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Finance

MULTI-CLOUD BONDS FINANCIAL SERVICES AND FINTECH INDUSTRIES

By DAVID BLESOVSKY, Chief Executive Officer at Cloudhelix

 

In the past, the financial services sector has held the reputation of being behind the curve when it comes to technology and digital transformation, but that is changing. Earlier this year, a report showed that 60% of financial services businesses will use multi-cloud to architect their IT environments within the next two years. Alongside this stat, agility tops the list of cloud adoption drivers (47%, compared to 32% of businesses overall). Being able to innovate quickly to capture new market opportunities and emerging technologies, such as AI and blockchain, shows how the bond between the two financial sectors is growing. Adaptation is at the heart of these partnerships, led by the need to gain ready-made customers, motivate growth with innovation, and avoid being left behind by the competition.

The traditional three pillars for IT in financial businesses are security, compliance and flexibility – reviewing these can help to understand where multi-cloud will come into its own:

 

Multi-cloud – an introduction

Multi-cloud has become a buzzword and it’s easy to lose track of the true meaning. Unlike a hybrid cloud, where you can use different platforms (such as public and private clouds) but with the same provider, multi-cloud allows you to use multiple platforms with multiple providers for separate workloads. Multi-cloud is broader than hybrid – you could have a hybrid cloud within a multi-cloud but not vice versa.

There are several reasons why you want to host workloads on entirely different cloud platforms or with different providers:

  • DAVID BLESOVSKY

    compliance for security and data protection policies

  • better data control
  • to avoid vendor lock-in
  • cost and performance optimisation
  • opportunity to develop new tools and services, such as AI and blockchain
  • flexibility to use the best environment for each workload

 

More security for your firm

Keeping all your business-critical systems with just one service provider is a bit of a gamble. There are multiple threats to the reliability of technology – cyber-attack, natural disasters, nuclear war!

A multi-cloud strategy increases resilience, it’s a solution that can be consistently deployed in the same manner, regardless of location. It improves cost efficiency as well as allowing you to leverage different services, ensuring each of your department’s critical functions are served and secure.

Public cloud can be used for big workloads with low compliance needs, whilst private cloud could be more compliant and efficient for data with security policies attached, and another set-up could be provided for dev testing and building etc.

There is a solution for firms that need to keep an on-premise product; the converged cloud stack brings the benefits of the cloud on-prem. While on-premise data centres perhaps aren’t the best way of working, there’s been a recent acceptance in the industry in the role of on-prem.

This is shown in products like AWS Outposts, which is Amazon’s version of the CCS. Historically, AWS have said ‘you can run anything on AWS, public cloud will be the way everything works eventually.’ However, AWS building an on-prem solution shows that on-prem is still important. We’ve seen how it can be used within the financial sector. When used in the right way, on-premise has a role, and is likely here to stay.

 

Compliance, no matter what

Compliance is a close second to security; financial data has always come with compliance policies, even more so now with recent changes in how data is stored and reported on.

43% of the financial industry sees multi-cloud architecture as a way to meet regulatory needs, and this can be met by working with providers who understand your compliance needs.

Part of compliance is documenting and proving an effective Disaster Recovery strategy. If your service is hosted on a single cloud provider’s infrastructure, a natural follow-up question from an auditor will be “What is your plan for when that cloud provider experiences an outage?” Having your solution spread across multiple cloud providers in an active-active configuration facilitates a satisfactory answer.

By introducing a multi-cloud strategy to your firm, you can make the most of the strongest services offered by each individual provider to ensure your business can handle almost any situation. Mission critical data can be held on the most suitable platform whilst other elements of your infrastructure can be run on another to ensure security and cost efficiency.

 

Flexibility, on your terms

Vendor lock in can occur easily when you use a single cloud service that restrains you from easily being able to transfer to another service.

This can happen because of introductory offers that have constraints in the fine print, not having a cloud strategy that allows for unexpected usage, using technologies or services that are incompatible with the common standard, or even long-term reliance on a provider, skill sets, or older systems and processes.

A multi-cloud deployment will mean that the cloud vendor’s native services cannot be used – instead, independent services are required. As an example, let’s imagine that your application requires a real-time data/event ingestion service. These services are natively available on public cloud, e.g. Amazon Kinesis, Microsoft Event Hubs and Google Pub/Sub. While you could write your application in three different ways to account for all three of these options, you might prefer to deploy your own equivalent solution using Apache Kafka. This would avoid being locked into the vendor-specific services and add flexibility to your deployment strategy – the software could even be deployed in the same way on private cloud infrastructure. The trade-off is that as you do not have a managed service from the cloud provider, you have an additional administrative overhead.

We know the pain of being trapped by a provider and it’s something a business shouldn’t have to deal with. Working with a provider who only has an allegiance to you, will allow you to utilise multiple services across different platforms whilst ensuring your flexibility comes with the peace of mind of dealing with a single company. This also provides you with more freedom when it comes to acquiring new fintech solutions as you adapt and grow.

 

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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.

 

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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.

 

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