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.

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The digital customer experience has never been more important. Consumers are more mindful about world problems such as global warming and others. All of this translates into expecting their banking provider to act as responsible corporate citizens while offering advanced digital experiences.

How technology can help drive innovation

 Before we take a look at the types of technology some financial organisations are using, remember that implementing technology isn’t ‘just because’. The real impact comes when you use technology to emphasise the following three areas:

• Customer insights: Produce correlations from dispensed internal data such as CRM, transactions, and investment stats.
• Intelligence: Merge customer insights with external data related to economic trends and behaviour.
• Customer engagement: Leverage data from customer insights and intelligence to deliver personalised customer experiences at the right time, through the right channel.

Here’s a teaser from our financial services whitepaper with three out of five ways organisations can use technology to drive innovation, build resilience, and be truly customer-focussed. Download the whitepaper to access the full guide.

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1. Public cloud infrastructure

If you’re looking to innovate into a digital-first model, you need strong cloud foundations. Public clouds can be deployed faster than on-premise infrastructures and there’s no extra cost of purchasing, managing, and maintaining on-premise infrastructures. Every employee can use the same application from any device, securely over the internet.

For finance organisations, compliance and security is very important. Microsoft Azure is built with a multi-layered security approach, with physical data centres, infrastructure and operations. There are 3,500 cyber security experts actively monitoring to protect your business assets and data. With over 90 compliance offerings, you can ensure valuable data is correctly safeguarded, and AI-driven security signals can also help modernise your security operations.

2. AI

Another way for organisations to empower employees is by using AI. AI-powered chatbots are ideal as a first point of contact, and can answer frequently asked questions. If customers need more help, they can move them onto customer service representatives.

AI can also be leveraged for knowledge mining and machine learning. This uncovers insights and analytics that can enable more informed business decisions. AI can test millions of ideas/scenarios per minute, uncovering insights and information such as credit risk scoring, identifying vulnerable customers, and interest rate changes. You can also test new business models rapidly. In the new normal, the ability to enrich existing data with external data will help build resilience within the organisation.

3. User experience

In the EY survey, 43 percent of respondents say the way they bank has changed. As customers are more used to digital ways of interacting, they expect financial institutions to adapt and innovate alongside them. Moving to mobile and web banking apps and leveraging new ways of delivering augmented experiences such as video conferencing, virtual reality, and augmented reality are key new business model enablers.

Citi traders, for example, is using the Microsoft HoloLens to see a virtual workstation that shows data as 3D images, making it easier to work and collaborate.

The new normal

In the new normal, competition will occur between business models rather than product and/or process innovations. Financial leaders should adjust their digital strategy to focus on supporting their customers with innovative ideas and empowering employees with new skills. When you think about how you’re planning on achieving your business goals in the new normal, make sure you build a skilling roadmap alongside. This will ensure there’s no skills gaps in your organisation.

Find out more

Download the report: Boosting the innovation of banking business models

Watch the on-demand webinar: How are traditional banks adapting their approach in a digital world?

About the authors

Tine Petric is a Specialist in the area of Applications and Infrastructure, advising organisations within the Financial Services Industry. He is passionate about the impact that technology can make in inclusive finance and ESG overall. Tine is also an avid tech blogger and guest lecturer at universities where he talks about Business Model Innovation and latest tech trends. Tine holds a Master Degree in Business Administration and Management from the HEC University of Lausanne, Switzerland

Christian Thier leads the Financial Services Account Team Organisation of Microsoft in Switzerland. He drives strategic and transformational partnerships with Banks and Financial Services firms across all segments, helping its clients to accelerate in digital business transformation. He has more than 20 years of working experience within the Banking, Insurance, Financial Services and IT industry in various roles. Before joining Microsoft, he was working at Interactive Data, serving as Managing Director and Board Member of Interactive Data in Switzerland, and Vice President Sales EMEA since 2005. Christian holds a Master Degree in Business Administration from the Goethe-University in Frankfurt/Main, Germany.

The post 3 ways the banking sector can innovate in the new normal appeared first on Microsoft Industry Blogs - United Kingdom.

A few weeks ago, Microsoft and Reason Digital, a business that uses technology to overcome societal issues, teamed up with charities across Manchester to think digital.

What technologies can make the workplace more accessible? How does Microsoft help charities in the modern world? How do you even start to solve some of the monumental problems facing small and medium-sized charities today?

Matt Haworth, co-founder and director of Reason Digital, and Microsoft’s Eve Joseph and Harry Morgan sat down with a dozen charity leaders, as well as beneficiaries of those charities to have a crack at answering those questions.

Innovating the experience

A rare sunny Manchester morning saw Matt open the morning with a brief about why developing digital skills are important – improving experiences for beneficiaries, employees, volunteers, and contributing to the overall success of today’s modern charities.

Age UK provided a touching case study on innovating new technology to tackle the challenge of chronic loneliness. Chronic loneliness affects elderly people who don’t necessarily have friends and family to stay in touch with, and has been shown to be as harmful as smoking 15 cigarettes a day. As a charity connecting elderly people with a volunteer over the phone, Age UK makes a huge difference to its beneficiaries quality of life.

However, the charity faced the problem of connecting a massive group of elderly people with a growing fleet of volunteers, with a focus on safety and care for their beneficiaries. By using cloud technologies, it was able to streamline the way volunteers could join, get background-checked, and matched with an appropriate partner based on a combination of interests and other factors. Age UK continues to grow and mature its digital strategy in innovative ways, such as the use of AI to safeguard the conversations between a volunteer and beneficiary by scanning for alarming phrases and keywords.

The magic button

After a quick lunch (and a surprise fire alarm!), Matt introduced helpful ‘unblocking’ exercises that let the charities and their young beneficiaries brainstorm – and solve – some of their own problems.

The first saw charity leaders imagine a magic button, the capability of which charity leaders must decide. Would the magic button instantly end world hunger? Melvin from mental health charity MHIST designed his magic button to “Make you feel normal, whatever that might mean for you.” In the cold light of social media we often feel like our own lives, with all its blemishes, are somehow different from the norm of society, or in some cases worse. We witnessed how Melvin is striving to democratise self-appreciation.

Of course, the only problem with the magic button is just that – it’s magic. The point of the exercise, Matt reminded us, is to enable you to envision the aims of the service you’re providing. Then, you can use technology to fill in the blanks.

Using cutting-edge technology

Another exercise saw everyone use a collection of flashcards depicting cutting-edge technology like virtual reality, cloud and blockchain. Using these as a launch-pad, charities and beneficiaries worked together to pitch services that could transform the lives and well-being of those receiving them. One team, for instance, envisioned a virtual reality job interview that helps develop the skills of those who find interviews an insurmountable barrier to society.

Technology is rapidly changing. Being fluent in digital skills is more important than ever for charities to deliver the services their beneficiaries need. From all of us at Microsoft and Reason Digital, we encourage you to see what’s out there. When the future is now, anyone can change a life.

Find out more

Develop your digital skills

About the author

Peter Ronshaugen is an Associate Consultant Intern in the UK. He works with Microsoft Services to leverage cloud technologies for both customers and charities. Being early in career, Peter is passionate about making cloud tech accessible for people that don’t necessarily have a high level of technical confidence.

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