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HOW FINANCIAL INSTITUTIONS CAN MEET CUSTOMER EXPECTATIONS BY WORKING WITH TECH-SAVVY PARTNERS TO CLOUDIFY OPERATIONS

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Daniel Meere, VP, BFS&I Consulting, UK&I, Cognizant

 

Consumer habits are changing. We now increasingly expect a seamless and agile experience from the brands and businesses we interact with. This is no different when it comes to financial services providers.

As such, financial institutions are searching for new ways they can optimise and transform the experience they offer to customers and many have been turning to cloud for its flexibility and agility.

Cloud is central to any digital transformation strategy, and this has been especially true throughout the pandemic. However, incumbent financial institutions that lack expertise in the technology domain should seek support from tech-savvy partners who can ensure it’s a seamless migration and that they are best positioned to leverage all of the benefits cloud has to offer.

 

The three key elements for successful migration: Technology, culture and people

Investment in cloud has increased rapidly during the pandemic, with the global financial cloud market expected to grow from $16.55 USD billion in 2018 to $46.03 billion USD by 2023. However, only a small number of transaction workloads have already fully migrated to cloud.

As consumer expectations of financial services are now driven by what they experience from other industries, where cloud’s high capacity is being leveraged to store vast amounts of data, financial institutions must cloudify more of their operations to be able to deliver against customer expectations.

Cloud offers many benefits from an operational level. For example, as data is stored on a cloud provider’s server, financial institutions no longer need as many people to manage these operations as before, which means they no longer need as much office space, so their operating model fundamentally changes, and this leads to a lot more remote delivery.

For financial institutions wanting to migrate operations and workloads to cloud, though, it is a question of hand holding. But how do you hold someone’s hand just to get them on that journey and make it a success? Well, there are three elements: technology, culture and people. While a longer-term ideal would be for multiple financial institutions to collaborate, this is an opportunity for the future. For a single financial institution to make its cloud transformation a success and to really adopt the cloud, it must start by:

  1. Creating a common architecture and a hybrid framework, which is not isolated to one public or private environment.
  2. Defining the blueprint and the transformation path, questioning what the current landscape looks like and how heterogeneous the technology is from an application perspective.
  3. Implementing an auditing process in case of eventualities.

 

Making the most of external expertise

Technology like cloud is not where financial institutions’ expertise lies, despite it being key to solidifying their future by accelerating innovation to meet customer expectations. So, sourcing better-placed partners to collaborate with could help traditional financial players balance cost, agility and innovation, and deliver to market at a faster rate.

Incumbents should also be looking to new fintech players for inspiration. In many ways they already do, especially to learn from fintechs’ dynamic nature and the way in which they know instantly what the customer wants and how to respond to this. Some of that ability is because they have smaller customer bases, meaning they affect fewer customers to affect by change. Some of it is also just because they have a different mindset.

There is a real advantage to financial institutions in being able to absorb some of that culture and outsource some tasks that would take banks a long time and cost to deliver. Financial institutions talk about ‘cloud-first’ platforms, but just embarking on cloud is not going to provide innovation, flexibility or even a cost-benefit, unless there is a cultural change within the organisation.

However, many incumbents have been too quick to dismiss fintech firms and have been on a mission to either acquire or annihilate them. Today, there must be more focus on looking to partner with and learn from these kinds of tech-savvy companies.

Financial institutions must also understand that this may result in conflict as innovation cannot be outsourced, and financial institutions must understand relevance and the fact that fintechs are not only part of the financial ecosystem but are also in direct competition with them.

 

Relinquish control, but not accountability

As a vital part of any cloud migration journey by an incumbent financial institution, a mindset shift needs to occur – not just from a cultural perspective, but from an operational and business one too. Financial institutions need to realise that they’re going to be providing banking services to customers while someone else provides the cloud service to them.

On one hand, while you may have the advantage of scale, lower cost, flexibility and agility, this will result in a reduction in the control that is exerted over services which many aren’t used to as historically financial institutions have created and managed their own infrastructure. Ultimately, cloud infrastructure is forcing financial services executives to think about not owning their infrastructure, relinquishing an element of control, and adapt to working with a service provided by an outsider.

However, financial institutions will still be regulated for their use of cloud and regulators are continuously making the point that buying in services rather than owning them does not mean outsourcing the accountability. Banks can control the outcomes through their own performance and consequently create an environment where all constituent parts can work together to deliver the right outcome.

 

Finance

THREE STEPS TO ENSURE RECOVERY OF COVID LOANS GOES SMOOTHLY

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In the wake of the pandemic, the government acted quickly to provide financial Covid support packages to help struggling businesses. With the economy now recovering, Mike Hampson, CEO at Bishopsgate Financial explores the range of options available for banks to ensure that those loans are repaid.

 

Since the start of the pandemic, businesses have raised over £75bn[1] from banks and financial markets, through interest-free emergency support schemes. But the harsh reality is that not all loans will be honoured as the economy recuperates.

As a result, banking professionals with client relationship management experience and skills in supporting clients to repay loans in a challenging business environment, will be in high demand.

 

Mike Hampson

Setting up training capabilities for client support post-pandemic

Commercial bankers estimate 60% of new coronavirus scheme loans[4] will default or suffer other repayment issues that will drive previously unseen levels of non-performing loans. It’s a tough balancing act and one that demands careful management of the lending transaction lifecycle, from origination through to collection, recovery, and handling bad debts. Banks no doubt already have frameworks in place to manage these elements, but it’s highly important to make customer interactions as easy as possible and ensure their genuine concern for their customers is clear.

Subsequently, hundreds of workers at major banks including HSBC, NatWest and Metro Bank[5] are understood to be receiving training in how to deal with vulnerable customers and “demonstrate empathy” as the first wave of repayments for coronavirus loans fall due. Staff ‘sensitivity[6] training builds on client-support and workout capabilities, such as improving sensitivity to early-warning systems, developing short-term forbearance solutions and loan modifications, and providing guidance on alternative products.

This approach may further avoid the additional pressure on the UK’s mental health crisis as financial institutions prepare to call in loans issued during the pandemic.

HSBC, which now has 400 staff in its debt collection team,[7] said the aim was to ensure staff had a “consistent understanding of vulnerability” and are “aware of the factors that could make an individual vulnerable” when having repayment conversations with customers.

An executive at another bank said its expanded debt collection team was being trained in “empathy, vulnerability and listening skills”. The individual told The Telegraph: “Ultimately, we don’t want to damage the economy by being overly aggressive.”

A peculiarity of a crisis situation is that customers don’t always know what they will need until that need is pressing. Finding that their bank is prepared to help in unexpected ways will go a long way toward reassuring them.

[2] https://www.law360.com/articles/1355897/

[3] https://www.bishopsgate-financial.com/insights/the-change-perspective/the-change-perspective-2021

[4] https://www.grantthornton.co.uk/insights/how-to-manage-upcoming-non-performing-loans/

[5] https://industryslice.com/NewsLetter/8_33

[6] https://www.telegraph.co.uk/global-health/climate-and-people/covid-19-has-amplified-parallel-pandemic-poor-mental-health/

[7] https://www.msn.com/en-gb/money/other/bank-staff-get-sensitivity-training-before-calling-in-covid-debts/ar-BB1fNMte

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FOUR STEPS TO INTEGRATING INTELLIGENT AUTOMATION IN THE FINANCE DEPARTMENT

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Marieke Saeij, CEO of Visma | Onguard

 

It’s clear that Intelligent Automation (IA) is still very much an emerging technology, with one indication being that is has only been mentioned a handful of times on Twitter since the beginning of 2021. Results from our latest annual FinTech Barometer reveal a mixed picture in terms of awareness, with half of finance professionals having never heard the term before. Whilst this is unsurprising for a technology concept very much in the ‘early adopters’ stage, organisations can stand to gain real benefits from embracing Intelligent Automation now, particular within the finance department. With this in mind, we explore some of these benefits and share a step-by-step best practice to implementing it into business operations.

 

Intelligent Automation ensures a predictable order-to-cash process

Such is the speed of introduction of new technologies that it’s a challenge for businesses to keep pace. As the newest innovation in finance, Intelligent Automation is one that organisations can’t afford to let pass by. It truly takes financial process automation to the next level. In addition to helping maintain a high-quality customer service, it also complements the existing skillset of finance professionals in the industry.

Marieke Saeij

While Robotic Process Automation (RPA) and Big Data are key innovations for the sector, IA can be likened to an additional layer that enhances existing technologies. By combining applications, this layer is capable of independently assessing situations and determining the appropriate process sequence. It can, for example, fully determine the risk of a specific customer, and can also predict at an early stage which invoices will be paid late, or even not at all, ensuring that finance professionals can then plan accordingly. The result is a reliable and predictable order-to-cash process.

 

The four steps to an IA-proof organisation

While the benefits of IA are numerous, implementing the technology can prove complex, although some are already treading the IA path without knowing it. In this instance it’s crucial to become aware and begin the purposeful process to full integration. Below are the four key steps to becoming fully IA-proof.

  1. Exploring the potential: Brainstorm where automation can be applied

Step one is to examine the extent to which automation can help your organisation. Blue sky thinking is the key here. What is the ideal relationship with the customer? What does the ideal order-to-cash process look like? In this phase, involving multiple departments from within the organisation is key, from management to operations. The finance professionals who have the most contact with customers are likely to have the strongest knowledge of which processes they would like to see automated. With no limits to ideas, it’s best to explore all the opportunities in the entire order-to-cash process and describe broadly the potential value to the organisation.

 

  1. Decipher which data and technology is needed

The second step is to map out which data and technology is required. Working with a specialist, either external or from the internal IT department, is beneficial at this stage to see where the opportunities lie. In many cases, off-the-shelf solutions are already readily available to help make the difference, so it pays to do the research and gain advice where possible.

 

  1. Firm up the strategy

With the plan mapped out, it’s time to fit the pieces of the puzzle together. Which technology and accompanying software is proving most valuable? It’s vital at this stage to analyse the results the organisation is achieving from deploying the right technology and software. It’s also important to outline any limitations and emphasising the potential risk of failure. This is the business case and the basis for the elevator pitch that will be presented to internal stakeholders.

 

  1. Draw up the roadmap and start benefitting from agility

The fourth and final step is prioritisation. The roadmap will describe step-by-step how to move from the undesired current situation to the desired end goal. In the first step, choosing a subproject that is relatively easy to achieve will help gain support from other departments within the business, and provide invaluable experience that can be applied to the more complex components that follow later. This agile approach facilitates a learn-by-doing mindset and allows the following steps to be tackled in a smarter and simpler way.

 

Effective preparation is half the battle

Exploring the potential of automation, mapping the required data and technology, establishing the strategy and laying out the roadmap are the four crucial steps to ensure the foundation for Intelligent Automation. Effective preparation and estimating which technology and accompanying software is needed will help to create a streamlined and error-free order-to-cash process. To ultimately save time and costs, empower finance professionals and maintain customer loyalty, the time for Intelligent Automation is now.

 

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