The way forward for getting your P&L in line is to drive revenue. However, each business is unique, and its situation depends on the company’s leadership function, ownership structure, recent financial history, CapEx and OpEx exposure, and industry-specific concerns.

While digital transformation can often be mistaken as a ‘silver bullet’, it is, in fact, the cost of doing business in today’s environment. So how should finance leaders proceed? 

Balancing cost with ROI: the three biggest challenges for CFOs 

There can be a temptation to make immediate cost savings at every turn. Yet by investing in digital transformation programmes now, astute CFOs: 

• Can deliver a rapid return on investment with efficiency savings, thanks to automation and the cloud. 

• Will future-proof their company at a time of significant technological change. 

• Will make it easier to meet sustainability targets. 

While senior leaders recognise the need for digital investment, they want returns quickly. According to the Gartner Global CFO Poll 2022, 69 percent of CFOs are looking to increase spend around digital transformation initiatives – but their expectations for returns are one to two years. Agility, flexibility, and speed have become more pressing. 

To map out where savings can be made and how best to plan ahead, we advise considering the three most pressing, intersecting challenges faced by CFOs today – and crucially, where technology can win much-needed reprieve, helping organisations ultimately achieve more with less.  

These three challenges are:  

1. Cost optimisation

2. Supply chain

3. Energy

Let’s look at each factor in turn. 

1. Cost optimisation 

Following the global economic crisis of 2007-08, the world’s economy was fuelled by cheap money. With inflation making a return, this has become more difficult to find. Supply-side costs, including scarce affordable energy, have driven up inflation as never before. According to the UK’s Office for National Statistics, the annual rate of input inflation has lurched beyond 20 percent, while input cost inflation for manufacturers leapt 24 percent compared to the same time last year (end of 2022 data).  

How to balance growth aspirations with priorities around spend

This pain may not have hit every business yet. But when companies are forced to respond to it, many will go into survival mode, and some will fail. 

CFOs are having to evaluate their areas of investment to remain competitive when consumer expectations are high, but confidence is low. They also have to prioritise incremental investments designed to deliver efficiency gains. 

Organisations, in turn, are under pressure to ensure every part of their business is working as well as it can – and the digital imperative is key to resolving this. Businesses need more innovation, agility and resilience, with less complexity and at a lower cost, quickly. Put simply, they need to do more with less. 

Making the most of existing infrastructure and technology roadmaps 

We believe organisations should look to their existing infrastructure and technology roadmaps to drive further efficiencies with the assets they already own. They can reduce operational costs by digitising based on unified platforms. 

Rolls-Royce succeeded on both counts by leveraging benefits available in its existing Microsoft stack. The company trained staff to use our low-code Power Platform – including Power Automate, Power BI and Power Apps – which has since become its most popular upskilling solution. In a few months, Rolls-Royce saw a financial benefit of about 8M across the organisation, a figure that can grow organically as more staff and teams use the platform. 

Retaining talent by digitising 

At first, the COVID-19 crisis stalled attrition rates; later, it saw employees reassess their career priorities. Many left their roles in what was sensationally termed the ‘great resignation’. As a result, the war for talent heated up.  

Retaining talent is now more pressing than ever. With employee turnover forecast to be 50 to 75 percent higher than businesses have ever experienced, they need to ensure staff are both happy and productive, with enough investment in skills to keep top talent within the organisation.  

Digital investment is the only way to meet higher staff expectations. Employees want modern technology that works effortlessly, and are increasingly expecting hybrid or remote roles as a given, with all the associated technology support. 

What the pandemic demonstrated to CFOs is that every business must strive to be a technology business, or fail. Those unable to swiftly pivot to digital were punished harshly.  

2. Supply chain

The wider supply chain is the core of most businesses and must absolutely be on every CFO’s radar – but using history to make decisions for the future no longer works. Customer demand is constantly changing, whether it’s influenced by the economic climate or making environmentally conscious purchase decisions.  

To shore up customer confidence, organisations can take advantage of intelligent automation to reduce costs, maximise operating margins and recalibrate their supply chains from ‘just-in-time’ to ‘just-in-case’. 

Take the UK company Spy Alarms, for example. By switching to Microsoft Dynamics, the service team have reduced the time it takes to book a service interview from six minutes to a few seconds. Their sales operations have also benefited from a much simpler and faster quotation process for its 45,000 customers. With the seamless integration of Power BI and Microsoft Teams, all levels of the team have access to data insights – empowering data-driven decision making with incredible precision and foresight.  

3. Energy 

Energy is a hot topic and is central to the boardroom conversations CFOs are becoming involved in. Data centres and offices are an enormous cost factor; a more cost- and energy-efficient answer is to retire data centres and invest in the cloud.  

Investing in the cloud to reduce energy consumption 

At Microsoft, our customers want to use energy management tools to reduce complexities around staffing and save costs in the near to long term. Cloud-native organisations can deliver more core value, with fully managed, end-to-end Azure cloud solutions to boost developer productivity, optimise and allocate resources, and speed up the pace of innovation. 

The East London NHS Trust has been a shining example of this. By taking advantage of Microsoft’s Intelligent Data Platform such as Azure Synapse Analytics and BI, staff can sense-check, monitor metrics and look at trends to see what’s happening on the ward. These insights are accessible from any device and even off the network, building a truly efficient integrated data system. 

Three takeaways: simplify, unify, innovate 

Every business can use technology to become more efficient and effective, whether it’s driving more value from existing platforms and assets, consolidating to reduce cost and complexity, or introducing deployments with rapid payback. 

By leveraging data and AI, businesses are armed with the data and insight on how to increase agility and growth with the assets they already have. 

At Microsoft, we’re working with our customers to define how they will survive, and even thrive, in a continually changing environment. If you’d like to understand more, visit The Microsoft Cloud – Trusted Cloud Platform. 

Find out more

Read Microsoft Azure case studies and customer stories

Announcing Microsoft Azure Data Manager for Energy: Enable your data to do more in the cloud

Imagining more: How organizations are reinventing operations and finding opportunity in the face of volatility

Understanding Microsoft’s digital transformation

About the author

As CFO of Microsoft UK, Mark leads the Finance Organisation supporting Clare Barclay and the UK Senior Leadership team by delivering against the strategic priorities of the company, through influencing key decisions around people, business processes and performance.

Prior to this role, Mark held the position of International CFO at Adobe and Rackspace, where he was a key part of leadership teams driving growth across all markets outside the US. With a career spread across banking, the oil industry and technology, a breadth of finance experience contributes to his dynamic, objective approach as we pursue great customer outcomes with our product portfolio.

Mark returned to the UK recently after spending time in Zurich and Amsterdam in previous roles, is a trained accountant with the ACCA, studied Economics at the University of Leeds and is married with 3 children.

The post How to future-proof your business: a CFO’s-eye view   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.

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.

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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.

Find out more

Listen to more in the Future of Finance podcast with UK Finance

Take the Zero Trust Assessment

Drive trust and agility

4 ways to drive the future of security in the financial sector

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.

The post How to enable cyber resilience in the hybrid workplace appeared first on Microsoft Industry Blogs - United Kingdom.

The financial services industry is rapidly changing. In a world where the future means hybrid working, hyper-personalisation, and Banking as a Service, there is no doubt that data and AI at scale is going to be needed to succeed in the future of finance.

Technologies such as AI and automation can help organisations solve business problems and inform decision making. It can also increase productivity by taking over repetitive manual tasks. Data and analytics can help organisations better understand their customers, build resilience, discover new opportunities and remain competitive.

However, as more organisations adopt and capitalise on data and AI, those who are successful are the ones who take an unsiloed approach. They bring the whole organisation along on the journey and focusing on the result. This, in many cases, is as much about culture change as it is about technology.

I recently took part in an engaging panel discussion where myself and Peter Jackson, author of the Chief Data Officer’s Playbook and the Chief Data and Analytics Officer at Carruthers and Jackson, Norman Neimer, Chief Data Scientist at UBS, and Steve Higgins, Lead Impact Strategist for financial services at SparkBeyond. We discussed the challenges and opportunities financial services organisations need to consider when implementing AI into their business.

What are the challenges facing the financial services industry?

Despite the use of chatbots, machine learning programmes, and a lot of experimentation, adoption of AI is lower in financial services than in other industries. And as much as we all wish it were, every new technological implementation is not always smooth sailing.

“It would be hard within one organisation to see a successful uniform pattern of adoption and operationalisation of AI,” agrees Peter. He adds that there are four key challenges to AI adoption for financial services organisations, which the rest of our panel agree:

1. Low levels of data maturity: Are you ready to embrace AI? Measure your data maturity first.
2. Low levels of data literacy: To get good AI, you need good data knowledge.
3. Low levels of investment: The opportunities are huge, but it hasn’t been matched yet. Not only in the tech, but the processes, people and data.
4. Bad experiences and risk: Ensuring your data is secure and compliant helps reduce risk. To be quick to succeed you need to not be afraid to fail fast and move on.

The key to successfully implementing AI is based on data, company culture, and the business values. Don’t start with AI just for the sake of it. Look at your business values, and what you want to achieve. And instead of starting with the biggest use cases that will drive the biggest impact, start with the smaller value but more achievable cases. That will help you see results faster.

Deliver personalised customer experiences with data and AI

In a recent report by SparkBeyond and Microsoft, banks using AI found that 30-80 percent of conventional patterns are no longer relevant. Customer behaviours are constantly changing, and financial services need to achieve customer intimacy. People want to know that organisations understand who they are, know what they want and can meet their needs. Just look at how quickly we adapted to changes in the last 12 months. Banks need to understand these patterns quickly to best serve their customers. AI can inform decision making to help build personalised experiences for customers, from banking to investments. Additionally, the ability to understand customer experiences and make more dynamic decisions around customer vulnerability using data will help across society more broadly.

ABN AMRO, the third largest bank in the Netherlands, wanted to be able to efficiently access and use data to help support customers during key stages of their lives. By migrating to the cloud, ABN AMRO could scale faster, access better insights to empower both customers and employees.

“I foresee a future where we have a much smaller on-premises footprint. There’s so much data processing and analytics we can do, making predictions, doing all kinds of complex calculations, and developing entirely new, cutting-edge use cases, for example with Azure Machine Learning Services,” says Piethein Strengholt, Principal Data Architect.

Establish a data-driven business

To gain a full view of the customer, internal silos need to be reduced. Data modernisation is key to fixing silos. Additionally, it can help organisations uncover new insights that wouldn’t otherwise get accessed without a collective view of data. At the same time, organisations need to be sure this data is of good quality.

Nationwide uses Dynamics 365 to connect their data silos and provide a holistic view of the customer. “It’s much easier to check in with clients and keep them up to date with key product and service changes,” says Anthony Pooley, Customer Relationship Manager in the business savings team. “We’re spending less time on admin tasks which gives us the capacity to spend more time on value added activities which our clients appreciate. We now have a wealth of information at our fingertips.”

Underpinning a data-driven business is data governance. “There’s a need to have regulatory oversight to ensure the data is safe and protected,” says Steve. Ensure valuable business and customer data is adequately protected, including the proper regulatory compliance. At the same time – think about how that data will be used. The responsible and ethical use of data will build strong AI models, reducing bias and risk. At the same it, it will ensure the models deliver exactly to customer’s needs.

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Build a data-first culture in finance

“I would encourage data leaders to really think about how they can build culture and business impact within their organisation,” says Norman. “That’s going to require some rewiring and rethinking of processes.”

According to a CBI/PwC survey, 93 percent of financial service businesses expect a greater need for skills in technological proficiency and 71 percent believe that people management and leadership skills will be needed.

Therefore, when you start implementing AI projects, don’t just bring your C-level and boardroom suite along the journey. Bring your frontline workers too. “Building a model doesn’t get you all the way. What gets you all the way is bringing the users along, turning the model into an app or report that someone can use and drive impact with it,” says Norman.

Illimity bank offers employee discounts for loans, but it’s application and approvals process was slow an inefficient. Originally, a single employee handled all the requests, performed complex prescreening processes and sending summaries to HR for authorisation. By automating this workflow, they saved 15 hours a month of employee time. They also sped up the process for employees wanting to use the benefit. What’s more, they now can see the big picture when it comes to employee loans, using the data to power further insights.

To build data literacy and use new technology such as AI, the right skills are needed. Democratising AI and data for every employee helps uncover innovation. For example, employees can drive innovation by using low/no code apps to automate workflows. This will enable them to spend more time with customers or on other value tasks.

[msce_cta layout=”image_right” align=”right” linktype=”blue” imageurl=”http://approjects.co.za/?big=en-us/industry/blog/wp-content/uploads/sites/22/2021/05/SUR21_LaptopGo_Contextual_1629_RGB-1.jpg” linkurl=”http://approjects.co.za/?big=en-gb/home/digital-skills/” linkscreenreadertext=”Microsoft’s digital skills hub” linktext=”Microsoft’s digital skills hub” imageid=”49202″ ][/msce_cta]

Reduce risk and build resilience with data and AI

Traditionally, incumbent banks and other financial service organisations are risk averse. As a result, there is a slower take up of new technologies such as AI and cloud services. However, as challenger banks and digital-native fintechs appear, traditional organisations need to rise to the challenge.

In this challenge, lies opportunity. Regulators recognise the value in new technology, for example, with the implementation of Open Banking. The Bank of England recently issued a Supervisory Statement on Outsourcing and Third Party Risk Management, which focusses on facilitating adoption of the cloud and other new technologies.

AI can help gain insights into risk – spotting fraud quicker or flagging unusual banking activity. It can also be implemented to help protect data – taking over low-level monitoring, scanning thousands of signals daily to spot cyberthreats.

AI can also help reduce errors, with RPA taking over repetitive manual tasks. Low and no-code AI solutions can improve operations, while reducing errors. And starting with a small AI project, for example in the middle or back office, will increase data literacy, while showcasing its effectiveness at a smaller risk than starting with a big project.

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Improve sustainability goals with data and AI

For organisations across every industry, Environmental Social and Governance (ESG) is becoming a reputational importance. “What I’ve seen as a trend is financial firms no longer look at their ESG as a reputational risk, but as a credit risk, i.e., if they don’t help reduce their carbon footprint, that’s going to impact their portfolio. AI can help you understand a complex problem,” says Steve. AI can help uncover insights around financial services value chain to reduce waste, save energy, and optimise processes.

Recently, NatWest and Microsoft announced a partnership to help NatWest’s business customers understand how they can start reducing their emissions, using data and AI to inform the decision making process.

Data and AI for innovation

Implementing AI isn’t just a technology process. It’s requires organisations to think culturally about how to address decision making within the organisation to be able to take opportunities quickly. Start small. Experiment fast, fail fast and learn fast. Keep the focus on the customer and the problems to solve but let the data guide decisions. As a result, challenges previously not already considered may be identified.

To successfully innovate and deliver competitive advantage, organisations need to establish a data-driven business, underpinned by skilled employees and focussing on customers as a key part of their value chain.

Find out more

How are leading finance institutions are capitalising on AI analytics

Future-proofing financial services with AI analytics

Boost the innovation of banking business models

About the author

Janet currently leads the Industry Strategy for Financial Services at Microsoft UK. She ensures that drivers of change and emerging technological trends across the sector are core to how Microsoft works with Financial Services organisations, supporting their digital transformation. Before joining Microsoft in 2018 Janet held roles within commercial banking; latterly at Lloyds Banking Group and prior to that, Barclays and RBS. She has a personal interest in cultural transformation and has also played an active role in supporting and driving the inclusion and diversity agenda during her career.

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