Connect with us

Banking

HOW SOFTWARE ROBOTS CAN SUPPORT ESG INITIATIVES IN BANKING AND FINANCE

Published

on

Gavin Mee, Managing Director of Northern Europe at UiPath, introduces readers to software robots and explains how the technology can bolster environmental, social and governance initiatives within banking and finance.   

 

This year has only highlighted the growing need for corporate social responsibility. As concerns grow over COVID-19, social inequality, climate change and so forth, regulatory bodies and stakeholder activists alike are ramping up the pressure on financial institutions to implement environmental, social and governance (ESG) initiatives.

On the whole, the sector is realising that true commitment and compliance is a key element to success, with 80 per cent of banks having already made ESG commitments.[i] Several commercial banks, for example, have started to offer sustainability-linked credit facilities to customers. In one case, Brivtic, the soft drinks producer was offered up to £400 million dependent on whether the company can meet various ESG targets.[ii]

However, these initiatives are complex and require huge swathes of data to be regularly processed in order to be successful. For example, if a bank was committed to green financing, it would need to track the clients’ field operations, carbon emissions, supply chain activities, and a score of other variables. Searching for, collecting, processing and reporting back on this data is a huge undertaking which is extremely prone to error. It’s here where software robots can help.

What is a software robot?

Think of a software robot as a colleague who can lend a hand with completing rule-based, repetitive admin. They can control a computer as an employee would, only virtually, reading, extracting and processing data that you’ve taught them to look for.

Using a combination of technologies such as Robotic Process Automation (RPA) and Artificial Intelligence (AI), these software robot can complete data-intensive tasks with ease, more quickly and accurately than an employee could.

This technology is already being used around the world to lighten administrative loads and hand employees back time in their day to focus on value-added work that requires human ingenuity and skill.

How can software robots help with ESG?

As mentioned, ESG initiatives require huge volumes of data to be collected, processed and reported. These are the exact tasks that software robots are best at. The technology can comb through numerous sources of data, extracting the necessary information and reporting it back to colleagues to action as required.

Reporting is one area where software robots are most commonly used in ESG initiatives. Let’s take a bank keen on offering lower rates of interest for green properties, otherwise known as green mortgages. To ensure a property meets the lender’s specifications, additional documentation must be processed. Software robots can sort through this information and report back as to whether the property meets the green standards, providing employees with the information they need, when they need it.

An organisation looking to shape their investment strategies in line with ESG policies is another good example. Software robots can scan through various sources of information such as prospectuses, annual reports and media reports, and consolidate the required information into the necessary format. Portfolio managers can then consult this information to make responsible, purpose driven investment decisions.

Software robots can also be used to relieve the stress on auditing functions. In order for ESG initiatives to be successful, auditing is crucial. However, auditing teams already have enough on their plates without ESG being added to the mix. Therefore software robots can be deployed into the function to assist in sampling, monitoring and assessment.

Alongside assisting with reporting and auditing, the technology can also enact change itself. A business process management firm that provides solutions to the banking and finance sector, for example, is using software robots to digitalise loan documents and to manage customer processes. This has reduced the business’ reliance on paper, thus assisting in their objective to cut waste. Elsewhere, software robots are assisting a Turkish bank in processing requests to postpone loan repayments for customers impacted by COVID-19 in line with the banks new social responsibility initiatives.

As ESG initiatives vary from business to business, so too will be the application of software robots. However, despite the specifics, the running themes throughout these programmes require huge volumes of data to be processed quickly and accurately. Employees can’t pick up all this work alone, nor would it be the best use of skills, software robots on the other hand are designed to handle this exact work with ease.

It’s no surprise, therefore that the technology is proving itself to be an extremely useful tool when transforming ESG objectives into impactful realities. As the importance of corporate social responsibility is only set to grow in the coming years, those organisations that deploy software robots into their processes now will be more prepared for new ESG regulations as they emerge.

[i] https://www.consultancy.eu/news/5905/banks-globally-taking-sustainability-and-esg-more-seriously
[ii] https://home.kpmg/xx/en/home/insights/2020/05/embedding-esg-into-banks-strategies.html

Banking

Are SaaS platforms challenging banks for a piece of the payments pie?

Published

on

By

4 common myths about the role of open source in financial services

Attributed to: Ralph Dangelmaier, Global CEO of BlueSnap

 

The finance industry is at a tipping point with software firms on the brink of becoming banks. This may seem like a farfetched idea, but now that software platforms come equipped with payment capabilities, their SME customers may want to receive more financial products from these platforms.

This is part of the wider trend of ‘embedded finance’ – when companies which aren’t banks incorporate financial services such as lending, insurance, and payments into their product.

Software firms are particularly leveraging ‘embedded payments’ – where the ability to accept and process payments comes with the software itself. Think of a school consolidating all the payments a parent would make for their children – tuition, books, extracurricular activities – in one software platform. This trend has exploded in popularity because there’s a desire among companies, and their customers, for everything from products to payments to happen under one roof.

With the market value of embedded payments expected to reach £2.08 trillion by 2026 and customers becoming increasingly married to their software, let’s look at how we ended up at this turning point in payments.

How chasing convenience puts money in platforms’ hands

Ralph Dangelmaier

The growth of embedded payments is propelled by the need for ease, trust, and convenience. As platforms are selling payments hand-in-hand with their software, customers don’t need to integrate with additional service providers just to accept payments. And they’re already bought into using the platform for its other functions.

Not only is this kind of back-end reconciliation easy and convenient but it helps software platforms generate revenue too. That’s because software companies that embed payments become Payment Facilitators (a.k.a PayFacs) – allowing them to monetize transactions that happen within their platform.

By selling payments, software firms can see up to a fivefold increase in value per client. Rather than depending on software subscriptions alone, these platforms now receive a cut of every transaction that’s facilitated using their software too. This provides them and the businesses they serve with a mutual incentive – shared profits.

Software platforms are passionate about helping their customers create the most easy-to-use experience to drive a higher volume of transactions. Of course, there are many ways to launch new revenue streams, but why leave money sitting on the table when all you have to do is become convenience-obsessed?

Why finance teams want software and payments in one  

As a payment expert who’s worked in a bank’s back office, I know how important a financial software stack can be. In its highest form, it can steer a business’ entire financial strategy.

Often these stacks are well curated, but the biggest drawback is the manual collection of data across platforms. Trying to build a financial picture of a business using your ERP, CRM, human resource and billing system can involve hours of laborious data entry.

For everyday finance teams, this isn’t an efficient use of time. They need to be able to pull data swiftly to advise their executives on financial strategies. CFOs are also under pressure to choose the right software stack to streamline processes and ensure payments ROI.

That’s why payment technology that removes the manual work for finance teams – to get from A to B more quickly – is growing in popularity.

Software firms using embedded payments are saving them hassle and time. Not only that, it helps the key financial decision makers of SMEs stay in a constant state of financial planning, where they can change their strategy whatever the market conditions may be.

The end of traditional banking for SMEs?

Increasingly, SMEs are struggling to get the payments support they need from traditional banks. The ‘higher risk, lower return’ view of the small business market among banks leaves software platforms in a ripe position for a takeover.

There are over 90,000 software companies in the UK alone. With nearly half of software platforms (48%) turning to embedded payments to gain a source of competitive advantage, this figure could represent a threat to corporate banking as we know it.

SMEs don’t have the deep pockets that multinational businesses have. The Amazons and BMWs of the world have long reaped the benefits of a corporate account with a large bank – and the round the clock support this offers.

But SMEs face high conversion fees and often receive minimal support chasing late payments, leaving them between a rock and a hard place. If these businesses can save money by moving from banks to software platforms, then banks are at risk of losing their position over the middle market.

Looming regulation

Until now banks have been able to defend their position because safety and security is key. Once platforms become regulated, then what? It won’t be long before regulators eye up the software industry as their next big focus.

But regulatory bodies like the FCA, PRA and more favour ‘controlled innovation’, so this will take time.

Currently, to process transactions in Europe, businesses must go down the lengthy and costly process of becoming Payment Service Providers (PSPs). That’s why many software platforms are choosing to partner with a licensed payment provider which sells the payment package to them, instead.

In fact, 89% of software platforms choose to work with PSPs rather than become a PayFac themselves. It makes sense when it’s taken more than a year for some platforms to begin processing payments on their own.

Given the sizable financial risk of processing your own payments and the administrative burden this brings, it’s no wonder software firms are looking to fintech for a better way.

After all, it’s not just about processing the payments. A partnership with a payment technology partner comes complete with support in onboarding, underwriting, compliance, risk, payouts and customer support.

In short, software platforms see the benefits of selling payments and are primed to become the next big financial players.

Not only is there revenue for the taking but their customers benefit as well. With software platforms ready to offer SMEs a banking alternative and a superior customer experience, they’re offering a truly win-win solution for all involved. And it’s payment technology partners that can help them make this vision a reality.

Continue Reading

Banking

Emerging technology will power long-term sustainability within the UK banking industry 

Published

on

By

By Peter-Jan Van De Venn, VP Global Digital Banking at Hexaware Mobiquity.

 

Sustainability has been a big focus for the banking industry in recent years, with the issue becoming increasingly important for consumers. It’s no wonder that sustainability has become baked into the purposes of almost every bank, from Natwest to HSBC.

However, the economic uncertainty of the last year has led to many banks putting it on the back burner. Challenging market conditions have forced financial institutions to change their priorities to concentrate on protecting the bottom line. Our research found there’s been a significant drop in the number of UK banks saying that sustainability remains a key business strategy. 12 months ago it was a major priority for 100 per cent of banks, but now that number has shrunk to 60 percent.

Whilst it’s understandable that banks are feeling the pressure at the moment, there’s a risk that they will miss out if they hit the pause button. From cost savings brought by innovative digital products and services, to improved brand reputation and increased profitability, there are a lot of longer-term benefits they could be failing to unlock. So how can they keep moving forward?

Losing momentum

Emerging technology holds the key to their success, with the power to disrupt current behaviours and promote a more sustainable culture. Banks are already aware of this, with 76 percent using digital transformation to drive sustainability, but a lack of leadership has made it difficult to build momentum in the last 12 months. Currently just over half (54 percent) of banks have tasked an executive at board level with overseeing sustainability – way down from 83% just 12 months ago.

This lack of board authority means banks are struggling to engage the entire organisation to move ahead with sustainable initiatives. As a result, almost two-thirds of banks are seeing progress slow, admitting they are not actively taking steps to foster more sustainable behaviours throughout the organisation. Those that have taken their foot off the gas need to find a way to move forward again.

No time for standing still

Banks know that technology can drive sustainable behaviour. For instance, many of them are already encouraging their workforce to work remotely, as a way of reducing travel. This has two benefits – not only does it cut the costs of running physical offices at full capacity, but also reduces the bank’s carbon footprint. There has never been a better time to invest in technology to drive more sustainable behaviours.

New digital products and services can also extend the benefits beyond employees to encompass the wider customer base. A fair number of banks are already investing to make this happen. More than a third (35 percent) of banking organisations are using Machine Learning (ML), Artificial Intelligence (AI), cloud and analytics to make digital services more easily accessible. Investment in these technologies will be critical as the number of physical bank branches continues to decrease, with figures from Which? showing this is taking place at a rate of 54 branch closures each month.

Hitting environmental and social responsibility goals

Emerging technologies can also help banks keep pace with tightening ESG rules and regulations. Banks are faced with demands for increasingly granular reporting and transparency on ESG – demanding a new approach. In line, 41% of them are developing data visualisation tools to improve stakeholder engagement and understanding of ESG risks and opportunities, while 37% are using machine learning and artificial intelligence to identify and track ESG risks and opportunities across a wide range of data sources.

More than one in three are also using the blockchain to improve transparency and traceability in supply chains, and implementing digital tools and platforms to collect, analyse, and report ESG data and metrics in a standardised and consistent manner. All these applications of emerging technology will put banks on track to address global environmental challenges and unlock a greener future.

Long-term sustainability

As the economic pressures hopefully start to subside, increasing numbers of banks will start investigating how they can use emerging technologies to provide engaging experiences and value-added services for customers, to drive greater revenue and efficiencies.

Whilst banks are right to focus on their revenue under difficult trading conditions, it’s important they don’t miss out on the long-term benefits that sustainability can bring. To capitalise on this, banks must keep pushing the boundaries and invest in emerging innovations to drive more sustainable banking behaviours, benefiting the planet and driving great digital experiences for customers.

Continue Reading

Magazine

Trending

Business22 hours ago

How can law firms embrace automation and revolutionise their payments?

Attributed to: Ed Boal, Head of Legal at Shieldpay   Once again, AI is dominating international headlines. This time, it’s...

Business2 days ago

In-platform solutions are only a short-term enhancement, but bespoke AI is the future

By Damien Bennett, Global Director, Principal Consultant, Incubeta   If you haven’t heard anyone talking about artificial intelligence (AI) yet,...

Business3 days ago

Exploring the Transformative Potential and Ethical Challenges of AI in Wealth Management

Nuno Godinho, Group CEO of Industrial Thought Group   In recent years, the advent of AI has sparked both excitement...

4 common myths about the role of open source in financial services 4 common myths about the role of open source in financial services
Banking3 days ago

Are SaaS platforms challenging banks for a piece of the payments pie?

Attributed to: Ralph Dangelmaier, Global CEO of BlueSnap   The finance industry is at a tipping point with software firms...

Banking3 days ago

Emerging technology will power long-term sustainability within the UK banking industry 

By Peter-Jan Van De Venn, VP Global Digital Banking at Hexaware Mobiquity.   Sustainability has been a big focus for...

FinTech Trends In 2022 FinTech Trends In 2022
Business3 days ago

Is your business suffering with Fintech FOMO?

Tom Kiddle, Chief Commercial Officer at Equals Money   It’s a challenging time for businesses of all sizes, but the past three...

Banking3 days ago

The Future of Banking: Streamlined Cash Management for ATMs

Gaetano Ziri, Innovation Manager, Auriga   “Maintaining free access to cash for the community demands robust strategies to mitigate the...

Top 103 days ago

Can AI revolutionise wealth management?

~ The benefits of AI when collecting and analysing financial data ~   Global fintech company Finder reported that around...

AI and machine learning AI and machine learning
Finance3 days ago

Where is the value in generative AI for financial services?

Michael Conway, Executive Partner, Data, AI and Technology Transformation Service Line Leader at IBM Consulting   The New York Times...

Technology3 days ago

Connecting the security dots with cyber fusion 

Anuj Goel, Co-founder and CEO at Cyware  Against the backdrop of Russian-based hacktivists declaring war on Europe’s financial systems, the...

Business3 days ago

Exploring the symbiotic advantages of SoftPoS for merchants and consumers

By: Brad Hyett, CEO at phos by Ingenico   Amid the dynamic shifts that have come to define today’s fintech...

Finance4 days ago

Investing In Bitcoin: What You Need To Understand Before You Buy

Bitcoin—the digital currency that launched a financial revolution—is more than a trending investment. This decentralized currency, free from traditional banking...

News6 days ago

How the LEI Can Help Financial Institutions ‘Address’ a Growing Challenge in ISO 20022

The vast complexity and inconsistency of address formats globally presents significant challenges for financial institutions. In this blog, GLEIF’s Head...

Banking1 week ago

Building towards an inclusive financial future

By Catharina Eklof, CCO of IDEX Biometrics    From the visually impaired to displaced migrants, the unbanked, and people living...

Business1 week ago

Euro deep tech M&A deal value expected to reach $20bn+ in the next 15 months

Written by Oliver Warren, Associate at DAI Magister   Investment in European deep tech has mirrored the broader decline in...

Business1 week ago

Why ESG Investing Is Becoming More Important

Author: Urtė Karklienė, Sustainability Manager at Oxylabs   Environmental, social, and governance (ESG) term was first mentioned in a 2004...

Banking1 week ago

Preparing banks for digital transformation

By Joman Kwong, Strategic Solutions Manager, Financial Services at Laserfiche   Today, digital transformation is imperative for every industry. After...

Finance1 week ago

The critical tech to deliver personalised digital financial experiences 

Jay Sanderson, Senior Product Marketing Manager, Digital Experience at Progress   Providing customers with outstanding digital experiences is now a must...

Banking1 week ago

Bank-fintech partnerships can shape the future of cross-border payments

Steve Naudé, Head of Wise Platform   People and businesses are more interconnected than ever. In today’s global economy, international...

Business2 weeks ago

DORA Compliance in Financial Organisations: What You Need to Know

Nick Hogg, Director of Security Training, Fortra   The regulatory landscape is tightening for European banking, financial, and insurance institutions....

Trending