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HOW CAN BANKS BUILD A GENUINE, EFFECTIVE DIGITAL CULTURE?

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Matt Phillips, VP, Head of Financial Services, Diebold Nixdorf UK/I

 

The huge global increase in connectivity, prompted by the launch of mobile devices, has affected banks just as much as retailers. As a result, financial institutions have had no choice but to put digital at the front and centre of their strategies – using technology to enhance the customer journey at every touch point, personalising services, combining channels, and using big data to make the consumer’s banking experience more seamless. As the industry is starting to see, organisations that do this successfully can gain loyalty from customers, attract new business and make savings along the way.

 

We know that financial institutions haven’t always been able to effectively digitally transform at the pace they need. However, digital is no mere fad, and so finding a new approach is essential. After all, it is estimated that by 2025, 40% of Fortune-500 companies will have vanished because they will have failed to keep pace with the changes now underway. Customers increasingly expect a digital experience and financial institutions therefore, have no choice but to provide one.

 

A digital approach is a people-first approach

To deliver a digital experience to their customers, financial institutions need to build a digital culture into their processes and foster this among their staff. They also need to remember that investing in technology alone doesn’t make them digital.

 

That’s because ultimately, any digital strategy must start by putting people at its heart. Digital teams must ask – what do our customers want to achieve? What’s the journey like for them? What information do they need access to, and how do they want to access it? And, crucially, how do we help our staff make this possible? It’s only by understanding the answers to these questions that a financial institution can then start to build and implement the technology that will best support its customers.

 

Of course, every customer likes to deal with their banks, lenders, mortgage providers, or current accounts differently, so it’s likely that there’s no one simple answer to these digital strategy questions. One banking customer might be very happy to embrace the whole mortgage process from their living room, even down to booking their removal firm from the banking app on their smartphone. For others, a transaction like this is preferable face to face, but they would expect services and information to be readily available via engaged and knowledgeable staff in branch. Financial institutions need to consider this, and make sure that their digital investments support a wide range of customer journeys and preferences.

 

Achieving all of this, of course, is no mean feat, and there is a growing need for banks to put customers and people at the heart of every digital change. So, how do banks need to change culturally to make that happen?

 

Building a digital culture

Of course, financial institutions need to invest in technology and continually monitor developments in digital applications, but it is nowhere near good enough just to give staff new technology and tell them to get on with it. If banks are serious about going digital, they must create an organisation that is customer-focused. For many, this involves a certain amount of cultural change at an internal level.

 

Initial steps might seem small – such as cross-team working to encourage new ideas, or data analysis to understand customer trends and requirements better – but steps like this are vital for setting out on the right path, and for making the right digital choices in the long run.

 

Most banks already have a crew of ‘digital natives’ who can contribute to the process (according to some reports about50% of today’s workforce is currently considered to be digitally native). So, banks can benefit from not only informing, but also actively engaging enthusiastic staff from the beginning. When barriers are removed, and contributions welcomed, a ‘learn fast’ rather than a ‘risk averse’ approach can inspire creativity and foster digitalisation.

 

Once initial steps have been taken to encourage collaboration and agility, concept work and R&D, will be essential to digital development. Every new innovation must be tried and tested, a process that involves stakeholders and many levels in the business – from customer experience teams in branch, to security professionals at HQ.

 

Before new technology can be put to work, financial institutions must also train staff effectively. For many front-line employees in the branch, a switch to digital might involve them having less of a transactional role and becoming more customer-facing, so an educational programme to bring staff onboard with change, if they’re not already, is essential.

 

Many, or all, of these steps require an adjustment – whether that’s because traditionally siloed teams must work with other departments in the business, or whether because projects may need to change direction or morph as time goes on. Cultural change is not easy – in fact, according to Harvard Business Review, three-quarters of all organisational change initiatives fail. This makes it all the more important that financial institutions help staff to see the benefits of change. Certainly, there is reason to hope that employees will be keen, if they understand the future benefits of transformation.

 

In short, digital culture requires greater collaboration, agility and, above all, a strategy and vision that is designed to put people first. Because for financial institutions who can engage with customers in a way that adds real value to their daily lives, the digital future looks very promising indeed.

 

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Banking

Bringing Automation to Banking

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Ron Benegbi, Founder & CEO, Uplinq Financial Technologies

 

Automation is everywhere you look these days; from supermarkets to warehouses to automobiles. This prominent trend shows no sign of abating anytime soon. However, some sectors remain behind others when it comes to adopting automated technologies. Banking is one such segment, but there’s now evidence to suggest that this could be about to change.

 

What do we mean by automation?

There are a lot of ways to define automation, but broadly the term applies to any technological application where human input is minimized through design. Over the years, automation has evolved from a basic level, which took simple tasks and automated them, all the way to advanced automation powered by Artificial Intelligence (AI). In general, automated solutions work to increase productivity and efficiency within businesses and often result in a reduction in costs associated with human capital.

 

Ron Benegbi

Why has the banking sector been slow to adopt automation?

The banking sector has been built on a number of long-standing, tried and tested processes and protocols, which have been continually fortified and refined over time. This is one explanation as to why the sector has been so slow in adopting new, automated methods within its operations. Additionally, many major financial institutions have spent decades building their own internal legacy computer systems, which are often incompatible with modern automated solutions.

When combined, these two issues have caused a significant lag in the banking sector with regards to the adoption of automated technologies. This lag has created a market opportunity that a number of fintech providers have been able to exploit in recent years. Offering a more responsive and tech-first user experience, many fintech providers are leveraging the power of automation to better meet the banking needs of their customers. However, there is still time for the banking sector to start bridging this gap.

 

Does automation have a place in the banking sector?

The opportunity for automation to play a role within banking can be transformational.

To achieve this, it’s important that legacy organizations begin to learn from their more tech-savvy, smaller counterparts. If used effectively, automated financial solutions can greatly improve the experience of banking customers, both on a personal and business level. So, what exactly does this change look like, and how far away are we from seeing it become a reality?

A good place to start is the small business credit lending process, where not much has changed since the 1980’s. Over that period, the world has greatly transformed, but the methods used to assess credit worthiness have remained somewhat static. For the most part, banks assess data related to businesses’ accounting and banking records and from credit scores. For many businesses, especially the newer and less established ones, this antiquated approach is having a detrimental effect. In fact, it’s often cited as a contributor to the huge funding gap between SMBs and their larger counterparts.

 

How can automation benefit the banking sector?

By adopting more automated technologies, lenders in the banking sector can begin to assess more comprehensive information when making credit decisions. Notably, new methods exist, which enable additional data sets to be evaluated, in order to build a more accurate financial depiction of a business’ overall position. This data can come from sources like external market attributes, economic indicators, demographic data and exogenous shocks.

By leveraging additional data sets through new methods of financial automation, banks are now in a position to respond more effectively to small businesses, including those in emerging and evolving markets where there is a lack of conventional sources of information.

With more ways to access funding, facilitated by alternative data and automated processes, small business owners can improve their operational efficiencies and accelerate their growth efforts. In doing so, legacy oriented financial institutions can now better equip themselves in protecting against new, nimbler tech-based disruptors.

 

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Banking

MYTH BUSTING THE ROLE OF OPEN SOURCE IN FINANCIAL SERVICES

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Nigel Abbott, Regional Director North EMEA, GitHub

 

There is no denying the financial services (FS) industry is under pressure to innovate. Not only have customer and consumer expectations for digital experiences surged in recent years, but the emergence of nimble and ambitious fintechs have disrupted the market. Yet, despite striving for innovation being table stakes across the industry, FS organisations inevitably face familiar hurdles that slow their progress, including concerns surrounding security, compliance, and the ability to act fast.

Open source is increasingly seen as a route to drive innovation and create new value. The FS sector’s utilisation of open source and the transformative role it can play is accelerating – on paper, at least. According to the recent Fintech Open Source Foundation’s (FINOS) 2021 State of Open Source in Financial Services survey, as many as 80 percent of FS leaders said that innovation, reduced time-to-market and total cost of ownership are factors for FS businesses to consume open source.

Nigel Abbott, Regional Director North EMEA -GitHub

But the reality is these positive adoption figures don’t tell the whole story. The survey also revealed that 75 percent of FS technology leaders said their businesses are either not “open source first”, or that they did not know if they were. Tellingly, less than one in ten (eight per cent) said that their business has put in place policies to encourage open source contribution.

The statistics point towards disparity between uptake of open source and the ability to use it to its full potential. But why?

For me, it comes down to some common myths about the role of open source that need demystifying:

 

Myth #1: There are limits to the innovation that open source can deliver

This could not be further from the truth. All enterprises, including FS companies, rely on open source software to build the best software for their customers, improve infrastructure, and unlock the potential of their engineering teams. Nationwide, for example, has completely redesigned its DevOps processes to respond faster to market changes and keep pace with customer expectations to remain relevant. The impact is transformative when they actively embrace it and participate fully in the open source community, creating a win-win situation for end-users. 

 

Myth #2: Data can be shared without consent 

Quite the opposite. Open source does not require FS businesses to share all their secrets and give away their competitive advantage. Instead, taking an “innersource” approach allows financial institutions to take the skills of developers who are accustomed to using open source tools and brings these inside the company firewall, providing a secure internal platform for working collaboratively on projects.

 

Myth #3: Open source is not secure

The most common misconception is that higher security risks are associated with code being openly available to anyone who uses it. But the open concept is, in fact, one of the biggest security strengths of open source. This is because of the collaborative nature of how code is built. The open source community has a shared responsibility for developing and maintaining secure code, and there is a vast global pool of developers identifying and fixing security issues. Supported by the right tools and processes, open source makes it easier for developers to code securely throughout the entire software development lifecycle, reducing the amount of time and financial investment in delivering secure products. Research from Red Hat found that security is regarded as a top benefit for enterprises using open source.

 

Myth #4: The open source community lacks finance sector contributors

This is untrue. Financial enterprises of all shapes and sizes are prominent participants in the open-source community and lead by example, sharing meaningful code contributions. Challenger banks and institutions such as Goldman Sachs contribute to open source initiatives via FINOS. By opening their code and ideas, FS companies can share lessons and support the whole community – helping them deliver better services and more value to their customers. And crucially, they are advancing a community that they can systematically tap into and benefit from.

Open source is already delivering innovation in the FS sector. But the bottom line is that there is so much extra value it can bring. Unlocking the full potential of open source to effect change does not just require buying DevOps tools. Open source requires organisation-wide understanding and support, a culture of collaboration and a progressive DevOps and governance process to thrive. Only then can it deliver its true value and accelerate innovation.

 

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