What are really the concerns, risks or benefits of incoming Brexit changes? Below Finance Monthly hears from Todd Latham, CMO & Head of Product, Currencycloud, who explains what’s truly rocking the fintech sector.
Am I the only one who has had enough of all the “Brexit is coming; the UK is doomed” headlines dominating the news?
The truth is, no one can really know what impact Brexit will have. Combine this uncertainty with the fast pace of modern business, and you might be tempted to throw your ten year plans out of the window.
Should businesses really be worried? Or are there, in fact, more pressing things to be concerned about?
The concerns
The main concern for the fintech industry post-Brexit is that the UK is going to lose its fintech crown, becoming less attractive to both business and workers. Will companies migrate their head offices to the continent? Will the world’s top talent still want to work in the UK? These are the questions keeping some of our fintech leaders awake at night. In reality, contrary to what the scaremongers would have you believe, the fintech industry in the UK is thriving, with firms attracting close to £3bn in venture capital funding in 2017. At Currencycloud, for example, we are expecting to double in size this year, and we had our first ‘billion-dollar month’ in terms of cross-border payments processed in December 2017.
Despite the rocky political times, it’s clear that the strength of fintechs means they are unlikely to be deterred. In addition, our home talent pool is impressive, and many industry essentials are exclusive to the UK. Whether it’s specialised legal firms, a friendly regulatory environment or something as basic as the time zone, there are many factors that are difficult for other nations to replicate, meaning the influx of job seekers to the UK’s fintech sector is unlikely to be affected.
But unfortunately, Brexit will not be all plain sailing. The regulatory and financial hurdles surrounding the loss of passporting will certainly result in logistical challenges for firms operating out of the UK. However, it’s important to see this as just another bump in the road for the fintech industry – no more so than previous obstacles from regulation and investment.
What is clear is that in this volatile business climate, predicting what effect Brexit will have in the future is a minefield of speculation, and ultimately, a waste of time. Instead of worrying about the what-if’s, the sector should be diverting its attention to a regulation that is affecting the industry right now: open banking.
Open banking – The fintech revolution nobody knows about
Open banking, part of the Second Payment Services Directive (PSD2) requirements, is aimed at increasing opportunity in the sector, as fintech companies can now offer traditional banking services – but with a faster, more seamless and exciting user experience.
Fintechs can provide the fresh ideas and agility the banking sector desperately needs, while capitalising on the customer trust and ability to scale the traditional institutions’ offerings. The regulation also ensures that any third party wishing to have access to customer data is subject to greater regulation in accordance to data protection laws - providing a safety net for businesses and customers.
A potential partnership between UK banks and fintechs, if executed correctly, could see a global revolution of the financial industry, and could lend a hand in securing the UK’s place as a top competitor in the market - regardless of EU status.
Innovate – before it is too late
As well as being a safety net for businesses, the key reason open banking is being hailed a monumental change for the fintech and wider financial sector is because it is enabling innovation in a previously stale market and is creating opportunities for fintechs to capitalise on.
In this age of AI and machine learning, customers have grown to expect a level of personalisation, which the traditional banking industry currently lacks as is shown by growing customer interest in alternative banking methods, such as Revolut, Starling and Monzo.
Open banking presents an opportunity for the sector to respond to these customer demands by tailoring traditional banking services to individual customer’s needs and wants. This could be through things such as detailed spending graphs or gamification techniques such as nudging for improved user behaviour.
Although the benefits are clear, this drive for innovation has created a pressured environment for businesses. Our research found that 49% of businesses believe their offer will lose appeal within just two years from launch and 60% of businesses agree that their companies will eventually become irrelevant if they don’t innovate constantly. Working with external organisations could offer businesses a solution to bridging the gap between idea and action. This is where the partnership between banks and fintech could be beneficial for both parties.
Brexit may, or may not, have an impact on where consumers bank down the line – but fintechs should be focusing their attention on the possibilities in the market now. By investing the time and energy on open banking, the fintech sector could have the public shunning high-street bank branches for AI and robo-advisers sooner than we think.
Change is happening – be it political, regulatory or otherwise – but you must determine which change will have the most impact on your individual business. With all the focus on Brexit, it’s easy to understand why less consideration has been given to the impact of open banking regulation. However, perhaps this is where you should be diverting your attention, as the opportunities are endless. As more and more fintech companies are jumping on the bandwagon, the initiative is picking up momentum and, we believe it will soon transform the banking industry as we know it.
A new breed of ‘challenger banks’ has risen up around traditional institutions in the last few years. This catch-all phrase doesn’t capture the breadth of different offerings that have emerged, from mobile only banks such as Atom and Starling, to digital contenders looking to capture even more of the value chain by exploring links between online banking and social networks – Fidor is a great example. With a digital-first mentality, the competitive ace that these technology businesses have to play is their agility. Unencumbered by legacy systems, they are quick to add innovative new products and services, often encouraging open collaboration with customers – as Monzo has done – to develop the product and offering.
These FinTech companies are incredibly nimble, though hanging on to this advantage will depend on how smart they can be as they scale. With a continued focus on innovation and a clear target customer value proposition – whether that’s migrants, freelancers, Millennials or students – there will be some tough decisions to make about which technology to keep in-house, and which to outsource. Will they choose to trade on the value of their proprietary systems? Or take the view that the value lies? in the front-end, and outsource the remainder?
One of the key challenges that traditional banks face is simply understanding the infrastructure that lies under the hood. Systems have been developed over so many years, by so many IT architects, for so many use cases and do not forget all the mergers and acquisitions, that it has become very difficult to untangle the technology wires that link business areas across Operations, Product, Customers and Channels.
The advent of Open Banking has thrown down both a lifeline and an intimidating gauntlet for large banks. A lifeline, assuming they have the opportunity to innovate, drawing on the advantages of trust and large existing customer bases to fend off digital rivals with new appealing product offerings. A challenge, in that they must now open up their systems to third parties, which brings both a competitive threat and a logistical challenge.
No such worry for nimbler challengers. Not only do they have the benefit of operating on new, lean tech stacks, but they have been born into a mentality of collaboration, and business model evolution. High Street Banks, by contrast, haven’t been tested in this regard historically, and are jostling to keep pace.
After a period of immense innovation in the challenger bank sector, the next phase will be a tale of expansion and consolidation – a battle that some will weather more successfully than others. Some have argued that those with in-house back-end tech will experience initial pain in scaling, due to the larger tech code base and infrastructure they must maintain. Others might counter that this will be offset by lower long-term operating costs per customer, and possibly greater flexibility in product development – which could make all the difference in the quest for customer wallets, hearts, and loyalty.
Operational management and innovation do not always sit comfortably next to each other, but young banks have a golden window of opportunity to future-proof their model. Smart, proactive, risk-based decisions will ensure that scale does not hamper the agility that propelled them into the spotlight in the first instance.
It’s more fun to count soaring customer numbers and glamorous media headlines, though, in my view, the winners will be those that take the time to unpick and monitor the systems that underpin their ability to create dynamic, responsive solutions. In this instance, good things will come to those who refuse to wait.
Hans Tesslaar, Executive Director at banking architecture network BIAN
New research reveals a UK technology market which has attracted the eye of US businesses and seen a huge increase in transactions, with acquisitions of UK technology companies up 386% in 2017 than there were in 2009).
Of the 247 UK companies to have exited into the US in 2017, almost a third (32.3%) of those were technology companies, followed by manufacturing, which has also seen an increasing interest from the US over the same period.
While technology has been one of the principle drivers of the UK M&A market in the mid-market, the results highlight there has also been a wider trend of increasing activity from US acquirers. Overall, the UK has seen the acquisition of companies below £1billion increase by 86% over the last decade (2009 to 2017), with sectors such as Business Services and Manufacturing having increased in the number of sales to US acquirers.
Commenting on the findings, Andy Hodgetts, Senior Corporate Finance Manager at Buzzacott said: “The UK’s technology landscape is changing dramatically and is far more active than it was just under a decade ago. Silicon Valley is no longer the sole proprietor for developing new innovations, the UK is a hotbed for talent, and in the US’ acquisitions of UK companies, they are gaining access to that talent pool.
Hodgetts continued: “There has been a lot of uncertainty around Brexit and what it means for the UK, which has left many businesses unsure as to when might be a good time for them to sell. What we are seeing however is that there are a number of opportunities and buyers out there, especially in the US. For UK companies that are planning on exiting, but have waited due to the uncertainty the UK faces, it is important to not just think about companies within the UK that might want to acquire the business, but explore internationally too as there are plenty of buyers available, whatever the sector.”
(Source: Buzzacott)
Technology advances have changed every aspect of financial markets. For consumers, this transformation has made financial services more affordable, accessible and tailored to our individual needs. For financial institutions, digital tools, including emerging technologies such as artificial intelligence (AI), robotics and analytics, have delivered huge opportunities to radically improve the efficiency and effectiveness of risk management, while reducing costs and better meeting the needs of customers.
However, these advances have also raised fundamental questions around how regulation should adapt. For an industry still finalizing reforms introduced after the global financial crisis, financial technology and innovation present a new round of challenges. That’s why it’s time for financial institutions and regulators to ask: How can we build a regulatory environment fit for a digital future? Below Kara Cauter, Partner, Financial Services, Advisory Ernst & Young LLP UK, answers the hard question.
Technology’s potential to make financial markets safer
It’s inevitable that new technologies introduce new risks, and new twists on old risks, as well as different ways of working. Systems can fail and undermine market stability; machines can make decisions with unintended consequences that harm customers and markets; and the almost limitless data that is the lifeblood of the digital world can be manipulated, misused, stolen or inadvertently disguise criminal behavior. But new technologies also offer significant opportunities to improve risk management and enhance the efficiency, safety and soundness of markets and convenience to consumers.
As a result, financial services firms are constantly tapping into new tools to improve the customer experience and strengthen risk management and compliance:
Regulators are also exploring how to use technology in their role:
Time to ask new questions about old risk principles
But despite positive moves to deploy technology to improve the security and efficiency of global financial markets, it’s still early days. Both industry and regulators are struggling with fundamental questions around how to identify and describe the risks posed by new technologies and new ways of doing business.
Delivering regulatory answers fit for a digital future will call on all market participants to revisit old principles, ask new questions and work together. Building a transparent, balanced, and connected risk management ecosystem will require:
Ultimately, as regulators and market participants navigate the FinTech landscape, they’ll need to consider how to best use and regulate the use of digital tools to deliver effective risk management and compliance – without stifling the innovation that can help deliver better and secure financial services.
Technology is transforming almost every area imaginable, but education and recruitment are surprisingly yet to be disrupted, and consider themselves to be relatively early in the adoption of technologies. These technological developments, combined with data analytics and job-specific simulations are at the forefront of driving this disruption, particularly in the financial sector. Below Finance Monthly hears from William de Lucy, CEO of Amplify, who delves into the drive behind technology development in the recruitment departments of finance teams worldwide.
Businesses are now delivering targeted training for companies throughout the fintech ecosystem, providing them with new, innovative ways to enhance the learning environment for prospects, resulting in a higher calibre pool of talent for the client.
It would appear that despite a certain level of volatility existing in the financial sector, leading financial institutions are still chomping at the bit to secure the best candidates, demonstrating the overall buoyancy of the market. Much like certain aspects of the financial ecosystem that is witnessing a transformational shift away from manual, human-oriented tasks, the level of automation and simulation in financial recruitment can reap huge rewards for leading institutions.
Evolution of technology and data allowing real world simulation
Technology and data expectations have never been higher, due to the major advancements in technology that have driven this change. Not only has technology significantly increased the amount of data being generated, but it has also provided affordable and efficient ways to collect and store this data so that organisations can leverage data-driven strategies to innovate, compete, and obtain value from information. With technology upending workflow and processes, tasks that were once handled with paper money, bulky computers and human interaction are now being completed entirely on digital interfaces.
Data analytics have come a long way in recent years. From e-commerce businesses tracking who visits their websites and what pages they visit, technology has moved to the collection of huge amounts of data about consumers and their behaviours. This has led to a huge paradigm shift from focus on products, to focus on consumers and what they want and value. Financial services institutions that use big data to drive their decisions will win the competitive race in the long run.
Education with the implementation of technology
Technology has previously been seen as a disruptive influence in the classroom, however this perception is slowly changing. With apps that change how we shop, eat and communicate, technology is moving at a fast pace, and society is having to adapt alongside it. Education with the help of technology has opened up a world of opportunities for students. From collaboration through the use of emails to easy sharing of information - technology is and will continue to alter the education sector into the future.
Students are now looking at the value they receive for their investment. They want to know how this experience will help to secure a place in their chosen careers, rather than the academic ambitions that their professor may have harboured when they were a student. Technologies can give students the same on-the-job training experiences delivered to clients, which enables them to directly connect with such institutions when they perform.
The simulations of real-life work roles give students a broad experience across the entire industry, from any area including investment bank market-making and sales-trading to portfolio and risk management. The objectives are for students to learn through ‘doing’, allowing them to enhance their academic skills and to better prepare them for their future workplace and their best suited role.
Technology and recruitment within the finance and education sectors
A recent LinkedIn study of 12 global investment banks has found that analysts and associates who left their positions in 2015 had stayed in their roles for an average of 17 months. This compares to a 26 month average in 2005. Furthermore, the study also revealed that some banks are incurring significant costs that are associated with replacing employees who leave.
Bridging the gap between what students are taught in theory, to what happens on a day-to-day basis in an office environment, proved difficult before the implementation of certain technologies. Technology has enabled the disruption of traditional recruitment paths of many major financial institutions which often recruit from only a select few universities and use rigid, automated processes. Along with this, companies are now able to broaden their search and identify talent that may not have been uncovered previously. A candidate could have a distinct ability to perform a specific function outside of their pure academic achievements, which allows for a more diverse workforce and greater overall performance and output.
Technology these days, can give businesses the ability to measure so many different data points over a long period of time. For example, technology platforms can measure how well a potential sales trader, or broker uses voice versus typed communication and how well they can use that communication to leverage client relationships. With this actively taking place over a full-day, or a series of days, it can help to provide corporate partners with graduates who possess soft skills that are required in client facing roles. This can often be hard to find from an initial CV review or telephone interview.
Along with this, technology allows businesses to gather innovative approaches to enhance and revolutionise graduate recruitment, this helps firms find the right candidate for the right role, without having to sift through thousands of CV’s or rely on behavioural data that has been collected from a short game or questions unassociated with the role in question. Due to the innovative approach that technology has enabled, candidates can gain a practical understanding of what their day-to-day role would actually involve, which helps them identify in depth the specific role they can see themselves committing to long-term.
It’s evident that technology is and will continue to revolve and bridge the gap between what students are taught in theory, to what happens in a day-to-day office environment. It has broadened the playing field and identified talents that may never have been uncovered previously. This can lead to businesses becoming more diverse in their workforce and have a greater overall performance and output for their company.
Below Finance Monthly hears from Brian G. Sewell, Founder of Rockwell Trades, on the prospects of cryptocurrencies moving forward. Brian argues that cryptocurrency is still in the run for driving the future of commerce.
I would rather see the SEC make a methodical decision, with thoughtful guidelines, to approve a cryptocurrency ETF than a rash decision to reject one. And though the agency may not reach a final decision until next year on the proposed SolidX Bitcoin Shares ETF, I think the agency will eventually approve it. The proposal (requiring a minimum investment of 25 bitcoins, or $165,000, assuming a BTC price of $6,500) seems to meet the SEC's criteria -- on valuation, liquidity, fraud protection/custody, and potential manipulation.
Cryptocurrency’s Challenges and Potential
Since 2010, when it emerged as the first legitimate cryptocurrency, bitcoin has been declared “dead” by pundits over 300 times. Critics have cited the cryptocurrency’s hair-raising price volatility, it’s scalability challenges, or the improbability of a central bank ceding monetary control to a piece of pre-set software code. Yet since 2009, bitcoin has facilitated over 300 million consumer payment transactions, while hundreds of other cryptocurrencies have emerged, promising to disrupt a host of industries. Granted, no more than 3.5% of households worldwide have adopted cryptocurrency as a payment method. But I think cryptocurrency will transform how the world does business as developers, regulators, and demographics resolve the following key issues:
Data underscores the receptiveness of Developing World consumers to cryptocurrency. The Asia Pacific region has the highest proportion of global users of cryptocurrency as a transaction medium (38%), followed by Europe (27%), North America (17%), Latin America (14%), and Africa/The Middle East (4%), according to a University of Cambridge estimate. Although the study’s authors caution that their figures may underestimate North American cryptocurrency usage, they cite additional data suggesting that cryptocurrency transaction volume is growing disproportionately in developing regions, especially in:
Demographics will also likely drive cryptocurrency adoption in the Developing World, home to 90% of the global population under age 30.
Remember The Internet - Investment Bubbles and Bursts Will Identify The Winners
High volatility is inherent in the investment value of this nascent technology, due to factors including technological setbacks and breakthroughs, the impact of pundits, the uneven pace of adoption, and regulatory uncertainty. Bitcoin, for example, generated a four-year annualized return as of January 31st 2018 up 393.8%, a one-year 2017 performance up 1,318% -- and year-to-date, a return of down over 50%. Bitcoin has previously experienced even larger percentage drops before resuming an upward trajectory.
In my view, bitcoin and other cryptocurrencies will experience many more bubbles and bursts, in part, fueled by speculators. But the bursting of an investment bubble may signal both a crash and the dawn of a new era. While irrational investments in internet technology in the 1990’s fueled the dotcom bust, some well-run companies survived and led the next phase of the internet revolution. Similarly, I believe a small group of cryptocurrencies and other blockchain applications, including bitcoin, will become integrated into our daily lives, both behind the scenes and in daily commerce.
Although “irrational exuberance” will continue to impact the price of cryptocurrencies, this disruptive technology represents not only the future of money, but of how the world will do business.
Barclay’s ex-boss Anthony Jenkins recently said that technology could replace more than 50% of banking jobs. Finance Monthly heard from Ian Bradbury, CTO Financial Services, Fujitsu UK & Ireland, who shared his thoughts.
With the number of banking branches declining, the financial services sector is undeniably undergoing significant change, driven in no small part by the increasing adoption and implementation of emerging technologies. This of course has led to concerns of job displacement, and when we asked both the public and businesses which jobs most likely won’t exist in their current form 10 years from now, bank tellers was the top answer. One of the technologies said to disrupt the sector increasingly is Artificial Intelligence (AI), and in fact we found that seven-in-10 financial sector leaders believe technology such as AI will enable them to overcome many of the socioeconomic issues they are facing today.
The use of AI in financial services is nothing new. Trading businesses have used algorithms for many years, but what is new is the widening range of applications to which AI is being used for. The technology will not only replace existing manual processes, it will create new ways of doing things, which will add new value for businesses and their customers. For example, given the drive towards efficiency and agility, we can expect a lot of jobs to be created in the areas of automation, with more people employed to develop and implement AI-based automation solutions. It’s important to remember however that whilst some roles will disappear, many will surface in their place - 80% of jobs that will exist in the next decade haven’t even been invented yet.
It is the responsibility of us as a nation, from banks, government, to the companies creating these new technologies to ensure that we are equipping people with the right skills to manage this digital transformation that both the banking sector, as well as many others are currently and will be going through for the foreseeable future.
Artificial intelligence (AI) is infiltrating all industries, meaning a transformation in the way we live our day-to-day lives – and the way we work – is inevitable. But this is nothing to be afraid of and we should embrace AI to improve the way we work.
According to Adobe, 15 % of companies currently use AI, with 31 % expected to adopt it over the next 12 months. This significant technological disruption is set to affect everyone in some form, and many are worried that AI will displace our jobs and make humans irrelevant.
However, Reed Accountancy & Finance research found that almost half (47 %) of finance professionals asked are enthusiastic about AI in the workplace and are willing to embrace new technology. This shows there is a lot of enthusiasm about all the ways AI can improve our everyday activities. With this in mind, here are five reasons why we shouldn’t be panicking about the introduction of AI into the workplace.
Research from Deloitte shows that 61 % of companies are now actively designing jobs around robotics. However, it is expected that, in the coming years, the skills and traits that make us human and enable us to interact effectively will become increasingly important for employment and career advancement. While machines and AI will be capable of performing many routine tasks, human cognitive skills will still be sought after, so businesses will still need to target candidates with these talents. The introduction of AI will also free up time for creative thinking and judgement work – areas in which humans are naturally superior. AI can design solutions to complex societal issues, but only humans can implement them, as well as display empathy and compassion in a way machines never can.
A study by Accenture has revealed that AI could increase productivity by 40 %, and profitability by 38 %. This is in addition to our own research which found a third (32 %) of finance professionals believe AI will improve productivity and efficiency by having the capabilities to report and summarise accounts taking away the menial tasks – understandably, businesses are interested. This means employees are free to concentrate their efforts on more stimulating, forward thinking work, making companies using AI very attractive. It can also help with recruitment, where AI can source, rank and arrange interviews with candidates. More accurate forecasting, predicting maintenance and repairs, personalisation, optimising manufacturing and replenishing stock automatically are all areas in which AI can also help companies become more efficient working within their budgets.
By 2030, it’s estimated that Generation Z will represent 75 % of the workforce, meaning innovative methods of appealing to this group must be a priority for all organisations. One way to do this is by promoting the use of AI in the workplace, as this generation appreciates the value that technology brings. The use of AI-driven foundational technologies, such as blockchain, may also help companies that are based on this technology present themselves as the more fashionable, innovative places to work.
Unconscious bias has long been an issue in recruitment, and for those responsible for recruitment in an organisation. Some tech start-ups are already using AI to perform initial interviews, along with facial recognition software to detect body language and emotion cues when screening candidates, in order to eliminate the unconscious bias that is so often found in the human decision-making process. In fact, according to KPMG, 60 % of HR departments are planning to adopt cognitive automation in the next five years with the aim of making recruitment a bias-free procedure.
McKinsey research has found that, if AI is adopted by 2030, eight to nine % of labour demand will be in new types of jobs that didn’t exist before. History would suggest that, after a large technological disruption in society, over time, labour markets would adjust in the favour of workers. However, the skills and capabilities required for any job will shift, with the need for more social and emotional skills, such as logical reasoning and creativity, making candidates with these skills in heavy demand.
Navigating the unchartered territory of artificial intelligence can be daunting, but there is no need for businesses or candidates to panic. If used in the right way, AI can be incredibly helpful and vastly improve the effectiveness and efficiency of not just many organisations, but our everyday working lives.
In July, global customer experience provider Voxpro - powered by TELUS International, hosted a major event at its Centre of Excellence in Dublin, Ireland, entitled The Future of Money. Over one hundred FinTech innovators from around the world gathered to discuss the current state of the cryptocurrency industry, regulatory and operational challenges, and the opportunities that lie ahead.
“If you ask any crypto company what their biggest issue is, they're not going to tell you regulation; they're going to tell you getting bank accounts.”
That’s according to Jeremy Allaire, Founder & CEO of Circle - a speaker at The Future of Money event in Dublin. Allaire, whose company recently acquired cryptocurrency exchange Poloniex, revealed the significant obstacles that traditional banking institutions are putting in the path of his industry.
“Banks have pretty systematically limited companies’ ability to operate in this space, and that really is a challenge. I think part of that is regulatory uncertainty and part of it is just hostility to a technology which basically threatens to eliminate a lot of their profit margin and business models.”
Allaire believes the solution lies in the establishment of ‘”crypto-native banks” that will work closely with both crypto companies and central banks to provide the connectivity that is urgently needed.
The fact that traditional banks are under threat at all points to a fundamental shift in how the world views money, something that David Schwartz, Chief Cryptographer at Ripple, believes was inevitable in an increasingly global economy. Schwartz told the Dublin audience that the key problem with money as we know it is that it is neither “universal nor interoperable” and that currency needs to be one or the other if it is to serve the modern economy.
“If it was universal and everybody in the world could accept it with equal ease, then that would be fine. And if it could operate with other systems that other people use, that would be fine too. If you're stuck on an island as the economy becomes increasingly global and more and more people want to do business internationally, but have to do it through intermediaries and slow systems, then we start to really hit the problems created by that system.”
So how exactly does cryptocurrency solve this ‘money problem’? Schwartz pointed to the example of how financial services company Cuallix is using XRP, a digital currency created by Ripple, to move money between the United States and Mexico. Instead of relying on the conventional method, which is very expensive and takes several days, Cuallix buys XRP the moment they need it and a few seconds later sells it for Mexican Pesos. The speed of the transaction avoids the market volatility of both the peso and cryptocurrency, and, according to Schwartz, makes the whole process up to 60% cheaper.
As the adoption of cryptocurrency rapidly grows, so will the need for a new kind of infrastructure to support it, particularly with a view to enhancing the customer experience. Jeremy Allaire of Circle described how a new infrastructure layer of the internet is going to allow a lot of the functions currently performed by the financial industry, mostly record keeping in very proprietary siloed systems, to run on the open internet, at a radically lower cost, and with a much better consumer experience.
And he foresees a new wave of industry enabling this shift: “There are going to be very significant large technology companies built that support the move to crypto finance, just like there have been really big technology companies that have supported the move into digital media and digital communications.”
Gregoire Vigroux, a Vice President at TELUS International Europe, shared a powerful prediction with the audience at The Future of Money event. “Within just a few years, over 95% of the world’s population will hold cryptocurrencies.” Moreover, he believes that we are currently witnessing a landmark moment in history, telling the audience:
“If this was the early 1990s, we would have a panel of internet professionals telling us that the internet is coming and is going to represent a major disruption. Well, it’s now 2018 and today we’re talking about the biggest revolution since the dawn of the internet – cryptocurrency.”
The disruption of traditional financial institutions is being fuelled in part by cutting-edge customer (CX) and user (UX) experiences that are now being offered by digital currency providers. Today, more and more FinTech innovators are forming partnerships with customer experience experts like Voxpro – powered by TELUS International, in order to successfully capitalise on crypto’s increasing popularity.
With experience powering customer operations for some of the world’s leading technology companies, Voxpro has the agility, talent, and digital capabilities to ensure a world-class end-to-end experience for every user, even during periods of intense onboarding.
Leading exchange Binance, for example, recently experienced onboarding rates of up to 250,000 new users per day. If that company fails to successfully deal with the increased levels of customer contact that will naturally come their way, those users may head straight to a competitor. As crypto approaches mass adoption, companies must prioritise investments in their customer experience in order to avoid brand-devaluing issues that can come with a major spike in business.
At the end of the day, the overall customer experience provided by companies is what will differentiate them in an increasingly competitive market. Simply put, the FinTech and cryptocurrency brands that ‘put their money where their mouths are’ when it comes to investing in their customer and user experience will win the day in the modern economy.
Contact details:
telusinternational.com
voxprogroup.com
The price of bitcoin plummeted to under $6,000 in the first half of August 2018 before ticking up again days later. Here is how cryptocurrency experts have reacted to the recent price moves.
Given how new technologies have been revolutionising customer experience across a variety of sectors, proclaiming the importance for banks to embrace digital transformation may sound like old news. Haven’t all banks already created compelling online banking services by now, to satisfy the tech-savvy consumer’s demand for anytime, anywhere banking?
Well, no. The banking and financial services industries have traditionally been digital laggards, partly as a result of the highly regulated industry in which they operate and partly because senior decision makers have been slow to recognise the potential ROI. We are now entering a critical new phase in which intelligent machines are enabling – indeed, compelling – banks to fundamentally see and do everything differently. With the growing threat of FinTech firms increasingly gaining traction with consumers due to the accessibility, flexibility and availability of the financial products which they provide, banks now have a significant incentive to accelerate the move into the digital age.
Embracing the digital age
Digital transformation will affect all working practices and the way banking organisations are structured. New intelligent technologies for augmenting human performance will make it easy to achieve things that seemed impossible before.
Employees will become more speedy and productive – as well as happier and more fulfilled.
Banks will be able to reach incredible new levels of efficiency, accuracy, safety and security, and adopt radical new approaches to the way products and services are constructed.
Banks will soon be able to digitise every conversation they have with customers and then use algorithms to anticipate problems – for example, with contactless cards or credit card misuse. Based on these predictions, glitches can be prevented before they even arise.
Another way that intelligent technology can create a win-win for banks, staff and customers alike is with Robotics Process Automation. Machines can be programmed to do mundane, repetitive tasks, thousands of times faster and more accurately than humans. This frees up employees to do more fulfilling work that needs a personal touch – significantly improving customers’ experience all round.
Reaping the benefits of early adoption
Not all banks have been slow to embrace digital transformation. Here are some examples of how digital innovation is already benefiting organisations whose technology-embracing boldness is paying off:
JPMorgan Chase
The global financial services firm recently introduced a Contract Intelligence (COiN) platform to analyse legal documents and extract relevant insights and data. If their staff manually revised 12,000 annual sales contracts, it would take around 360,000 hours. With Machine Learning technologies, the same task can be done in minutes.
The Bank of America
Meet ERICA, who works for The Bank of America. You can’t shake hands (she doesn’t have any). This is the first time Artificial Intelligence has been used to help customers manage their savings. ERICA does this using AI, Predictive Analytics and Conversational Interfaces.
N26
N26 describes itself as ‘a bank account for your phone’. Using an International Bank Account Number, customers can do everything they could with a traditional bank, except faster and from anywhere. The app is integrated with Pulse26, an analytical virtual assistant that provides personal insights based on each individual consumer’s needs.
CapitalOne
CapitalOne was the first bank to offer a new way for customers to interact through a completely different channel. It integrates online banking with Amazon Echo so that customers can ask Alexa (the virtual assistant in the device) real-time information about their bank account, and perform transactions just by using their voices.
Citibank
Citibank has recently acquired Feedzai, a Data Science company that works in real time to identify and eliminate fraud. By constantly and rapidly evaluating vast amounts of data, Feedzai identifies suspect activity and alerts customers immediately.
Act now or be left behind
As the above examples show, this technology is already revealing some astonishing benefits for financial institutions. And yet, many established banking organisations are still a long way from embracing this next stage of digital transformation. According to a recent PwC study, two banks out of three in the US have not yet adopted any meaningful application of these powerful new tools.
There are various reasons for this, such as operational, regulatory, budgetary and resource constraints. But the fact is, we are at a once-in-a-decade, pivotal moment – similar to the dawning of the internet age, back in the nineties. Leaders must transform how they run their banking organisations and embed these new technologies in their business or risk being left behind by the competition.
For those banking organisations looking to press ahead with their digital transformation journey, here are some important considerations:
Recognise the importance of agility
With the maturing world of powerful intelligent technologies such as AI, organisational agility is more essential than ever before, and many established financial institutions still lack this key requirement to digitally transform their businesses.
Engage the entire organisation
It’s imperative to have engagement from all levels of the organisation, from board level downwards. This is a fundamental transformation programme that will touch every aspect of the business. To truly benefit from these innovations, an entire organisation will need to be engaged in the journey and adopt the mind-set necessary to embrace the new technologies.
Be measured about the potential results
The potential benefits of the new technology are enormous, but it’s safer to be conservative with estimates – they will still be impressive. Organisations should exercise some healthy caution, perhaps born out of previous investments in technology that only delivered marginal improvements.
Demystify the terminology
Machine Learning, Intelligent Machines, Cognitive Platforms, Deep Learning, Intelligent Technology, Artificial Intelligence, Robotics, Robotic Process Automation, Intelligent Products, Virtual Assistants, APIs…. the list goes on and on. These new capabilities are wrapped in a language that to many is impenetrable. Find ways to simplify it. Compile a glossary. Educate everyone so you’re all speaking the same language.
Create powerful practical examples
It’s important to communicate effectively at board level, in a way that demystifies the potential of the technology. The best way to do this is by creating powerful examples that show this intelligent technology in action. Take a look at how IBM is demonstrating what these technologies can do: https://www.ibm.com/thought-leadership/you/uk-en/.
Bring in business areas early
Reinforce the idea that digital transformation is much more than a big IT initiative. Bring in other business areas early to work on proof of concepts.
For the first time, the technologies now exist to radically transform all aspects of a banking organisation. The potential of digital transformation is yet to be fully realised but the warning signs for banks are clear – those that don’t act now to embrace the future will rapidly be left behind.
More than two fifths (41%) of finance back-office processes could be automated in the next five years, a new study from global customer services provider Arvato CRM Solutions and management consulting firm A.T Kearney has found.
According to the new report, 41% of finance back-office processes are set to be performed by robots by 2023, with this figure rising to 53% within the next 10 years.
Implementation of Robotic Process Automation (RPA) is set to significantly boost firms’ productivity and efficiency, as bots are 20 times faster than humans with a 10% lower error rate. Subsequently, companies that adopt this technology, could potentially receive an ROI of between 300 and 1,000% over a three-year period.
It’s also predicted that the widespread roll-out of RPA solutions will result in an annual compound market growth of 50%, with the global market set to be worth $5billion by 2020.
New developments
The research also predicts that by 2023, RPA, with the help of cognitive capabilities, will be able to make automated decisions, and by 2028 robots will be able to carry out most back-office processes independently with minimal human intervention.
The new report, named ‘Robotic Process Automation: The impact of RPA on finance back-office processes’, interviewed more than 20 technology partners and players in the field of RPA, gathering together their view on the trends and developments within the sector.
Ben Warren, vice president of Digital Transformation at Arvato CRM, Global BPS, said: “RPA will revolutionize the finance back-office, as the new technology is more accurate, efficient and can work for longer hours, depending on demand.
“This can consequently help drive revenue for a business, streamlining processes and allowing employees to spend more time on higher value tasks.
“But although the benefits of automation can be great, it’s important that firms understand that to successfully utilize the technology they will need to invest.
“A full analysis of end-to-end systems and redesign of existing processes will be initially required, and companies will need to regularly review their processes as technology continues to evolve and develop over the coming decade.”
Dr. Florian Dickgreber, partner at A.T Kearney and co-author of the study, said: “Having transformed manufacturing, bots are now set to change processes in the service sector.
“We expect RPA, the automation of structured business processes, to take over more than half of all back-office processes over the next five to 10 years.”
(Source: Arvato CRM Solutions)
