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WHY FINANCIAL SERVICES NEED TO ADOPT LEAN AND AGILE PRINCIPLES

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By Philip Farah, AVP Head Digital Transformation Services, Global Accounts at World Wide Technology (WWT)

 

The financial services industry is going through major changes as it prepares itself for a digital future.

With the pandemic in play, social distancing rules drove digital uptake amongst consumers as most highstreets banks were closed, forcing many people to manage their finances remotely. As society has adjusted to this change, and ‘banking through a screen’ has become the new normal, financial services institutions are feeling the pressure to integrate new technologies that will meet the demands and expectations of digitally savvy customers.

Prior to the pandemic, it took IT teams in financial services up to 18 months to release a new product. However, with increasing customer demands for digital services combined with the backdrop of the pandemic, this is not fast enough. Speeding up this process is a key challenge for the financial services industry – and one that needs more attention.

This is where adopting lean and agile processes as well as DevOps processes that bridge the gap between Application Development and Infrastructure Operations, which are used by some of the most advanced technology companies in the world, can help.

 

Following the trend

Service offering is a key competitive differentiator in the financial services sector. The rise of new fintech players, who already use agile principles, has forced traditional financial institutions to emulate the way they work.

Fintechs have demonstrated that Agile and DevOps can speed up the rate of innovation and reduce time to market. This has been observed by the wider financial services industry. The onus is now on the incumbents to integrate agile (and DevOps) practices to match this pace.

Companies understand they need to adopt lean and agile principles – as it will help speed up the process of replacing legacy technologies with modern digital innovations or bolting on new digital front ends on top of existing systems (through the use of APIs and Mircoservices). But the question is, from a practical perspective, how do large financial institutions implement lean and agile principles that will give them the ability to evolve and compete? One answer is the cloud.

 

Cloud as an enabler

Cloud service providers offer products that deliver a seamless extension of the enterprise private cloud into the public hosting sphere. This includes tools to manage an agile development process, such as Kanban. More importantly, it leverages seamless links between app development and infrastructure operations (e.g., automated infrastructure provisioning).

This means developers can set up infrastructure on demand to accelerate development and deployment of new applications to support business opportunities. Moreover, this integration allows financial institutions to deploy at scale especially in situations where spikes in demand are frequent.

However, migrating to the cloud has challenges. A move to cloud-based collaboration requires cultural change. And innovations such as automation open up operational and security risks. Therefore, it is easier to get developers rallied behind DevOps than teams running security or operations.

This is why a successful and broad adoption of Agile and DevOps at the enterprise level is conditional on operations, security and development teams working hand in hand with a joint strategy and prioritisation plan aimed at peeling the value/risk onion in layers.

Organisations are working tirelessly to solve these challenges. Businesses will require solid leadership, and a strategic plan in place to act on. It is those organisations that overcome these barriers that will succeed in a new cloud enabled future.

 

The lean and agile tech revolution

While the public cloud removes some of the constraints to the adoption of lean and agile principles, financial services Institutions have to pursue a hybrid approach the includes their on-prem infrastructure as well with the goal of creating seamless infrastructure provisioning and workload migration capabilities that cut across public and private infrastructure.

To do so, they need to invest in observability, AI, automation, and security through upping their skills /expertise in areas such as AIOps, DevOps, DevSecOps, GitOps, design thinking, and agile development.

Bottom line is that for Financial Services Institutions to be able to accelerate time-to-market, they need to adopt new capabilities and upskill their teams today, focus on quick wins (new Apps in the cloud as an example) while setting the foundations for a comprehensive enterprise-wide adoption of Agile and DevSecOps to expand the reach to legacy apps and private Infrastructure.

 

Finance

THREE STEPS TO ENSURE RECOVERY OF COVID LOANS GOES SMOOTHLY

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In the wake of the pandemic, the government acted quickly to provide financial Covid support packages to help struggling businesses. With the economy now recovering, Mike Hampson, CEO at Bishopsgate Financial explores the range of options available for banks to ensure that those loans are repaid.

 

Since the start of the pandemic, businesses have raised over £75bn[1] from banks and financial markets, through interest-free emergency support schemes. But the harsh reality is that not all loans will be honoured as the economy recuperates.

As a result, banking professionals with client relationship management experience and skills in supporting clients to repay loans in a challenging business environment, will be in high demand.

 

Mike Hampson

Setting up training capabilities for client support post-pandemic

Commercial bankers estimate 60% of new coronavirus scheme loans[4] will default or suffer other repayment issues that will drive previously unseen levels of non-performing loans. It’s a tough balancing act and one that demands careful management of the lending transaction lifecycle, from origination through to collection, recovery, and handling bad debts. Banks no doubt already have frameworks in place to manage these elements, but it’s highly important to make customer interactions as easy as possible and ensure their genuine concern for their customers is clear.

Subsequently, hundreds of workers at major banks including HSBC, NatWest and Metro Bank[5] are understood to be receiving training in how to deal with vulnerable customers and “demonstrate empathy” as the first wave of repayments for coronavirus loans fall due. Staff ‘sensitivity[6] training builds on client-support and workout capabilities, such as improving sensitivity to early-warning systems, developing short-term forbearance solutions and loan modifications, and providing guidance on alternative products.

This approach may further avoid the additional pressure on the UK’s mental health crisis as financial institutions prepare to call in loans issued during the pandemic.

HSBC, which now has 400 staff in its debt collection team,[7] said the aim was to ensure staff had a “consistent understanding of vulnerability” and are “aware of the factors that could make an individual vulnerable” when having repayment conversations with customers.

An executive at another bank said its expanded debt collection team was being trained in “empathy, vulnerability and listening skills”. The individual told The Telegraph: “Ultimately, we don’t want to damage the economy by being overly aggressive.”

A peculiarity of a crisis situation is that customers don’t always know what they will need until that need is pressing. Finding that their bank is prepared to help in unexpected ways will go a long way toward reassuring them.

[2] https://www.law360.com/articles/1355897/

[3] https://www.bishopsgate-financial.com/insights/the-change-perspective/the-change-perspective-2021

[4] https://www.grantthornton.co.uk/insights/how-to-manage-upcoming-non-performing-loans/

[5] https://industryslice.com/NewsLetter/8_33

[6] https://www.telegraph.co.uk/global-health/climate-and-people/covid-19-has-amplified-parallel-pandemic-poor-mental-health/

[7] https://www.msn.com/en-gb/money/other/bank-staff-get-sensitivity-training-before-calling-in-covid-debts/ar-BB1fNMte

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FOUR STEPS TO INTEGRATING INTELLIGENT AUTOMATION IN THE FINANCE DEPARTMENT

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Marieke Saeij, CEO of Visma | Onguard

 

It’s clear that Intelligent Automation (IA) is still very much an emerging technology, with one indication being that is has only been mentioned a handful of times on Twitter since the beginning of 2021. Results from our latest annual FinTech Barometer reveal a mixed picture in terms of awareness, with half of finance professionals having never heard the term before. Whilst this is unsurprising for a technology concept very much in the ‘early adopters’ stage, organisations can stand to gain real benefits from embracing Intelligent Automation now, particular within the finance department. With this in mind, we explore some of these benefits and share a step-by-step best practice to implementing it into business operations.

 

Intelligent Automation ensures a predictable order-to-cash process

Such is the speed of introduction of new technologies that it’s a challenge for businesses to keep pace. As the newest innovation in finance, Intelligent Automation is one that organisations can’t afford to let pass by. It truly takes financial process automation to the next level. In addition to helping maintain a high-quality customer service, it also complements the existing skillset of finance professionals in the industry.

Marieke Saeij

While Robotic Process Automation (RPA) and Big Data are key innovations for the sector, IA can be likened to an additional layer that enhances existing technologies. By combining applications, this layer is capable of independently assessing situations and determining the appropriate process sequence. It can, for example, fully determine the risk of a specific customer, and can also predict at an early stage which invoices will be paid late, or even not at all, ensuring that finance professionals can then plan accordingly. The result is a reliable and predictable order-to-cash process.

 

The four steps to an IA-proof organisation

While the benefits of IA are numerous, implementing the technology can prove complex, although some are already treading the IA path without knowing it. In this instance it’s crucial to become aware and begin the purposeful process to full integration. Below are the four key steps to becoming fully IA-proof.

  1. Exploring the potential: Brainstorm where automation can be applied

Step one is to examine the extent to which automation can help your organisation. Blue sky thinking is the key here. What is the ideal relationship with the customer? What does the ideal order-to-cash process look like? In this phase, involving multiple departments from within the organisation is key, from management to operations. The finance professionals who have the most contact with customers are likely to have the strongest knowledge of which processes they would like to see automated. With no limits to ideas, it’s best to explore all the opportunities in the entire order-to-cash process and describe broadly the potential value to the organisation.

 

  1. Decipher which data and technology is needed

The second step is to map out which data and technology is required. Working with a specialist, either external or from the internal IT department, is beneficial at this stage to see where the opportunities lie. In many cases, off-the-shelf solutions are already readily available to help make the difference, so it pays to do the research and gain advice where possible.

 

  1. Firm up the strategy

With the plan mapped out, it’s time to fit the pieces of the puzzle together. Which technology and accompanying software is proving most valuable? It’s vital at this stage to analyse the results the organisation is achieving from deploying the right technology and software. It’s also important to outline any limitations and emphasising the potential risk of failure. This is the business case and the basis for the elevator pitch that will be presented to internal stakeholders.

 

  1. Draw up the roadmap and start benefitting from agility

The fourth and final step is prioritisation. The roadmap will describe step-by-step how to move from the undesired current situation to the desired end goal. In the first step, choosing a subproject that is relatively easy to achieve will help gain support from other departments within the business, and provide invaluable experience that can be applied to the more complex components that follow later. This agile approach facilitates a learn-by-doing mindset and allows the following steps to be tackled in a smarter and simpler way.

 

Effective preparation is half the battle

Exploring the potential of automation, mapping the required data and technology, establishing the strategy and laying out the roadmap are the four crucial steps to ensure the foundation for Intelligent Automation. Effective preparation and estimating which technology and accompanying software is needed will help to create a streamlined and error-free order-to-cash process. To ultimately save time and costs, empower finance professionals and maintain customer loyalty, the time for Intelligent Automation is now.

 

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