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Towards Data-as-a-Service – why the next step in Managed Data Services is resonating with financial services firms

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by Martijn Groot, VP Marketing and Strategy, Alveo

Financial services firms are collecting ever-greater volumes and an ever greater diversity of data. Concurrently, they generate more data too as a by-product of business activities, not least driven by regulatory demands for increased pre- and post-trade transparency. Safe to say that most if not all processes in the financial services industry have gotten increasingly data intensive. But to capitalise on the insights this data brings, they must home in on the most relevant information, filter it, integrate it, curate it and embed it into their decision making to use it to deliver competitive edge.

There are multiple ways and techniques that can be used in setting up the right process to do this. Firms can use methods such as Natural Language Processing to directly extract content from text-based data. Working with shopping lists of instrument or entity identifiers or keywords to analyse textual data can help them focus on extracting the required content. The curation or quality-control of data then requires the integration of multiple data sets from different sources to attain a composite picture.

In this context, a conservative approach to data acquisition is no longer viable. Historically, drawn-out data preparation processes were typically driven by monthly or quarterly reporting cycles, leading to insights that were inaccurate, dated or both. Processing data over a long period and relying on poor-quality data to drive business decisions will be insufficient to enable firms to keep pace with nimbler fintechs and challenger banks.

To properly steer data management requirements, firms must first decide its objectives. This can focus on regular supply of data sets to streamline BAU operations, improve data quality, setting SLAs for turnaround time on data deliveries or onboarding new financial instruments or entire datasets or, more generically, on enabling data scientists to deliver self-service data collection and analysis. But there must be a defined business goal to work towards.

Firms need to leverage data scientists to gather the right data and ‘ask the right questions’. What constitutes the right data will depend on the clients, markets and geographies the firm works with and can lead to lists of interest specifying what needs collecting. Linked to that are metadata requirements, e.g. SLAs that specify service windows, turnaround times and quality metrics. The cycle time required for data preparation and curation is continually shrinking thanks to the advanced technologies now in place to harvest data, combine data sets and derive live insights. The questions that need answering and the use cases in scope will steer data collection and curation processes.

Today, a skilled data analyst can do all this and translate data into the big picture view the C-Suite needs to base decisions on. Here we look at what’s making this possible and the benefits it brings.

Catering to changing business needs

Recent years have seen significant changes in the data management and analytics processes employed by financial services firms and together these changes are helping empower analysts, quants and data scientists.

Historically the two disciplines have been separate. The data management process involves activities such as data sourcing, cross-referencing and ironing out discrepancies. Data analytics is typically carried out afterwards, close to the users and on separately-stored subsets of data. This divide has created problems for financial institutions, with the separation impacting time to insight and holding back decision-making.

Today that’s changing. The availability of vastly more data, the benefit from using more data analysis to distil insights and the emergence of stronger data management tooling is helping firms transition to a more integrated approach to data management and analytics.

Any data used to drive decision making also needs to be of the highest quality. Otherwise, the analytics may not work and the intelligence derived may not be accurate.

All the above explains how analytics has been empowered within financial services organisations. But how do organisations get that analytics quickly to decision-makers and ensure they can use it to drive business strategy?

 

From on-prem, to managed services, to DaaS

As the data management function expands and extends into analytics, it is positioned to empower staff working in different functions through providing them self-service capabilities and easy access to data to drive better informed decision-making. On the BAU data operations side, the availability of managed services has caused a shift from implementing solutions on-prem to sourcing services. This allows firms to source new services based on SLAs and metrics such as uptime, turnaround time and performance rather than implementing bespoke requirements.

Suppliers of data management solutions have shifted their service model from software to managed services. Increasingly this is now evolving further into a Data-as-a-Service (“DaaS”) model where suppliers not only host and run the data management infrastructure, but also verify data and perform root-cause analysis to fix data quality issues. A client can view complete data sets; have dashboards into the data preparation processes but can also get different selections of data formatted in different ways for last-mile integration with business applications.

Onboarding DaaS models for pricing data, reference data or corporate actions allows firms to hit the ground running, frees up operations staff and can lead to an uptick in productivity.  DaaS can cover any data set but includes processing a range of third-party data sources in pricing and reference data, to curves and benchmark data, ESG and alternative data and corporate actions. Offering a firm cleansed, fully-prepared data will facilitate any consuming business process including risk management and compliance.

Quants and data analysts can then take these prepared data sets and use them to attain the key metrics that then play into senior decision-making processes. Data scientists are looking at historical data across asset classes looking to distil information down into factors including ESG criteria to operationalise it into their investment decision-making process. Increasingly too, they are incorporating innovative data science solutions, including AI and machine learning, into market analysis and investment processes.

The new methodology enables the faster creation of proprietary analytics to support activities including investment decisions, valuations, stress-tests, performance analysis and risk management. By disseminating such information to C-Suite decision-makers and providing them with the necessary context and detail, data scientists can help drive business strategy. Self-service capabilities to request new sources or review the lists of interest make for a much shorter change cycle in data supply.

For many firms though, it will be Data-as-a-Service that will act as the ultimate catalyst for success.  It can deliver that will act as the foundation for both operations and analytics across the business. Combined with quality metrics on the different data sets and sources, it can lead to ongoing improvement in data operation effectiveness. Perhaps, most important of all, it will shorten the change cycle and increase the quality of data provisioning to all business functions.

Finance

astrantiaPay Selects SaaScada to Enrich Swiss Landscape of Business Payments and Fill Market Gap

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Swiss financial firm, astrantiaPay, to use SaaScada’s cloud-native core banking engine to simplify cross-border payments for SMEs and facilitate international trade and services across the old and new economies

 Cloud-native core banking engine, SaaScada, today announced it was selected by astrantiaPay to launch a Swiss point of contact for international businesses looking to open and run corporate bank accounts in Switzerland. Once regulatory approval is in place, astrantiaPay will provide mission-critical payment services to sophisticated Swiss, European, and global companies.

“Promoting SMEs is high on the agenda of policymakers, but the reality is very different when dealing directly with banks. In fact, financial institutions often show little or no appetite for low-margin, labour-intensive company accounts with regular cross-border payments”, explains Lukas Wissner, CEO of astrantiaPay. “As a result, opening and maintaining corporate bank accounts can become a complex and costly procedure, posing a real challenge for Swiss and European start-ups and established businesses. This can hinder growth, and sometimes even threaten a company’s existence. Ultimately, corporate bank accounts with a foreign nexus are an underserved niche segment in the Swiss financial ecosystem which is historically dominated by asset managers and private banking.”

SaaScada is an industry-proven core banking system that unlocks trapped customer value, mitigates risk, and drives real-time data insights. It was founded from a desire to provide first-class financial services capabilities for everyone. SaaScada’s configurable product features and transactional ledgers can be connected to any payment scheme, gateway, channel, or FX provider. Its event-driven architecture will provide astrantiaPay with a real-time stream of events for each company account.

“SaaScada’s experience and deep understanding of how to execute a bank in the Swiss financial and regulatory landscape convinced us,” concludes Lukas Wissner. “Looking back, SaaScada was the right starting point on our integration journey, as its experienced team of programmers readily enable open API connections to virtually any data source and endpoint; be it software tools for onboarding, client relationship management (CRM) and transaction monitoring (TM), or accounting systems, payment aggregators and international correspondent banks. Leveraging SaaScada’s proficiency and infrastructure has helped us create an organic whole.”

“Lukas Wissner and the team at astrantiaPay have a distinct vision to make bank account opening simpler for international SMEs,” explains Nelson Wootton, Co-Founder and CEO at SaaScada. “SaaScada is delighted to support astrantiaPay in driving financial inclusivity for its customers, solving complex compliance challenges, and enabling SMEs to thrive.”

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Banking

How Biometric Payments Are Tackling Financial Exclusion

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By Catharina Eklof, CCO, IDEX Biometrics

We are moving closer to a cashless society: 89% of payments in the UK are contactless and, globally, contactless payment transaction values are set to surpass $10 trillion by 2027. Ease, convenience, security, and inclusion have accelerated the transition away from cash. However, many of today’s current payment solutions are leaving entire cross sections of society behind: including the most vulnerable, underserved, and unbanked populations.

Developments in the payment sector over the past decade still aren’t a perfect fit for all. Those suffering from dementia, literacy challenges, or impaired vision can find current payment methods – with a PIN to remember – extremely challenging. Financial inclusion requires us to make payments accessible to all demographics. Though the financially excluded represent minorities, they account for an estimated 1.7 billion people – almost a third of adults globally.

Enabled by huge advances in technology, our evolving social dialogue has become accelerated and unfettered, on a global scale. It is critical to harness technology as a force for dynamic economic improvement: democratizing access to banking and payments. As such, we need to look beyond mobile wallets or digital payments and support those in need of easier access to payment and fintech solutions. A more inclusive form of payment technology is essential.

Catharina Eklof

 

Personal Identity as the New Pin Code

Many communities remain vulnerable or underserved by the functionality of traditional payment solutions such as bank cards. These products are, at their core, only linked to the owner by way of name and signature, offering limited security and protection. With contactless payments, no link whatsoever is required to a card for payment.

In an increasingly contactless society, fraud and digital security are growing concerns. Credit and debit cards can be used by anyone, and card readers don’t understand if cards have been apprehended illegally. Vulnerable groups may also struggle to input their credentials into what can be, for some, a complex system. Empowering those vulnerable groups therefore means providing them with the independence to access payments with greater ease.

Biometric payment cards play a significant role in bridging the gap between the financially underserved and the financially included. Simple and secure financial authentication, like facial or fingerprint recognition, allow payments to become about who a person is rather than what they know or remember. If individuals can be personally linked to a payment card via biometrics, it can address the significant 1.1 billion people worldwide who are currently without official government identification or access to it. In Nigeria alone, 149 million individuals lack the legal means to evidence their identity, while in South Africa, 12 million individuals are excluded from the country’s formal identity system.

Fingerprint authentication has the added benefit of optimizing security, in that it requires the individual to opt into a purchase, avoiding any issues of unauthorized or unintentional payments from having a reader placed near the card owner’s face. This provides increased independence for the blind and visually impaired, who account for an estimated 2.2 billion people globally, as it allows for seamless payment authentication without sensory barriers. Similarly, biometric smart cards can be transformative for more than 55 million people living with dementia and Alzheimer’s, as it enables access to payment without the difficulty of remembering passcodes.

Literacy is also a little talked about hurdle to inclusion. Globally, there are 750 million “functionally illiterate” individuals struggling to use and understand financial products. Across all levels of education, biometric authentication is a universally inclusive concept. It is easy to communicate and understand that one’s fingerprint is inherent to their identity, and can act as a form of verification. Biometric smart cards facilitate and secure payments with ease by simply requiring their fingerprint to instantly authenticate their own card.

 

Pushing on With Progress

Even the most reluctant individuals are likely to have succumbed to contactless payments and some form of digitized banking in recent times. This will have the positive impact of making the needed transition to biometrics more seamless. Using fingerprints or facial recognition to unlock phones or access apps is not unusual. If anything, they have been convenient and comforting additions to the surge of tech innovations over the last couple of decades. There is a relief in knowing that these portals are being secured by methods that are almost impossible to replicate.

It is a breakthrough that financial players and governments in the world’s most developed countries still need to catch up with, as emerging economies have already capitalized on biometrics’ capabilities for almost a decade now. In India, for example, internal fraud and leakage from pension payments dropped by 47 percent after transitioning from cash to biometric smart cards. Because the solution bypasses the need for prior credit ratings or credentials, the country has also been able to catalyze safe online banking among previously unbanked adults since biometrics’ introduction in 2014.

Meanwhile, in Pakistan, the total number of mobile wallet accounts tripled from 5 to 15 million in 2015, with an estimated 50 percent of new registered mobile wallet accounts opened using biometric authentication. This was a result of Pakistan’s National Database and Registration Authority’s (NADRA’s) effort of collecting biometric information to allow for more convenient and democratic account opening processes.

Many around the world have been marginalized by both the pace of change in banking and the solutions that have, to this point, been created to accommodate such change. With the mass adoption of biometric smart cards, the same benefits seen in India could be realized on a global scale. If we take on the opportunity in front of us – promoting solutions like biometric smart cards to increase accessibility to the global economy – we will foster a digitally-focused, equitable and inclusive society. This doesn’t just mean ease and convenience, but also security for all and financial inclusion of those who have been left out of digital evolution, until now.

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