In today’s digital world, data is a vital asset that gives organisations the ability to uncover valuable insights about customer behaviour, which ultimately provides businesses with a competitive edge. However, new research commissioned by managed services provider Claranet has revealed that UK financial services organisations are struggling to capitalise on the vast amounts of customer data they collect.

The research, which was conducted by Vanson Bourne and surveyed 750 IT and Digital decision-makers from a range of organisations across Europe, is summarised in Claranet’s Beyond Digital Transformation report. The findings reveal that despite the increasingly large quantities of data that the financial services sector is now collecting, over half of UK companies (54%) struggle to use and understand their customer data to help them make important business decisions.

According to the survey responses, 43% of UK organisations in the financial sector cite centralising customer data as being a key challenge encountered when trying to improve the digital user experience, and 41% reported that they were unable to provide a consistent experience across channels as a result.

For John Hayes-Warren, Head of Vertical Markets at Claranet UK, the findings highlight how the often-siloed and legacy approaches to data management are preventing businesses in the financial sector from exploiting the potential of the information at their fingertips.

Hayes-Warren commented: “Data has quickly become an incredibly valuable asset in the financial sector and the source of important intelligence that can be applied to respond to changing customer demands. Most businesses are sitting on vast amounts of data and those that can harness it effectively can gain a much deeper understanding of their customers, better predict, improve and personalise the customer experience and, ultimately, create stronger brand loyalty and repeat business. It’s therefore troubling that over half of UK financial services organisations are reporting challenges in this area, so addressing data management shortcomings needs to be a priority for any business that is passionate about delivering a positive customer experience.

“To realise the benefits of data you’ve got to be able to combine and mine different repositories of data and make it actionable in real time. However, that’s something that is often frustrated by legacy systems and batch processing. These unconnected and incompatible IT systems create data siloes and prevent data and insights from being discovered and actioned within organisations,” he continued.

“Cloud technologies can help a great deal, providing the tooling and infrastructure needed to collect, process, and analyse vast sets of data from across the organisation and make it actionable in real time. By creating a platform that can capture and analyse data from across an organisation, leaders can discover unique insights, issues and opportunities that will ultimately help them achieve the competitive advantage they seek,” Hayes-Warren concluded.

(Source: Claranet)

As brands think about targeting the student market, it would be very tempting to stereotype and develop marketing that is all about partying and watching daytime TV. This approach is doomed to fail because the student demographic is actually much more diverse and discerning.

According to Creative Orchestra, less than 60% of students are under 21, almost 40% study part-time and half of those are aged 30-50. In the UK, there are almost half a million students from overseas, and the number is growing.

The main reason why banks are interested in connecting with students is that while they may not have much cash initially, over time they usually become more financially secure and interested in additional products and services such as credit cards, loans and mortgages.

Genuine concern for customers

Despite the dangers of generalising, there are some traits which marketers should be aware of. As a whole, students tend to have a strong sense of social responsibility. When asked, 74% believe that ethics are very important and 65% believe that it’s very important to be environmentally friendly. These beliefs affect the purchasing habits and demands of future students but it is important that brands don’t make claims they can’t substantiate. Students know the difference between genuine claims and spin and are increasingly drawn to ethical financial institutions.

Building a reputation as a brand that truly cares will get cut through with this demographic. Customer Thermometer research highlights that people want to connect with a brand that shows it cares about them. This is heightened for student consumers who are usually financially stretched and may feel more vulnerable, living away from home and making independent, financial decisions for the first time. Sensing that a bank understands the pressures they face and is always ready to help, rather than hinder or scold, can go a long way in forging a strong customer relationship.

In addition, our ‘Connected Customer’ research shows found that a long-term relationship happens when companies become a meaningful part of a customer’s everyday life.  Making their life easier and delivering what is promised both contribute to finding a place in their emotions. When students sense that “this company helps me when things go wrong”, they begin to move along the engagement journey from interest to loyalty. There’s a real opportunity for banks to show genuine understanding and flexibility towards students and as a result to win a customer for life.

As well as supporting students when things go wrong or finances are tight, banks should also be thinking, what additional services and products can we offer that will enhance their life? This is because there is a direct correlation between the number of additional products held, such as overdrafts, loans and insurance, and higher levels of engagement.

The personal touch

Finally, banks should use the reams of rich customer data, aggregated across multiple touch points, to target students with hyper-relevant and engaging messages at opportune moments.

Banks must profile and target properly, taking time to understand their audience, rather than lumping all students in the same category. Students will not tolerate being bombarded with unsolicited messages. Less is more and they appreciate creative, clever and entertaining campaigns that are personal to them. The good news is that sophisticated data-driven marketing is totally attainable now, so long as the data is clean.

The student market is highly lucrative and if banks get their marketing and customer experience right, they could win an advocate for life. To win the affections of students, brands must provide a meaningful and personalised solution with products and services that really add value. Any bank that does this will soon discover they have an army of loyal brand advocates who are engaged and bring long-lasting financial rewards.

Karen Wheeler is the Vice President and Country Manager UK at Affinion

Louise Green is the Chief Marketing Officer at Bureau van Dijk, a Moody's Analytics company. It is committed to empowering customers to make better, faster decisions, by providing the most reliable private company information in the market. Below, Louise tells us about Bureau van Dijk’s Corporate and Financial Solutions and the importance of comparability and efficiency when it comes to data and company information.

Tell us about the key corporate and financial solutions that Bureau van Dijk offers

We aim to make our customers more successful by providing company information solutions that help improve efficiency, grow revenue and mitigate risk.

How much do you know about who you are doing business with?

Whether it’s the financial strength and longevity of your suppliers, your clients’ ability to pay, complying with regulations, protecting your reputation or understanding new and existing markets, more certainty is always welcome.

We capture a wide variety of data, then we treat, append and standardise it to make it richer, more powerful and easier to interrogate. In fact, we capture and treat data from more than 160 separate providers, and hundreds of our own sources, to create Orbis, the world’s most powerful comparable data resource on private companies.

Orbis has information on around 300 million companies in all countries. It’s the resource for company data.

The company reports are detailed and comparable, and comprise:

• 26 balance sheet items
• 26 profit and loss account items
• 32 standard ratios

Our customers, including financial institutions, corporates, governments and academia, use our products for a variety of purposes.

Compliance and reputation management

With comprehensive global coverage, the richest source of corporate structures and beneficial ownership data available, plus information on PEPs and Sanctions, we are the resource for compliance and onboarding.

Financial risk

Our standardised financials help to assess and benchmark companies globally. We offer financial strength metrics using a range of models and include a qualitative score when detailed financials are not available.

Tax and transfer pricing strategies

We combine our comprehensive company information with transfer pricing functionality, so customers can plan, set policies, manage risk and document compliance processes.

Customers can also fine-tune policies, create robust audit-defence analysis and prepare TP documentation. We’ve created a full document management system to help with BEPS and country-by-country reporting requirements that helps customers become more efficient.

Business growth and strategy

Research new markets and industries, understand the M&A landscape and foreign and direct investment.

Orbis includes information on:

• public and private company data – including banks and insurance companies
• associated news and independent research
• global M&A deals and rumours
• ESG reputational risk ratings and metrics
• original filed documents and document-ordering services

Data is getting bigger all the time, which makes extracting value from the numbers more difficult and time consuming. One of the ways that we increase efficiency is by making it simple to compare companies internationally.

Using our solutions, customers can interpret data quickly, and automate and centralise much of their research.

In what ways have Bureau van Dijk’s offering evolved over the years?

Bureau van Dijk has been an innovator in private company information since its beginning. We first delivered company information to clients on CD - then DVD-ROMs. This was a ground breaking way for companies to quickly research other companies. While we still offer on-premise solutions, our data and analysis resources today are accessible in the cloud, in third-party platforms and through integration into systems and workflows.

Our products are just as innovative today. For example, it’s not just that we offer the world’s most powerful comparable data resource on private companies, or the extensive corporate ownership structures included within it, it’s often how you can combine datasets in new and innovative ways to create better solutions for customers. For example:

• By combining our ownership data with our sanctioned-by-extension data, compliance with the EU and OFAC legislation becomes much easier.
• Orbis Intellectual Property links global patent data to companies and corporate groups in a way that’s never been done before
• Orbis CrossBorder Investment is the only solution that combines information on greenfield projects with M&A to understand globalisation, and delivers information on the companies behind the investments

Customers can blend our data with internal data to refresh and enrich CRMs and other internal databases. Our unique company identifiers and bespoke matching services help to create links between disparate datasets across organisations and create single views from data silos.

We recently updated the interface for Orbis and several other products to make them even easier to search for and visualise data with pivot analyses, heat maps, dynamic company structures and more. These and other changes were made based on interactive feedback from our customers. We bring data to life in new ways with reports and dashboards that give a clear, intuitive view into the information that matters most.

How important is it for businesses to trust a data specialist like Bureau van Dijk when it comes to data and company information?

At Bureau van Dijk, we’re in the business of certainty. It’s vital that companies know who they are dealing with. Before embarking on a major investment, a new third-party relationship or procurement decision, companies need to have confidence that the information they base their decisions on is accurate and comprehensive.

As businesses can be global and often complex, it's harder to get a clear view of all entities involved and who holds control. We make it easy to analyse management and ownership structures. Orbis includes extensive corporate structures so you can assess the complete group or take the financial stability of the parent into account.

Having a clear view of ownership also helps our users comply with sanctions lists, anti-money laundering legislation and to perform the other crucial due diligence checks that are intrinsic to global business.

What are Bureau van Dijk’s goals for the future?

Our mission has always been to provide the most reliable private company data on the market. We will continue to enrich and expand our private company information database. This means identifying and integrating new, reliable information sources and standardising data to make it more comparable and useful for our customers’ decision-making processes.

 Contact details:

To find out about our free trial scheme, please visit www.bvdinfo.com or email bvd@bvdinfo.com.

Telephone (London): +44 207549 5000

Two years on from the CMA market review which initiated Open Banking, Jake Ranson, banking and financial institution expert and CMO at Equifax, anticipates profound long term impact.

Open Banking was established to encourage competition. It’s well known that current account switching remains low, but this doesn’t reflect the full story. The initiative has been a wake-up call for traditional banks to improve their understanding of their customers and tailor services to their needs. Consumers won’t necessarily have to switch to experience improvements in their banking services.

Since inception two years ago, Open Banking has prompted exciting and much needed product developments to facilitate faster and more effective banking services for consumers. Many providers have applied for Open Banking regulatory permissions, showing the huge appetite to offer new and improved services.

The services that will really take off are the ones that give consumers transparency, control and save them valuable time. Consumers need a compelling reason to share their data, whether it’s faster lending decisions or the ability to access financial products better suited to their needs, and providers must articulate the value clearly in order to succeed.

The potential next steps are vast. We could see services that go beyond banking data, encompassing for example social media information so that consumers can manage their data in one place to gain easier access to tailored services. More and more companies are likely to get involved, potentially including players as varied as online estate agents and debt management companies.

Momentum is building but there’s still a need to educate consumers on how Open Banking can improve their financial lives. Equally important is reassurance that they maintain control of their data, it will only be used with their permission and they can revoke access at any time.

This week Finance Monthly talks to Daniel Kjellén, CEO and Co-founder of Tink on the democratisation of data and what this means for both financial services businesses and consumers.

Open Banking was designed to open the retail banking market by giving everyone access to the data they needed to deliver banking services. Initially viewed as a massive boon for fintechs, and a worrying threat for banks, the mindset of the latter is shifting.

They may have been slow to start, but today the majority of retail banks are waking up to the opportunities offered by Open Banking. Banks are realising that the new battleground is the level of valuable insights and product offerings, tailored to the individual, that can win over consumers. And the key to unlocking this customer value? Data.

But CIOs and product analysts will be only too aware that data was relatively unmanageable until fairly recently. Historically, legacy systems and fragmented technology stacks have meant that getting the right data-sets in one place has been a huge struggle for banks.

What’s more, being able to use these data-sets to create data-driven insights and support data-driven sales has proved even more of a challenge. This means that, until recently, banks and consumers alike have been unable to make full use of the financial data at hand to make better, more informed decisions.

Out-engineered or the opportunity of a lifetime?

Banks might still be grappling with trying to make the best of their consumer’s financial data. But heel-dragging is not an option.

For several years, banks have been under siege from all sides. The technology that allows consumers to grant third parties access to their financial data has existed for some time, and agile fintechs have out-engineered banks in the field.

There’s no question that the advent of Open Banking has widened the data floodgates now that banks have had to open up their APIs. With data more readily accessible, third party providers in all sectors - from finance to insurance - can begin to compete with the traditional banks by introducing innovative new products and services.

What’s more, these challengers have the advantage of being more agile with their time to market; getting new software off the shelf and into people’s pockets in a fraction of the time previously taken.

Banking on the future

Banks have work to do. They’ve been caught napping by these nimble fintechs who have stolen a march.

Regulation is really only the rubber stamp on a technology-led revolution that was already well underway. Banks are now waking up to the same opportunities by partnering with agile industry players that can leverage the financial data at hand.

They need to act now to keep pace with the new market entrants who have already tapped into a world where the access to financial data is democratised, to build newer and better products for consumers. Instead of inventing the wheel once again, banks can choose to invest in the best technology that will provide them with the right data-sets that will both give them a holistic overview over their customer’s finances, and the ability to deliver data-driven sales and insights, tailored at the individual.

Why does this matter?

Open Banking has changed the way consumers can choose to manage their finances. By democratising the access to financial data, consumers are beginning to understand, and take advantage of, the benefits of sharing their financial information with third parties.

Once faithful to traditional banks, people are becoming increasingly fickle - flirting with other providers to find the best deal, service or experience on the market.

It might be intelligent personal finance technology that can predict consumer spending habits and provide advice and recommendations based on these predictive insights. Or it might be a current account platform that allows people to monitor and change their mortgage and savings in the same place, despite using different providers.

Whatever the specific solution, consumers are feeling the benefit of increased flexibility and choice, and demand for new ways to manage money is growing.

It really is win-win-win

Banks must stop viewing the democratisation of data as a zero-sum game - where their loss is a fintech’s or another bank’s gain. Instead, they should see it as an opportunity to gain an advantage by ensuring that their data analytics capabilities keep them one step ahead of their rivals.

While aggregation is just one part of the puzzle, the democratisation of data opens up a wealth of opportunities for banks. Data-driven banking will allow banks to make better commercial decisions based on their customers behaviour, while PFM (personal finance management platforms) will help banks give their customers a better experience.

There is a huge opportunity for banks to successfully monetise Open Banking through identifying where they can offer customers a better deal to meet their needs and targeting them accordingly with a personalised offer.

In this brave new world of banking, the winners will be those who decide what their unique offer to consumers will be and focus on doing it better than anyone else in the market. This might be providing the smoothest UX, the best predictive personal finance management platform, or the slickest analysis and insights tools. Or it might be offering the best products in one particular area - for example the most competitive rates on mortgages or loans

Unlocking this opportunity might require developing new customer centric platforms in house or buying technology of the shelf by partnering with fintechs to take advantage of their technology solutions.

But one thing’s for certain. Far from sounding the death knell for the banking industry, the democratisation of data will become the smart bank’s secret weapon for winning their segment.

General Data Protection Regulation is a ‘game changer’ for the financial services industry and many small firms are unlikely to be fully compliant with the new rules.

Nigel Green, the founder and chief executive of deVere, is speaking out since the implementation of GDPR, a regulation in EU law on data protection and privacy for all individuals within the European Union and the European Economic Area.

Mr Green says: “GDPR is a game changer for the financial services industry – the biggest shake-up I can remember.

“Not only is it protecting clients further by putting them back in control of their personal data, but it is going to make the industry work smarter, harder and better.”

He continues: “One of the main day-to-day ways GDPR will impact financial services is that no longer will firms be able to poach staff asking them to bring client data with them. Unfortunately, this has been a highly unethical modus operandi for many smaller financial companies for far too long. This is now no longer possible.

“Another key way that GDPR will affect the admin operations of financial services companies is the storage and management of the data. Holding data without good reason to do so will no longer be allowed.”

Mr Green goes on to add: “Despite them having ample advance notice, due to the breadth and scope of GDPR, and because it represents a fundamental shift for some companies’ business models, many smaller firms will find it extremely challenging to meet the requirements.

“It is likely that they will have found, and will continue to find, it difficult to dedicate the time and resources to getting this right and being fully compliant – especially as many are still struggling with the costs and demands of Mifid II and other complex regulatory reforms.

“As such, we can expect that many smaller firms will be hit with hefty fines for failing to meet GDPR’s stringent standards.

“Bearing this in mind, GDPR will prove to be a ‘burden’ too heavy for some smaller companies, forcing them to exit the industry.”

The deVere CEO concludes: “GDPR represents a watershed moment for the financial services sector. This is an opportunity for all firms to redouble their efforts to overhaul their business practices where necessary, ensuring the clients’ interests are always front and centre.”

(Source: deVere Group)

Much that has been written about the General Data Protection Regulation (GDPR) relates to the burden of obtaining proper consents in order to process data. This general theme has provoked questions about whether and how financial institutions can process data to fight financial crime if they need consent of the data subject. While there are certainly valid questions, GDPR is much more permissive to the extent data is used to prevent or monitor for financial crime. Richard Malish, General Counsel at Nice Actimize, explains.

Clients and counterparties will oftentimes be more than happy to consent to data processing in order to participate in financial services. But consent can be withdrawn, so offering individuals the right to consent will give the impression that they can exercise data privacy rights which are not appropriate for highly-regulated activities.

Rather than relying on consent, the GDPR also permits processing which is necessary for compliance with a legal obligation to which the controller is subject and (2) processing which is necessary for the purposes of the legitimate interests pursued by the controller or by a third party.

Some areas of financial crime prevention are clearly for the purpose of complying with a legal obligation. For example, in most countries there are clear legal obligations for monitoring financial transactions for suspicious activity to fight money laundering. The European Data Protection Supervisor stated in 2013 that anti-money laundering laws should specify that "the relevant legitimate ground for the processing of personal data should… be the necessity to comply with a legal obligation by the obliged entities…." The 4th EU Anti-Money Laundering Directive requires that obliged entities provide notice to customers concerning this legal obligation, but does not require consent be received. And the UK Information Commissioner's Office gave the example of submitting a Suspicious Activity Report to the National Crime Agency under PoCA as a legal obligation which constitutes a lawful basis.

Very few commentators have attempted to cite a legal authority for anti-fraud legal obligations. The Payment Services Directive 2 (PSD2) requires that EU member states permit personal data processing by payment systems and that payment service providers prevent, investigate and detect payment fraud. But PSD2 has its own requirement for consent and this protection may fail without adequate implementing legislation in the relevant jurisdiction. Another possible angle is that fraud is a predicate offense for money laundering, and therefore the bank has an obligation to investigate fraud in order to avoid facilitating money laundering.

"Legitimate interests" are also permitted as a basis for processing. However, this basis can be challenged where such interests are overridden by the interests or fundamental rights and freedoms of the data subject which require protection of personal data. Financial institutions may not feel comfortable threading the needle between these ambiguous competing interests.

However, the GDPR makes clear that several purposes related to financial crime should be considered legitimate interests. For example, "the processing of personal data strictly necessary for the purposes of preventing fraud also constitutes a legitimate interest" and profiling for the purposes of fraud prevention may also be allowed under certain circumstances. It is also worth recognizing that many financial market crimes such as insider trading, spoofing and layering are oftentimes prosecuted under anti-fraud statutes.

Compliance with a foreign legal obligations, such as a whistle-blowing scheme required by the US Sarbanes-Oxley Act, are not considered "legal obligations," but they should qualify as legitimate interests.

While legal obligations and legitimate interests do not cover all potential use cases, they should cover most traditional financial crime processing. Some banks have been informing their clients that a legal obligation justifies their processing for AML and anti-fraud. Others have included legal obligations and/or legitimate interests as potential justifications for a laundry list of potential processing activities.

Financial institutions should use the remaining days before GDPR's effective date to provide the correct notifications to data subjects and confirm that their processing adequately falls under a defensible basis for processing. And with this basic housekeeping performed there is hopefully little disruption to their financial crime and compliance operations.

The financial services industry has witnessed considerable hype around artificial intelligence (AI) in recent months. We’re all seeing a slew of articles in the media, at conference keynote presentations and think-tanks tasked with leading the revolution. Below Sundeep Tengur, Senior Business Solutions Manager at SAS, explains how in the fight against fraud, AI is taking over as a dominant strategy, fuelled primarily by data.

AI indeed appears to be the new gold rush for large organisations and FinTech companies alike. However, with little common understanding of what AI really entails, there is growing fear of missing the boat on a technology hailed as the ‘holy grail of the data age.’ Devising an AI strategy has therefore become a boardroom conundrum for many business leaders.

How did it come to this – especially since less than two decades back, most popular references of artificial intelligence were in sci-fi movies? Will AI revolutionise the world of financial services? And more specifically, what does it bring to the party with regards to fraud detection? Let’s separate fact from fiction and explore what lies beyond the inflated expectations.

Why now?

Many practical ideas involving AI have been developed since the late 90s and early 00s but we’re only now seeing a surge in implementation of AI-driven use-cases. There are two main drivers behind this: new data assets and increased computational power. As the industry embraced big data, the breadth and depth of data within financial institutions has grown exponentially, powered by low-cost and distributed systems such as Hadoop. Computing power is also heavily commoditised, evidenced by modern smartphones now as powerful as many legacy business servers. The time for AI has started, but it will certainly require a journey for organisations to reach operational maturity rather than being a binary switch.

Don’t run before you can walk

The Gartner Hype Cycle for Emerging Technologies infers that there is a disconnect between the reality today and the vision for AI, an observation shared by many industry analysts. The research suggests that machine learning and deep learning could take between two-to-five years to meet market expectations, while artificial general intelligence (commonly referred to as strong AI, i.e. automation that could successfully perform any intellectual task in the same capacity as a human) could take up to 10 years for mainstream adoption.

Other publications predict that the pace could be much faster. The IDC FutureScape report suggests that “cognitive computing, artificial intelligence and machine learning will become the fastest growing segments of software development by the end of 2018; by 2021, 90% of organizations will be incorporating cognitive/AI and machine learning into new enterprise apps.”

AI adoption may still be in its infancy, but new implementations have gained significant momentum and early results show huge promise. For most financial organisations faced with rising fraud losses and the prohibitive costs linked to investigations, AI is increasingly positioned as a key technology to help automate instant fraud decisions, maximise the detection performance as well as streamlining alert volumes in the near future.

Data is the rocket fuel

Whilst AI certainly has the potential to add significant value in the detection of fraud, deploying a successful model is no simple feat. For every successful AI model, there are many more failed attempts than many would care to admit, and the root cause is often data. Data is the fuel for an operational risk engine: Poor input will lead to sub-optimal results, no matter how good the detection algorithms are. This means more noise in the fraud alerts with false positives as well as undetected cases.

On top of generic data concerns, there are additional, often overlooked factors which directly impact the effectiveness of data used for fraud management:

• Geographical variances in data.
• Varying risk appetites across products and channels.
• Accuracy of fraud classification (i.e. which proportion of the alerts marked as fraud are effectively confirmed ones).
• Relatively rare occurance of fraud compared to the huge bulk of transactions; having a suitable sample to train a model isn’t always guaranteed.

Ensuring that data meets minimum benchmarks is therefore critical, especially with ongoing digitalisation programmes which will subject banks to an avalanche of new data assets. These can certainly help augment fraud detection capabilities but need to be balanced with increased data protection and privacy regulations.

A hybrid ecosystem for fraud detection

Techniques available under the banner of artificial intelligence such as machine learning, deep learning, etc. are powerful assets but all seasoned counter-fraud professionals know the adage: Don’t put all your eggs in one basket.

Relying solely on predictive analytics to guard against fraud would be a naïve decision. In the context of the PSD2 (payment services directive) regulation in EU member states, a new payment channel is being introduced along with new payments actors and services, which will in turn drive new customer behaviour. Without historical data, predictive techniques such as AI will be starved of a valid training sample and therefore be rendered ineffective in the short term. Instead, the new risk factors can be mitigated through business scenarios and anomaly detection using peer group analysis, as part of a hybrid detection approach.

Yet another challenge is the ability to digest the output of some AI models into meaningful outcomes. Techniques such as neural networks or deep learning offer great accuracy and statistical fit but can also be opaque, delivering limited insight for interpretability and tuning. A “computer says no” response with no alternative workflows or complementary investigation tools creates friction in the transactional journey in cases of false positives, and may lead to customer attrition and reputational damage - a costly outcome in a digital era where customers can easily switch banks from the comfort of their homes.

Holistic view

For effective detection and deterrence, fraud strategists must gain a holistic view over their threat landscape. To achieve this, financial organisations should adopt multi-layered defences - but to ensure success, they need to aim for balance in their strategy. Balance between robust counter-fraud measures and positive customer experience. Balance between rigid internal controls and customer-centricity. And balance between curbing fraud losses and meeting revenue targets. Analytics is the fulcrum that can provide this necessary balance.

AI is a huge cog in the fraud operations machinery but one must not lose sight of the bigger picture. Real value lies in translating ‘artificial intelligence’ into ‘actionable intelligence’. In doing so, remember that your organisation does not need an AI strategy; instead let AI help drive your business strategy.

Take a look at the inner workings of any modern enterprise, and there’s a good chance you’ll find IT silos - islands of departmental data only loosely connected across the organisation. Such isolation presents a potential regulatory risk and undermines the rich productivity gains that digitisation should be driving across commerce, and yet these silos are becoming ever more commonplace.

Whereas ten years ago the primary cause for disjointed IT was the existence of outdated legacy systems within operations, now it is the advent of hosted independently-sourced solutions that is driving compartmentalisation across the IT landscape. With some options coming out of operational, rather than capital, expenditure, departmental heads have empowered themselves to take the matter of updating their processes and software into their own hands.

This empowerment has bred productivity gains, as departments have acquired best-of-breed functionality from systems to support their specific needs. Front and back office operations - from finance and business development to HR, logistics and marketing - have been invigorated by the introduction of solutions specifically implemented to fill operational gaps; address deficiencies and bottlenecks; and allow functionality which had been on managers’ wish-lists for a decade.

Unfortunately, these upgrades have often been made without consideration for the rest of the organisation. This narrow-minded piecemeal approach will return to haunt organisations across most sectors in the years to come, if the issue is not addressed on a company-wide basis.

The dangers represented by such silos are already becoming apparent within many firms: Reliability of data, in particular, is becoming ever more important for both regulatory and operational reasons. But if customer information is stored separately by each department that needs it, the numerous versions which a company possesses can gradually digress. In the case of a financial services organisation, for example, a loan approval department may end up holding a different set of data on a client than the online banking platform. The eventual outcome could range from frustrating or embarrassing the customer, to incurring bad debt and regulatory sanction.

At the very least, such a situation is highly inefficient from a business perspective, and an obstacle to good customer service. There are also cost implications in time and money: Time, because it is harder for employees who require data to access it; and money because the charges for storing and processing data are not inconsiderable, particularly given increasing regulatory and security requirements.

Therefore, as digital transformation is helping businesses to address individual operational problems, the time has come to reassess the approach and ensure that the entire information ecosystem is supporting the greater demands of internal and external customers.

Executive leadership must acknowledge that digitisation alone will not enhance information flow, innovation and productivity, unless there is a clear enterprise strategy to ensure information is made available and can be freely interchanged. Without this, content fragmentation is likely to accelerate, creating further challenges to aggregating, connecting and managing the flow of digital content.

There are inherent challenges for businesses looking to safeguard the efficient and secure access to enterprise-wide information, while retaining the benefits of a distributed approach to technology. One approach that is working well for an insurance client currently in a process of change and growth, is to encourage departments to first seek a solution to any IT need they have from one of a ‘family’ of trusted providers.

In this scenario, it is crucial to work with partners who are committed to ensuring the best for your company: whereas some IT providers will be inclined to make a sale of their own software at all costs, others will be happy to recommend a ‘friend’ from the trusted business family, where they feel that their rival can provide a more suitable product.

At the same time, this ’friends and family’ approach encourages supplier firms to work together on inter-operability and connectivity issues, and to adapt their own products, where necessary, to ensure a solution that is both bespoke and easily integrated into a wider corporate system. With such an approach, all the core systems can be hosted under a single roof - our client works with five core suppliers - and the momentum is towards further integration, not divergence, as each new applications is added.

However, even with such practices, institutions of any size can end up running hundreds of applications. It is essential to link those data repositories and ensure that they are accessible to all potential users, with as much ease as possible. This can be accomplished with an enterprise information hub: a unified information platform, which facilitates an end-to-end view of the organisation’s entire ecosystem.

Such a hub is a valuable tool for management and a driver of innovation, as it is used to speed feedback times and analyse data on whole-company performance. It is also invaluable when it comes to increasing efficiency and diligence at the ‘coal face’, by allowing all documents to be viewed on a single platform or device.

As digitisation drives further changes in years to come - some not yet conceived or planned for, the ability to integrate new systems and view operations holistically will be crucial, if organisations are to fully realise potential gains and remain efficient.

Website: www.hyland.com

The arrival of the GDPR (General Data Protection Regulation) is less than a week away. However, many businesses are still not prepared for the legislation shake-up that could see huge sanctions imposed for non-compliance. Experts at UK based IT support solutions company, TSG, explain for Finance Monthly what the key considerations are when it comes to the finance sector.

If your business is unprepared for GDPR, you are not alone. A Populus survey conducted only this year revealed that 60% of UK businesses do not consider themselves “GDPR ready”. It’s definitely not too late to put measures in place to ensure compliance with the regulation. Following the introduction of GDPR on 25^th May, complying with GDPR will be a continuous journey.

What are the key areas you should be considering in light of the looming GDPR deadline?

Cyber-security tops the list

In this digital world, we produce, store and disseminate huge amounts of data. And a significant portion of that will be Personally Identifiable Information (PII); this is the data that matters under GDPR.

Even if, as a business, you don’t store customers’ sensitive data, you’ll still store the data of your employees. Therefore, all businesses must put measures in place to safeguard that digitally-stored data.

Encrypt everything

Arguably the most valuable cyber-security tool at your disposal is encryption. Not only is it a robust way to keep your data inaccessible to cyber criminals, it’s the only method that’s explicitly mentioned multiple times in the GDPR. Should any PII data you hold fall into the wrong hands – whether deliberately or accidentally – encryption will render it unintelligible. Encryption can operate at a file, folder, device or even server level, offering the level of protection most suited to your business needs.

Review your policies and processes

The GDPR requires you to implement policies that detail how you intend to process personal data and how you will safeguard that data. It also states that data controllers – that’s your business – must “adopt internal policies and implement measures which meet in particular the principles of data protection by design and data protection by default.” All new policies, whether specifically related to GDPR or not, must be compiled with a ‘privacy by design’ model. Existing policies, including your data protection policy, privacy policy and training policy should also be reviewed in light of GDPR.

Don’t forget subject access requests

Much of the coverage of GDPR has focused on two areas: data breaches and the potentially eye-watering fines. An area that’s arguably been overlooked is complying with subject access requests. Individuals can request access to the data you hold on them, verify that you’re processing it legally and, in some cases,, request erasure of their data – also known as the ‘right to be forgotten’. Under GDPR you’ll have only a month to respond to these requests, otherwise you’ll be at risk of non-compliance. More guidance on this can be found on the Information Commissioner’s Office (ICO) GDPR guide.

Don’t forget your reporting obligations either

Another element that’s received significantly less coverage is your reporting requirements. In the event of a data breach, businesses must report it to the Information Commissioner’s Office (ICO) within 72 hours of discovery. It’s especially important to note this, as failing to meet this obligation could be considered a bigger breach of the GDPR than the data leak itself. Both Uber and Equifax have come under fire in the past year for covering up breaches, reporting them late and keeping the extent of the breaches under wraps.

A good example to follow is Twitter. Following the discovery of a bug that stored users’ passwords in plain text – which is a bigger deal than it sounds – Twitter not only reported on the breach, but immediately informed its users of the bug, what caused it and the potential repercussions, and advised customers on how to keep their data safe. The second element of this is critical to GDPR too – if the breach poses a risk to individuals’ “rights and freedoms”, the victims of the breach must be informed too.

The key takeaway

The GDPR wasn’t created to punish businesses or to catch them out, but rather to empower individuals and consumers. Whilst there has been a lot of confusion around exactly what has been required for businesses, it’s clear that cyber-security is imperative, as is clueing up on your reporting and response obligations. It’s important to note that simply experiencing a cyber-attack or data breach won’t automatically result in financial punishment; the GDPR clearly states that, should you prove you put in place measures to protect your PII data, you won’t be hit with the most severe fines.

Just last month Facebook was found to have been providing user data to Cambridge Analytica, which would then allegedly use this data to influence users.

More recently it has been reported that music, and such apps as Spotify, could be providing the Bank of England with data on consumer moods. How far can behavioural data analysis get? Book lists, TV choices and even computer games could also be used to gauge consumer confidence. What are your thoughts on this?

This week Finance Monthly spoke to a couple of experts on this news, who gave their two cents on the matter.

Steve Wilcockson, Industry Manager, MathWorks:

Andy Haldane, Chief Economist at the Bank of England has revealed that researchers are using data from individuals’ Spotify playlist choices and data from games including World of Warcraft to gain insight into public sentiment – information that can be fed into financial models used to reveal important economic indicators such as consumer spending patterns.

Haldane has highlighted the potential of use of alternative data in helping institutions make sense of new sources of information and use it to gain useful insight, in this case into consumer sentiment that feeds economic modelling.

Approaching the anniversary of the global financial crisis reminds us of the critical importance that data and model governance must be impeccable. Alternative data, whether Taylor Swift download metrics, news sentiment derived from text analytics or geolocation-inspired datasets should therefore be used in conjunction with, rather than a replacement for, traditional economic indicators. As the Bank of England has rightly noted, it is also vital to ensure the proper anonymisation and safeguarding of public data, especially in the wake of the Facebook/Cambridge Analytic scandal.

Jacob Gascoine-Becker, Associate Director, Pragma:

Using Spotify data as a guide for consumer sentiment relies on semantic search techniques predicting user intent and meaning. Retailers frequently use these consumer insight tools to analyse social and digital conversations about their brand.  However, the method has increasingly developed a reputation for inaccuracy due to the complexities of language, context and the British love of sarcasm.

At a basic level, it taps into sentiment - words understood as positive or negative and flag a post accordingly. For example, a post that says: “Thanks a lot for delivering my package four days after you promised” is tagged as positive, despite its clearly sarcastic tone. In Pragma’s view, the degree of separation between a sentiment expressed online and one inferred through a song choice will only add to this inaccuracy.

Despite current challenges in automating analysis, retailers wanting to stay on top of perceptions of their brand - and get ahead of operational problems - already pay close attention to online narrative. As the reliability of sentiment analysis improves, it’s easy to see this becoming a widespread leading-indicator of performance, incorporated into management KPIs in the future.”

Behavioural analysis is already used for targeting online. In its most rudimentary and obvious form, shoppers browsing a product on one website will be trailed by relevant banner ads for days afterwards. There are much more subtle ways that e-commerce operators are exploiting behavioural data. Increasingly retailers optimise what consumers see on their websites based on past digital behaviour, even making assumptions about items based on your location, web browser, ISP and so on. Amazon is a perfect example.

In-game behaviour as a confidence barometer is viable, particularly as many role playing games incorporate their own virtual economies. However, the greatest value for economists will surely lie in capturing data from more ubiquitous services, such as social media platforms, offering a more broadly representative consumer cross-section.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!

The Cambridge Analytica revelations have put the issue of data privacy front and centre in the minds of consumers, policy-makers and businesses. Facebook has taken up much of the media’s attention but with other recent and notable data breaches involving many millions of customer credentials, companies are being scrutinised for their data-handling practices like never before. Below Finance Monthly gains expert insight from Nick Caley, VP of Financial Services and Regulatory at ForgeRock, who delves deep into the implications of the data scandal on open banking.

In this era of heightened privacy awareness, it’s clear that there will be implications for businesses across all sectors.

This all raises significant questions for the financial sector. At a time when the banking industry is seeking to open up and encourage data sharing as part of the Open Banking initiative how should banks react to growing concerns from consumers about the risks and realities of online data sharing?

Firstly, UK banks need to prepare for their data management capabilities to be put under extra scrutiny. Banks are already well underway with their preparations for the EU General Data Protection Regulation, which comes into effect in May, and this provides them a solid foundation to work from.

However, the flurry of headlines around data protection and privacy will certainly make consumers more nervous about how and where their data is being used and, as a result, banks must be extra vigilant in order to maintain and grow customers’ trust.

For those already familiar with these issues, the reaction to the Cambridge Analytica story will not have come as a surprise. In a survey commissioned by ForgeRock before the Facebook revelations, only a third (36%) of UK consumers said they would be happy to share data in order to get a more personalised service. Yet over half (53%) said they would not be comfortable for their personal information to be shared with a third party under any circumstances at all. At the same time,

57% of UK consumers said they were worried about how much personal data they have shared online and 63% admitted that they know little or nothing about their rights regarding their own data.

Although this presents a challenge, incumbent banks do hold a considerable advantage over fintech companies and challenger banks when it comes to asking customers to share data: they are already trusted entities with a long track record of safely storing and managing customer data. As such, the demands of securing API access to high value customer data has been the focus of most Bank’s security teams for years. Investment in security expertise, well defined security operations and the latest technologies being tested ‘under fire’ and ‘at scale’ on a continuous basis lead to much greater levels of assurance. Standards such as OAuth 2, Open ID Connect and User Managed Access, which authenticate and authorize only trusted third parties, reinforce this access control model.

Our research shows that consumers do tend to trust banks and financial services companies to handle their personal data responsibly, especially when compared to more digitally native companies. ForgeRock’s survey found that banks and credit card companies were amongst the most trusted holders of personal data, with over 80% of UK consumers saying they trusted banks and credit card companies to store and use their data responsibly. In comparison, just 63% said they would trust social networks with the same data. This is very positive news for the UK banking sector particularly at a time when Open Banking is set to unleash a new wave of competition from digital-first competitors.

Why are banks considered trustworthy? Our research revealed a clear correlation between how in control of their data consumers feel, and how much they trust companies. Banks and credit card companies were ranked among the organisations that gave users most control over their data. This suggests that, particularly at a time when attention is being paid to data policies and privacy controls, banks must continue to invest in systems and processes that put control over data firmly in the hands of users.

The management of customer consent must be central to this strategy as it will only be possible to maintain and build trust if customers know they can turn data sharing on and off at their convenience. Putting consumers more in control of their data through consent and giving users transparency and control over how and under what circumstances their information can be used will allow banks to not only ensure compliance with Open Banking and GDPR, but also establish a basis on which they can build trusted relationships with their customers. They will then be well-placed to offer additional, more personalised services to their existing customers, allowing them to add valuable real time, context-based insights and offers for users, that in turn will create new revenue opportunities.

The Cambridge Analytica scandal combined with the regulatory changes that GDPR and Open Banking will bring appears to mark a turning point in how businesses approach issues around data sharing. The good news for banks is that they are already starting from a strong position as trusted holder of personal data. They now have a real opportunity to build on this and become true leaders in the next era of digital finance - by giving customers greater visibility, choice and control over their own data.