But what if we’re making a false assumption about the trade-off between growth and efficiency? This very question was raised at a stimulating discussion I took part in at the Financial Times Global Banking Summit in London back in December. We were talking about ‘Sustaining a growth mindset: Innovating for consumer needs’, and I was joined by fellow guests Claire Calmejane, Chief Innovation Officer at Societe Generale; Rishi Khosla, CEO and Co-founder of OakNorth Bank; and Andy Ellis, who is CEO of Mettle and Head of Digital Assets at NatWest Group. The event was moderated by Liz Lumley, Deputy Director of The Banker.

How can banks continue digital transformation in a downturn?

Liz Lumley launched the session by providing helpful context. Rising interest rates and inflation are a challenge to both fintech startups and consumers as the cost-of-living crisis looms and funding is constrained. Businesses are more focused on the shorter term, while consumer purchasing decisions are in a state of flux. Nevertheless, the world’s leading lenders continue to invest in technology, data and hyper-personalisation of services. These are seen as necessary steps to retain customer loyalty and improve risk management during uncertain times.

But, we asked ourselves, is digital transformation really delivering revenue growth and profitability fast enough for shareholders? The vulnerability of many fintech businesses at the current time would suggest otherwise.

Data insights that deepen customer relationships

All the participants agreed that data was going to play a central role in the future of banking, not least by providing an accurate and complete view of the customer. In essence, rich data enables banks to make better lending decisions by anticipating changes in businesses’ financial situations. Modern analytics also provide insights that customers want to know about, which gives banks opportunities to deepen client relationships and nurture their loyalty.

Artificial intelligence, sentiment analysis and omnichannel customer engagement are also on the agenda right across the sector. The advent of these technologies has led many established banks to partner with fintechs to improve the developer experience and add to their stock of digital skills.

Integrating with fintechs for better all-round customer value

Delivering more tailored banking services and real-time customer experiences is, no doubt, an attractive proposition. However, despite the temptation to snap up smaller businesses that can deliver these, Andy Ellis of NatWest Group believes fintechs should only be considered for acquisition if they align with a bank’s strategic mission and deliver a specific capability for a defined sector. While there may be no single formula for a successful partnership, effective integration is fundamental. Fortunately, banks are getting better at preserving the agile culture of startups, where so much value lies.

Meanwhile, banking-as-a-service (BaaS) offers significantly more growth potential than traditional banking, in the view of both Andy Ellis and Claire Calmejane. Looking further ahead, Claire also saw potential in greater collaboration around open data. But progress in this area will require an international framework around data standards, secure data exchange and certification.

Advocating industry evolution, not revolution

At Microsoft, we partner with banks to help them deepen and extend their relationships with clients. A key aim is to bolster customer trust through increased responsiveness and security, while anchoring digital transformation initiatives in improved customer experience. In other words, we need ongoing work to build the foundations for innovation rather than a wholesale digital revolution.

Digital transformation is a long-term process, as are the relationships that bankers seek to foster with their clients. Microsoft’s partner network, industry specialisations and technical expertise – as demonstrated by the Microsoft Cloud for Financial Services – play a key role in enabling this to happen, as well as helping businesses become more sustainable.

Looking ahead: agile banking operations that accelerate growth

One critical insight this debate revealed was the need for banks to create an efficient digital operating environment that can add products and services quickly while helping to mitigate factors like climate risk. Digital transformation can also help make lending smarter as well as faster, while growing the quantity of lending as well. As Rishi Khosla neatly put it, “The trade-off between operational efficiency and growth isn’t actually a trade-off if you’ve got a good operational environment.”

Find out more

Lead new opportunities and advancements in financial services

Scale to revenue: How to leverage fintech solutions to drive growth

4 ways to deliver a personalized banking experience

Microsoft Cloud for Financial Services: Create new value with deeper customer connections

About the author

As Client Director for Microsoft, Janet is responsible for leading the strategic partnership between Microsoft and one of the UK’s leading banks. She focuses on supporting its transformation, anchored on business outcomes and drawing on Microsoft technology and partner solutions to deliver innovation and strategic change. Prior to this, Janet led Industry Strategy for Financial Services, helping customers address industry-wide challenges and innovate for the future of the industry.

Janet has a background in Corporate and Commercial Banking, having joined Microsoft in 2018 from Lloyds Banking Group and previously held roles at Barclays and NatWest. She has a personal interest in cultural transformation and has also played an active role in supporting the inclusion and diversity agenda during her career.

The post How to negotiate uncertainty in banking: aligning growth with efficiency appeared first on Microsoft Industry Blogs - United Kingdom.

In the current economic environment, banks and other financial services firms recognise the need to embrace digital transformation to get maximum value from their technology investments and do more with less. Leveraging technology also helps businesses to navigate emerging risks while driving sustainable and responsible business outcomes internally and with their customers. But how are they approaching these challenges? Last week I attended Sibos 2022 in Amsterdam, where business leaders, policy makers and technologists came together for deep dive debates and big picture outlooks on the future of the corporate banking market, including lending, trade and treasury solutions, and the related capital markets instruments. The energy and excitement on the pace of innovation was clear and I saw many themes that resonate with where we aim to lead the market in our Microsoft UK Financial Services business.  

Geopolitical tensions, the economic environment, evolving cyber threats, the race to Net Zero, the competitive landscape and ongoing reimagination of business models, modernising policy and regulation, and the continuous innovation of what is possible with people, process and digital technology are driving rapid change in the industry. When managed correctly, this change can unlock new opportunity. 

The industry is leading in many areas of technology, product and operating-model innovation, but a responsible business purpose and sustainable societal outcomes are now firmly embedded as objectives that banks are expected to deliver. “We should not seek innovation for innovation’s sake,” noted HM Queen Máxima of the Netherlands in the opening plenary. “With each new technology, we must always ask ‘What problems are we trying to solve?’” At the same time, we need to ensure any innovation is done securely and collaboratively while being additive to interoperability of data and platforms. The IMF predicts technological fragmentation can cut a country’s GDP by five percent; the benefit of collaborative industry approaches and ecosystem business models is clear. 

Through all the customer, partner, and colleague conversations at Sibos 2022, and while contributing and learning as much as we could about new ideas and technologies, the Microsoft UK Financial Services team took away four main action points: 

1.      Transform securely  

One of the key things that was highlighted by industry leaders was the importance of getting cyber security basics right to enable secure transformation. “The human firewall is the first line of defence,” said Nicolas Trimbour, Head of Fraud Prevention and Chief Data Officer for Cash Management at BNP Paribas. It’s important to educate employees and customers to recognise phishing, scams and ransomware attempts especially while the attach surface grows with increased digitisation and growing ecosystem business models. 

AI/ML solutions can work at high performance across large amounts of data to spot fraud or suspicious activity in transactions and endpoints. An industry-specific cloud solution that uses a completely private data model, while offering full data portability can help organisations as they shift from on-premise to hybrid or cloud-native architectures. At the same time, organisations can benefit from built-in security and compliance offerings that infuse healthy cyber hygiene. 

Our security experts have pulled together resources, training and more to help your teams empower and educate your employees and customers to be cyber aware. This is the right time to focus on this with October being Cyber Security Month. Check out our Cyber Security Awareness Month resources. 

2.      Build a talent and collaboration model that supports your digital ambitions   

Banks need access to the right engineering and digital skills at scale to drive industry digitisation and innovation. This is not just about attracting the talent, but re-skilling and up-skilling current resources and creating an empathetic, flexible culture. I’ve often heard it said that the number one headwind on many banks’ ability to execute on their digital transformation strategies is access to the right talent and skills. “We need to make sure we invest in our people and support them in their growth,” says Erika Irish Brown, Chief Diversity, Equity and Inclusion Officer and Global Head of Talent at Citi.  

At Microsoft, we’re helping financial services institutions give their employees the digital skills they need. Whether that’s showing how decentralised teams can work collaboratively while working remotely, using tools to securely automate processes and workflows, or empowering pro dev, citizen dev and fusion dev teams to develop new apps, processes and reporting to make their work simpler in their domains. With 53 percent of employees more likely to prioritise health and wellbeing over work, leaders must take an empathetic approach to building a hybrid workplace. A culture that embraces flexibility and prioritises wellbeing will build a thriving organisation and drive long-term sustainable growth. This webinar with my colleague Craig Wellman goes into the importance of planning, leadership and culture in transforming financial services. 

3.      Align your ESG objectives to your business value 

The banking industry has a societal obligation to direct funding, capital, investment and lending to businesses in the real economy that will move the needle positively on ESG measures and on carbon reduction. And not only do customers, stakeholders, investors, regulators and governments expect it, but it’s also good for business. “$97 trillion needs to be invested to get to net zero. That’s a massive opportunity. It’s the most strategic and important thing we can do as an industry,” says Marisa Drew, CSO at Standard Chartered. 

The best way to start building effective ESG strategies is to tie it into your business value. Some institutions are already including their sustainability results in their financial statements. However, the industry faces challenges. A lack of global standard around climate reporting, mixed with slow manual processes and siloed data can affect how quickly you can build an effective strategy. “We don’t have perfect data, but we have actionable data,” says Gill Lofts, Global Financial Services Sustainable Finance Leader at EY. 

A unified and resilient cloud infrastructure like Microsoft Cloud for Sustainability can help you gain visibility across your data, drive efficiency, track and minimise your environmental impact and create sustainable value chains. We also need to drive more cross-industry collaboration.

“This is a planet-scale problem that needs planet-scale innovation and collaboration,” says Bill Borden, Corporate Vice President of Worldwide Financial Services at Microsoft.

When we made our sustainability commitment in 2020, we also decided to share our learnings, results and practices, and increase our focus on supporting our customers drive their own ESG agendas. 

4.      Lead on innovation that can open new sources of value  

Recent innovations are increasingly moving from POC to production adoption across digital assets such as Central Bank Digital Currencies (CBDCs), Non-Fungible Tokens (NFTs), Artificial Intelligence (AI) and Distributed Ledger Technology (DLT). 

While AI has been leveraged in organisations for a long time to reduce risk and streamline operations, organisations need to take a novel approach to AI to create new avenues of growth. “People don’t think of AI as a way to get to a new digital business,” says Sameena Shah Managing Director, AI Research Executive, and Chief Transformation Officer for Client Onboarding at JP Morgan Chase. “You need to bring people with a business mindset together with people with AI knowledge.” These groups, known as fusion teams, can help organisations deploy solutions up to two and a half times faster than siloed teams. 

“Cash as a form of payment has been declining, but cash in circulation is growing. We have also seen over the past 10 years the rise of digital assets, including cryptocurrencies and CBDCs,” says Marion Laboure, Senior Economist at Deutsche Bank. 

One thing digitisation can do is help with financial inclusion. The 1.7 billion people who don’t have access to financial services can potentially use CBDC to start using financial services without a bank account. 

NFTs are currently used to tie ownership to a digital asset. However, as they evolve, it could allow the construction of the end asset to be more sophisticated. “That’s when it becomes more interesting to us in Finance. We can look at a new type of securitised asset, a new type of yield profile that may or may not be totally uncorrelated with traditional markets and assets,” said John Egan, CEO of L’Atelier at BNP Paribas. In fact, the US Securities and Exchange Commission are already looking into NFTs as a security. With no intermediaries, Decentralised Finance (DeFi) is less complex and more agile than the traditional central counterparty model. However, it is probably riskier. Experts suggest a hybrid model for DeFi, with the right regulatory guiderails to manage AML, fraud, conduct risk, and cybercrime. 

“Web3 and blockchain technologies are unique because they create a different, efficient way of executing processes. They can be best served to decrease complexity, increase security and transparency,” says Willayna Banner, Microsoft’s Head of Web3/Blockchain in Financial Services. Learn how organisations are using blockchain to transform functions such as trade finance and commercial specialty insurance. 

Collaborating for industry growth and responsible innovation 

As we shared these thoughts and ideas on the future of banking at Sibos 2022, a recurring theme was industry collaboration across the widest perimeter of stakeholders. To drive growth while being resilient, secure and compliant in our changing industry, our key priorities must be removing friction, increasing interoperability and improving the service experience for our customers, empowering our teams, and driving inclusive, sustainable innovation. 

Find out more 

Microsoft Cloud for Financial Services 

Microsoft Dynamics Customer Service Webinar for Financial Services: The changing role of the Digital Contact Centre

Rethinking the Customer Experience | Microsoft

About the author 

Niall is responsible for defining and leading Microsoft’s strategy for Financial Services in the UK. His focus is on helping Microsoft’s customers’ address industry-wide challenges, adapt to new regulatory frameworks and achieve business transformation through the adoption of Microsoft technology and partner solutions. He works to deliver on the cost, growth, risk and regulatory agenda front-to-back through the enterprise. 

Niall has experience in consulting, partner ecosystems, and large programme delivery in Financial Services. Niall has focused on operating model transformation and technology solutions for business challenges in Banking and Capital Markets, often in the regulatory change context. He has worked mostly with international banking groups and has lived in Hong Kong and London. 

The post The future of banking: How to stay innovative, collaborative and secure appeared first on Microsoft Industry Blogs - United Kingdom.

But a topic that seems to be top of mind in every meeting I’m in at the moment is supply chain risk. In particular, how we can balance it against the risks that come from concentration.

So, what do we mean by concentration risk? And where should organisations stand on the axis between that and the risks that come with multiple-vendor supply chains?

In this article, I want to unpack the debate with particular regard to FSI organisations, and offer some ideas for how CISOs can move forward securely and with confidence.

The risks of a multiple-vendor approach to security

Many of the customers I speak to face a dilemma: stitch together multiple security vendors from the top right of the Gartner Magic Quadrant, or go with a best-of-suite approach with a smaller number of vendors?

Both approaches have their benefits and drawbacks. Historically, the Magic Quadrant approach has been the most prevalent, because customers have felt that buying all the best-in-class products and services will give them the best level of security.

It’s an approach that’s been followed by lots of CISOs for years also because it’s been easy to justify to the board. But it’s one that comes with a number of risks.

Integrating multiple security vendors has always been a challenge for organisations. It’s complex and costly, and it can be difficult to keep the skills within the organisations to maintain it. But while these challenges have been known to organisations for some time, what’s become apparent more recently is the security risk a supply chain poses to an organisation.

Put simply, the more vendors you have in your environment, the higher your risk. This really came to light following the SolarWinds incident. One of SolarWinds’ products was compromised and it had an impact on a large number of SolarWinds’ partners. The hackers used the vulnerability in the SolarWinds software as a way to gain access to their customers environments.

And these types of attacks are growing. In fact, 45 percent of organisations worldwide will have experienced attacks on their software supply chains by the end of 2025, according to Gartner, a three-fold increase from 2021.

It’s something organisations are acutely aware of and was the focus of the City of London Innovation Challenge, which I presented at a few weeks ago. The event brought together FSI organisations such as Nationwide and Hiscox alongside tech companies to try and tackle the challenge of supply chain risk.

Managing supply chain risk

Companies try to stay on top of their supply chain risk by thoroughly auditing their suppliers. The challenge with this is that the answers the organisation gets back are only as good as the questions they ask. What’s more, the data from those audits quickly becomes out-of-date, because an audit isn’t a continuous process.

Some of the questions that organisations need to ask are:

• Does my risk of a breach increase as I increase the number of suppliers in my environment?
• Do I trust that my suppliers are dedicating the right level of investment and resources to their own security standards?
• How do I validate this on an ongoing basis?

Digital supply chain risks demand new mitigation approaches. Things like more deliberate risk-based vendor/partner segmentation and scoring, requests for evidence of security controls and secure best practices, and a shift to resilience-based thinking and efforts to get ahead of forthcoming regulations.

But another approach to reducing supply chain risk is to reduce the number of vendors you work with. However, this presents another type of perceived threat: concentration risk.

Balancing concentration risk for FSI organisations

The basic concept of concentration risk is simple: if you have too much of your environment that’s dependent on one vendor and something happens to that vendor, it can take down your whole environment.

Companies have typically addressed this by spreading their risk across multiple vendors, which means if something happens to one then they still have the majority of their environment running.

In the financial services industry, companies’ aversion to concentration risk is exacerbated by regulators who require you to have an exit plan in place to mitigate the impact if one of your systems is compromised; you need to be able to keep your services running. A lot of organisations see that as a reason to have multiple deployments. Because if something goes wrong with one, they have an exit strategy by moving things from one place to another.

This is really where the dilemma comes from for financial services organisations. How to balance the regulatory need to have an exit strategy if something goes wrong with the growing prevalence of supply chain attacks?

You might think that, as a Microsoft security professional, I would be advocating to move everything to our security infrastructure. But that’s not what I’m advocating for. In fact, I think it’s impossible to go all in on Microsoft from a security perspective, because we don’t play in every area of security.

What I believe is that you need to keep your supply chain at a level where it’s manageable from a supply chain risk perspective, manageable from a skills perspective, and also from a cost perspective.

You don’t need to put all your eggs into one basket, but try not to have so many baskets that it becomes a challenge in itself to carry them all.

The post How FSI organisations should balance supply chain and concentration risk appeared first on Microsoft Industry Blogs - United Kingdom.

Today their role hasn’t necessarily changed. However, the value organisations place on them certainly has. The focus is shifting from fitting customers around business processes to reshaping contact centres around customers’ needs.

For years, the role of contact centres was limited – often confined by traditional 9-5 working hours. It was predominantly aimed at driving down costs and improving efficiencies.

This was reflected by the way companies measured their success. They had KPIs ranging from targets for call volumes to queue times and abandonment rates. These inward-focussed efficiency metrics have, however, consistently failed to put the customer at the centre of the service.

In today’s increasingly digitalised environment, this is no longer sustainable. Nothing is more valuable than customer experience and customer outcome. Organisations are fast adapting to the idea that great customer experiences convert into customer loyalty and new customers. People increasingly sharing their positive and negative experiences online. As a result, financial institutions can no longer afford to underestimate their services.

Contact centres are transforming. From unempathetic, 9-5 services reliant on a standard agent script, to becoming a customer experience centre. They don’t just focus on a service but the total customer experience across an organisation.

This presents a new opportunity for financial services companies to become fully connected organisations driven by technology. Embrace solutions that connect and unify all their channels – from digital to physical and mobile. As a result, they can create seamless, connected customer experiences that distinguish them from their competitors.

Understanding the needs of financial services customers

To better equip contact centres to service customers, we first need to look at how the needs of these customers have changed over time.

The past few years have seen the customer landscape evolve and diversify significantly. Alongside more traditional customers, organisations are increasingly welcoming a new generation of tech-savvy, socially connected customers. They come with a fresh new range of expectations.

Empathy, passion and hyper-personal connections are key drivers behind their demands. They centre around being understood and supported throughout their customer journey. Failure to do so can have catastrophic effects for organisations. Not only will it risk customers leaving their service but also expressing their frustration online.

This means one thing:

The more you know your customer, the more you can tailor your service to them.

A customer who’s been with your organisation for decades will be likely to seek support through traditional landlines or your website. On the other hand, the younger, digitally savvy customers will want mobile and self-service options, pursuing a more digital experience.

So how can organisations make sure that all these needs and preferences are satisfied? Put simply, the more diversified the audience, the more diversified the services.

Breaking down silos in contact centres

To really drive customer satisfaction across your evolving customer base, you need to invest in omnichannel engagement. Encompassing anything from social media to instant messaging, webchats and physical customer support, customers choose their channel of preference.

But this hasn’t always been the case for organisations in the financial services industry. Organisations may have invested in technologies to support a growing number and type of customer-facing channels. However, these are often used in silos and operated by different vendors.

This leaves customer data confined. Additionally, it prevents agents from surfacing customers across multiple systems. Most importantly, it prevents organisations from leveraging customer insights and using them to better orchestrate the customer journey.

Organisations who adapt and unify these siloes will be more likely to succeed at improving the customer journey. Doing so will empower employees to be more collaborative and productive. It will also reduce time to serve customers and provide an overall higher quality of service.

But it’s not enough to change the internal ways of working. Organisations must improve the way they build relationships with their customers. Looking ahead, they need to improve their ability to capture interactions in the moments that matter. They must continuously adapt and improve using this new-found knowledge.

To do this, they need an infrastructure and technology foundation. One that can empower them to capture these moments, understand their context and orchestrate the best, most optimal route across any function. All to deliver fast, impactful and personalised services that convert prospects into long-lasting advocates.

The rise in automated self-service technology

In a world that increasingly relies on digital innovation and newly found tech capabilities, automation can play a key role in improving customer services and contact centres.

Until recently, these have had virtually no front-door filter standing between customers and operators. Self-service has only just started to become a reality, leaving agents to deal with more complex cases.

This is where automation comes in. As data-based insights and capabilities become the norm, organisations have the opportunity to identify the simpler customer queries. They can then direct them to self-service areas, virtual assistants and AI-powered services.

Conversational virtual assistants are a powerful tool. Especially when it comes to harnessing data to gain insights on the customer. This data can be used to understand customer demands, their purchase history and previous complaints and other crucial information that can help them address their query entirely autonomously.

If the customer wants to transfer to a human, all that data can be carried across. Using AI, potential knowledge articles and recommendations, agents can successfully solve a customer’s request.

AI can also assist with more complex tasks such as pre-authenticating customers before speaking to an agent. This time-saving feature benefits both the customer experience and a contact centre’s inward metrics. With the addition of voice-biometric technology, a virtual agent could also help detect and prevent fraud by comparing a customer’s voice against their customer profile. A more cost-effective solution to training agents on fraud prevention and extra reassurance to customers that their money is secure.

These kinds of innovations aren’t there to make calling a contact centre redundant. There will always be a need to speak to agents to help manage banking relationships or advise on future monetary decisions. But for simpler, everyday tasks, financial organisations can empower customers to self-service rather than waiting to speak to an adviser.

Challenger banks have been particularly good at pushing innovations in this way and raising the customer service bar. Many of them are truly revolutionising retail banking by reducing typical applications processes from a week to minutes. By promoting a digitally-native experience, more traditional banks are forced to reconsider their own customer experience.

Keeping customer data secure in the cloud

Data breaches happen far too frequently today. And as financial institutions can hold an entire customer’s wealth – from mortgages to loans to bank balances – there’s an enormous responsibility to ensure that data is kept safe and secure.

This presents an immediate challenge to spend millions innovating on an existing IT infrastructure. This may require a huge amount of capital investment and resources to maintain. We’re seeing many leading insurance companies and banks choosing to migrate their contact centre operations from on-premise servers to the cloud.

If you consider Azure for example, Microsoft has already spent billions creating a secure cloud solution and helped protect leading organisations from cyber-attacks, fraud and Denial-of-Service on an intraday basis. This reassurance makes migrating to the cloud not just a business decision for better data security, but also for greater cost efficiency by eliminating the many overheads that physical servers require.

The cloud also offers advantages when it comes to complying to financial regulations such as how organisations handle data, offer services and prevent financial crime. By working with a trusted cloud provider like Microsoft, a lot of this responsibly can be shared and evidence can be provided to show that data is being kept securely and systems are operating within regulations.

An all-in-one solution for financial services contact centres

Financial organisations are changing. Their reputation and global presence is increasingly tied to customer experience, online reviews and the quality of their services. As a result, they must reimagine their services with a new, more demanding and diversified customer base in mind.

At the same time, switching banks or insurers has never been simpler. Therefore, it crucial for organisations to innovate their contact centre and make the end-to-end experience as efficient and helpful as possible.

The key is to not consider every channel as a separate challenge. A 2021 Forrester report commissioned by Microsoft, Boost Your CX With A Better Integrated Contact Center, CRM, And Collaboration Systems, found that 74 percent of contact centre agents in organisations typically use four or more applications to service customers. This gives a disconnected experience for agents. But by implementing an all-in-one contact centre solution such as Microsoft Dynamics 365 Customer Service, financial organisations can manage their operation through a single platform. From initial customer contact to automated self-service with AI virtual assistants, to agent-guided case management and back office collaboration with Microsoft Teams.

This allows live agents to interact with customers on any channel. They have a complete overview of all previous interactions to give a frictionless and effective customer journey. It also helps to free up their time. So they can focus on the most complex and sensitive requests that virtual assistants aren’t equipped to handle.

Find out more

Envisioning the Future of Customer Experience

Microsoft Dynamics 365 Customer Service

About the author

Chris leads the Dynamics 365 Customer Engagement portfolio for Microsoft UK within the Dynamics 365 Business Group. Chris is responsible for developing and orchestrating the go-to-market strategy across this portfolio for the UK geography to generate awareness, create excitement and drive business development. The Dynamics 365 Customer Engagement portfolio is a suite of intelligent front office business applications designed to accelerate digital transformation across sales, marketing and customer service.

The post How data and AI will transform contact centres for financial services appeared first on Microsoft Industry Blogs - United Kingdom.

Digital modernisation is quickly becoming critical for business success in financial services. Especially in areas like customer experience and business process efficiencies. But the key to any modernisation is innovation. As a result, many financial institutions now see value in digitising and automating business processes to address three challenges:

1. How to provide more authentic and personalised customer experiences.
2. Reducing business process inefficiencies.
3. How to digitally transform and innovate whilst needing to maintain existing core and legacy systems.

With simple and effective no/low code applications such as Microsoft Power Apps, organisations are finding innovative ways to manipulate data and overcome these challenges. This makes these quick and easy-to-develop business apps a common solution across financial services. Here’s some examples of how this technology is being implemented.

Creating a more valuable customer experience

The expectation around customer experience is changing, resulting in more customers showing a lack of loyalty to financial brands. According to Gartner, “banking customers are increasingly demanding authentic human interactions.” This is a level of service that financial organisations need to provide across all channels to boost their customer engagement and loyalty.

When thinking about human interactions, automation may seem like a step in the wrong direction. But by digitising operational processes in the backend, financial institutions are finding innovative ways to free-up employees. As a result, they can focus on delivering the best customer experience.

Metro Bank for example has driven down many of its business inefficiencies by innovating with a retail experience in mind. In-store greeters now use a tablet with Power Apps to access a customer’s details the moment they walk through the door. This helps appointments feel more efficient and personal. If meetings over-run, the customer is free to leave the bank and is notified via text message when to come back for their appointment.

Another great example is how Standard Bank’s mobile application helps digitise the process for maintaining ATMs. Developed in Power Apps in just 24 hours, it allows employees to geotag and update a machine’s status during routine inspections. Automation in the backend then categorises the data and flags any issues to the appropriate department. This ensures an ATM is promptly fixed to help maintain a premium brand image for customers.

Finding and solving business inefficiencies

If business processes are negatively impacting an organisation’s performance, financial institutions should look for a solution with two aims. One, to reduce inefficiencies and two, increase profitability.

Automation can play a key role in both goals and provide a range of business benefits. It can remove paper-based processes, reduce the risk of human error and offer better access to data insights.

UK insurer William Russell has done just that by creating a Power App solution to automate its online quotations. This provides a faster, more efficient service for customers. Once a request has been raised, a sales agent is promptly alerted to call the customer, and provided with all the necessary information to have a productive conversation. As a result, they’ve been able to convert 50 percent more quotes into sales than before.

Removing legacy barriers to digital innovation

On average, financial institutions can spend up to 70 percent of their IT budgets on maintaining and servicing core systems and legacy applications. But by allocating resources this way, organisations reduce their time and ability to consider new innovations. At the same time, they risk delivering a poor customer experience with outdated systems.

This is a digital modernisation barrier that no/low code application and automation platforms can help address in two key ways:

• Create modern user interfaces or mobile applications that seamlessly integrate with any existing business applications, workflows and processes to change how employees interact with legacy systems.
• Extend and innovate legacy systems with Robotic Process Automation to help get more value out of a core infrastructure and ensure it can integrate with other modern applications.

The importance of innovation for financial services

Innovation is fundamental for any business growth. Whether you’re considering how to deliver more personalised customer engagement, reduce inefficiencies or implement new solutions. So if you’re considering how to begin innovating with no/low code, here’s some things to keep in mind.

Firstly, pinpoint any of your current business processes that aren’t operating as well as you’d like or delivering the right level of insights. This will help you consider what use cases could drive your transformation to improve these inefficiencies and allow you to match the technology to the best approach before investing in a solution upfront.

Innovation can come from any part of an organisation. Always get input from a mix of IT and business teams when doing this research. This ensures you understand what pain points and inefficiencies exist within your organisation. It will also help ensure any new technology you bring in will work alongside the people use it day-to-day.

If you’re not sure where to start, see how implementing common use cases such as improving manual or paper-based tasks and reducing repetitive or data-heavy processes can improve your efficiencies. Then once you’ve got the ball rolling, it’ll be easier to identify other inefficient processes that could be improved through digitalisation.

There’s a wealth of potential for no/low applications in financial services. With tools like Microsoft Power Platform, you can have a solution up-and-running in a matter of days and weeks rather than months and years.

Find out more

Discover the Total Economic Impact of Microsoft Power Automate

Watch on demand: Intelligent Operations in Financial Services: Transforming with Power Platform

Boosting the innovation of banking business models

Innovation blog (tba)

About the author

Lucy leads the financial services industry team within Business Applications at Microsoft. She is passionate about helping financial services organisations transform, delivering improved ways of working and amazing experiences for their customers and employees. She has spent her entire career in technology, mainly in the enterprise business applications space. Prior to joining Microsoft, Lucy was an early member of the Salesforce UK business. Here she spent 15 years in a variety of roles – gaining a deep understanding in how to help organisations radically transform their customer experience.   

The post How financial institutions can digitise and automate business processes with no/low code appeared first on Microsoft Industry Blogs - United Kingdom.

With less of a product-centric approach, these banks are building innovative cloud-native platforms from the ground up in as little as 12 months. They offer customers an analytical view of their spending habits alongside useful banking features to empower more control of their money.

But even in this space, digital banks are only just scratching the surface. What happens when you start to really understand the behaviour of a customer or business on a transactional level? You open up a wealth of financial and non-financial services that can help improve a customer’s way of life.

Adapting a traditional banking model for the digital consumer

Banks have the ambition to change. However, many are still tied down with high IT operation costs from supporting legacy systems. As a result, we’re increasingly seeing banks across the world looking to ‘create capacity’ and reduce these overheads.

If they can find ways to increase their innovation budgets, traditional banks have a few ways to modernise and keep up with their digital competitors. Right now, we’re seeing three key models being used in this space:

• Leveraging an existing legacy system by adding an API layer to enhance a customer’s digital experience. This allows the bank to integrate with other open banking sources. They can better analyse transactional data to offer more customer-centric features. A faster way to keep pace with other digital banks but ultimately still limited by the legacy.

• Creating a digital sub-brand in the retail space can appeal to anyone looking for a richer banking experience. At the same time, they don’t lose the consumers who still prefer using a trusted provider as their primary account. This does raise an immediate challenge of maintaining two cores – an expensive legacy system with little insight into customer spending habits, and a paralleled digital platform with more discretionary spending but only a small amount of data to target customers with.

• This leads to a third model that we are seeing more and more. Banks building a modular cloud platform to replace their core and take full advantage of the digital space. This approach has more complexity. It requires the new cloud-native system to still support a breath of banking products to maintain the bank’s existing customer base. For a business transformation on this scale, banks should consider simplifying or decommissioning certain financial products in place of new data-driven services. But the outcome will always be a more agile business that has something to offer customers and businesses of all shapes and sizes.

The potential of data-driven and AI banking solutions

By shifting from a product-centric model to one that prioritises customer experience, both traditional and digital banks have more opportunities to support customers in achieving their own personal or business goals.

The key to this is analysing behavioural data and spotting patterns that can prompt a related recommendation or service. In the financial space this could be predicting when a customer may be late paying their bill and reaching out with a solution to extend their credit. Or for non-financial services, like combining a customer’s eco-friendly transactions with smart fitness data to show a holistic view of their carbon footprint.

A second area to consider is how banks could use their partner ecosystem or existing customers to make personalised recommendations for businesses.

Take banks that work with farmers and other agriculture-type services for example. Every year around harvest time they know farmers will request a loan to lease equipment. They use AI to discover the organisations within their customer base that lease farming machinery. Why not approach the farmer with a pre-approved loan when harvest time rolls around and details to connect the two businesses? This turns the whole experience from a product with a transaction rate to a value-added service supplied unexpectedly by the bank.

The goal is to make customers part of the bank’s ecosystem. If the bank can understand what the customer’s products and services are, they can matchmake or connect the customer with opportunities to grow their business. Plus, it ultimately helps the bank grow its own revenue and profit.

Creating a cross-industry banking ecosystem

Transaction data can offer a degree of insight into when, how much and who customers spend money with. But without the SKU level data, banks still don’t know anything about the purchases themselves. Retailers on the other hand are the complete opposite – knowing what they’ve sold but little idea who they’ve sold to.

If banks can create a proposition to bridge that gap. They then can use AI to identify patterns in a customer’s buying behaviour. As a result, they can make personalised recommendations to use partners in the bank’s ecosystem. From special offers on travel insurance for people who fly regularly to recommending eco-friendly brands to sustainable shoppers.

When you consider also the range of customers a bank can have – SMBs, corporate, retailers, manufacturers – this proposition can also go a step further. Banks can connect customer-to-customer and improve the value chain for everyone involved.

Say a farmer produces milk and distributes it to a manufacturer of yogurt and cheese. This is then moved on to a wholesaler and finally the end retailer. If each business was a customer of the bank, they could help remove data silos and interconnect them. This will benefit the entire value chain.

If milk demand rises, the bank can link the manufacturer to more milk farmers in its ecosystem. Or if the farmer has a surplus of milk this month, the bank can recommend other manufacturers to do business with. A smart decision to help accelerate the business’s growth. It also turns the bank from a financial service into an industry partner.

Envisioning the bank of the future

Whatever digital banking model a bank chooses to invest in, it’s essential they first define their new customer journey. This will determine what data, AI and advanced analytics the bank needs to achieve this goal. They can then start looking into partners that can deliver those capabilities.

This is where Microsoft’s ISV partner ecosystem helps digital banks fast track their implementations. Using Azure as a modular platform, new solutions and services can be plugged in as required in ways a more monolithic core banking platform could never do.

It’s important to remember that the success of digital banks isn’t solely down to the fintech or platforms they are using. It is the change of mindset that traditional banks need to embrace – shifting from product-centric thinking to experience-centric action. With that in mind, here’s some things to consider:

1. With more and more banks moving into the digital space, make sure you are clear on your digital proposition. What customer needs will it address and how can you achieve this better than other providers?
2. When you’re ready to progress, keep in mind that it’s not just the technology that you need to have in place. Your business also needs to rethink how it operates and be willing to make changes to move the organisation forward.

Find out more

Get insight to the latest modernisation strategies in the Digital Banking Playbook 2021

Grow your business with Microsoft Cloud for Financial Services

About the author

Steve is a senior industry architect at Microsoft Industry Solutions, working for the worldwide team. He leads digital transformation for Microsoft’s largest and most strategic Financial Services customers across the globe. He specialises in core banking, payments, and the design and delivery of neo-banks on the Microsoft Cloud platform. Steve has over 25 years of experience in various leadership, architectural and advisory roles. As a result, he has been instrumental in leading banks on their journey to the cloud.

The post The rise of digital banking: where do we go from here? appeared first on Microsoft Industry Blogs - United Kingdom.

AML-KYC has been the primary focus for financial regulators. However, increasing attention is being paid to cyber risks and fraud, with more emphasis on the overall effectiveness of a bank’s approach rather than just adhering to rules.

For larger banks, there is already significant effort required to consolidate data, profile customers and transactions and to detect and investigate threats. This is only expanding as regulations become more extensive and watchlists continue to grow.

Multiple teams, systems and solutions are applied to detect anomalous behaviour and there is often overlap in these efforts. Up to 30 percent of money laundering activity may involve fraud as well – and a portion of that could also be linked to cybercrime.

With this in mind, it makes sense to think about financial crime in a more holistic fashion. This is exactly the shift we are seeing today. More organisations are considering how to optimise their teams, processes and tools to improve detection insights and reduce rework.

While there are certainly benefits to doing so, overcoming these existing silos in a large complex organisation is no mean feat.

Unlock the value of data by reducing siloes

The ultimate vision is to have a single, secure data platform that brings together all data from across a bank to help support risk decisions in real time. This can then be complemented with processes and teaming models that enhance collaboration between case workers. A single operations centre may work for some.

However, consider how entrenched these siloes may be within large banks. Attempting to integrate these systems might be a long-term North Star to aim for. Instead, it may be initially more appropriate to take smaller and more actionable steps.

Distinct financial crime teams have spent years focussing on their metrics and deliverables. So simply getting people talking regularly or sharing data in a weekly stand-up is a great starting point. Recently, a bank reflected on a series of perimeter attacks picked up by their cybercrime team, logging it as a COVID-related anomaly. However, once the fraud team got wind, these were linked to a vulnerability in account numbers being issued sequentially – helping them quickly change their approach and reduce future vulnerabilities.

At Microsoft, we’re working with a group of banks to take collaboration a step further. Pooling data to collectively get better insights of how money moves around the country and more easily pick up on transactions that might be suspicious.

For banks coming together like this, both data privacy and competitive information is a concern. But through the use of Microsoft privacy enhancing technologies, each banking team can share encrypted data representing the history of all suspicious transactions they’ve investigated and the results. All without sharing underlying data that they may not want to disclose.

These can then be put into a model with insights from the participating banks. This gives a more accurate dataset than any individual bank could achieve on their own. Additionally, ‘post suspicion’ investigation information can be shared between banks using secured documents that can only be accessed by selected recipients in the other organisation.

We’ve seen similar initiatives starting in Singapore and the Netherlands, which shows the mindset change happening now across the financial world. Sharing information across borders and organisational boundaries to enhance everyone’s collective AML capabilities.

Finding efficiency in AI and automation

Sharing data between teams and organisations may be the ultimate goal. Additionally, there’s still an optimisation role for technology in how banks investigate cases post-detection.

For example, fraud systems have had a mini revolution over the past 10 years. They’ve moved from determining whether a transaction is fraudulent using individual data points to leveraging more in-depth knowledge about a customer’s spending habits.

While this creates a more insightful view, it’s not easy to interpret this volume of data using a set of rules. However, you can ask AI to spot what’s anomalous within the data. Using a platform like Microsoft’s Azure Sentinel, behavioural analytics models can look for anomalies at the cyber level based on a combination of data. And all while keeping within any existing rule sets the bank has in place.

So if AI can lead to more accurate fraud detection, can the same be useful for AML?

A common approach is to apply AI on top of the bank’s existing rule system. Then, using all available data, it can provide a rating on if a detected anomaly requires further investigation.

This has many obvious benefits from a productivity and efficiency perspective. A low rating could be the difference between an investigator spending minutes double checking a case to hours looking deeper into the transaction history.

Regulators are becoming more open to using AI and automation in this space. Not just as a guidance to reduce work for investigators, but also for optimising workflows and processes.

Human workflows like logging into systems, pulling up records and combing documents for the right data are all tremendously time consuming. Through a solution like Microsoft’s Power Platform, these human and system workflows can be automated and even combined with cognitive services for more advanced tasks – such as extracting key information from supporting documents during an investigation.

A significant bank can spend up to 60,000 hours across its case team performing annual KYC checks for existing corporate customers. However, AI can support these checks even if 20 percent still need to be investigated further. As a result, a bank can save a substantial amount of time and resources and put them to better use.

Use AI to improve business processes

The rules-based systems banks use today fulfils an important compliance role. Yet it may not be very effective at detecting generally anomalous behaviour. This presents an opportunity for those who want to circumvent the systems.

AI is very good at detecting anomalous behaviour. As a result, it can help cover those gaps. But it probably can’t solve the root of money laundering problems, at least not until things like universal disclosure and sharing of information is more accessible.

But can AI help banks get more accurate at detecting and make AML less of a problem for customers? Absolutely. And utilised in the right way, it can help a bank dramatically enhance the total quality of its operation and the productivity of its workers – all while still staying compliant.

This starts by thinking about your organisational structure and the technology you’re using. Here are some steps to keep in mind:

1. Make sure information is being properly shared within your organisation. Both weekly stand ups and virtual team meetings can help get different teams out of their siloed thinking.
2. When thinking about your data strategy a unified customer and transaction data profiling solution is your North Star. Keep this in mind while working within existing constraints. What steps can you make towards that single data platform that can make a difference today? And what technologies can you implement that will be as relevant today as they are in the future?
3. Don’t think of AI and automation as solving every problem. Find the 20 percent of investigation processes that are burning through your time and consider what human workflows you could automate within your financial crime processes. Then, partner with a cloud provider that understands automation and cognitive services to help you extract data or search entries automatically and build a focused model that will land you a couple of quick wins each month.

Find out more

Microsoft Cloud for Financial Services

Redefine risk management in an era of data and disruption.

Empower intelligent banking

Risk assessment and compliance guide for financial institutions

About the author

Rupert is a Global Specialist for Financial Services in Microsoft’s Industry Solutions team. In this role he meets with strategic customers and partners globally to share Microsoft’s technology strategy in financial services, learn from their successes and to support Microsoft engagements. As such he has practical insights into successes and challenges relating to the use of leading edge Microsoft and partner technology in financial services around the world. Particular areas of focus include data driven solutions for Risk Management, Financial Crime and Data and AI in banking scenarios.

The post How AI and collaboration are shaping a smarter future for anti-money laundering appeared first on Microsoft Industry Blogs - United Kingdom.

When we talk about app innovation, we’re talking about exploring new ways to become more agile as organisations. I work with a lot of customers in the financial services industry and they all have one thing in common: they want to be more agile.

However being ‘more agile’ means different things to different financial service businesses depending on their starting point. Let’s break down the goal of app innovation into three horizons.

Modernising legacy systems to unlock and drive value

The first horizon is to have app innovation support legacy modernisation. “How can the cloud better optimise and enable the stuff we already run?” The focus is on efficiency: making things easier to manage, less onerous to upgrade, more sustainable. At the other end of the scale, the third horizon is all about the net new. How can app innovation empower us to bring new or better products to market? Or radically transform the way we bring products to market, expand our offerings to new markets, or bring new services online?

The shades of grey in between is the second horizon. The focus here is on things like transformation automation, or even simply moving applications ‘up the stack’. This means moving from manually managing Virtual Machines to leveraging Platform-as-a-Service (PaaS) offerings that can help streamline operations. Because innovation doesn’t have to be radical. Sometimes the most effective innovations are the incremental gains where we pay down some of the technical debt we’re carrying, slowly creating more agility, power, and momentum, ultimately allowing our teams to do more with less.

Here I want to unpack a few of these themes and shine a light on the great potential that app innovation in particular offers financial services organisations.

The value of business process automation

Technical debt is an analogy I often use to explain the challenge many financial services organisations face. Just like financial debt, the bigger the amount of technical debt you carry, the more interest you have to pay on it just to stand still.

But if I can pay down some of my technical debt, I can reinvest that interest in accelerating part of my organisation’s momentum in the right direction. For financial services organisations, this second horizon transformation can be extremely powerful.

Say you’re running an application that requires hundreds of virtual machines (VMs) to function. Somebody’s patching those VMs, manually making sure that the middleware on them is up and running. They ensure the connectivity, disaster recovery, the backup plans are all in place. Additionally, they build and maintain the data and applications that deliver business value and run them on those VMs.

If you can move some of that to a platform or service offering that manages that for you such as Azure, you can automate that process and reduce the manual labour. This is what we refer to as ‘moving up the stack’. Patching and updating becomes something you do with configuration. It may seem obvious to developers and development leads, but often the infrastructure status quo hampers the ability to see that bigger picture and build the business case for the move to PaaS. So it’s all about efficiency in the total cost to operate. How do you automate more of what you do, so you can move customers up the stack, free the teams that build these systems to spend less time manually overcoming hurdles and spend more time delivering business value?

Embrace an agile developer culture

A scenario that happens a lot in financial services is developer teams want to experiment with a new service. But they often spend more time filling out paperwork to request the infrastructure they need than it would actually take to do the development. However, by automating the secure creation and management of those environments, we can build agile dev teams.

Within policy controlled environments, we can create sandboxes where within minutes developers can experiment to see if the idea has legs and they want to scale, or if it’s not what they thought it was. Scale fast or fail fast, as they say.

Having the ability to be agile, to experiment, to test and learn, to play with new services quickly in an automated way, means you can genuinely innovate faster. And that is my goal: to unlock our customers’ ability to execute on their innovation and vision.

Develop a culture of innovation and change

When it comes to introducing new technologies, one of the pieces of the puzzle that is often overlooked is process. How do we create a culture of sharing best practise, encouraging reuse – a culture of inner sourcing? How do we encourage the collaboration environments in which developers can share the technology they build within their organisation? How do we promote reusability inside an organisation?

That’s where development collaboration platforms like GitHub become really powerful. It’s not just source control. It helps develop collaboration and empowers developers to reuse assets. You can do that by bringing the open-source approach into your own business and fostering that culture. It’s about saying: within my business, any business unit can take what I’ve built and reuse it or extend it or contribute back to it, but it’s not a public thing.

But a hurdle organisations need to overcome is feeling overwhelmed by the prospect of a cultural transformation. I often hear: “It’s such a big problem. I don’t know where to start. Huge cultural transformation. We’ll never get there.”

The key is to break the process down into bite sized chunks. Start with one key area of the business for one product, a set of workloads or a service line. Demonstrate the value of transformation in a smaller project. You’ll learn a load of lessons on the way about where the organisation is in its readiness to embrace that type of transformation. This may be politics, technology or real capabilities.

From there, you can grow. It typically takes a senior leader who believes in the project and wants to make it happen, as well as an engineering function that’s willing to embrace different ways of working and take onboard learnings from outside the business. But it also takes business units who want to be part of that process. If you’re a business unit and you want to just throw requirements over the fence and hope that somebody deals with them, that’s not going to work. That’s where the cultural change really needs to come together.

AI and innovation to drive customer expereinces

One of the main challenges facing the financial services industry at the moment is changing customer expectations. As consumers, we get instant gratification with the expectation for immediate delivery, instant access to data and service on-demand.  As a result, we have that same expectation of our business interactions. We assume that every business should operate the same way. However in reality, the systems and processes in financial services aren’t geared for that.

At the same time, there is a challenge from FinTech start-ups nipping at the heels of established industry players. They don’t have the same technical debt to carry and are more agile. As a result, they can come at the industry from a very different angle, building services that feel much more like our consumer interactions, are much more data-led, where the experience is the same regardless of interaction – online, via apps, or an intermediary.

Both of these factors create a compelling need to be able to become a differentiator. To move faster, to innovate, to release new products, to meet the customer’s expectation. In the modern world of finance, we need that transformation to flow front to back, from the button I press on my phone through to that being recorded in a ledger somewhere. For insurance companies, it’s more about how we can use data and AI algorithms to calculate risk. If I can automate that process rather than it requiring human intervention, I can write more policies, I can take on more risk as an insurer, or win more business as a broker because I can make the decision much quicker.

These are the business outcomes. And in order to achieve them, we must be comfortable with building modern applications, and doing that rapidly, taking them to market quickly. Just like a FinTech start-up would.

But doing that means being agile, which we can’t be if we’re carrying lots of technical debt. We can’t do that if we’ve got lots of legacy to deal with. That’s where Microsoft can support our financial service partners. To reduce their technical debt. To modernise their processes and infrastructures. To unlock a future of agility, experimentation, and innovation.

Find out more

Imagine digital innovation that delivers a seamless experience with real impact

Drive business performance by empowering developers to innovate

Discover how to scale DevOps practices throughout your organisation

Resources to empower your developer team

Using Azure Pipelines to increase creativity and reduce costs

Introduction to Azure DevOps

About the author

Matt heads up the Digital Transformation & App Innovation team within Microsoft UK’s Solutions business. He leads a team of innovation and development centred Specialists focused on helping customers understand, plan for, and adopt some of the most cutting-edge services in Microsoft’s arsenal – from GitHub for developer productivity, managed container offerings such as Azure Kubernetes Services, PaaS and serverless with Azure Functions and Logic Apps, Integration Services, Event Grid, and more, through to engaging wider stakeholder audiences in the development process through adoption of low-code development with Power Apps.  

Matt’s background is firmly in engineering for innovation. With a master’s in computing and over two decades of experience from hands on ecommerce, payment and billing systems development in the late ‘90s and early 2000’s, to leading a global consulting team designing and rolling out bespoke Budgeting, Planning & Forecasting products for FTSE 10 integrated energy companies, and on to launching an IoT Pet Tracking start-up, founding, building, and selling a Digital Transformation consultancy before joining Microsoft in 2018. 

Consistent to all of Matt’s endeavors is an understanding of what is possible, how it aligns to solving real world business challenges, and always starting with the “Why”.  

The post How to drive innovation and agility in financial services appeared first on Microsoft Industry Blogs - United Kingdom.

Fintechs are often cloud-native by design and therefore have agile architectures, making it easier for financial services organisations to leverage them and respond to changing market opportunities. In this blog, we’re going to uncover some of the top opportunities to drive innovation in the sector. Additionally, we’ll share practical ways to start building your future focussed strategy.

1.      Create differentiated customer experiences with data and AI

One of the things that we’ve seen in the last year is a rise in demand for digital experiences. Customers want – and expect – great experience no matter the platform they’re on. It is also key to long term growth and customer loyalty.

One Microsoft partner helping financial service providers to better connect with their small business customers is Codat, who provides seamless integration to the leading financial data platforms, so banks can expedite the loan application process. Codat are innovating with organisations like Virgin Money, Atom Bank. They are expanding through partnerships with Visa, Plaid and Dynamics 365. SMEs will play a key role in our economic recovery moving forward. For many, their survival will depend on their ability to access funding.

At Microsoft we believe that client experience can be fundamentally transformed through the power of AI, a belief shared by our fintech fintech partner Abaka. Using a financial intelligence platform, Abaka helps provide customers with the right products, at the right time, through the right channels. It’s all based around hyper-personalised nudges and next best action recommendations. As a result, engagement, retention, product conversion and upsell has increased. Institutions such as HSBC, Prudential, OTP Bank, NatWest, St James’s Place are all leveraging Abaka technology to deliver services to their retail and wealth customers.

2.      Modernise core banking systems through cloud-native technology

Many institutions are modernising core banking systems through partnerships with new cloud-based core providers. This shift is due to the public cloud’s enhanced agility and ability to handle a high volume of transactions. At the same time, a modern core helps drive more personalised experiences through enabling real time access to wide data sources.

Whether launching greenfield banks or modernising existing cores – there are some excellent UK fintech partners that are well-positioned to help the industry innovate. Two UK Microsoft partners driving this trend worldwide are Thought Machine and 10x Future Technologies. These both scale rapidly to meet the increased demand for cloud-native cores. Also, they help organisations shift away from the cycle of expensive legacy technology. According to McKinsey, 65 percent of banks are exploring next generation platforms like these.

3.      Deliver customer lifetime value with Banking as a Service

The opportunity isn’t just limited to the financial services industry. In fact, any organisation can start to build financial products into their offerings through embedded finance. Partnerships with Banking as a Service (BaaS) providers are key in enabling this. They have the platforms and regulatory frameworks to enable non-bank customers to provide services such as bank accounts, payments, credit cards and lending. ClearBank for example, are using their extensive experience to offer access to their BaaS platform, and help organisations like Tide to increase their range of UK SME offerings.

Additionally, there are fintechs like Omnio who are helping financial and non-financial institutions, such as retailers and airlines, to transform the way consumers receive financial services. Omnio has helped the likes of EasyJet and An Post to embed white label financial products into their digital offering, helping to position these brands in the financial lives of their customers.

4.      Manage risk and build customer trust with data and automation

The use of Open Banking rose in 2020, with  4.3 million payments made using the system, compared to 230,000 in 2019. Open Banking is key to fintech innovation as it allows third parties to access consumer financial data to develop new, customer-centric services. It also allows banks to build an ecosystem of digital offerings. Many UK fintechs focus on Open Banking and automation to help keep customers safe and are choosing to host on Microsoft Azure.

One example is Experian’s Open Data Platform, which gives organisations instant access to a customer’s financial information by using Experian’s comprehensive set of consumer and business credit services. Organisations can get a better picture of affordability, credit worthiness and financial wellbeing that is critical in protecting a financial institution and its customers. As well as managing risk, the platform also serves to build a more trusting relationship with consumers.

Trade finance for large corporate and financial institutions is another example of where risk can be managed through innovative fintech. Demica have a powerful, intuitive platform that interfaces with corporate ERP systems to enable automated financing and powers the working capital programmes of the world’s leading financial institutions. The platform currently enables the financing of over $18 billion of assets worldwide and helps to manage financial stress and liquidity more effectively for its users.

Finally, substantial risk can also stem from the manual handling of data. This is another key reason why automation is on the rise, enabling financial firms to better tackle hidden operational risk and perform more accurate reconciliation. Xceptor is one such specialist in this sector, providing an no-code platform to deliver end-to-end automation of complex processes. Xceptor’s automation customers include Citi, HSBC and US Bank.

Find out more

Microsoft AppSource – destination for business apps

Microsoft Azure Marketplace

Let’s shape the future of intelligent banking and capital markets together

Read more about intelligent banking 

About the author

George works in the Microsoft UK partnership team, building strategic relationships with industry leading software vendors across Banking, Insurance and Capital Markets. He is the fintech guy and helps shine a light on the great impact the B2B Fintech ecosystem has on the Microsoft business and with customers. He also has a keen interest in technology-led sustainability, supporting the UK partner community on the carbon benefits of cloud computing.

The post How UK fintechs can help build innovation and personalised customer experiences appeared first on Microsoft Industry Blogs - United Kingdom.

Most financial services organisations already have robust defences. However, we know that no network, or system, is infallible. Attackers will use a variety of means to gain access to the estate. The financial services industry is also a high value target for cybercrime and fraud. According to PwC, 69 percent of financial services’ CEOs reported that they are either somewhat or extremely concerned about cyber threats. In a recent podcast with UK Finance, we took a closer look at the current threats facing financial services organisations and why cyber resilience is so important.

[msce_cta layout=”image_center” align=”center” linktype=”blue” imageurl=”http://approjects.co.za/?big=en-us/industry/blog/wp-content/uploads/sites/22/2021/06/SUR21_SurfaceLaptop4_Contextual_Platinum_19_RGB-scaled.jpg” linkurl=”https://anchor.fm/ukfinance/episodes/Enabling-cyber-resilience-in-a-hybrid-world-e12jnb9/a-a5roa9n” linkscreenreadertext=”Listen to the podcast now” linktext=”Listen to the UK Finance podcast now” imageid=”50673″ ][/msce_cta]

The future of work will remain hybrid. People are fluidly working between home and office, intertwining their personal and work networks. Many financial services organisations have security strategies that focus on recovery and operational resilience, with testing and recovery planning. So how can organisations ensure they stay secure and safe in a hybrid environment, while continuing to manage distributed and legacy environments? By making cybersecurity the foundation for operational resilience. Here’s five ways to start.

1.      Assume compromise

Instead of assuming everything behind a corporate firewall is safe, assume compromise. Continually ask ‘what if’. What if an attacker gained access to your network, servers or data? What if a trusted insider gained access to information they shouldn’t? What could be done with it? Therefore, what level of protection is needed to help keep information safe?

Organisations may be operating in a hybrid or multi-cloud environment, using thousands of different applications. Employees may be working on multiple devices in different locations. As a result, a defence-in-depth approach is needed to protect data and services.

The hybrid workplace is borderless, so wrapping security around identity and devices is critical. Recent cyberattacks have shown that identity is the new battleground. Implementing multi-factor authentication (MFA) can prevent 99.9 percent of credential attacks, yet many organisations have yet to fully deploy MFA. We also see Zero Trust security as a business imperative.

2.      Protect identity

Zero Trust takes a risk-based approach by embracing the principle of least privilege. It assumes compromise and verifies each request as though it originates from an open network. Regardless of where the request originates or what resource it accesses, Zero Trust teaches “never trust, always verify.” Every access is fully authenticated and authorised before granting access.

When integrated with security and compliance solutions, employees can securely sign on once, and access everything needed, when needed. No matter the location.

For Rabobank, taking an identity-first approach to security opened up more productivity for their people.

“The ability to more securely access documents through Microsoft Teams and OneDrive from mobile devices means people can easily work in different locations, but still keep our data and documents highly protected in our environment.”

Erik Passchier, Global Head of IT Infrastructure at Rabobank.

3.      Keep devices and networks healthy

Anything that has a connection to the internet is potentially vulnerable. While the cloud boasts multiple security benefits, organisations need to segment infrastructure and networks, to reduce the probability of lateral movement across the estate. This is especially important for any legacy services or systems that can’t be patched or upgraded.

Ensuring devices and infrastructure are updated with the latest security patches and updates is very important. In the cloud, patching becomes part of the shared responsibility model, making it easy for teams to manage updates.

As part of their hybrid strategy, Rabobank has built robust mobile device management policies and uses tools like Endpoint Manager and Intune. These focus on making it easy for employees to securely access work apps across devices. They use protection policies to restrict company data from being saved to local devices or moving across to other apps.

“Before, I only had access to email while out of the office. Now if I’m traveling to work on the train or working from home, I can call colleagues and we can work together in the same document. The ability to be more mobile is a huge step forward.”

Boy Sleddering, Senior Vice President Corporate Communications at Rabobank.

4.      Automation and audit logs

Automation and orchestration are key to enabling cyber resilience. For example, Microsoft XDR provides better detection, incident response and blocks known threats. Additionally, it’s key to reducing security operations fatigue and increasing efficiency with the volume of alerts. It also provides the opportunity to be proactive by performing active threat hunting. Machine learning can also identify and correlate behavioural-based attacks .

SIEM provides an aggregated and unified experience with investigative capabilities across the estate. Checking for Indicators of Compromise (IOCs), analysing logs, verifying changes, isolating and potentially preserving forensic data is critically important for financial services organisations to leverage as an audit trail for regulators and law enforcement.

Waverton Investment Management used automation to help streamline their security processes, adopting tools including Azure Sentinel.

“Now we have one platform that looks across all our estate. One system, one skillset means greater understanding and more effectiveness. We have a more comprehensive solution, and we can focus staff training on the Microsoft solutions, so we have broader security competence through our team.”

Mudassar Ulhaq, Chief Information Officer at Waverton

5.      Invest in people and skills

We know there is a balance between human capacity and skilled resources which is also at a premium right now. (ISC) ² reports that there is a 3.1 million cybersecurity gap. While automation and machine learning can reduce the noise, the cybersecurity professional skills gap needs to be addressed. Introduce new ways of acquiring talent, apprenticeships and diversity and inclusion programmes. Highlight talent in-house and re- or upskill your employees.

Each employee should have good digital literacy and understand the different type of cyber threats that they may be exposed to, such as phishing attempts and business email compromise. However, leaders must also have digital empathy for the end-user experience and be mindful of the stressors that they be facing. Security and compliance can work together by being dynamic to the changing landscape, and help employees to be safe and secure, through regular tips that reinforce awareness of the policies.

Enabling cyber resilience

Financial services organisation needs to be kept up to date on cyber capabilities and made aware of potential threats on an ongoing basis through both push and pull means. However, key to cyber resilience is collaboration and partnerships. For example, the Financial Sector Cyber Collaboration Centre collaborates with around 40 organisations, including Microsoft. We work together to provide focussed messages across an array of customers that is timely and relevant.

Strong governance, operational resilience and partnerships are key to ensure the financial services industry builds cyber resilience now and, in the future, in the face of an ever-changing landscape.

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About the authors

Sarah Armstrong-Smith is a Chief Security Advisor in Microsoft’s Cybersecurity Solutions Group. She principally works with FSI customers in the UK and strategic customers across Europe, to help them evolve their security strategy and capabilities to support digital transformation and cloud adoption.

Sarah has a background in business continuity, disaster recovery, data protection and privacy, as well as crisis management. Combining these elements means she operates holistically to understand the cybersecurity landscape, and how this can be proactively enabled to deliver effective operational resilience.

Sarah has been recognised as one of the most influential women in UK Tech and UK cybersecurity and regularly contributes to thought leadership and industry publications.

Elizabeth is a Principal Cybersecurity Consultant in the Detection and Response Team (DART) and 20+ year veteran at Microsoft. She works directly with financial services and national security agencies in detecting and protecting critical infrastructure.

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