Last mile logistics is not solely the literal last mile; it could be the last 10 miles or 1,000 miles, or in fact any distance. It does, however, cover the period between when the product arrives at the distribution center to when it reaches the end user. Thus, it represents the final step in the logistics chain.
It’s fast becoming one of the most crucial steps for logistics companies to succeed in, and for good reason. With e-commerce having experienced exponential growth over the last few years, more retail stores are shutting by the day, and there is an ever-increasing need for faster and more efficient deliveries. From food shops delivered within two-hour windows, and outfits ordered and worn within the day, consumers expectations are rising – and companies need to act quickly to meet this demand. The answer? Invest in innovation.
Packaging supplier Rajapack investigated how technology is transforming last mile logistics. With insights from Glen Walker (COO of online marketplace Trouva) and Bertand Nicoli (Director of Operations at Mindful Chef), here’s how innovations in last mile logistics are allowing companies to speed up the system and capitalise on its clear profitability.
Tracking and traceability
These days, the likes of live-tracking and GPS mean that the last mile in logistics can be monitored more effectively. It’s important for customer trust, because it allows them to know where their order is, and when it will arrive. People have come to expect this level of service: “Just because the logistics chain is complicated for the retailer doesn’t mean it has to be for the customer,” says Trouva’s Walker.
Tracking is vital for the company’s visibility too, and provides a chance to improve their last mile. Bertand Nicoli of Mindful Chef says: “We believe that the customer has a better delivery experience when we are able to be involved closely with the last mile. Because of this, we have full visibility when it comes to routing, courier loads, ETAs etc. and this allows us to pre-empt any problems and deal with customer queries much more efficiently.”
Delivery by drones
It’s said that 79% of deliveries will be done by drones in the future. They’ll be capable of carrying up to 15kg as well as take the most direct route to the item’s final destination. Their appeal to companies trying to get ahead of the curve are limitless: they cut costs of labour (often the highest cost in the delivery process), as well as offering constant availability, able to work 24 hours per day with speedier service.
Granted, there are some things yet to be sorted out, including drone regulations and how drone traffic control would work. Plus, Mindful Chef’s Bertand doesn’t think they will take over in cities “due to density” but suggests it “could be an effective way to carry out deliveries at low cost to more remote locations.”
Autonomous Ground Vehicles (AGVs)
Another autonomous courier of deliveries is AGVs. With seven companies already speeding to get theirs on the streets, it’s now a matter of when, not if. These will be mobile parcel lockers monitored from a control point, that follow a set route along the road. Customers will be notified of the time the vehicle will reach them and then be expected to collect their items from a specific locker. Companies like Amazon are pouring money into this technology, with the goal of controlling the entire shopping process from click-to-buy to delivery. Though this is an expensive investment, McKinsey predicts it can reduce retailers’ shipping costs by 40%.
Finally, technology has the potential to transform the way that packaging is put together in a way that can improve the final step of the process. One of the ways this is being done is through robotics such as arms that sort small items into boxes; an increasingly popular choice among both manufacturers and retailers.
Packaging innovations are something that Nicoli of Mindful Chef is passionate about, particularly for the food and beverages sector: “I think packaging innovations will be important in keeping food fresh and goods in the condition in which they are meant to be received. The e-commerce industry is so huge that innovation in packaging will be richly rewarded by consumers and so should have brainpower and capital diverted to it.”
The above is a taster of how technology is transforming the last mile of logistics, at a time when this final part of the process is becoming more and more profitable for retailers – and more and more important for consumers. And it’s not all drones and self-driving delivery vehicles. Companies that are early adopters of accessible technologies like live tracking, real-time data and efficient packaging processes can capitalise on the speed and efficiency this creates – and make a real difference to their business profitability in the process.
BANKING’S SECOND WAVE OF TRANSFORMATION: INTEGRATING THE CLOUD-ENABLED FUTURE BANK
Keith Pearson, Head of Financial Services EMEA, ServiceNow
The last six months have seen significant changes to the financial services landscape, with operational resilience, economic recovery, cost reduction and an acceleration of digital transformation key themes emerging from the industry.
At the start of this crisis, much of the banking industry was in a different position to many businesses. The 2008 recession spurred a need for improvements and combined with the emergence of tech-savvy fintechs, the industry has seen a major shift as customer expectations have adapted. The pandemic has forced organisations to accelerate innovation already part-underway in the banking industry.
As banking experienced its first wave of transformation, institutions focussed on customer engagement, uniting physical and digital channels for an improved customer experience. Banks invested heavily in front office digital technology, creating visually appealing mobile apps, engaging online banking experiences and technologies for bankers to personalise customer engagement.
However, this digital engagement layer is not enough. Regulations like PSD2 reinforce the necessity to remain compliant, adding additional pressure to the digital transformation process which in turn has been accelerated by COVID-19. Banking is therefore in the midst of its second wave of transformation, where financial institutions are creating and seeking out critical infrastructure to better connect underlying middle and back office operations with the front office, and ultimately, with customers.
A disconnected operation
Many financial organisations are still struggling because they have yet to streamline, automate and connect the underlying processes that are enabling customer experiences. Which poses the question: why is connecting operations so difficult?
In most cases, multiple systems are still glued together by email and spreadsheets to track end-to-end status. Around 80% of a middle office employee’s time is spent gathering data from systems to make a decision, with only 20% spent actually analysing and making the decision.
The disconnect negatively impacts customers. For many, experiences like opening a bank account or getting a mortgage involve clunky, manual processes riddled with paperwork and delays. When front and back office employees lack the ability to seamlessly work together, customers can be asked for the same data multiple times, elevating frustration.
Customers have little patience and can be inclined to publicly broadcast problems when left unresolved. In a world of social media and online reviews, this could be detrimental to a company’s reputation.
With digitally native, non-traditional financial services players gaining market traction by offering a seamless customer experience, maintaining satisfaction is crucial for traditional banks to ensure that customers don’t switch. Banks must focus on making it easy for customers to do business with them by offering faster cycle times with more streamlined operations.
The fintech effect
Fintechs and challenger banks like Starling have shown what connected operations can do, having been built with digitised processes from day one. Modern consumers expect round-the-clock service from their bank. As financial institutions look to the future, developing a model of operational resilience that is capable of withstanding unforeseen issues, like power outages or cyberattacks, is critical to minimising service disruption. Having connected internal communications between front and back office staff means customers can be notified about any problems, how they can be fixed and when they might be resolved, as well as receiving continuous progress updates instantaneously.
Automation can go a step beyond this. Today, customers expect companies to not only do more and do it faster but to prevent problems arising in the first place. With connected operations and Customer Service Management (CSM), banks can proactively fix things before they happen and resolve issues fast, enabling frictionless customer service and replicating the ‘fintech effect’.
What about compliance?
In the European Union and the UK, PSD2 and the Open Banking initiative are giving more control to the customer over personal account data. Digital banks such as Fidor and lenders like Klarna are seeking to reinvent banking by offering customer-centric services. But the process of streamlining underlying operations is not simply about providing customers with the fintech-esque experience. More than 50% of a financial institution’s business processes are also impacted by regulation.
Financial services leaders are focussing on streamlining and taking cost out of business operations while also placing importance on resilience. Regulators are pushing banks to have a firmwide view of the risk to delivering their critical business services.
Banks must invest in digitising processes to intuitively embed risk and compliance policies, which are generally managed separately and often manually from the business process, leading to excessive compliance costs and risk of non-compliance. With the right workflow tools for monitoring and business continuity management, banks can minimise disruption by gaining access to real-time, actionable information about non-compliance and high risk areas, encompassing cybersecurity, data privacy and audit management.
Increasing openness of financial institutions to regtech solutions, or managing regulatory processes in the industry through technology, will prove key during this second wave of transformation. Banks will increasingly move away from people and spreadsheets and toward regulatory solutions that provide a real-time view of compliance and provide an end-to-end audit trail for Heads of Compliance, Chief Risk Officers and regulators.
With a unified data environment aided by technology, financial institutions can drive a culture of risk management and compliance to improve business decisions.
Riding the wave
The banking industry is still in the midst of its second transformation, and the pandemic hasn’t made it any easier. But riding this wave and successfully digitising processes to connect back and front office employees will present a profound difference to customer service.
The bank of the future will be frictionless, digital, cloud-enabled, and efficient; interwoven into the fabric of people’s lives. It will continue to be compliant and controlled but will deliver those outcomes differently, with risk management digitally embedded within its operations.
Demonstrating the operational resilience of its key services will not only drive customer confidence but will also provide a greater indicator of control to regulators and the market, adjusting overall risk ratings and freeing up capital reserves to drive more revenue and increase profitability.
The institutions that will thrive in this increasingly digital and connected world are the ones that are actively transforming themselves and the way they do business now, by taking learnings from fintechs, following regulations and paving the way in defining the future of financial services.
MAINTAINING SECURITY: NOT SOMETHING TO LOSE CUSTOMERS OVER
By Philipp Pointner, Chief Product Officer of Jumio
They say it takes 60 days to make or break a habit. With the UK having spent over 100 days in lockdown, old habits have changed and new ones have formed. While restrictions are starting to ease, these habits will stay with us, including how we choose to manage our finances. While prior to the pandemic, we may have gone to the bank regularly to deposit a cheque, change our bank account or open a new one, this habit has now been broken, putting the role of the branch in question.
Well before the outbreak of COVID-19, bank branches were closing in large numbers. More than a third of the UK’s bank branches have shut for good in less than five years, while hundreds of those that remain have reduced their business hours.
These macro changes in how we interact with our finances impacts financial institutions, which have had to adapt to allow current and prospective customers to access services remotely with the same level of security. Digitalisation in banking has been happening for years, but the global pandemic has significantly accelerated these efforts. While newer challenger banks have a reputation for faster sign-ups and seamless customer experience, security remains a top concern, particularly when the annual value of online banking fraud losses eclipsed £112 million in 2019.
Fraud detection measures have a reputation for making the customer experience worse. How can we preserve the user experience without compromising online security?
The best experience vs. the best security
Top security at the account sign-up stage is essential, yet nearly half (48%) of all fraud value stems from accounts that are less than a day old. Experian’s 2020 Global Identity and Fraud Report found that account opening and account takeover are responsible for higher losses than any other type of fraud. The account onboarding process is one that carries many risks — financial, regulatory, and reputational — when identifying the true identity of a customer, especially when not done in person.
In ensuring fraud detection, measures with incremental friction are often put in place to keep identities secure. However, too much friction can be problematic, with nearly 40% of potential new customers quitting onboarding processes which are too time-consuming and onerous. This level of abandonment represents a significant cost for financial institutions. With friction having such an impact on conversion rates, there are lessons traditional banks can learn from their challenger counterparts when it comes to customer experience.
How do we solve this?
For many consumers digital banking is not new, but the global pandemic has forced others to try digital banking for the first time because there are no other options. How many of these consumers will return to a physical branch when lockdowns are lifted?
When onboarding, whether online or in branch, banks perform the same set of steps even though the process differs. While banks are required to perform the necessary due diligence as part of their KYC obligations, many of the onboarding steps required in-branch can be automated, streamlined and simplified to deliver a better customer experience.
Face-based biometrics have the power to help banks strike the right balance between customer experience and security when it comes to digital verification. When a customer goes to set up an account, the bank asks them to take a picture of their government-issued ID (e.g., driver’s license, passport) and a corroborating selfie. This process determines if the ID is authentic and if the person in the selfie matches it.
To make this process even more secure, online solutions are now embedding certified liveness detection in the selfie-taking process to make sure that the customer is not attempting to spoof the system with a deepfake video or a picture of a picture. By leveraging biometrics and AI, an accurate verification decision can be made in a matter of seconds, which dramatically lessens the friction and frustration experienced by most online customers.
Going beyond onboarding
With over 60% of financial institutions experiencing an increase in fraud volume over the last few years, and cyber fraud as the primary concern, top-end security needs to go beyond the onboarding stage.
Face-based biometrics can also serve as the answer to ongoing authentication. During the initial identity verification process, better online solutions create a 3D face map, containing over 100 times more liveness data than a 2D photo. When a future authentication is required, for example, when a customer tries to reset their password or initiate a wire transfer, the customer is asked to take a new selfie, during which a new 3D face map is created. This face map is compared to the original and authorises the transaction in seconds with a significantly higher level of identity assurance.
This holistic approach is required now more than ever, with fraudsters taking advantage of the surge to digital.
So, what next?
Digitalisation is no longer just an important priority — it must be a primary focus for all regulated financial institutions. When lockdowns were announced all around the world, challenger banks were better prepared to support their customers online, but while they may have had an advantage at the start, it doesn’t need to stay that way. With the extraordinary power of face-based biometrics and AI, financial institutions can level the playing field by delivering an online experience that balances account security and customer usability.
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