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TIME TO ACT: MODERNISING THE TRADITIONAL BUILDING SOCIETY FOR FUTURE SUCCESS

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Rob McElroy, CEO, Sopra Steria Financial Services

 

Our high streets are finally starting to heal from the challenges experienced during the Covid-19 pandemic, and the building society remains a vital part of this recovery. For over 100 years, building societies have been a staple in our communities, having built and maintained a loyal customer base. However, this traditional model is being turned on its head as members now have more choice as to how, when and where they manage their finances.

Whether it’s traditional high street banks, new and digital-savvy challenger banks or fintech product providers, building societies now have a range of digital products and service offerings to compete with. This is especially true in the mortgage and savings markets, where they have their biggest stakes.

It’s now or never to move with the times to ensure market share. Building societies must modernise their more traditional operating models. Thankfully, these changes aren’t a case of reinventing the wheel. Instead, it’s about making incremental changes to lending, savings and collections processes to ensure members are at the heart of strategies and they can create a customer experience that’s a true differentiator from their competition.

 

To create a truly ‘member first’ strategy, building societies should explore the following considerations:

  1. Increase digital touchpoints with customers

Customer expectations have changed. Like many other organisations, building societies are tasked with identifying new and innovative products and services to meet the changing needs of their existing and potential members who now expect a real-time 360-degree view of their finances, as well as access to services and products at any time via any device.

Rob McElroy

To ensure this, building societies must embrace both digital and traditional channels, exploring ways to deliver personalised and targeted services and offers. Member engagement should also be built around the ‘moments that matter’ in their lives. Whilst digital, telephone and email might work for business as usual, many members take comfort in knowing their local building society is there to help them through major life events, or when they face financially vulnerable situations.

This availability of information and ease of access via a customer’s device will become a differentiator for those able to make it happen. Failure to make the necessary changes or an over-reliance on traditional systems to deliver a true ‘digital’ strategy could see a rise in member attrition rates and cause the business to stagnate.

 

  1. See connected services as an opportunity

With the rise of connected services, such as open banking, customers are rapidly shifting towards aggregator sites for a cohesive overview of available deals suited to their needs. We’ve already witnessed the impact these sites have had on the savings, credit cards and loan markets.

As technology improves and provides members and potential members with the confidence to go directly to their chosen providers, mortgages and straight-through product/service processing will be the next focus of these sites. In the short to medium term, building societies should also remember aggregator sites still provide an important route to market for their savings and loan products.

Despite this, connecting to these services is not without its challenges. Many building societies are still heavily reliant on mortgage broker networks and don’t have the appropriate technology infrastructure to provide aggregator sites with real-time information and deals, potentially stopping them from competing via these channels. It’s time therefore, for building societies to prioritise building – through incremental change – an infrastructure capable of delivering real-time data and availability of products/services on their latest offers to these sites. This will ensure they are future ready.

There are many quick wins to building micro-services around existing infrastructure and establishing an orchestration engine which will allow almost immediate implementation of a digital strategy. Once in place, this infrastructure will also provide the foundation many building societies will need to ensure they’re correctly set up for the exchange of customer data to comply with open banking regulations.

 

  1. Personalise offers and services to meet members needs

Building societies need to ramp up personalisation efforts and keep pace with the advancing technology available to them. They’ve targeted sales and marketing campaigns aimed at specific segments, but still have much to learn when it comes to personalised offers and services. For example, many building societies still have a ‘one journey fits all’ approach to customer experience via digital channels, with no differentiation in the customer journey between different product sets.

In today’s data rich environment, customers expect to receive personalised experiences and offered products and services designed specifically to meet their needs. Using customer data at every customer touchpoint and continually refining the personalisation approach is no longer an option – it’s a necessity. Even simple personalisation efforts, such as an email with exclusive offers, can lead to strong conversions and better customer relationships.

 

  1. Maintain a community-first approach

Building societies have always been a key part of local communities. Whether it’s providing a couple with the mortgage to their first house, or setting up a child’s first account, this connection with customers has been built over many years. Therefore, it’s important this is not lost due to a lack of personalisation and/or digital channels. Communities are embracing digital, especially since the start of the pandemic which forced us to stay at home and closed local branches, and it is vital building societies provide these services alongside the traditional. Failure to do so will, over time, lead to severed customer relationships.

 

Final thoughts

In a post-pandemic world, building societies need to think about more than just surviving, they need to put processes in place to help them thrive. They must focus on delivering a member-first strategy and personalised products, services and experiences across digital and traditional channels. By planning these changes incrementally, and not undergoing a complete overhaul, they can start actioning these changes immediately.

 

Finance

HOW FINANCIAL ORGANIZATIONS CAN PROTECT THEIR DATA

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Yuval Wollman, President, CyberProof and Chief Cyber Officer, UST

 

Top executives from Wall Street’s largest banks pinpointed cybersecurity as the greatest threat to America’s financial system, at a Congressional hearing that took place in May.

The concern of financial industry leaders with cyber-attacks is neither surprising, nor new. The attraction of cybercriminals to banks and other financial institutions makes sense, given the fact that the financial sector functions as gatekeepers – not just of financial assets, but also of valuable Personally identifiable information (PII).

Threat actors are attracted to attack financial institutions to earn a profit through increasingly sophisticated attacks that range from ransomware attacks to identity theft. But while the threat continues to grow, there is much that can be done to mitigate the risks.

 

The Downsides of Digital Banking

The number of attacks on financial institutions increased sharply in the last two years due to the upheavals wrought by COVID-19, which prompted a dramatic rise in the number of online transactions.

With so much of today’s financial transactions done on both web and mobile devices, threat actors have more opportunities than ever before. Take, for example, the growing importance of Man in the Middle (MITM) Attacks, which impersonate another party online and give criminals access to personal data, passwords, and banking details.

With the widespread adoption of digital banking, consumers have become increasingly worried about cyber-attack. As a result, there’s growing demand to create better consumer protection laws that respond to the rapidly evolving technology. The U.S. Federal Trade Commission (FTC), for example, recently strengthened security safeguards for consumer financial information.

 

It’s Not “Just” About the Money

Financial organizations are at risk not just from threat actors looking for profit, but also from nation-states and hacktivists acting out of idealistic motives or as a means of achieving specific political ends.

The most famous examples of this type of attack include Russia’s 2016 attack on Ukraine’s electric grid and North Korea’s 2017 attack on Britain’s National Health Service.

Because of the extent of the damage that this type of attack could cause, NATO established cyberspace as the “fifth domain of warfare” in 2016. It developed a definition of when foreign factions are banned from attacking financial institutions, due to the fear that this type of attack could directly lead to a country’s destabilization.

 

Recognizing Risk Factors

The digital transformation of financial services helps banks and other financial institutions provide more a more convenient customer experience.

And while significant customer demand has led many banks to implement changes such as the transition from legacy to cloud-based solutions, these shifts also have the potential to create additional security risks.

For example, if we’re talking specifically about cloud migration, there’s need for additional security layers to protect organizations working with public cloud providers from the range of attacks targeting the financial sector: ransomware, account takeover, data theft and manipulation, phishing attacks, identity theft, and more.

Another example is the extensive use of third-party vendors, which has increased the risk of attack for organizations in the financial sector. Because third-party vendors enlarge the attack surface, they create more entry points to the system and make it harder to protect customer data.

 

Accelerating Detection & Response

By adopting an agile approach that supports continuous improvement, financial organizations can facilitate proactive identification of evolving threats and vulnerabilities in the wild. More specifically, by placing an emphasis on use case optimization – which starts by mapping out an organization’s threat detection gaps to a framework such as MITRE ATT&CK – enterprises can prioritize threats and invest their time and resources in mitigating risk more effectively.

For organizations transitioning to the cloud, what’s key is managing the migration process in a way that provides optimal visibility in the cloud and supports ongoing optimization at the enterprise level. Digital playbooks are a crucial tool in providing improved detection and response, creating automated or guided responses that allow faster, more effective, collaborative action.

The development and regular review of incident response plans similarly allows for efficient response in emergency situations and helps reduce the business impact of cyber-attacks.

 

Targeted Threat Intelligence

Threat intelligence that’s tailored to the financial services sector is another key component of timely detection and response. By working with expert Cyber Threat Intelligence (CTI) services, organizations can obtain up-to-date information about industry-specific threats in real time – information that is a highly valuable tool in strengthening the defense of an enterprise.

 

Cyber Hygiene

Employees make mistakes; after all, it’s only human. But these errors can lead to massive data breaches. For example, when someone clicks on a phishing email or leaves passwords for a company computer on a slip of paper that’s easily seen by the wrong person, the damage can be astronomical.

Providing regular cybersecurity training programs for employees can help minimize the risk of an accidental or careless action leading to cyber-attack. To be effective, training programs should not only explain how to spot cybersecurity risks like phishing emails but should also discuss how and where it’s safe to access company information.

Aside from employee training, there are fundamental cybersecurity-related decisions that should be implemented at the enterprise level such as Zero Trust, DevSecOps, and multi-factor authentication (MFA). From a policy perspective, for example, it’s crucial to enforce MFA for all applications. Moreover, technology-related vulnerabilities can be minimized through frequent patching and updates for systems. Audits, as well as vulnerability and penetration tests, must be conducted regularly.

 

For the Financial Sector, “Best Practices” are Key

With the growth in number and complexity of cybersecurity attacks on financial organizations and the increased risk of nation-state attacks, proactively approaching the question of cybersecurity and implementing “best practices” makes the difference in reducing the degree of risk to an enterprise.

By modernizing the SOC with a carefully navigated migration to the cloud, adopting continuous improvement of use cases and the development of digital playbooks that improve detection and response – as well as by leveraging targeted threat intelligence and maintaining strong cyber hygiene – enterprises can put themselves in a stronger position to minimize the potential business impact of a cyber-attack on their organizations.

 

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IF IT’S A LOSS, YOU’RE TOO LATE – WHY THE INSURANCE INDUSTRY NEEDS TO FOCUS ON FIRST NOTIFICATION OF RISK

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Simon Dicks, Insurance Channel Manager EMEA, Lytx

 

Insuring commercial fleets can be an expensive business. Average repair costs have increased by up to 40% in the past 8 years and disputes about who was responsible can drive up expenditure for both fleets and insurers.

Part of the problem is that the insurance industry hasn’t had the tools to forecast costs and premiums accurately enough in this sector. Underwriting decisions are still made in the same way they always have been, by looking back at historical data from previous years. This approach simply isn’t giving insurance companies an accurate indication of potential risk – or a proper indication of the impact of driver behaviour.

Technology is helping insurers to an extent by providing information about First Notification of Loss (FNOL) – automatically sending notifications when unusual G-force readings are captured within a black box tracking device as a result of sudden braking or impact. This is good, but far better is the ability to use proactive technology to detect when an incident is at risk of occurring and when a driver is distracted.

The only way to address this is to put a highly accurate level of camera technology both inside and outside cabs, supported by sophisticated technologies such as Machine Vision (ML) and Artificial Intelligence (AI). This way, we can see not just that an incident has happened, but why it happened. What’s more, we can assess risk before an accident happens at all and prevent it happening in the first place. We call this First Notification of Risk (FNOR) – and it’s a whole step up from FNOL.

Machine Vision scans the internal and external environment of the vehicle to identify distracted driving behaviours such as mobile phone use, eating, drinking, smoking, inattentive behaviour or failure to wear a seatbelt. AI, comparing the behaviour against a vast bank of accumulated data, is then able to determine the riskiness of that situation and whether it needs to be flagged to the fleet manager, driver, or insurer via a short video clip. The big difference in this approach is that it’s proactive, not reactive. For the first time, fleets and insurers can identify adverse driving and distracted driving in real-time for the first time.

This includes the ability to alert drivers of any momentary slip-ups or distracted behaviours. Using the same technology, drivers will receive an audio or visual alert to help keep them on track and to lessen the likelihood of a moment’s distraction becoming anything more.

When insurers have access to these insights, they can also start to see patterns from the data over time. For example, a fleet manager might start to see that there’s a peak in risky driving behaviours on a Friday afternoon when lots of drivers are rushing to finish for the weekend. As a result, they may decide to spread the shifts differently so as to avoid that pattern of behaviour.

When insurers are only looking at FNOL, it’s already too late. A driver could be unthinkingly driving whilst smoking, on their phone, and nobody would never know. Whereas with FNOR, both managers and insurers are provided with insights that remove the guesswork, and underwriters have the information they need to assess risk with far greater precision.

There’s still a long way to go in making the move towards FNOR. With so many different companies selling cameras and telematics systems and producing information in hundreds of different formats, claims data will have to be standardised before the sector can really transform. However, by starting to embrace ideas like FNOR, the industry can move towards a solution that saves them time, money and lives.

To find out more, visit  www.lytx.com/FNOR

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