A greater proportion of IT decision-makers in the financial/banking sector see key financial services regulations as a driver of innovation (34%) than regard them as a barrier to it (24%).

More than a third (34%) of IT decision-makers across the UK financial sector regard key financial services regulations such as PSD2 and FRTB as a driver of innovation within financial services organisations, while fewer than a quarter (24%) see them as a barrier to it. That is according to survey of IT decision-makers across a range of financial and banking sector organisations, including retail and investment banking, asset management, hedge funds and clearing houses.

The survey, commissioned by software vendor, InterSystems, also found that just 20% of these decision-makers believe their organisation is very well prepared for the roll-out of the new regulations.

Graeme Dillane, financial services manager, InterSystems said: “Historically, firms have responded in a piecemeal fashion by putting in place new siloed applications to meet the needs of each new ruling. The latest round of regulations raises the stakes by effectively demanding businesses break down their data silos, better integrate their data enterprise-wide, and analyse it in real time in the context of new event and transactional data. All of that makes it vital that organisations innovate now.”

To lay the foundations for innovation, firms need automated systems. Currently, however, automation levels are low. Just 21% of the sample said they had fully automated the processes they had put in place to meet regulatory and compliance demands. 33% said they had not automated them at all.

More positively, the survey indicates that IT decision-makers across this sector are aware of what needs to be done to change this. Nearly two thirds (66%) said that they expect innovative technology will have an important role to play in ensuring regulatory compliance for financial services businesses over the next five years.

“It’s clear that financial services businesses increasingly understand just how crucial it is to actively innovate in order to address the challenges presented by the latest industry regulations,” says Dillane, “and the good news is that we are starting to see evidence on the ground that they are seeking out new solutions to help ensure their compliance.”

(Source: InterSystems)

Improving access to financial services is on the agenda of central banks and development-focused organisations around the world. Yet, in many cases, efforts to reach unbanked individuals – around two billion – collide with outdated regulations and policies. Antonio Separovic, Founder and CEO at Oradian, believes regulators must embrace innovation to solve financial inclusion challenges.

In light of new technology, the financial services sector is undergoing rapid transformation and it’s time for regulations and policies to adapt as well. Regulators must embrace innovation and enable the sector to correct flaws in our current financial system that leave certain communities disconnected from the economy.

The case for digital financial services

Financial institutions are looking to digital financial services (DFS) as a way to serve individuals, many of whom live on less than $2 per day, in rural hard-to-reach communities. With DFS, essential banking services, most notably loans for small business, secure ways to save, convenient money transfers and bill pay become more accessible and more affordable.

Financial institutions that provide DFS also benefit. Unlike with cash and pen-and-paper accounting processes, financial institutions and their decision-makers gain accurate, digitised data that can be used to make data-driven, informed decisions. With digital financial services, leaders of financial institutions can know and control their portfolios.

Macro or micro?

Innovation in banking is occurring much faster than regulations are evolving. Central banks that regulate emerging markets are criticised for their preference to cater to the needs of Tier 1 banks over individuals who are excluded from the financial services industry.

More often than not, traditional banks do not meet the specific the needs of unbanked people, and leave these communities isolated from the global economic system. A study from Elixirr in 2015 revealed swathes of micro, small and medium enterprises (MSME) owners in Uganda held strong levels of distrust conventional banks. The focus group interview revealed that they were wary to use ATMs or online banking platforms, afraid that money would never reach the recipient. MSME owners in these regions can rarely afford introductory fees to open an account with a bank, and are often located only in large cities, far from isolated, rural communities.

Advances in payment technologies and cloud platforms have the potential to render these barriers to entry obsolete. In fact, cloud-based banking is now enabling an entirely new way of banking in many frontier markets. Because of cloud-based solutions for financial institutions like cooperatives, rural bank and microfinance institutions, the potential to reach rural areas with limited network bandwidth and low barriers to entry has never been higher. With new technology, non-bank financial institutions are enabled to become more efficient, grow and serve more individuals in their communities.

And given the lack of trust in commercial banks, out-of-reach pricing and inconvenient locations, non-bank financial institutions are often the most viable option for individuals seeking loans, savings accounts and microinsurance. Commercial banks often require collateral to secure loans, require government issued IDs, require a credit score and have high minimum loan sizes that aren’t suitable for microenterprises. Their requirements can block individuals from accessing their services. Because of the strict requirements from commercial banks, many individuals rely on non-bank financial institutions that cater to sectors that are excluded.

There is a remarkable opportunity for central banks to realign their focus on what microfinance institutions (MFIs) can do for unbanked communities by supporting digitisation through cloud-based technology. Yet regulatory hurdles persist in many instances.

Stringent regulations

Know Your Customer (KYC) requirements are a prime example of where regulations are poorly targeted to the needs of the unserved. While comprehensive KYC regulations have been effective for anti-money laundering campaigns, they present a stark problem on a micro-level: many individuals remain undocumented.

For instance, of 338 million citizens in the Southern African Development Community, 138 million lack authentic identification from national governments. Stringent KYC regulations in Africa can block unserved individuals from financial services by requiring credentials and documents that many don’t have.

What is clear is that central banks need an overhaul of regulations to meet the needs of the excluded. By reassessing regulations that restrict these communities’ access to financial services and encouraging further deployment of cloud-based banking platforms to users, financial institutions will finally be in place to help bank the unbanked and give them a chance of a better life.

A case study to model

In the last two years, regulators in Southeast Asia have pioneered new opportunities to reach unbanked individuals. Take the case of the Philippines, the Asian Development Bank and Cantilan Bank, one of the largest rural banks in the Philippines. Cantilan Bank, as announced in July 2017, will become the first regulated bank in the Philippines to move their core banking to a cloud-based system. To do so, Cantilan Bank collaborated with the Bangko Sentral ng Pilipinas (BSP), the body regulating rural banks, to get the necessary approvals on their innovative move. Cantilan Bank also successfully gained support for the project from the Asian Development Bank – a grant to finance the financial inclusion focused pilot project.

The process included the BSP, in collaboration with Cantilan and Oradian, to operate in a sandbox environment, as to explore and review policies that regulate technology within rural banks in the Philippines. The Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla Jr. said: “The pioneering introduction of cloud banking in the Philippines is a key moment in solving the challenges of financial inclusion. Cloud technology can upgrade the competitiveness of rural banks and enable them to provide affordable, high quality financial services.”

The project aims to make Cantilan Bank the first rural bank in the Philippines to use cloud-based core banking technology in its operations and can set the tone for the future use of the model in other parts of the Philippines and the greater region in the future.

Advice to regulators and financial institutions

Financial institutions that are working in underserved communities know their business needs and which technologies will enable their operations to reach more individuals. Financial institutions know how to boost financial inclusion. For this, regulators should be receptive to innovations that financial institutions are leading.

Regulators are in the unique position to support their efforts to implement new technology – either by refreshing policies to allow new technologies to be implemented or with additional resources like grants for change management and technical assistance. Non-bank financial institutions must push for attention, support and change.

New entrants to the banking market — including challenger banks, non-bank payments institutions, and big tech companies — are amassing up to one-third of new revenue, which is challenging the competitiveness of traditional banks, according to new research from Accenture (NYSE: ACN).

Accenture analysed more than 20,000 banking and payments institutions across seven markets to quantify the level of change and disruption in the global banking industry. The study found that the number of banking and payments institutions decreased by nearly 20% over a 12-year period – from 24,000 in 2005 to less than 19,300 in 2017. However, nearly one in six (17%) of current participants are what Accenture considers new entrants — i.e., they entered the market after 2005. While few of these new players have raised alarm bells among traditional banks, the threat of reduced future revenue growth opportunities is real and growing.

In the UK, where open banking regulation is aimed at increasing competition in financial services, 63% of banking and payments players are new entrants – eclipsing other markets and the global average. However these new entrants have only captured 14% of total banking revenues (at £24bn), with the majority going to non-bank payments institutions. The report suggests incumbent banks will likely start to see a significant impact on revenues as leading challenger banks are surpassing the 1 million customer threshold and 15 fintechs have been granted full banking licenses.

“Ten years after the financial crisis, the banking industry is experiencing a level of competitive intensity and disruption that’s much greater than what’s been seen before,” said Julian Skan, senior managing director for Banking and Capital Markets, Accenture Strategy. “With challenger banks and platform players reducing traditional banks’ competitiveness and the threat of a power shift looming, incumbent players can no longer rest on their laurels. Banks are mobilizing to take advantage of industry changes, leveraging digital technologies and ecosystem business models to cement their relevance with customers and regain revenue growth.”

In Europe (including the UK), 20% of the banking and payments institutions are new entrants and have captured nearly 7% of total banking revenue — and one-third (33%) of all new revenue since 2005 at €54B. In the US, 19% of financial institutions are new entrants and they have captured 3.5% of total banking and payments revenues.

Over the past dozen years, the number of financial institutions in the US has decreased by nearly one-quarter, largely due to the financial crisis and subsequent regulatory hurdles imposed to obtain a banking license. These factors have made the US a difficult market for new entrants and a stable environment for incumbents. More than half of new current accounts opened in the US have been captured by three large banks that are making material investments in digital, while regional banks focus on cost reduction and struggle to grow their balance sheets.

The research appears in two new reports: “Beyond North Star Gazing,” which discusses how industry change is shaping the strategic priorities for banks, and “Star Shifting: Rapid Evolution Required,” which shares what banks can do to take advantage of changes.

The reports found that many incumbent banks continue to dismiss the threat of new entrants, with the incumbents claiming that (1) new entrants are not creating new innovations, but rather dressing up traditional banking products; (2) significant revenue is not moving to new entrants; and (3) new entrants are not generating profits. To the contrary, the reports analyze where revenue is shifting to new entrants and identifies examples of true innovation happening around the world that can no longer be dismissed. Accenture predicts that the shift in revenue to new entrants will continue and will start to have a material impact on incumbent banks’ profits.

“Most banks are struggling to find the right mix of investments in traditional and digital capabilities as they balance meeting the needs of digital customers with maintaining legacy systems that protect customer data,” said Alan McIntyre, head of Accenture’s global Banking practice. “Banks can’t simply digitally enable their business as usual and expect to be successful. So far, the conservative approach to digital investment has hindered banks’ ability to build new sources of growth, which is crucial to escaping the tightening squeeze of competition from digital attackers and deteriorating returns.”

“As the banking industry experiences radical change, driven by regulation, new entrants and demanding consumers, banks will need to reassess their assets, strengths and capabilities to determine if they are taking their business in the right direction,” McIntyre said. “The future belongs to banks that can build new sources of growth, including finding opportunities beyond traditional financial services. They can’t afford to blindly follow the path they originally set out at the beginning of their digital journey. However, as the report clearly shows, there is no single answer and each bank needs to truly understand the market it is operating in before charting a path forward.”

As global business and cross-border transactions have proliferated, there are significant implications for commercial customers who rely on banks and payments providers to provide a flawless service faster than ever. So how do can the financial services sector put value back into the process? Below Abhijit Deb, Head of Banking & Financial Services, UK & Ireland, Cognizant, explains for Finance Monthly.

Consumers now expect easy and immediate payment services, no matter where they are or what they are buying, whatever the payment method. It may be symptomatic of the ‘age of instant gratification,’ but it also demonstrates how people value financial agility. This was highlighted by a recent system failure with the UK’s Faster Payments System that caused mass inconvenience and frustration among consumers. Whether paying a friend back for last night’s dinner or sending emergency funds to family travelling overseas, the offerings of digital banks such as Monzo and Starling are testament to the industry’s efforts to keep up with rapidly evolving consumer expectations. This trend has now also filtered into the business world.

The technological saturation of the financial services industry has been met with an increasing affinity for risk amongst business customers. Churn has never been easier. If one bank cannot meet their needs, customers can leave, and it has never been easier for them to switch financial providers in a congested market. In essence, the evolution of the payments ecosystem encompasses much more than innovation targeted at consumers.

Understanding the value of payment data

Of course, there are some interesting examples of innovation in consumer payments. Gemalto’s biometric bank card, for example, highlights that the area is steadily advancing, despite scepticism that there will be mass consumer acceptance.

However, the pace of change is accelerating rapidly in terms of offerings. For instance, blockchain is being harnessed by banks and technology vendors as a prime enabler of an instant B2B payments infrastructure. Industry players realise that the methods that can derive benefits today are largely based on a better understanding of the value of payment data.

While such data has mostly been used to create a hyper-personalised customer experience for consumers, it is increasingly being harnessed in services to businesses, even outside the financial services sector with companies such as Google recently purchasing Mastercard credit card information to track users’ spending to create an additional revenue stream.

This evolution of B2B product consumption is emerging as a key theme across the broader financial services market and is increasingly allowing businesses of all sizes to ‘window shop’ for the products and services they want the most. Providers are racing to commercialise the increasing amounts of account information, a trend that has increased in the wake of regulation such as PSD2 (the Second Payment Services Directive). By doing so, they can position themselves as the customer’s ‘digital front door’ to a wider range of services such as financial advice, merging the dimensions of ‘fast money’ (a consumer’s daily spending) and ‘slow money’ (future spending, saving and investment).

Adopting innovations such as automation, means that banks and card providers can help their commercial customers transform payments into a process that can add real value and allow the integration of additional services. By making financial reporting much easier, organisations can glean better insights into data showing purchasing trends among their customer base. The emergence of machine learning and self-learning systems will make this process much more efficient, even incorporating features like automated financial advice or fraud detection to become commonplace.

Consumption models are changing

Therefore, as payments processors and providers realise the opportunities in the business payments ecosystem, innovation accompanied by a commoditisation of payments services is on the increase, characterised by providers trying to add more value in the supply chain. Although currently most relevant to the SME market, companies of all sizes are being targeted with added value payments services such as reporting, to help them make better decisions. For example, retailers working with Barclays have access to add-ons and third party apps via the bank’s SmartBusiness Dashboard, including basic analytics to see what customers are spending their money on. This information can then inform marketing schemes that tailor product promotions to specific customers.

Ultimately, the more choice the customer has and the more informed they feel, the more likely they are to return to the same bank to take out a loan or use other services.

With so many contributors to the payments ecosystem, and an increasing number of organisations using the analysis of payment data as a key differentiator against competitors, it is crucial that banks, regulators and payments processors co-ordinate their efforts and use the best technology available to create an efficient system. And with the Faster Payments Service deal up for renewal, a system that underpins most of the UK’s banks and building societies, perhaps it is time for the government to consider how it can best support a payments infrastructure that works for all.

Earlier this month Z/Yen published their global financial centres index which stated that for the first time in 15 years, New York has overtaken London as the world’s top financial centre. The report focused on a number of factors including infrastructure and reputation and was combined with a survey to show the most attractive financial cities. To follow on from this, job search platform Joblift looked into the financial job markets in both London and New York to find out if these results matched or contradicted the Z/Yen conclusions. While New York may have become the most attractive worldwide financial centre, Joblift’s results show that the crown still lies with London when it comes to job availability and growth.

London has more than twice the number of vacancies and three times as much job growth

According to Joblift, 124,788 financial job vacancies have been posted in London in the last 12 months. In comparison, New York has been the location of 49,526 financial vacancies in the same time period, around 2.5 times less than in the UK’s capital. To further bolster London’s claim as the financial job market top spot, vacancies in the capital have increased at three times the rate of New York’s. While the US city’s financial job market increased by 1% each month on average in the last 12 months, London’s market saw a 3% average rise.

Both cities share the most in-demand professions and top employers but vacancies in new york were more secure

Despite the differences in number of vacancies and job growth, the financial job markets in the two cities have a lot in common. Accountants are the most in-demand professionals in both cities, making up 12% of the job market in London, and 9% in New York. They are followed by Finance Managers in London (11%) and Economists in New York (6%), with these professions switching in each location as the third most in-demand – Economists in London (4%), and Finance Managers in New York (6%). Additionally, while not in the same ranking order, JP Morgan, Goldman Sachs and Morgan Stanley were the top employers in both New York and London. However, while the same professions are in demand, jobs in New York were more secure. In the last year, 87% of the finance vacancies advertised in New York were for permanent contracts, while postings offering the same contract type in London made up just 75% of the capital’s financial market.

(Source: Joblift)

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)

For almost three quarters (73%) of financials services leaders, customers are the main driving force behind their company’s digital transformation, however fear of failure is holding back the implementation of digital projects, with almost three quarters of financials services leaders put off by the costs of failed projects. This comes as no surprise, as seven-in-10 admit to cancelled projects in the last two years, according to Fujitsu’s Digital Transformation PACT Report.

“Financial services firms are under pressure from their customers to deliver greater speed, convenience and personalisation, as well as better customer services,” said Ian Bradbury, CTO Financial Services at Fujitsu UK & Ireland. “Digital transformation is certainly a key strategy in helping banks and insurers achieve this, however, despite the sector going from strength to strength, financial sector firms have undertaken unsuccessful projects and lost money. This has made them nervous about deploying new projects. But we feel that success can be born out of previous unsuccessful projects, as previous failures allow organisations to learn. In an ever-changing market, there is no such thing as permanent success. Organisations must continuously improve, learning from their mistakes along the way.”

Even though over four-in-five (87%) have a clearly defined digital strategy, almost three quarters (73%) admit that their digital transformation projects often aren’t linked to the overarching business strategy. But is this the sole reason UK financial services leaders can’t get to grips with their digital projects?

Realising a digital vision is not just about having the right technology. In order to successfully digitally transform, this research highlights four strategic elements businesses must focus on: People, Actions, Collaboration and Technology – the Digital PACT.

1. People

While admitting to a problematic skills gap – especially as 80% believe the lack of skills within the business is the biggest hindrance to addressing cybersecurity – it is encouraging to see that over nine-in-10 believe they have a culture of innovation within their organisation. Despite this believe, 87% believe that fear of failure is a hindrance to digital transformation projects. There is therefore a long way to go for financial services companies to truly transform their culture to thrive on innovation. As UK financial services firms are taking measures to increase their access to digital skills and expertise (93%), four-in-five believe attracting ‘digitally native’ staff will be vital to their firms’ success in the next three years, as well as turning towards targeted recruitment (72%) and apprenticeships (50%) to support digital transformation.

2. Actions

Although having the right processes, attitudes and behaviours within the organisation to ensure digital projects are successful are seen as the least important of the four key elements of digital transformation, 87% are taking specific measures to support collaboration on digital innovation and over two-in-five (43%) are creating networks for employees to share expertise across the business.

3. Collaboration

Over a quarter (28%) of UK financial services leaders believe collaboration is an important element in realising the company’s digital strategy. While almost four-in-five (78%) turn to technology experts for co-creation, 67% go as far as seeking consultancy and training from start ups and organisations outside their industry.

4. Technology

Many organisations are already leveraging new technology that will radically change the way they do business. A fifth of financial services leaders believe implementing technology will be the most important factor to realising their digital strategy, with cloud computing and big data and analytics playing a key role in helping drive the financial success of their organisations over the next 10 years.

Bradbury continues: “Historically, financial services firms have been cautious when it comes to innovation. They are working under strict regulations and the very nature of what they do, means that a radical digital transformation project could have a detrimental impact on people’s lives – for example, negatively impacting access to bank accounts or making insurance claims. But this shouldn’t hinder innovation across the sector. Quite the opposite – with the help of external expertise and willingness to implement digital transformation, we can be soon pleasantly surprised at a revamp of the industry. Change doesn’t always come naturally, but the financial sector understands what’s at stake, with 86% admitting that the ability to change will be crucial for the business’ survival in the next five years.”

(Source: Fujitsu)

A traditional industry like finance and accounting doesn’t often go through many changes. However, with the rise of artificial intelligence (AI), machine learning and automation, technology is having – and will continue to have – a huge impact on every business; changing the way people work within an organisation. And, finance departments are not exempt from this change. Below Andy Bottrill, Regional VP at BlackLine, discusses the future of finance and accounting with Finance Monthly.

Whether finance departments like it or not, technology is going to become part of the accounting process. And despite 71% of workers admitting to still using spreadsheets to manually carry out month-end tasks, 80% of businesses are expected to be ready to adopt AI by 2020.

So why should today’s accountants look forward to, and not fear, the future and technology?

Automating Admin

Companies have already reported that 75% of intercompany transactions are automated, and this is only set to increase over the next 10 years; with 45% of individuals predicting invoicing will cease to exist by 2030.

Although the prospect of investing in automation may seem negative to many accountants at face value, they need to consider the long term benefits it can bring.

Workers must realise that technology will actually positively impact them. For example, removing mundane tasks such as admin data entry – automation can do this far quicker than a human, with a much higher accuracy rate. Using this technology, accountants are seeing manual admin tasks disappear, giving them time back to do tasks of greater value, such as financial analysis.

Augmenting the Accountant

A large concern around the future of finance and accounting is that robots will result in redundancies. But many fail to realise technology won’t wipe out jobs, but instead augment existing roles.

In 10 years’ time, the accountant we know today will no longer exist and instead, an accountant with a completely new skillset will have evolved. Technology is transforming employees’ roles, allowing them to transition from accountants who report last month’s numbers to reporters and analysts who deliver real-time data and predictive analytics.

Removing mundane tasks from day-to-day activities frees up time for more rewarding tasks in the finance department and others that require help – augmenting accountancy roles. Having the opportunity to work in other departments or take on other areas of expertise augments the skillset that accountants have.

Augmenting the accountant role in this way not only boosts job prospects within the workplace, but makes employees much more employable in the future.  Making it an opportunity accountants should embrace.

Removing bad habits

Many organisations pride themselves on “best practices”, and don’t stray away from what they have always known. Sometimes, however, adhering to outdated traditional processes can do more harm than good and that is seen within the finance department.

Financial departments are known more than any to practice the phrase “if it ain’t broke, don’t fix it”. However, technology is changing this and removing these somewhat bad habits from day-to-day tasks and instead replacing them with new “best practices” through the use of technology.

Efficient Processing

Amid the personal benefits technology can bring to businesses, the practical savings are just as important – especially for C-suite level executives.

Imagine it’s the year 2028. The CEO questions the finance department on the likelihood of being able to acquire a desirable start up. In response, the CFO brings up real-time figures on her iPad and analyses them with her team to evaluate the potential options. She then emails the CEO their forecast: the business can afford to put in a competitive offer.

And while this evaluation is happening, the machine learning programme installed in the finance department has spotted and flagged a suspicious transaction that looks like possible fraud. The team are able to investigate this straight away, instead of waiting for auditors to discover it. Through this continuous accounting, businesses gain better insights and minimise mistakes.

Increased Sector Reputation

Whilst it’s important to look forward to the internal benefits technology will bring, it is equally important to understand the external impact.

When it comes to quarterly reporting, many finance departments have been scrutinised for incorrect data. But the technology available to finance departments today is helping reduce, if not eliminate, this from happening.

By using real-time data analysis, automation and machine learning businesses can reduce the number of reconciliations required and decrease the margin of error. As a result, more accurate financial results and closing data is produced.

This not only increases the reputation for individual businesses, but for the sector as a whole. Instead, accountants can promote their profession in a positive light. As businesses look to be the best in their industry, enhancing reputation is critical – and technology can certainly help do that.

A decade on from the great financial crisis and the fall of Lehman Brothers and Europe’s financial services is the only sector not to have returned to pre-crash levels. Below Finance Monthly hears some expert commentary from Beranger Guille, Global Editorial Analytics Director at Mergermarket, an Acuris Group company, on the current state of European M&A in the Financial services sector.

Despite an appetite for large-scale banking mergers and an eagerness to create pan-European banks capable of challenging rivals across the Atlantic, Europe still operates under strict rules that have so far prevented such merger ideas from materialising.

Between 2006 – 2008, Europe saw a total €607.9bn change hands across 1,592 deals. Since 2016 to date, activity remains still nowhere near these pre-crisis levels, with a mere €221.1bn traded over 1,251 deals and a spectacular absence of mega-deals that were once a prominent fixture in the build up to last financial crisis.

10 years later

A decade on from the crash, regulators continue to introduce new rules on top of what is already a very comprehensive rulebook. Basel III and Solvency II: the first ever set of rules on liquidity, placed a robust set of capital requirements on banks and insurers, with additional process still not complete. The capital conversation buffer, which ensures banks build up capital reserves to weather losses incurred during downturns, will take effect on 1 January 2019. In 2013, The European Market Infrastructure Regulation (EMIR) drove the centralised clearing of derivatives and promoted robust reporting requirements to trade repositories. While most recently, the Markets in Financial Instruments Directive (MiFID II) and Central Securities Depositories Regulation (CSDR) has pushed more transactions to occur on exchanges to improve transparency and the overall efficiency and safety of securities settlement.

In the build up to the crash, Italian lender Unicredit conducted a string of mergers between 1998 – 2006, while Royal Bank of Scotland spent €71.1bn acquiring Dutch lender ABN Amro on the eve of disaster. Both left shareholders and taxpayers alike reeling from heavy losses.

The current situation

Today, mega-mergers are once more mooted with cross-border deal discussions between Unicredit and Société Générale reportedly taking place. However, “there is nothing on the table,” according to France’s Minster of the Economy and Finance, Bruno Le Maire.

There is also talk of potential national mergers afoot. In the UK, Barclays chairman John McFarlane is eager to do a deal with Standard Chartered, while German lenders Deutsche Bank and mull a merger of their own.

But, despite an apparent eagerness to get deals done, there is a lot of cold water that investors and analysts are only too quick to pour on such tie-ups.

There is a lack of strategic rationale behind a Barclays-Standard Chartered deal, with two banks having little to no geographical overlap, with the former boasting strong ties in the UK and US and the latter firmly focused on emerging markets in the Asia and Africa. Meanwhile, discussions between Deutsche Bank and Commerzbank certainly offer a stronger rationale, but it should not be forgotten that Deutsche Bank launched a €8bn rights issue – its fifth capital hike since the crash – to plug holes that continue to leak.

A political climate

Given the political environment in the EU, and that there is a degree of nationalism when it comes to banks, large-scale cross-border deals look anything but likely. Two years ago, Swedish lender Nordea made an approach to acquire ABN Amro but had its offer slapped down by the Dutch government. Some bankers were even brazen enough to pitch a merger between Barclays and Santander. Cross-border European deals for the time being at least seem off the table, but domestic mergers could provide dealmakers something to chew on.

The timing of renewed merger talks is interesting, with the next cyclical downturn expected to come to bear in the next two years.

Calls for consolidation amid so much uncertainty is cause for concern, but desperate times lend themselves to management contemplating desperate measures. Weak profitability is putting pressure on banks to take action at a time when big tech, fintech and alternative lenders threaten to grab market share. And while the appeal of cross-border mergers may provide a boost to the sector's profitability, bigger banks, history tells us, are not necessarily healthier banks.

The growing necessity to adapt rapidly to disruptive technologies and react to shifts in the market at an accelerated pace, is driving ‘agility’ in the financial services sector. Below Adam Gates, Principal at Odgers Connect, explains why the financial services sector is increasingly turning to independent consultants over traditional management consultancies.

Firms are increasingly looking at how they can evolve their organisations to operate more flexible business models and become more responsive to customer expectations. It’s a growing trend that is reflected in the way financial services firms are using consulting support.

The UK’s consulting market is estimated to be worth anywhere between £9 and £10 billion. Almost one-fifth of this is being delivered by a growing number of independent professionals. Often called the ‘professional gig-economy’, this cohort of freelance consultants is, for the most part, made up of ex-Big Four partners or senior managers. It’s a pool of highly-experienced individuals that the financial services sector is increasingly calling upon.

Offering a blend of strategic direction and hands-on implementation, independent consultants are a highly flexible resource that can be used for a range of business issues. Our latest research has found that it’s because of this level of flexibility that 43% of financial services firms are choosing to work with independent consultants over traditional management consultancies.

Of course, when it comes to meeting mass capacity demands, the big consultancies have teams of people available. It’s why 57% of businesses in the financial services sector cite this as the primary reason for working with a traditional consulting firm. This is however, becoming an unwieldy approach to delivering strategy, especially when staying ahead of the competition means operating at pace and being able to adapt to the whims of regulators and shifting market currents.

This competition is coming in the form challenger banks and ‘digital native’ fintechs who have a level of inherent flexibility that is enabling them to bring products to market faster and more readily adapt to the needs of customers. As a result, a trend towards agility is emerging in the financial services sector which coincides with the use of more flexible consulting support.

What’s more, owing to the level of experience they have built during the course of their careers, independent consultants tend to deliver a better quality of work, which is why most financial services firms will seek out specific skills from independent consultants, rather than from a big consultancy. This ‘area expertise’ means organisations will often expect an independent consultant to ‘get things moving’ within the first couple of weeks of coming on board; something that links an independent so closely to this aspect of flexibility.

That said, quality assurance remains an area of contention. Whilst an independent professional offers that much needed level of flexibility for financial services firms, a mainstream consultancy can often be seen as the safer bet; if things aren’t going well, you can always escalate the problem ‘up the chain’.

It is clear however, that with organisations in the financial services sector now focusing on meeting the changing expectations of their customers at the same time as staying ahead of continuous disruption, flexible consulting support is going to become that much more critical.

Widespread confusion about cancer symptoms among employees could be leading to delayed diagnoses and irregular self-examinations according to new research by Bupa UK.

One in two people in the UK will be diagnosed with cancer in their lifetime, however 53% of employees in the financial services sector are confused about what to check for when it comes to common cancers such as skin, bowel or lung.

The study found over half (56%) also say it is hard to remember the warning signs or physical changes they should look for. As a result, a third (32%) of employees have never checked themselves.

This confusion is one of the significant factors that could delay diagnosis. One in five (19%) employees said they have delayed seeking medical advice about a symptom as they “didn’t realise what to look for”. But for a fifth of these people (4%), this symptom was later diagnosed as cancerous.

Additionally, a third (35%) of those across the financial services sector would worry about taking time off from work to have a symptom checked.

Being able to recognise if something is wrong is important for improving survival rates, which is why Bupa has created a simple Cancer Check-CUP guide, which can be incorporated into health and wellbeing guidance for employees.

If someone experiences all three signs they should get medical advice.

Change:

Is something about your body different or unusual? Is something new, or does something feel ‘wrong’ to you? Trust yourself to know what is right and wrong and seek help.

Unexplained:

Can you pinpoint why something has changed, why you are feeling physically unwell? If not, it is worth further investigation.

Persistent:

Have you been experiencing this or feeling unwell for longer than two weeks? Watch out for the symptoms that you can’t shake off.

Creating a culture where people feel comfortable discussing health challenges at work can help ensure that employees receive the support they need, but the research also highlights that for nearly half (46%), cancer isn’t talked about in their workplace.

(Source: Bupa)

New research from Haven Power, one of the UK’s largest business electricity suppliers, reveals two fifths of Financial Services firms think renewable energy is just a passing trend. A perception that is significantly higher than any other industry.

Despite scepticism, almost two thirds of businesses in the sector are keen to start selling energy back to the grid. The Financial Services industry is one of the greenest compared to others surveyed, with 41% stating they already had onsite battery storage facilities installed.

The survey of Utility Decision Makers in Financial Services showed the biggest barrier preventing them from implementing sustainable change was cost (44%), followed by uncertainty on both how to measure the impact and ROI (30%) and how to discuss with investors or senior management (26%).

Paul Sheffield, Chief Operating Officer at Haven Power, commented: “Despite a proportion of firms still seemingly sceptical about the future of renewables, it’s encouraging to see that many are implementing positive changes. Understanding of renewable energy and its benefits varies greatly from sector to sector. We believe that every industry needs to start making sustainable changes to help reduce carbon emissions and embrace cleaner energy.”

When asked to list whose responsibility it is to lower carbon emissions, energy suppliers were cited top (48%), ahead of the Government (47%) and manufacturers (44%). Additionally, almost half (46%) strongly agree it is the energy providers’ responsibility to educate decision makers on the different types of energy available.

Paul Sheffield continued: “It’s imperative that organisations of all sizes across different industries work together with their energy provider to ensure the future of British business is low carbon. By moving beyond viewing energy as a commodity, we can help to drive sustainability and profitability. Here at Haven Power we are keen to help businesses understand the wider benefits of renewables.”

Haven Power is one of the UK’s largest business electricity suppliers, founded over ten years ago, it aims to help businesses control spend, manage risk and boost sustainability by using renewable electricity, energy efficiency and bespoke energy solutions.

(Source: Haven Power)