CASH FLOW IN UNCERTAIN TIMES

CASH FLOW

While the world is constantly changing, probably at a faster pace now than ever before, businesses need to manage cash flow and costs to drive success in uncertain times, says Matthew Thorpe, partner at Haines Watts Essex.

 

Managing people and expenses

There are certain costs that you just can’t avoid as a business – to keep your operation running seamlessly, but scrutinise the detail and cut down on any non-essential expenses. Check things like your SaaS subscriptions and look out for costs that auto-renew and if you do cancel, remember to also cancel your direct debits too.

You might want to put a freeze on hiring new people, but ensure that other roles and responsibilities are clearly and efficiently assigned across your team. The Coronavirus Job Retention Scheme (CJRS) has been introduced by the Government to help UK employers access support to continue paying part of their employees’ salary to avoid redundancies. Affected employees are classed as “furloughed workers”.

Once furloughed, the employee cannot work or they will not qualify for the scheme. For businesses that perhaps need to go further, there may be some roles they don’t need any more, but businesses should work sensitively with people to manage this.

 

Cash is king

In uncertain times, owner managers will need to keep operations going to ensure financial stability. You should look to manage debt more efficiently by negotiating extended payment terms with creditors. You could also renegotiate loans for longer repayment terms to give yourself a lower monthly payment, helping the business to set some cash aside each month.

 

Daily forecasting

As a business owner, you need to create a cash flow projection and update this regularly if you are to improve things. You can do this using financial information to create a picture of how the business will look in the next 12 months. The forecast needs to show revenue sources and expenses, which will show the ups and downs of business income and can be used to make sure that enough finance is in place.

 

Good house-keeping

While banks and other finance providers recognise that the cashflow of a business may be disrupted by the impact of Covid-19, they are still going to want to see that you are viable and continue to trade in these uncertain times. Make sure your business is organised and don’t let disorganisation cause unnecessary issues. You can evidence this by having detailed forecasts; current order books and projections (as best as possible).

Having instantly accessible, accurate financial information allows you to plan effectively, spot issues before they become problems and manage your money in the most efficient and rewarding way.

 

Embrace technology

Software is now incredibly user-friendly and accessible from anywhere. For a business owner embracing the technology, this means:

  • Invoicing can be done instantly when a job is complete, emailed to the customer with an easy to use link to a payment platform.
  • Comparison websites can automatically monitor and help maintain lowest cost for things such as light & heat, insurance etc.
  • Technology can be used in place of face-to-face meetings. It can also enable them to adapt production lines to different demands.

All of these things and more, used properly, can make managing your business finances quicker, easier and often cheaper.  You will also be able to bring clarity to where your business stands and prepare for the next steps.

 

Continue Reading

Finance

HOW FINANCIAL SERVICES CAN GET TO GRIPS WITH RISING SUPPLY CHAIN RISK

FINANCIAL SERVICES

By Alex Saric, smart procurement expert, Ivalua

 

UK businesses have never been more dependent on their suppliers to help them deliver goods and services to their customers. Be it retail, manufacturing or financial services, suppliers have a vital role to play when it comes to innovation and meeting customer expectations. However, as supply chains become increasingly global, businesses are potentially exposing themselves to more risk than ever before.

This is especially true in financial services. Whether it’s the impact of geopolitical events like Brexit or global tariff wars, supply shortages, security or the businesses impact on the environment, an organisation’s failure to identify and mitigate risk could see millions wiped off its share price, and its corporate reputation left in tatters. Risk can present itself anywhere and at any time, so financial services firms must be ready to address it. However, many simply don’t have the ability to evaluate suppliers for risk factors, leaving them wide open to business operations being hindered, or being slapped with financial penalties.

 

More suppliers, increasing risk

One reason why financial services firms aren’t able to evaluate suppliers is the breadth and scale of today’s supply chains. For example, French oil company Total said in in a recent human rights briefing paper that they work with over 150,000 direct suppliers worldwide. This is just one example of how large and varied the roster of partners has become. Research from Ivalua has found that financial services businesses on average are working with around 3,600 suppliers annually, which is evenly split between UK-based and international partners. That number is expected to rise, with 60% expecting the number of suppliers they work with to rise.

The expanding nature of suppliers is only going to expose financial services firms to more potential risk than ever before, yet 78% say they face challenges gaining complete visibility into suppliers and their activities.

A lack of supplier visibility leaves businesses unable to identify and mitigate against supply chain risk. In fact, almost three-quarters (73%) of financial services firms have experienced some type of risk during the last 12 months. These include; supplier failure (43%), environmental impact, such as pollution or waste (35%) and supply shortages (45%). Supply shortages can be among the most damaging to a business, as seen by both the KFC chicken shortage which closed stores, and the summer 2018 CO2 shortage which caused companies such as Heineken and Coca-Cola to pause production, impacting supply across Europe during the World Cup.

 

Businesses unprepared for the worst

One way financial services firms can better prepare for risk is to ensure they know what to plan for to reduce the impact. However, whilst some say they have a contingency plan in place to deal with risk, many of them are unprepared. Financial services firms admitted to not having comprehensive and deployed contingency plans in place to prepare the supply chain for risk such as; natural disasters (68%), supply shortages (67%), geopolitical changes (65%), environmental impact (63%), supplier failure (62%) and modern slavery (50%).

In order to effectively prepare for these types of risks, it’s vital that financial services businesses fully understand their suppliers, their business environment, global variations in regulations, geopolitics, and a host of other factors. But for many, there are multiple challenges when it comes to gaining this understanding. A prevailing factor is an inability to gain visibility into all suppliers and activity because supplier management data is stored in multiple locations and formats, making insights difficult to access. This leaves teams unable to review supplier activity and assess compliance.

 

Making supplier management smarter

It’s imperative that financial services businesses are able to respond or prepare for supply chain risk. Clearly, much more needs to be done to ensure they have complete visibility of suppliers, especially in an era where regulators can levy heavy fines for GDPR breaches and scandals spread in minutes over social media. These types of risks can be reduced in the future if procurement teams have a 360-degree view of suppliers which will help with contingency planning and risk management.

For example, in the instance of supply shortages, plans could be put in place that identify alternative suppliers to ensure any shortages do not impact end users. This type of supplier collaboration is paramount when it comes to managing and mitigating against supplier shortages. When it comes to regulations, financial services firms can’t allow a lack of visibility to limit their ability to ensure all suppliers are compliant.

To do this, teams must take a smarter approach to procurement that gives complete visibility into suppliers throughout the supply chain. This will allow financial services firms to identify and plan for risk, reducing the potential damage, and ensuring they are working with and awarding business to low-risk suppliers. Supply chain risk is rapidly becoming an overarching concern for financial services firms, but by providing the ability to assess suppliers, they will have all the insights they need to mitigate the impact on business operations.

 

Continue Reading

Magazine

Partner Events

Trending

SOFTWARE SOFTWARE
Business18 hours ago

MAKING THE (ENTERPRISE) GRADE IN LOW-CODE SOFTWARE

By Willem van Enter, Vice President EMEA, OutSystems   We all use software applications every day, all the time. That...

INSURANCE INSURANCE
Top Stories18 hours ago

IS PRIVATE PLACEMENT LIFE INSURANCE THE PERFECT PRODUCT FOR GLOBAL HNW FAMILIES

By Louis Zuckerbraun, Managing Director, GMG Insurance    Everyone wants to know that their family will be okay after they...

FINTECH FINTECH
Top Stories19 hours ago

FINTECH IN AFRICA: WHY THIS MUSTN’T BE A DECADE OF WASTED POTENTIAL

Albert Maasland, Chief Executive Officer at Crown Agents Bank  The current COVID-19 pandemic is an unprecedented crisis of our times....

CLAIMS CLAIMS
News19 hours ago

NEW TECHNOLOGY PLATFORM REDUCES CLAIMS PROCESS FROM WEEKS TO MINUTES

New platform has potential to cut fraudulent claims by almost half Decrease claims costs by as much as two thirds...

CORONAVIRUS CORONAVIRUS
Business19 hours ago

CORONAVIRUS: FURLOUGHED WORKERS AND WHAT IT MEANS FOR BUSINESS

by Tina Chander, Wright Hassall   c All businesses with a PAYE scheme in place on 28 February 2020, regardless of size...

CAR INSURANCE CAR INSURANCE
Wealth Management19 hours ago

FIVE THINGS YOU’RE DOING THAT ARE INVALIDATING YOUR CAR INSURANCE

Car insurance is a legal requirement for motorists, but many drivers may be unknowingly voiding their policy. Failing to update...

CORONAVIRUS CORONAVIRUS
News19 hours ago

CORONAVIRUS PANDEMIC, STORE CLOSURES, SHIFT CONSUMER BUYING BEHAVIOUR LEADING TO ACCELERATED DIGITAL TRANSFORMATION FOR MERCHANTS

Forter Issues First In A Monthly Series of Coronavirus Special Reports  Forter, the leader in e-commerce fraud prevention, today announced...

FINANCIAL FINANCIAL
News19 hours ago

BTON FINANCIAL PARTNERS WITH GENESIS TO AUTOMATE TRADING FOR ASSET MANAGERS

BTON Financial, the independent outsourced dealing desk for asset managers and genesis, the Low Code Application Platform for Capital Markets,...

DIGITAL TRANSFORMATION DIGITAL TRANSFORMATION
Technology2 days ago

HOW TO KEEP DIGITAL TRANSFORMATION ON TRACK AFTER THE PANDEMIC

Ashley Coker, CEO and founder, Slate   Introduction The global coronavirus health emergency has made it abundantly clear how dependent...

DIGITAL BANKING DIGITAL BANKING
Banking2 days ago

THE FUTURE OF CUSTOMER EXPERIENCE IN DIGITAL BANKING

By Richard Billington, Chief Technology Officer, Netcall Over the past five years, the digital banking revolution has had a seismic...

COVID-19 COVID-19
Banking2 days ago

TRANSFORMING BANKING: WHY COVID-19 IS UNFREEZING CONSUMER HABITS

Raj Chakraborty, Senior Managing Director, Publicis Sapient   There is much debate about the impact of COVID-19 on the economy....

LEASE LEASE
Business2 days ago

IS YOUR OFFICE LEASE CRUSHING YOUR BOTTOM LINE? YOU HAVE OPTIONS

By Jonathan Wasserstrum, Founder / CEO, SquareFoot These are unprecedented times for us all. Nobody has a playbook to get...

HOME HOME
Wealth Management2 days ago

THE TRIALS AND TRIBULATIONS OF TRADERS TRADING FROM HOME

Steve Haworth, CEO of TeleWare Group Banks had hoped to keep their London trading floors open amid the worsening coronavirus...

OPEN BANKING OPEN BANKING
Banking2 days ago

HOW WILL REVOLUT’S MOVE INTO OPEN BANKING AFFECT US?

By Richard Mathias, Senior Technology Architect at LiveArea Despite current uncertainty, the financial services sector is experiencing transformative change year...

AUTHENTICATION AUTHENTICATION
Technology2 days ago

IN CONSUMER BIOMETRICS WE TRUST: AUTHENTICATION FOR THE DATA PRIVACY AGE

Jonas Andersson, Head of Standardization at Fingerprints Data privacy is high on the global agenda. In the wake of data...

COVID-19 COVID-19
Business7 days ago

CAPITAL MARKETS – LIQUIDITY MANAGEMENT DURING COVID-19

Tony Farnfield, Partner at management and technology consultancy, BearingPoint   When “Dr. Doom” predicted the 2008 financial crisis back in...

SONY BANK SONY BANK
News7 days ago

SONY BANK SECURES AND ENHANCES MOBILE BANKING WITH ONESPAN’S MOBILE SECURITY SUITE

App shielding, biometric authentication and additional technologies secure and improve the customer experience for Sony Bank’s mobile banking app  ...

MOBILE BANKING MOBILE BANKING
News7 days ago

KOREA’S KB BANK USES TRUSTONIC IN-APP PROTECTION TO ENHANCE MOBILE BANKING EXPERIENCE

Using Trustonic Application Protection enables KB Bank to dramatically improve the authentication experience for users of its mobile banking app...

Customer Customer
News1 week ago

CUSTOMER CARE TODAY WILL BUILD RESILIENCE FOR FUTURE CRISES

Cathal McGloin, CEO of ServisBOT writes, “The COVID-19 pandemic has created major spikes in calls to financial sector helplines dealing with customers...

CREDIT CARD MARKET CREDIT CARD MARKET
Banking1 week ago

THE CO-BRAND CREDIT CARD MARKET – SINK OR SWIM

By Chris Vinnicombe, VP Financial Services at Acxiom The co-brand credit card market is the result of the partnerships between...

Trending