Finance

THE TECH “RENAISSANCE” OF THE FINANCE INDUSTRY – AND WHAT IT MEANS FOR RISK AND OPERATIONAL RESILIENCE

Published

2 years ago

July 30, 2021

admin

Stewart Griffiths is Co-Founder and CEO of Albany Group

Not unlike most industries, the finance sector went into something of a tailspin on the wings of the pandemic. While many scientists subsequently said that we could and indeed should have seen it coming, that was an outlier rather than a mainstream view: the possibility was far from “priced into” the market.

This has led to rocketing short term costs, with Lloyds of London expected to pay out up to £6.2bn – an unprecedented figure – but the fallout can also be viewed as an opportunity in disguise. A catalyst for necessary and, in some cases, long overdue change.

The pandemic laid bare a number of structural inefficiencies within the industry, that called for a drastic and considered response. The verdict has been fairly unanimous: the industry has had to ramp up its digitisation efforts, and become more efficient and resilient in the face of rare, disruptive events.

This is overwhelmingly reflected across different sectors. The share of digital or digitally enabled products in companies’ portfolios has leapt forward by seven years, according to a recent McKinsey survey. The reported jump was in fact nearly twice as large for the financial services sector – a testament that the pandemic has sped up digitalisation.

Stewart Griffiths

A gradual shift in mindset

Covid-19 has jolted the industry in the right direction by bringing the benefits of technology into sharp relief. It has also reached pockets of the market, which were not always necessarily as open or adaptive to technological change, and demonstrated the limits of a resistant mindset.

Part of this reluctance rests on a perception that technology will be disruptive when applied to certain areas including regulatory compliance, governance and supply chain management. Conversely, where service offerings and internal operations are concerned, the industry has had no qualms in fully embracing the power of technology. This is confirmed by research from Deloitte which found that automating manual processes (77%) remains the definitive area that companies want to strengthen with the aid of technology. Alternatively, consider the use of chatbots in banking, which could result in operational cost savings of up to $7.3 billion globally by 2023.

Other business-critical areas, however, are still being viewed as too complicated or risky for technology to tackle. This robs companies of the opportunity to streamline workflows and processes and strengthen their reporting and compliance credentials, among other things, as long as technology is seen as “off-limits.” It can also compound the challenge of meeting increasingly stringent regulation and compliance obligations.

Navigating complex supply chains

The supply chains for financial services companies are extensive, and often involve a number of organisations across multiple jurisdictions. As the complexity grows, so too does the data and the sheer administrative burden that falls on teams that are saddled with emails, spreadsheets, and an onslaught of information.

Technology can help ease that burden. It is estimated that automation alone can reduce the cost of a claim journey, for example, by as much as 30%. With everything managed through a single portal, teams can gain better oversight of third parties, analyse data and automate workflows. We recently implemented such a solution with QBE, creating a bespoke portal using Conect™, our ground-breaking regulatory technology. This served to enhance workflows; reduce operational costs; enable better oversight of suppliers; streamline communication, and ultimately claim management.

Getting ahead of the compliance and regulation curve

Assessing risk conduct levels is one the most pervasive challenges facing the financial services industry. Compliance has expanded over the last few years, and so too has the proliferation of data. There is also no reason to assume that this trend will slow down. If anything, the opposite is true, and data burdens are growing, while regulation is becoming increasingly stringent. In 2019, the FCA issued a record number of fines, while the pandemic has brought renewed levels of public interest in ESG in the finance industry, particularly among listed companies. This translates into more pressure for companies to meet complex and demanding compliance obligations.

For instance, taking a closer look at the insurance industry, companies here also need to appropriately assess the rules and determine where they are affected. This can include the delegation of activities such as underwriting or claims handling to third parties which is often not viewed as outsourcing. Regulations, however, still apply and if not adhered to, can result in hefty fines.

The right technological solution can enable financial and professional services companies to gain control and oversight and optimise their risk management. Deploying regulatory software can do just that. It is a proactive, efficient, and responsive way of minimising risks and preventing possible fallout. Risk-based regulatory technology is designed to bring genuine simplicity and oversight to supply chain management. This can serve to embed automated compliance right into the DNA of a business, minimising the possibility of human error, costs and other risks.

A tech-driven future for the financial services industry

The pandemic has demonstrated that no industry can afford to be reactive – at the whims of external change, in a constant struggle to keep up. The financial sector is no different, and the sooner it fully embraces a strategic and proactive mindset when it comes to technology, the sooner it will begin to remove the endemic inefficiencies that hold back some of its areas. Far from imposing an additional burden, embracing technology will allow organisations to save in costs, gain in efficiency, and future proof their businesses. Putting in place the right solution and infrastructure to manage risk and supply chains, will also enable businesses to stay abreast of regulation, compliance and increasing data volumes.

In an ever-shifting landscape, this involves adopting user configurable technology in a truly no-code environment. This way, businesses can focus on what matters most to their stakeholders and their futures.

Up Next

AS SAAS GROWS, FINANCIAL SERVICES MUST RETHINK THEIR SECURITY APPROACH

Don't Miss

REDUCE CUSTOMER DISPUTES WITH DATA TRANSPARENCY

Business

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

Published

1 day ago

September 27, 2023

editorial

By Damien Bennett, Global Director, Principal Consultant, Incubeta

If you haven’t heard anyone talking about artificial intelligence (AI) yet, then where have you been? Conversations about AI and its advantages to society have been a key talking point over recent months, with advances being made in the generative AI race and ChatGPT opening a whole plethora of possibilities. Many have highlighted the advantages of AI, but notably it’s ability to create human-like content.

But these discussions have only scratched the surface of what AI is capable of doing. It is for far more than just essay writing, adding Eminem to your rave and photoshopping dogs into pictures.

In marketing, we have been using AI for years, for everything from analyzing customer behaviors to predicting market changes. It’s enabled us to segment customers, forecast sales and provide personalized recommendations, having a huge impact on how our industry works.

It is even, for the more savvy marketers of the world, becoming a key tool in maximizing budget efficiency – which is apt, considering over 70% of CMOs believe they lack sufficient budget to fully execute their 2023 strategy.

Now, as AI becomes more intelligent, the number of efficiencies it can unlock continues to rise. Not only can it help brands get the most out of their available resources and identify any areas of waste, but it can also help highlight new opportunities for growth and maximize the impact of your budget allocation.

The trick, however, is to veer away from the norm of using in-platform solutions with a one-size-fits-all approach and create your own, bespoke solutions that are tailored to your business needs.

Pitfalls of in-platform solutions

In-platform solutions aren’t by any means a bad thing. In fact, built-in AI tools have become increasingly popular, owing to their ease of integration, user-friendly interfaces and minimal set up requirements. They come pre-packaged with the platform, offering the user the ability to leverage AI technologies without the need for in-depth technical expertise or the upfront cost of building a solution from scratch.

However, the streamlined and accessible nature of in-platform AI solutions comes at the expense of complexity and customization. They are designed to serve a broad user base, but for the most part are built using narrow AI solutions with predefined features and workflows.

This makes them great for assisting with common AI tasks, but they lack the flexibility to tailor functionality towards unique business requirements or innovative use cases, limiting the potential efficiencies and cost savings that can be unlocked. Additionally, if a business’ competitors are using the same platform, they are probably using the same AI solution, meaning any strategic advantage gained from these will be reduced.

Bespoke AI solutions, on the other hand, may carry a higher initial investment – but can offer a significantly more attractive ROI over a short amount of time.

Why customized and adapted AI is the key

The difference between bespoke AI and in-platform solutions is similar to that between home cooked food and a microwave meal. Yes, it is more time consuming to prepare, and yes it likely carries more of an upfront cost, but the end result is going to be far more appealing and will carry more long-term value (financially… not nutritionally).

That’s because bespoke solutions, by nature, will have been tailored to address your brands specific needs and challenges. These custom-built tools allow for much greater efficiencies by streamlining workflows across different channels, automating more complex tasks, and providing deeper, more relevant insights.

The increased level of optimization can significantly improve productivity and reduce operational costs over time, offering a higher ROI. The increased flexibility of bespoke AI also allows brands to implement innovative use cases that can significantly differentiate them from their competitors.

The data analyzed can be specifically chosen to match business requirements, as can the outputs of the AI tool, providing a significant advantage when understanding and acting on the insights provided.

Additionally, these tools are, by nature, more scalable. They can be updated, upgraded and expanded as needs change, ensuring they continue delivering value as the business grows. They can also be designed to integrate with any existing IT infrastructure, from CRM systems and databases to marketing platforms and sales tools – leading to more efficient and effective decision-making.

Managing finances with AI

It’s no secret that AI in marketing automation has, and will continue to, revolutionize the way marketing is done. It has a bright, if slightly terrifying, future and can help CMOs to unlock new efficiencies, maximize the impact of their budgets and increase their ROI. And as this technology becomes more advanced, its impact will only increase.

But we already know that…and so does everyone else.

So, in order for businesses to make themselves stand out from the crowd , they must look to fully adopt the power of AI. Creating a customized and unique AI solution could be the way to set yourself apart from your competitors. A bespoke AI tool can provide brands and businesses with features unique to them and their business needs. As a result, companies will benefit from more useful data and better results to make more data-driven decisions for their business. Ultimately, this will help brands to maintain a competitive edge over their competitors, deliver ROI and most importantly optimize their budgets.

Business

Is your business suffering with Fintech FOMO?

Published

2 days ago

September 26, 2023

admin

Tom Kiddle, Chief Commercial Officer at Equals Money

It’s a challenging time for businesses of all sizes, but the past three years created storms that are particularly hard for SMEs to weather. For businesses dealing with shrinking margins, while a weakened pound is making international purchases more costly, it’s a scary time.

For many businesses this meant initially reigning in any unnecessary costs, reducing investment in anything deemed as a ‘nice to have’, and focusing on keeping the lights on. However, despite not being out of the woods in terms of economic challenges, this year many SMEs have their eyes on growth.

While some might have been buoyed by the news that the UK narrowly avoided a recession at the end of last year^[1], data shows businesses were already making investments before this news was released. In fact, UK business investment rose by 4.8% in Quarter 4 (Oct to Dec) 2022, coming in at 13.2% above where it was during the same quarter in 2021^[2].

So, where are SMEs putting their cash? As well as predictable spending on IT equipment, machinery, and transport^[3], businesses are also putting more funding than ever into technology investments – a trend that isn’t slowing down anytime soon. UK tech investment is set to grow at its fastest rate in over 15 years, both in terms of budget but also headcount^[4]

Tom Kiddle

UK businesses are clearly seeing the real opportunity that technology, in all its various forms, presents to their operations. This may also be bolstered by the fact that tech investments are potentially more cost-effective now that the government has made recent changes to R&D tax relief, which sees things like cloud computing and data included in expenditure categories^[5]. When it comes to revamping legacy systems and introducing Fintechs that offer businesses a smarter, easier, automated way of doing business, investing in technology can increasingly feel like a no brainer.

However, it’s rare that a one size fits all solution exists for businesses. What works for your competitor may not offer the same benefits to your organisation. In a world with so many risk factors, making smart investments that are aligned to your individual business goals is key.

Tom Kiddle, Chief Commercial Officer at innovative money movement solution Equals Money, explains four ways businesses can reap the rewards of smart tech investments:

1. Measurement

Can you measure the impact it will have on your business? It doesn’t have to be monetary, but if it gives you efficiency, visibility, or certainty, these can have measurable tangible impacts to your top and bottom line.

2. Insight

Does it tell you something you didn’t know before about your customers, your employees, your suppliers, and their behaviour? What could you do with that information? Often, businesses lack critical insight on their key drivers, and understanding those can open up new opportunities.

3. Action

Pretty charts and graphs make for good reading, but make sure you’re taking action with your new piece of tech. Setting accountability for action from your latest investment will drive your business to achieve a return on that investment and ensure it doesn’t sit on the shelf.

4. Adoption, adoption, adoption

Often, the latest tech trend may seem like a great investment to the motivated few, but look more broadly: if your intended internal target for your new tech fails to adopt the new practice, you won’t achieve the return promised. Also, more likely than not, you’ll frustrate both the key supporters of the new product and those you’re imposing it on.

Innovative technology, particularly in the finance space, can transform the way you do business, but avoid being lured in by solutions that don’t align to your individual needs. Good suppliers should always take the time to give an honest appraisal of whether their product is right for you and should leave you feeling empowered to devote time to what matters most – growing your business.

^[1] HR Solutions, 2022 ^[2] The Guardian, Feb 2023 ^[3] ONS, Dec 2022 ^[4] ONS, Dec 2022 ^[5] Nash Squared Digital Leadership Report, 2022 ^[6] BDO, 2023 [1] The Guardian, Feb 2023 [2] ONS, Dec 2022 [3] ONS, Dec 2022 [4] Nash Squared Digital Leadership Report, 2022 [5] BDO, 2023