The Lords Select Committee recently issued a report: “AI in the UK: ready, willing and able?”. It outlines the burgeoning AI industry including the public understanding, engagement and design of AI and how the UK can become best placed to build and develop safe, secure and successful AI businesses.

Louis Halpern, Chairman of Active OMG, the British company behind the natural language conversational self-learning AI, Ami, spoke to Finance Monthly below.

AI will penetrate every sector of the economy and has tremendous potential to improve people's lives. I am pleased the report aims to set out a positive framework for the UK AI industry. However, the proposal is not enough to make the UK a leading destination to build and develop AI businesses. We embrace technology when it is safe, normal, and when it makes our lives better. If AI policy is directed at these elements we have the opportunity to make the UK a world leader.

For us at Active OMG safe means personal privacy. Consumers need to know their data is safe. We have to avoid the AI industry being tainted with Facebook Cambridge Analytica type scandals.

We use personal data so our clients’ customers have a better experience. When we apply the machine learning part of what we do the data is anonymised. We do not know if they are Mr or Mrs Jones, Chen or Blackwell. We are not concerned with the details of individuals. There is complete separation of personal and anonymised data.

Overcoming fear needs education, not reaction to “scandal’. The government should be educating individuals on how their data is going to be used and kept safe by the current legislation. We suggest a government information campaign, like the drink driving or Aids campaigns of the past. By explaining the data issue to people it will proactively help normalise AI.

The report talks about investing in Phd programs and cultivating AI companies directly from academic research. Yes, but we need to start programs in schools now to teach children how to use AI as a tool to thrive in a world where AI is normal. In the Pan Canada AI strategy they argued that AI should be taught alongside degrees, e.g. Sociology with AI. To become a leading AI nation, Britain must adopt a similar stance and ensure AI is intrinsic and everywhere.

Economies thrive on entrepreneurship. Entrepreneurs will develop the AI that will change our lives, like the iPhone and the personal computer. These devices cut across every industry and benefit every consumer. Government needs to follow the same model. The report talks about specific Government departments and initiatives; these will stifle, not accelerate. Every Government department needs to set an example by making policy that puts AI at the heart of what they do. No western country has been this brave.

When electricity became available it’s light quickly illuminated everything. To be a world leader, the UK needs to ensure AI’s light shines in every corner.

The controversy surrounding Facebook and privacy issues has made news headlines. However, data brokerage and the miss-use of information is nothing new.

The subtle manipulation of the way in which users respond to certain information stimuli is currently a hot topic of conversation. This after the recent Facebook/Cambridge Analytica scandal literally broke the internet in a way that no amount of funny cat video footage has ever managed to do. Whilst it certainly is no surprise that Facebook users find this kind of intrusion on privacy and thought manipulation to be exceptionally disturbing, it is interesting to note that many people consider this to be news, when in fact, it has been going on for a very, very long time. The only difference being that it was called by a different name.

The truth is, data, or information brokers have been around and doing business for almost as long as what the internet is old. It’s a multi-billion dollar industry and its not bound to come crashing down anytime soon. In many ways, the need for this type of intellectual trade is fuelled by everything from over-supply to economic recessions.

Companies have become increasingly more desperate to get a grip on effective marketing in order to sell their products to the best possible target market. Making the most profit from the least amount of effort and capital input has become the driving force behind every conceivable marketing strategy under the sun.

Information Is Money

Data brokers collect everything from census information, motor vehicle and driving records, court reports and voter registration lists, to medical records and internet browsing histories. The idea is to gather as much information about every conceivable human profile as possible.

This information is then categorised and grouped into typical market profiles, providing an in-depth analysis on everything from religious affiliation, political affiliation, household income and occupation to investment habits and product preferences.

It doesn’t require a technological genius to see why this information is worth thousands of dollars.

No Control

Individuals are usually not able to determine exactly what is known about them by data brokers. Most data brokers hold on to the information that they have obtained for an indefinite period of time. Loosely translated: the information may very well never go away. Part of the efficacy of the gleaning process is that historical information can be compared with the latest information in order to better determine customer trends as well as the rate at which certain dynamics evolve.

A very scary thought indeed, especially considering the fact that entities like social media giant Facebook still consider allowing companies like Cambridge Analytica to continue trolling its pages from an insider’s perspective, knowing full well that this is the case.

More Than Marketing

Moving away from the manipulative marketing point of view, information in general can be a very sensitive issue. The truth is, somewhere along the line, many of us have dabbled outside the borders of a marriage or relationship or have even discussed sensitive information relating to criminal behaviour and activities with contacts via instant messaging apps.

It’s safe to say that most of us would pay considerable amounts of cash in order to protect information of this nature, especially since the leaking of this information to interested parties can have dire effects on the very quality of our lives.

When considered in this light, blackmailing activities become a real and imminent danger, no longer something found only in crime and drama series on television. There’s also the risk of users information being used in scams, and con-artists are well versed in identity theft and assuming other peoples data as their own.

Its Free For A Reason

People have long been aware about the many dangers of over-sharing information on social media. Many people have fallen prey to identity theft and have lost everything but the clothes on their backs due to this. Imagine now the dire nature of the situation now that the problem is no longer criminals trolling social media pages that have not been sufficiently hidden from the public eye, but instead, are being handed sensitive information on a silver platter, for a minimal fee.

The question begs: is Facebook more than just a social media platform? Or has it been headed towards being a modern-day surveillance tool all along?

Perhaps there is a more sinister reason behind the fact that its free, and always will be, than what meets the eye.

Sources:

https://en.wikipedia.org/wiki/Information_broker

https://hbr.org/2018/04/facebook-is-changing-how-marketers-can-target-ads-what-does-that-mean-for-data-brokers

https://www.wsj.com/articles/facebook-says-its-ending-use-of-information-from-outside-data-brokers-for-ad-targeting-1522278352

https://thenextweb.com/facebook/2018/03/29/facebook-to-block-data-brokers-from-its-ad-network/

https://www.forbes.com/sites/kalevleetaru/2018/04/05/the-data-brokers-so-powerful-even-facebook-bought-their-data-but-they-got-me-wildly-wrong/#6740e0193107

Banks are increasingly using your data intelligently and effectively. Let’s find out how far they can go. Julius Abensur, Head of Industry and Financial Services at Relay42, explains.

Technology has advanced at a rapid pace in banking and our demands have changed, making our data – and banks using it properly to benefit us – more important than ever.

Through various utilities, facilities, transactions and experiences, banks have more opportunities to break down traditional barriers to offer us a more seamless experience across channels and outcomes, rather than products and functions. By using our data effectively, they can deliver us a unique journey, based around our personal interests and most frequently-used channels. The benefits to banks are clear; customers who are fully engaged bring an average of 37% more annual revenue to their primary bank than customers who are disengaged.

To achieve the levels of engagement and loyalty we now expect, banks need to ensure they are using our data wisely and responsibly in order to nurture our trust. If banks aren’t using our data to provide us with a better and more valuable user experience, it won’t be long before we stop sharing it altogether. This will only be made easier in light of regulations such as GDPR and PSD2, which are placing stricter rules on how banks use our information.

So how can banks use our data more effectively, while maintaining our trust?

Merging the real and digital worlds

Impending regulation changes are slowly pushing banks and disruptive fintech start-ups to collaborate, rather than compete, and this is opening up a whole new world of opportunities for us as customers. Banks possess a stronghold of customer data ripe for delivering personalised and useful experiences, and by partnering with fintechs who specialise in innovative, agile technologies, they can deliver true value.

For example, let’s say that a customer (we’ll call him Bill) has just paid for dinner at a restaurant with his friends, and they all want to split the cost and pay Bill back. By partnering with the right fintech and sharing customer data across platforms with a smart data platform, the bank can make this repayment process easier by enabling Bill to distribute payment requests through an online chat service via a single link. By using this link, Bill’s friends can then repay him instantly regardless of who they bank with.

By using data management technology to responsibly share data across different platforms, banks can launch intelligent customer experiences and solutions relatively quickly across both the real and the digital world. This offers clear advantages for customers, who can now use more intelligent services to increase convenience. And this is just the beginning.

Connecting with other industries

When it comes to delivering truly beneficial experiences, banks need to be looking beyond the industry they serve. We all have a vast range of interests that can be capitalised upon through the sophisticated use of data, and this can be achieved by connecting with other industries.

Take the travel industry, for instance. As seamless partnerships between payment providers, booking interfaces and airlines become ubiquitous, travel and financial services leaders need to take a sideways glance to carefully choose trusted partners, value propositions and technology.

To translate this into a practical example: Let’s revisit Bill. Bill has a Global Travel Plus credit card, which is issued by his bank and connected to a global airline, granting him rewards and discounts when he travels. The bank has also created a service called the Travel Plus app, which offers relevant recommendations related to Bill’s journeys and behaviours, and is orchestrated by the bank’s customer journey technology.

Through intelligent cross-pollination of insights and data, the bank can deliver a suite of offers based on Bill’s loyalty and customer value, including frequent flyer points and hotel discounts. Then, through contextual retargeting, Bill’s bank can send financially-related recommendations for his next trip to Barcelona, from the best insurance rates to lock-in forward Euro rates. This kind of data-driven personalisation is what we now crave, and simply would not be possible without banks connecting with other platforms and industries.

Stitching data intelligently

Data is undoubtedly the key to delivering the innovative, highly personalised banking experience that we are all seeking. For banks, the benefits are clear - customer retention is around 14% higher for companies that effectively apply big data and analytics to deal with velocity.

However, if banks are to achieve this then they need to make sure they use our data intelligently. As we have explored, using data management technology can go a long way to effectively stick data together to create a single customer view — the foundations for orchestrating right customer experiences — for the right people. Additionally, partnering with companies both inside and outside of the financial sector can open up new opportunities for next-generation loyalty and engagement.

Data released in Creditsafe’s Prompt Payment Formula 1 Standings, has revealed that, on average, Formula 1 teams pay 16% of their invoices late by an average of 10.5 DBT (days beyond the agreed payment terms), despite a combined turnover of over £3.6 billion.

Red Bull was found to be the worst offender, paying almost a third (31%) of its invoices to suppliers late by as many as 16 days beyond agreed terms. This is despite the team’s success, coming third in last season’s constructors’ standings, the exciting team rivalry between Daniel Ricciardo and Max Verstappen, and a turnover of close to £200 million.

In comparison, despite a disastrous 2017 season ending in ninth place and multiple engine failures affecting the team’s performance, McLaren was found to be the most prompt payer of the group, with 93% of its invoices paid on time. Of the 7% paid late, McLaren had a DBT of nine days.

Similarly, Torro Rosso, which came seventh in last season’s standings, was the second most prompt payer of the group, paying less than 10% (9.02%) of invoices late with a particularly low DBT of five days. While Ferrari joined Torro Rosso with the joint lowest DBT, 22% of its invoices were paid late, dragging it down the standings.

Led by Drivers’ Champion Lewis Hamilton, Mercedes topped the F1 Standings in 2017, but in terms of late payments, the team sat firmly in the middle of the table with 11% of invoices paid late and a slightly below average DBT of 11.

Rachel Mainwaring, COO, Creditsafe Group said: “In recent years we have seen the emergence of a late payment culture in the UK. Even in Formula 1, with the huge amount of money that is available to teams, late payment is rife and noticeably, none of the teams pay their invoices on time.

“Late payments can be a huge problem for businesses, whether dealing with the huge sums of money in F1, or smaller amounts of daily business expenses. It can leave companies with a potentially dangerous financial shortfall and all businesses, particularly those at the top of the podium should be fulfilling their obligations to suppliers.

“However, it is interesting to see the lower performing teams, such as McLaren and Torro Rosso, beating out competitors when it comes to prompt payment. There’s no doubt that if McLaren’s reliability last season had been as good as its prompt payment rate (97%), Fernando Alonso would have been a happier driver!”

Creditsafe’s Prompt Payment Formula 1 Standings

Data not available for: Force India, Haas and Sauber.

(Source: Creditsafe Group)

Protagonist of this week's news, Alexander Nix is the executive at the centre of the Cambridge Analytica and Facebook controversy surrounding political campaign influence, sly data based marketing and supposed behind-our-backs data harvesting through everyone's favourite social media platform.

In this video CEO Today delves in to the life of Alexander Nix, a very private individual, listing some hobbies, interests and much of what he's been up to to get where he is today.

Sharing confidential information is a data protection issue with more and more red tape every day. With more and more apps differentiating encryption methods, this becomes even harder to manage for authorities. Below Finance Monthly hears about the potential for banking fraud via apps such as WhatsApp from Neil Swift, Partner, and Nicholas Querée, Associate, at Peters & Peters LLP.

As ever greater quantities of sensitive personal data are shared electronically, software developers have been quick to capitalise on concerns about how susceptible confidential information may be to interference by hackers, internet services providers, and in some cases, governmental agencies. The result has been an explosion in messaging apps with sophisticated end-to end encryption functionality. Although ostensibly designed for day to day personal interactions, commonplace services such as WhatsApp and Apple’s iMessage use end-to-end encryption to transmit data, and more specialised apps offer their users even greater protection. Signal, for example, allows for its already highly encrypted messages to self-destruct from the user’s phone after they have been read.

The widespread availability of sophisticated and largely impregnable messaging services has led to a raft of novel challenges for law enforcement. The UK government, in particular, has been outspoken in its criticism of the way in which end-to-end encryption offers “safe spaces” for the dissemination of terrorist ideology.

Financial regulators are becoming increasingly conscious of the opportunity that these messaging services present to those minded to circumvent applicable rules, and avoid compliance oversight. 2017 saw Christopher Niehaus, a former managing director at Jeffries, fined £37,198 by the Financial Conduct Authority for sharing confidential client information with friends and colleagues via WhatsApp. Whilst the FCA accepted that none of the recipients needed or used the information, and the disclosure was simply boasting on Neihaus’ part, it was only his cooperation with the regulator that saved him from an even more substantial fine.

That same year saw Daniel Rivas, an IT worker for Bank of America, investigated by the US Securities and Exchange Commission and plead guilty to disclosing price sensitive non-public information to friends and relatives who used that information. One of the means of communication was to use Signal’s self-destructing messaging services. Rivas’ prosecution saw parallels with the 2016 conviction of Australian banker Oliver Curtis, an equities dealer, for using non-public information that he received from an insider via encrypted Blackberry messages.

These examples are likely to prove only the tip of an iceberg; given that encrypted exchanges are by definition clandestine, understanding the true scale of the issue, outside resorting simply to anecdote, is itself an unenviable task for regulators and compliance departments. Whilst those responsible for economic wrongdoing have often been at pains to cover their tracks – perhaps by using ‘pay as you go’ mobile phones, and internet drop boxes to communicate – access to untraceable and secure communication is now ubiquitous. It is difficult to imagine that future regulatory agencies will have access to the material of the same volume and colour that was obtained as part of the worldwide investigations into alleged LIBOR and FX manipulation.

How then can regulators respond? And how are firms to discharge their obligations both to record staff business communications, and monitor those communications for signs of possible misconduct? Many firms already ban the use of mobile phones on the trading floor, but such edicts – even where rigorously enforced – will only go so far. Neither Mr Rivas, nor Mr Neihaus, would have been caught by such a prohibition.

There may be technological solutions to technological problems. Analysing what unencrypted messaging data exists to see which traders are notably absent from regulated systems, or looking for perhaps tell-tale references to other means of communication (“check your mobile”), may present both investigators and firms with vital intelligence. Existing analysis of suspicious trading data may assist in identifying prospective leads, although prosecutors may need to become more comfortable in building inferential cases.

Fundamentally, however, such responses are likely to be both reactive, and piecemeal. Unless the ongoing wider debate as to the social utility of freely available end-to-end encryption prompts some fundamental rethink, the need to effectively regulate those who participate in financial markets – and thus the regulation of those markets themselves – may prove increasingly challenging.

The international community’s anti-money laundering watchdog is on UK soil putting the country through its paces.

Inspections of Britain’s defences against terrorists and money launderers by the Financial Action Task Force (FATF) are relatively rare but hugely important. The last evaluation was in June 2007 and negative findings can severely impact the country’s reputation in the war on terrorist financing and the laundering of criminal proceeds.

During the two-week visit, the UK has to prove to officials from some of the other 36 participating FATF countries that it has a framework in place to protect the financial system from abuse. The top secret inspectors have an “elaborate assessment methodology” but those involved are not allowed to talk publicly about the visit. The results of the inspection will be presented at an FATF Plenary session in October.

Julian Dixon, CEO of specialist Anti-Money Laundering (AML) and Big Data firm Fortytwo Data, comments: “AML supervisors are going to be on high alert this week because it’s not just public sector bodies who are inspected, but private organisations too.

“It’s also extremely timely, given the recent poisoning of ex-Russian spy Sergei Skripal, his daughter Yuliain and a policeman who came to their aid.

Tellhco

“The UK has been accused of being a soft touch for gangsters, politically exposed persons (PEPs) and criminal gangs, a theme that recently entered the popular imagination because of the TV series McMafia, written by journalist Misha Glenny.

“It’s unclear if this still holds true in the UK today, and that’s what the FATF are here to find out.

“It is up to the country being inspected to prove they have the right laws, systems and enforcement in place and the potential for reputational damage is high.

“After a recent inspection of Pakistan, FATF gave the country three months to prove it is doing enough to stay off an international watch list of those failing to curb the financing of terror groups.”

(Source: Fortytwo Data)

Attempts have been underway in Parliament recently to help tenants improve their creditworthiness. This includes new legislation to make lenders give rental payments the same weight as mortgage premiums, including most recently Big Issue founder Lord Bird’s draft Creditworthiness Assessment Bill.

Open Banking - ahead of any future legislation - offers tenants the potential to achieve improved creditworthiness at no extra cost.

The launch of Open Banking in the UK last month, backed by nine key UK banks, is now enabling renters who want to get a mortgage to improve their creditworthiness with an ease that would have been unimaginable only a year ago, says CreditLadder.co.uk.

Instead of onerous paperwork or agent/landlord permissions - as has been the case in the past - tenants are now able to report their rental payments via mobile/online platforms simply, quickly and for free.

Tenants tell their bank they want the platform to ‘read’ their rental payments and pass this information on to a credit reference agency, such as Experian.

“When we launched our Open Banking service last month we were acutely aware that the take up maybe held back given the newness of the technology,” says CreditLadder CEO Sheraz Dar.

“But so far Open Banking is proving popular with our customers. The number of people signing up to our service has doubled and last week 80% of those applying to join our service now do so via Open Banking.

“Many of the UK’s 11 million private renters are finding it harder and harder to get on the property ladder, so it’s no surprise that a service like ours which gives them a leg-up is proving popular.

Case study

Civil Servant Ian Cuthbertson, 33, from Norwich is the first person in the UK to sign up and register his rental payments with a credit agency using CreditLadder’s Open Banking service, which is provided through an FCA-regulated partner.

Ian pays £700-a-month for a two-bedroom barn conversion he shares with his partner on the outskirts of Norwich, payments that are now being added to his credit history via CreditLadder.

“My partner and I are planning to buy a home in a few years’ time so I’ve been realising more and more that I need to improve my chances of getting a mortgage,” he says.

“So I’ve been looking at how I manage my credit cards and trying to make little tweaks here and there to my finances so that I present myself as trustworthy to lenders.

“I was thinking to myself that I pay the rent on time every month and wondered if that could count towards my credit score. And then I saw an article on MoneySavingExpert.com about CreditLadder so I decided to sign up.

(Source: CreditLadder)

CFOs no longer rate Excel as most important skill, turning to new technologies, automation.

Adaptive Insights recently released its global CFO Indicator report, exploring finance automation progress and expectations of CFOs. The survey reveals that CFOs are embracing automation across various areas of finance, driven in large part by a requirement to be more strategic and provide better analyses. Financial reporting and period-end variance reporting top the list of automated processes today, according to the survey.

Automation initiatives are also impacting required skills for finance professionals. Whereas two years ago, 78 percent of CFOs considered proficiency in Excel as the most important skill for their FP&A teams, only 5 percent feel the same today. Looking ahead, only 7 percent of CFOs list better Excel skills as important for new hires. Instead, CFOs rated the ability to be adaptable to new technologies as the top skill for new hires, signaling a shift in desired skillsets for finance professionals in the future.

“We’ve seen CFOs increasingly take on the role of chief data officers in their organisations,” said Jim Johnson, CFO at Adaptive Insights. “At the same time, CFOs recognise the limitations in the way they manage and analyse data today and know it will only get worse with the proliferation of more systems with siloed data. That’s why Excel skills aren’t ranked as a top skill any longer. Proficiency in Excel is a given today. The new skills finance leaders need are those that can use technologies to access, analyse, and amplify data for insights to better manage the business.”

Limitations with manual processes like spreadsheets were recently documented in a Wall Street Journal article, Stop Using Excel, Finance Chiefs Tell Staff. The article noted that ubiquitous spreadsheet software that revolutionised accounting in the 1980s hasn’t kept up with the demands of contemporary corporate finance units, citing a lack of automation.

(Source: Adaptive Insights)

In force since January, the Second Payment Services Directive (PSD2), aka Open banking, is a regulation that forces the largest of our banks to open up access to their data; a necessity that could change the way many people and businesses bank. Below Jerry Matthews, Commercial Manager & Head of Bridging at KIS Finance, explains everything you need to know, touching on the risks and opportunities therein, and answering the big question: is it safe?

The Competition and Markets Authority (CMA) has started a revolution which encourages consumers to share their financial data to third-party companies, after years of being told to do the exact opposite.

The Open Banking Implementation Entity (OBIE) was created in response to the UK Government’s request for a fairer, more transparent banking and financial services. Transparent is definitely what they got.

What is Open Banking?

Open Banking is a new system which means customers can allow third party providers, other than their bank, to access their financial information.

These providers can be anything from insurance and mortgage companies to shopping sites, mobile phones and broadband providers.

The main idea is to give consumers more control of their financial information and have access to a wider range of products and services. Customers can allow the company to analyse their spending habits and offer them better deals, tailored to them.

There has been a new change in UK law which means that banks must allow FCA regulated businesses to access a customer’s personal and financial information, but the customer must give their permission first. Customers can give and withdraw permission at any time they choose.

The bank can only prevent the business access, on the customer’s behalf, if they suspect that the company is fraudulent, or not regulated by the FCA.

When will Open Banking Start?

Four of the nine largest UK account providers, Lloyds Banking Group, Nationwide, Allied Irish Bank and Danske are ready to start Opening Banking now.

Six weeks maximum has been given to RBS, HSBC, Barclays and Bank of Ireland by the Competition and Markets Authority (CMA). Santander’s Cater Allen has been given another year to prepare.

In order to integrate the new system smoothly, for the first 6 weeks the banks and companies offering Opening Banking services have been asked to only make it available to a small group of selected customers and to limit the amount of instructions processed.

How Will These Third-Party Providers Gain Access to our Information?

There appears to be two methods as to how your information can be accessed;

API’s: New communication technologies have been developed, Application Programming Interfaces, which are designed with customer security at the forefront. API’s are regularly used by various online tools and mobile apps to provide joined facilities, allowing software from numerous companies to, essentially, ‘talk’ to each other. This way, your information will be securely passed between companies with this technology in place.

Log-In Details: Another method may be that third-party providers will request that you share your online bank log-in details directly with the company. Yes, you read that right. A separate piece of legislation, the Payment Services Directive, will allow some companies to do this.

The company can then log in to your online banking account, like they were you, to access your financial data, such as; transaction history, direct debits and standing orders. This means that the company is likely to be able to access a much larger range of information, so really, the one way to withdraw your permission to this company, for certain, is to change your account password and other security details.

Do you Actually Have to Share your Information?

I am glad to say no, this isn’t mandatory.

The new rules state that banks must allow third-parties access to your information, but you have to explicitly give that company your permission – they can’t just look at your account willy-nilly. There will be an option to either switch on or switch off Open Banking on your account.

Once you have given that company permission, it’s not set in stone either. You can withdraw your permission at any time.

So, there is some security in knowing that this isn’t some sort of new binding contract.

So, what are the Potential Risks with Open Banking?

Current surveys suggest that a majority of consumers are reluctant to hand out personal and financial data. But, with the new system, this behaviour is expected to steadily change over time.

However, this does open up massive risks surrounding data privacy and security.

There are worries concerning the fact that by creating more chains of data access, it will be much harder to prove who was at fault if the customer’s information is stolen, making it harder than it already is to be compensated in these situations.

Not to mention how people handing out personal and financial data is like a gold mine to fraudsters.

To name just one potential scam, fraudsters could easily mimic third-party providers, by copying their choice of contact, to trick people into handing over their data which leaves consumers at risk of losing their money, and potentially, their identity being stolen.

Also, giving a company your bank log-in details with the only secure way of knowing that you have cancelled your permission is by changing your password? This is the main thing that consumers are told to never do, to never hand out your bank log-in details. This leaves your details at huge risk, and something just doesn’t make sense to me.

It is absolutely vital that the industry regulators ensure that consumers are wholly protected from any data breaches if they are to use these services with confidence and trust.

The Positives…

Although I think there is a lot at stake for people who decide to go forwards with Open Banking, I do think, for some people, this could be a way to gain much better control over their finances.

With Open Banking, it could be made easier to assess what type of bank account is best for you by analysing how you actually use it. For example, a lot of people can be unsure of how much their overdraft is costing them, but if a company can see your account, they may be able to provide you with a much clearer perspective and give you cheaper alternatives.

Or, for people who want to save money but are struggling to do so, sharing their data with budgeting companies/apps could help them see where and how they can save money.

Budgeting time is here, and you’re likely going to make some safe assumptions on the budgeting based on previous years, experience and forecast. But is are these backed by actual real data? Below John Orlando, CFO at Centage Corporation, talks Finance Monthly through data integration in budgeting, looking at specific trends we can expect in 2018.

At the present moment, the economic future looks good. Unemployment is dropping, inflation is manageable and both the House and Senate passed tax bills that will slash the corporate income tax rate, giving them added cash to grow. Over the past few months I’ve talked to many CFOs who say their companies are eager to expand and they’re actively building growth assumptions into their budgets.

However, even in the best of times, there are risks to growth since at any time some world event can affect economic conditions. Performance monitoring and forecasting are part and parcel to business success in a growth economy, and to the end, 2018 will see some positive data-driven trends emerge that will make it easy for executives to keep a watch over their businesses.

The data goldmine: CFOs and financial teams will look to the robust data-generated HR, CRM and other platforms to feed their budget models

Many mid-size companies have implemented third-party HR and CRM systems, platforms that generate robust datasets. For instance, PEO providers maintain detailed records on every type of employee or contractor who works with the company, as well as their benefit requirements. Salesforce.com tracks virtually any type of sales and metric important to the company. This data, much of it market-tested, offers a level of detail it would take an army to create. By entering or importing it into a budget model, finance teams can create highly detailed and robust budgets in a remarkably short time frame.

Organizations will be more assertive with their assumptions

With robust and accurate data from internal systems populating the budget, executive teams will have access to variance reporting that is far more accurate than ever before. Moreover, this level of specificity will prompt CFOs to be more assertive in their assumptions, as well as provide the confidence management teams need to execute on their growth plans.

Greater accountability in business decisions

Marketing pioneer John Wanamaker famously said, “Half the money I spend on advertising is wasted; the trouble is I don't know which half.” He wouldn’t say that if he were alive in 2018. The combination of robust data and better performance tracking will make it easier to assess the outcomes of virtually all business decisions (including advertising campaigns). The result will be greater accountability in business initiatives as CEOs obtain the tools to compare current results to the budget, forecasts and what occurred in the past.

With greater accountability comes greater learnings and more success

Armed with a better sense of what worked and what didn’t, business leaders will have keen insight into which activities, markets or initiatives are worth repeating. I can envision companies establishing new metrics with a greater degree of specificity than was possible in the past, supported by data-driven budgets and the ability to track budget versus the actual on a constant basis.

Forecasting will be the next big innovation in budgeting

Looking at the budget software market itself, I believe the next big innovation will be easy forecasting, driven by customer demand. CEOs in particular want streamlined and simple forecasting whether it be monthly, quarterly or half year, and will pressure their providers to deliver it.

I, of course, support this demand. As anyone responsible for a budget knows, within a few months of a budget’s completion, there’s a good chance some or all of it will be out of date. Benchmarks must be reset regularly as market or economic conditions change. If a particular product suddenly begins selling better than another, the company will no doubt want to rejigger resources in order to exploit the opportunity (or retrench in the face of disappointing sales). This is particularly true when companies are embarking on ambitious growth plans.

Growth opportunities and market conditions will move CFOs away from spreadsheets to budget models

Ten years ago, 90% of mid-size companies built their budgets in spreadsheets; today from what I see, it stands at 80%. As more and more executive teams realize the inherent power of a budget, I suspect that number will go down quickly, replaced by budgeting software that allows them to monitor performance much more frequently. But don’t expect a public mudslinging between budget-software providers. Growth in our market will come from first-time customers, rather than

Anomali recently released a new report that identifies major security trends threatening the FTSE 100. The volume of credential exposures has dramatically increased to 16,583 from April to July 2017, compared to 5,275 last year’s analysis. 77% of the FTSE 100 were exposed, with an average of 218 usernames and password stolen, published or sold per company. In most cases the loss of credentials occurred on third party, non-work websites where employees reuse corporate credentials.

In May 2017, more than 560 million login credentials were found on an anonymous online database, including roughly 243.6 million unique email addresses and passwords. The report shows that a significant number of credentials linked to FTSE 100 organisations were still left compromised over the three months following the discovery. This failure to remediate and secure employee accounts, means that critical business content and personal consumer information held by the UK’s biggest businesses has been left open to cyber-attacks.

The report, The FTSE 100: Targeted Brand Attacks and Mass Credential Exposures, executed by Anomali Labs also reveals that:

• Five of the FTSE 100 companies had more than 1,000 credential exposures, access to these enable cyber criminals to harvest and misuse additional credentials and company data
• The banking sector accounted for a quarter (23%) of the total exposed credentials

“Our research has uncovered a staggering increase in compromised credentials linked to the FTSE 100 companies. Security issues are exacerbated by employees using their work credentials for less secure non-work purposes. Employees should be reminded of the dangers of logging into non-corporate websites with work email addresses and passwords. While companies should invest in cyber security tools that monitor and collect IDs and passwords on the Dark Web, so that staff and customers can be notified immediately and instructed to reset accounts,” said Colby DeRodeff, Chief Strategy Officer and Co-Founder at Anomali.

The Anomali research team also analysed suspicious domain registrations, finding 82% of the FTSE 100 to have at least one catalogued against them, and 13% more than ten. In a change to last year the majority were registered in the United States (38%), followed by China (23%). With the majority of cyber attackers using gmail.com and qq.com (a free Chinese email service) to register these domains to mask themselves. With a deceptive domain malicious actors have the potential to orchestrate phishing schemes, install malware, redirect traffic to malicious sites, or display inappropriate messaging.

For the second year, the vertical hit hardest by malicious domain registrations was banking with 83, which accounted for 23%. This is double that of any other industry. To avoid a breach, organisations have to be more accountable and adopt a stronger cyber security posture, for themselves and to protect the partners and customers they directly impact.

“Monitoring domain registrations is a critical practice for businesses to understand how they might be targeted and by whom. A threat intelligence platform can aid companies with identifying what other domains the registrant might have created and all the IPs associated with each domain. This information can then be routed to network security gateways to keep inbound and outbound communication to these domains from occurring. No one is 100% secure against actors even with the intent and right level of capabilities. It is essential to invest in the right tools to help secure every asset, as well as collaborate with and support peers in order to reduce their risks to a similar attack,” continued Mr. DeRodeff.

(Source: Anomali)