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  • @fintechna 3:35 am on July 1, 2018 Permalink | Reply
    Tags: 7e00ff, , , Bronze, , ,   

    Will artificial intelligence launch a new Bronze Age? 

    In my last blog, I discussed how and talent are the building blocks for ’ transformation to what Accenture calls “the New”.

    But now let’s take a step back. Around five thousand years ago, humans in what is now China and Europe began working with an alloy of copper and tin. Combined, these two soft metals formed , a material harder than other metals available at the time.

    In the Bronze Age that followed, civilization made great leaps in agriculture, writing and government, all enabled by the gains in productivity from this valuable alloy.

    I don’t think it is unrealistic to believe that we are looking at the start of a new Bronze Age, an era of unleashed potential made possible by a new alloy: the combination of human and (AI) in the workplace.

    Will artificial intelligence launch a new Bronze Age? fintech
    Read the report

    Our recent research into the attitudes of financial services executives and workers toward the future of the workforce indicates that this belief is widely shared. Nearly seven in ten (69 percent) financial services executives said the industry would be completely transformed by intelligent technologies, and nearly two-thirds (63 percent) said they expect AI to result in a net gain in jobs in their organization over the next three years.  Bankers were even more optimistic at 74 percent and 67 percent, respectively.  And 62 percent of all financial services employees (67 percent in banking) said they expect intelligent technologies to create opportunities for their work.

    Across the board, survey respondents said they believed that AI would cause more jobs to be reconfigured than eliminated and that reconfigured jobs would be more strategic. Contradictions emerge, however, as many firms indicate that their people may not be ready for this transformation. Financial services executives say only one in four of their employees are ready to work with intelligent technologies, and nearly half (47 percent) say the growing skills gap is the leading factor affecting their workforce strategy. Yet only a small number (3 percent) indicate they plan to significantly increase their investment in reskilling over the next three years. Firms will need to resolve these contradictions to make real progress in creating the human/AI alloy needed for the new Bronze Age.

    Digital in general, and AI, in particular, can transform financial services HR support in multiple ways, with three levels of transformation to be reached:

    1. The first level of transformation is to digitize the existing processes linked to workforce management, lightening the process weight and facilitating new ways of working—ranging from tackling processes such as role fulfillment and evaluation to personal development and enhanced collaboration.
    2. The second level of transformation—which, like the third level, cannot be done without reimagining the way people and machines work together—is to pivot the workforce by supporting employees as they reinvent their role within the organization. Our research indicates that a large majority of workers are eager and willing to be retrained (with as many as 85 percent saying they would invest their free time to learn new skills).  Accenture recently announced a $ 200 million commitment to education, training and skills initiatives over the next three years, to equip people with the skills needed for the new work environment.
    3. The third level of transformation is “scaling up to the new”—that is, augmenting people’s capabilities to develop new business models using artificial intelligence. Scaling up means promoting innovation within the whole organization, through a different HR management model, different organizational structures (such as the tribes model) and different evaluation KPIs.

    A few banks and insurers have already started applying AI to their HR management, but the journey through the three levels has not yet been made at scale and will require significant investment in talent management, retraining and redeployment.  The new Bronze Age will confer advantages on firms that can harness the human/AI alloy, but doing so will require a serious commitment to the human as well as the AI part of the mix.

    Learn more about Accenture’s research into automation and the future of the workforce in our report, Reworking the Revolution.

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  • @fintechna 3:35 am on June 22, 2018 Permalink | Reply
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    Open Banking framework comes to Australia 

    Countries across the world are gradually following in the footsteps of in the UK and PSD2 in the EU, given the vast future potential offered by these schemes. In , the federal government has agreed to implement the recommendations made by the Open Banking Review team chaired by Scott Farrell, for the regulatory under which an Open Banking regime would operate. And initially, the four major in Australia have been mandated to make banking data available to TPPs (third-party providers) by June 2019.

    It is designed to give customers more control over their information, leading to more choice in their banking and more convenience in managing their money—thus resulting in more confidence in the use and value of an asset mostly undiscovered by customers: their data.

    One could consider the UK’s Open Banking technical specification as an example approach. Specific API design principles—such as redirect-based authorization and authentication flow—have been taken as the starting point for setting data transfer and authentication standards in Australia, though these would be adopted only with appropriate considerations.

    Highlights of Australia’s Open API framework

    • The scope of data that must be shared by data holders includes customer-provided data, transaction data and product data (e.g., fees and charges).
    • Value-added customer data or aggregated data sets are not required to be shared.
    • The product range included in the scope is very broad across a large range of deposit and lending products for both retail and business customer segments.
    • Data transfer would be completely free of charge.
    • The data recipient can rely on the outcome of an identity verification assessment performed on the customer by data holders.
    • Tiered accreditation system for data holders and data recipients will be based on the risk of data sets and participants—and with regards to existing license regimes for accreditation—would reduce costs for many participants.
    • Multifactor authentication is considered a reasonable security measure. Any authentication measure adopted should be consistent with authentication requirements in direct interaction between the data holders and their customers.
    • Screen-scraping is not restricted, but the alternative access mechanisms will be made very efficient, which will make screen-scraping redundant.

    Contrary to PSD2 and UK Open Banking, Open Banking in Australia is part of the Consumer Data Right. The CDR will give consumers greater power to control their data—and banking is the first sector in which it will be applied. So, the focus of all the developments is to form a single, broader framework which is interoperable across sectors apart from banking. The Farrell Review has given special consideration to how Open Banking is going to work with existing laws and systems such as the Privacy Act, Competition and Consumer Act 2010, and Anti-Money Laundering law to avoid any uncertainty and ambiguity.

    Other differences include&;

    • Australia’s Open Banking use cases are limited in terms of functionality, as it allows only read access, which limits payments initiation/write-access functionality—unlike UK Open Banking and PSD2, where it is allowed. However, in terms of accounts in scope, Australia includes more accounts (such as lending accounts) while these are not included in UK and PSD2. These are differences in the scope of the use cases:

    Open Banking framework comes to Australia fintech

    • Introduction of Australia Open Banking is divided into phases, starting with four major Australian banks at the outset and the remaining Australian Deposit-taking Institutions (ADIs) to comply within the following year—unless the Australian Competition and Consumer Commission (ACCC) determines a later date for them. In this way, ADIs will be able to benefit from lessons learned through earlier phases. The UK’s Open Banking implementation is not divided and is open to competition for all nine major UK banks from the very beginning. PSD2 is applicable to all banks in the EU that offer online-accessible payment accounts.
    • Australia’s Open Banking framework recommends standardizing APIs for data transfer similar to UK’s framework, while PSD2 leaves it to banks to decide what kind of interface they want to use. For PSD2, initiatives such as the Berlin Group’s NextGenPSD2 aim to close this gap.
    • In Australia, all Open Banking standards (transfer, data, security, and customers’ and participants’ experience) will be set by a Data Standards Body. This is comparable to the UK’s framework with the Open Banking Implementation Entity (OBIE); while in PSD2, standards are not centralized and are comparatively fragmented.
    • In Australia, Open Banking will be supported by multiple regulator models by the ACCC (competition and consumer issues, standards setting), OAIC (privacy protection), ASIC, APRA and RBA and other sector-focused regulators (advice as required). UK is regulated by CMA (for the nine largest banks) with standards set by the UK Open Banking Implementation Entity and regulated by EU’s PSD2 (for all UK banks). In PSD2, National Competent Authorities (NCAs) regulate and control the banks in their national markets with regards to PSD2 compliance.
    • Due to various legal complexities, Australian customers will not have the right to request deletion of their personal information under the Privacy Act, while in UK Open Banking and PSD2, it will be allowed under GDPR implementation.
    • Under the Australian regulation, third parties that participate in Open Banking will also be obliged to share their customer data, which is different from PSD2 and UK Open Banking.

    Australia has taken a very structured approach in planning for Open Banking to work with existing regulations and incorporating lessons learned. It has also addressed considerations such as customer education, dispute resolution, the ACCC breach reporting obligation and post-implementation assessment to make Open Banking more effective in Australia.

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  • @fintechna 3:35 pm on June 11, 2018 Permalink | Reply
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    Talent and transformation: New strategic approaches for banks 

    Around the world, are engaged in the transition to what we at Accenture call “the New”; they are undertaking initiatives to digitize operations, reduce costs and create previously unexplored revenue streams.

    The transition to the New is based upon the twin pillars of and . The technology—in the form of cloud, big data and analytics, , robotic process automation, machine learning and artificial intelligence—is readily available, and although it may not be easy to identify the right solutions and to graft these solutions onto the existing computing and data framework, it can be done.

    However, as banks are discovering, it is just as difficult to build and maintain the talent pillar as it is to develop or acquire needed technology. Banks are competing for new talent, not only with other banks but with technology start-ups, internet giants and a variety of digital players. Indeed, digital players interested in making inroads into the banking market are poaching talent from the banks themselves.

    Banks have not helped themselves on the talent front with their unrelenting focus on cost reduction. They have announced staff reduction objectives connected to plans to digitize and automate. This may please shareholders, but it can hardly be expected to please staffers worried about being displaced by digital technologies. Banks will be unable to compete with the Googles and Apples of the world if they are not seen as valuing the major asset (along with capital and liquidity) embodied in the competency and customer focus of their people.

    There are, in my view, three key steps banks need to take in dealing with the “people problem” and the impact of digital upon the workforce:

    1. Banks should figure out where they stand on workforce issues. This means either admitting that the workforce is, in effect, a commoditized asset to be managed for optimal efficiency at the lowest possible cost, or making it clear that talent is a competitive differentiation point and that people are central to the success of the organization. Depending on the bank’s overall strategy, either approach might be valid, but claiming that people are vital and then treating them as interchangeable parts is a recipe for failure.
    2. Banks then need to take actions appropriate to the people strategy they have adopted. Banks’ actions should match up with their stated objectives; for example, few banks have increased their training budget in recent years, even though training might be an excellent path to creating the intellectual property and people asset that distinguishes one bank from another in the marketplace.
    3. Banks need to acknowledge that they (and their people) live and work within a larger social context. In modern industrialized societies, large employers have obligations to their workers that extend beyond compensation and benefits. Banks contemplating major restructuring or reductions in staff due to digital initiatives should be working with an ecosystem of partners—including universities, government agencies and other potential employers—to develop coherent solutions leading to retraining and employment for displaced workers. 

    Banks have not yet come to grips with the full impact of digital transformation, including automation and artificial intelligence. In my next blog, I will look more closely at how artificial intelligence will affect banks, and how banks can create a powerful new force by combining AI with human insight and judgment.

    For further reading about the impact of technology on the workforce, read Whose Customer Are You? The Reality of Digital Banking.

     

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  • @fintechna 3:35 am on June 7, 2018 Permalink | Reply
    Tags: , , 7e00ff, , conundrum, ,   

    Solving the delivery conundrum 

    Guest blogger Mark Welsh discusses how can successfully scale application delivery and meet customer delivery requirements against the backdrop of increasingly complex in-house systems and a worldwide-shortage of software engineering talent.

     

    The Banking landscape is being influenced by significant forces of change. New customer and industry demands mean financial services businesses must bring new features and technologies to market faster than ever. If they don’t, they risk falling further behind the competition, whether that’s rival companies that have transformed and broken free from legacy systems or new entrants with greenfield solutions.

    It’s a big challenge. Particularly with a worldwide shortage of software engineering talent and in-house systems that are becoming increasingly complex, as new layers are added onto legacy solutions.

    Given these constraints, how can financial institutions meet customer delivery requirements?

    How to scale delivery?

    the delivery means addressing three areas: People, and Process.

    People

    The obvious way to scale delivery output is to increase team size and/or number of teams. But even ignoring the challenge of recruiting/retaining the right developers, you’ll quickly hit the ‘pizza boundary’: Jeff Bezos’s rule that a team should be no bigger than two pizzas can feed.

    The number of communication points increases non-linearly with each additional team member, so expanding a team’s size beyond a certain point becomes counterproductive (extra communication complexity outweighs additional capabilities/capacity).

    Figure 1: More people = more complexity
    Source 

    Solving the delivery conundrum fintech

    Solving the delivery conundrum fintech

    Large teams also engender ‘social loafing’. Team members have more opportunities to hide, aren’t encouraged to drive development forward, and are generally less dedicated to team and product success. Sound familiar?

    Next question: how should teams be aligned? Product features span multiple lines of business. The same holds for technology: any feature will likely require changes/new development across various architectural layers and technologies.

    Solving the delivery conundrum fintech

    So, do you split your teams horizontally, matching stack layers and enabling team alignment around key technologies? Or align them around product features, enabling team ownership of a complete feature, but requiring either a sub-structure within the team to align with technology layers or full-stack developers (‘jacks of all trades, masters of none’) that deliver end-to-end?

    It’s probably best to mix the two: recruit and train team members to develop across layers (not all layers, there will always be specialisms) and build on a more vertically aligned solution as the feature moves up the stack (with the bottom-most layers delivered as a platform—see ‘Technology’.)

    Ultimately, smaller teams with ‘t-shirt shaped’ developers (depth in one or more technology areas/breadth across many) will be much more productive than larger teams with lots of specialists. With the right recruitment and training strategy, it’s possible to create highly productive small teams focusing on a mixture of technologies across product feature areas. That ensures end-to-end ownership within a single team.

    Technology

    Where possible, splitting the system across the right boundaries will enable independent delivery that supports output scaling. After all, while an end-to-end feature is only delivered once, its constituent parts are delivered separately. However, breaking the solution up can mean the product becomes inconsistent and fragmented for end-users. Having somebody manage the system as a whole is essential.

    There’s also increased need for engineering and delivery platform support to ensure consistency and efficient use and creation of assets. These platforms should be managed through ‘Guilds’/communities of practice and, where appropriate, draw on examples like GitHub, npm and stackoverflow for inspiration.

    Technical debt is another key factor—ignoring it creates a drain on developer capacity and motivation. Of course, it’s difficult to justify technical debt stories over feature development. But understanding the direct impact on delivery timescales, productivity and production risk will help drive conversations that ensure a balance is achieved.

    A key aspect of approaches taken at Amazon, Facebook and Netflix is the automation of repetitive tasks, either by adopting an industry toolset or, where that doesn’t exist, developing it in-house. Giving developers the tools they need has a measurable delivery benefit and directly impacts developer motivation and retention. Typically, capacity investment of five to 15 percent is needed to maintain a good development architecture.

    Process

    Process and governance are key contributors to the time it takes to get from idea to live. In many banks and financial institutions, processes are put in place as a direct regulatory requirement and cannot be bypassed.

    Other, non-regulatory, processes will have often been added or modified in response to delivery issues or production problems. Frequently knee-jerk reactions, they don’t fundamentally address root causes.

    All these processes have an impact on motivation. Skilled developers do the right thing not because it’s written down and checked multiple times, but because it’s the right thing to do. But good processes remain crucial—to provide a safety net for new and bad developers (and for good developers having a bad day!)

    Achieving ‘good’ processes means continually reviewing them against the risk they’re attempting to mitigate. They must be understood—and wherever possible, automated—to eliminate the variability that’s inevitable when people perform repetitive tasks and (for regulatory processes) to increase speed/quality of compliance.

    Taking action

    To successfully scale application delivery, we recommend focusing on:

    • People: Understand developer productivity and where your key people are, use automation to enable them to focus on building stuff, get the right people in the right roles (t-shirt shaped) in small teams and give them tools to be productive, use Guilds to drive collaboration.
    • Technology: Focus on development tooling as much as production coding and continually invest in it, componentize the platform to enable decoupled development and releases, actively manage technical debt, provide managed assets to support consistency/accelerated development.
    • Process: Appropriate process and governance continually refreshed, automated where possible.

    Each of these areas will balance/constrain/support the other two (e.g. good tooling can enable process automation, which improves developer motivation/productivity). Thanks for reading.

     

    Solving the delivery conundrum fintech

    Mark Welsh, Technology Architect

    Solving the delivery conundrum fintechSolving the delivery conundrum fintech

     

     

     

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  • @fintechna 3:35 am on June 4, 2018 Permalink | Reply
    Tags: , 7e00ff, , , , , ,   

    CHANGING THE GAME: Integrated payments in acquiring 

    Guest blogger Marc Abbey discusses why addressing competitive implications of is a priority.

    The explosion of software at the point of sale (POS) is a major force of change in today. This trend is not new, but its speed and scope are. Addressing the competitive implications of integrated payments is now a priority concern for acquirers. Understandably so.

    The issue: Disruption from developers

    Software is migrating down market into smaller merchants. It performs various business functions for merchants and is replacing traditional terminals and PC-based solutions. Increasingly, these solutions are integrating payments and capturing the economics of payment acceptance.

    The merchant market is characterized by industry verticals with niche business needs and specialized accounting processes. For example, health and fitness companies can handle scheduling, e-commerce, membership collections, and on-premise payments through the business solutions available to the vertical. And not-for-profits can integrate donor management, events, fundraising campaigns, and e-commerce. Also, faith-based organizations can take recurring payments and payments through e-commerce websites and kiosks. All of this is possible because of these business solutions.

    By streamlining business operations through a single application and creating new user experiences for merchants and their customers, software developers are filling gaps that traditional acquirers are not. With payments now central to developers’ businesses, delivering payments functionality is not just a nice-to-have for them.

    In fact, software developers are realizing that payments is where the real economic value lies. In many cases, they can double their revenue as a result, according to Accenture estimates. Developers can achieve this revenue growth through different approaches. These include referring merchants to traditional acquirers or becoming ISOs or payment facilitators that are more centrally involved in payments processing. Private equity firms are often agents of change here. They are targeting developers before monetization of payments, leading them through the process, and exiting on the strength of the improved economics.

    A look at the software mergers and acquisitions (M&A) market reveals how common this approach is among private equity firms. The market has about 500 to 600 deals per quarter, many are payments focused.1 Some 30 to 40 percent of these transactions have been completed by private equity firms or their portfolio companies in recent quarters.2 In addition, more than half of companies being purchased are in dynamic acceptance verticals like healthcare, education, hospitality and real estate.3

    The impact: A catch-22 for acquirers

    These changes are creating new competitive dynamics for traditional acquirers. Software developers are emerging both as a new distribution channel for acquirers and as a new and formidable category of competitors.

    Most acquirers recognize the complexity of this friend-and-foe relationship. In response, many are investing to create integration environments hospitable to software developers to attract these new referral sources. Sometimes, this investment involves pursuing acquisitions to add capabilities. Accenture estimates that in the past three years, there has been more than $ 6 billion in acquisitions with an integrated payments business thesis.4

    The new normal: Unchartered territory for all

    To keep pace, traditional acquirers must take stock of what all this means to the future of integrated payments. Here is what the landscape will likely look like:

    Old rules getting broken

    As software developers set the new rules of acquiring, there will be more share shifts between traditional and -enabled channels. Already, growth in the independent software vendor channel (35 percent) is outpacing growth in the overall acquiring industry (8 percent), according to Accenture estimates.5

    Rise of the gatekeepers

    The road to acceptance product enablement will increasingly run through software at the POS. This results in a powerful gatekeeper role for software developers. Just like they did for near field communication and Apple Pay, acquirers must prepare to modify their solutions for the next generation of acceptance products.

    Next-gen sales and marketing

    Sales and marketing will never be the same with developers in the value chain. While acquirers have long relied on third-party sales partners, the dynamics will be different with developers in the mix. Acquirers should start to prepare for non-traditional sales partnerships with developers.

    Beating them by joining them

    Acquirers will become developers in key verticals, either through building internal software innovation capabilities or through M&A activity. Vantiv Inc.’s acquisition of Paymetric and Global Payment’s acquisition of Active Networks are among several examples of this trend.

    A critical decision

    Software developers have the ambition and ability to capture a good share of the payments acceptance business. Traditional acquirers must act to avoid disintermediation, and software developers that have yet to get involved are missing significant revenue potential.

    This is a fight-or-flight moment that calls to mind e-commerce in 1995. At the time, an emerging business model was taking off. There were a few dominant players and a handful of specialized players. But many acquirers stood still. There is every indication that integrated payments will evolve on a similar trajectory. Now is the time for acquirers to lean into the growth.

    1 Software Equity Group, “SEG Snapshot: 3Q17 SaaS M&A Update,” October 20, 2017, retrieved on April 3, 2018
    2 Ibid
    3 Ibid
    4 Accenture Payments research conducted March 2018
    5 Ibid

    CHANGING THE GAME: Integrated payments in acquiring fintechMarc Abbey, Managing Director, Payments

    CHANGING THE GAME: Integrated payments in acquiring fintechCHANGING THE GAME: Integrated payments in acquiring fintech

     

     

     

     

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  • @fintechna 3:35 pm on June 2, 2018 Permalink | Reply
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    Will PSD2 APIs and instant payments change the game in European payments? 

    The EU’s Second Payment Services Directive ()—and the Banking Authority’s related Regulatory Technical Standards (RTS) on Strong Customer Authentication (SCA) and Secure Open Standards of Communication—represent a turning point for existing business models in in Europe. PSD2 and RTS open up ’ systems to third-party payments services providers (TPPs) for account information, payment initiation and confirmation of funds via an access interface such as application programming interfaces ().

    The final RTS published on 13 March 2018 specifies only the technical framework conditions and not interface standards. To help fill this gap, the Berlin Group—consisting of almost 40 banks, associations and PSPs from across the EU—has defined a common API framework called &;NextGenPSD2&; (current version 1.1) for the use cases specified in PSD2.

    The major impacts in this context include:

    Payment initiation opens up: For payment initiation, the NextGenPSD2 framework offers, amongst others, SEPA Payments (SCTInst) as a payment instrument. The combination of PSD2 and SCTInst has huge potential to disrupt existing business models, depending on the level of API standardization and penetration of SCTinst in the EU.

    Impacts on the cards business: TPPs such as merchants, giants and PSPs could use the PSD2 APIs to make instant payments directly from customer accounts to the TPP bank account, bypassing card schemes and fees.

    Frictionless instant payments with PSD2: Customer experience is key in payments. Friction and slowness can reduce acceptance of the payment instrument on both the customer and merchant sides, leading to higher cancellation rates in eCommerce checkout processes and longer queues in the store.

    But there are issues with SCA—PSD2 APIs require banks to perform SCA on every transaction. This could lead to friction in the user experience at the point of sale (POS) and in eCommerce. PSD2 provides a convenient way to solve the issue of SCA through inherence and biometrics-based SCA methods. As innovation in this area continues, there will be a huge push towards creating RTS-compliant biometrics authentication methods.

    How banks can innovate

    TPPs such as tech giants and fintechs are not the only ones that could profit from PSD2 and instant payments—banks could also play an important role. Access to accounts and instant payments become commodity services with low or almost no margin for banks. New revenue opportunities will be in the value-added services and the platform ecosystems around these commodity services. “Going beyond PSD2” will include opportunities to monetize additional data and services combined with instant payments.

    Read my complete article at InstaPay for more insights and share your views.

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  • @fintechna 3:35 am on May 26, 2018 Permalink | Reply
    Tags: 7e00ff, Automating, , , , , , operations, , wide   

    Automating bank operations? Keep eyes wide open 

    Customer experience is the grand basis of competition in today’s business world. Unfortunately, most financial services institutions remain mired in manual, bespoke, paper-based processes—often siloed by customer, channel and product groups within a . That is beginning to change.

    RPA can reduce time to perform tasks by up to 90% and lower costs by up to 80%

    Automating bank operations? Keep eyes wide open fintech
    Read the report

    A key theme from Accenture’s recent survey of 80 bank COOs in North America is the need for back-office to become more digital and to act as the new front office. The survey report highlights several opportunities for to improve their operations—such as re-skilling back-office workers, creating agility through digital decoupling and robotics process automation (RPA). Sixteen percent of bank COOs we polled are using RPA, while 63 percent plan to use it over the next year or are piloting the . Half of those surveyed are looking towards straight-through processing and almost 75 percent have or plan to use analytics and data automation to truly unlock latent value in operations data.

    This presents a unique opportunity for banks to accelerate the use of modern automation techniques given their fundamental ability to enhance the customer and employee experience.

    Why is automation so important for banks?

    Intelligent automation has the power to impact operations. Here are five key reasons why:

    1. Simplifies work routines. Not all work is created equal and in many banks simple work is intermingled with complex work. This can create issues such as process bottlenecks, complicated workflows and slow customer service. Separating the simple from the complex can go a long way in making bank interactions better for customers and employees.
    2. Reduces process re-work. Enabling repeatability, enhanced predictability and streamlining the process helps a bank reduce hand-offs. Couple this with synergies of combined human-AI skills to run the process as a highly efficient factory and the benefits grow exponentially.
    3. Improves work quality. Automation aims to reduce errors by eliminating human touchpoints and judgment for routine activities across the banking value chain.
    4. Enhances efficiencies. RPA can free up resource capacity to focus on higher value activities.
    5. Speeds up innovation and time to market. Increased throughput, lower re-work and fewer errors all result in quick turnarounds.

    Banks should start their automation journey with the goal to look beyond cost savings. Five keys for success:

    1. It’s not a one-size-fits-all. Organizational processes can be repetitive or event-based with different types of data exchange. Assessment of process types and data is required to plan and using RPA or intelligent automation will actually simplify targeted processes to enhance efficiencies.
    2. Cost is only one piece of the puzzle. Automate because you want to create an innovative employee experience by focusing your people on the right activities, thus reducing errors and eliminating re-work. And improve the customer experience and speed to market. Efficiency will be a collateral advantage, but it should not be the going-in driver.
    3. Draw on operational data to drive front-office behavior. Operations is a treasure trove of data—from complaints and service/product issues to customer life events. Data automation with advanced analytics can extract valuable insights that banks can use to delight customers by anticipating their needs based on past transactions.
    4. Think big but start small. Circumvent the product-versus-customer-versus-channel debate by selecting a starting area and get going. Deliver in sprints, build momentum and stay the course.
    5. Agility is a mindset. Work through sprints without over-studying the current state, and then reimagine how the future could work in the context of an automated process.

    The power of RPA to invigorate bank operations is real—reducing time to perform tasks by up to 90 percent and lowering costs by up to 80 percent, by Accenture estimations. Before jumping on the bandwagon, however, business and IT must join together to strategically plan an optimal journey to an agile bank future.

    Read our 2018 North America Banking Operations Survey for more insights.

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  • @fintechna 3:35 pm on May 21, 2018 Permalink | Reply
    Tags: 7e00ff, , , , , coordination, , Meeting,   

    Meeting banking risk management coordination challenges 

    Accenture’s Global Risk Management Study highlights ongoing integration and that face teams. In our study’s first year (2009), only 15 percent of respondents reported having an integrated IT risk infrastructure. Over the years, that gap has closed only incrementally. This year, 67 percent of respondents report roadblocks resulting from a lack of integration across the enterprise.

    To centralize or not?

    New this year, though, is how our banking respondents view centralization. We first examined centralization trends in risk management coordination by risk type (market, credit and liquidity risks), and the results are somewhat contradictory. The 16 percent who are currently fully centralized expect to see an increase in coordination to 24 percent. Even the 20 percent of respondents who are fully decentralized, operating at mostly regional levels, expect more centralization in two years’ time.

    However, the majority of respondents that currently operate both a group and regional level believe the trend is toward decentralization. Forty-three percent of this cohort believe that coordination by risk type will actually decrease by nearly 10 percentage points overall in the coming two years.

    Interestingly, we see the same pattern of results in our examination of the coordination of risk management across lines of business. Those fully centralized across lines of business expect an increase of 10 percentage points in two years’ time and similarly those fully decentralized expect almost a halving of their full decentralization rate. Similarly, the majority of respondents fall in the hybrid model of centralization and believe that only 25 percent of risk functions will be coordinated across the business in two years&; time.

    Lastly, we looked at coordination of risk management activities across the overall business and found a lack of strong sentiment regarding coordination one way/another.  While 40 percent of respondents felt there was limited coordination between local- and group-level risk management functions, nearly 30 percent felt that this was neither true or untrue.

    Where do these seeming contradictions lead us? We see the role of risk manager becoming more integrated with the business and thus, demand has been put on the risk function to respond to both global and local needs. One intensive local need to highlight from our study findings is regulations; 78 percent of study respondents cite they are facing increasing demands in this area.

    Being an integrator of risk is a challenging role, not only in terms of serving global and local needs but also in terms of cost.  Over 50 percent of respondents reported duplication of risk management efforts across lines of business.

    An ongoing gap

    While ’ risk functions have had steady success since 2009 in coordinating with the business, a lack of integration with other business functions has always been a gap cited for improvement. We see an upward trend in improvement. In 2015, 7 percent of respondents said the risk and finance function worked closely together and provided joint input into enterprise risk strategy. That number more than doubled, to 16 percent, in this year’s study. And in two years, 30 percent of respondents expect that level of coordination between risk and finance.

    The other good news is the steady growth in influence among our survey respondents. Risk leaders have evolved from leading a very siloed function in 2009 to gaining a direct line to the CEO by 2013, and even a seat “at the table” in 2015. That positive trend is tempered by the challenge to integrate finance and risk. Only 38 percent of respondents say the finance and risk functions are working together—but they are not working together to help guide enterprise strategy.

    So, will risk leaders in banks take their seat at the leadership table to drive further integration? Time will tell, but we believe that working with common data sets and flows can be a powerful lever in addressing coordination challenges cost-effectively.

    We expect risk leaders to raise their game and be talented in many disciplines in order to rise to the integration challenge. In my next post, we’ll explore talent needs.

    How can risk managers balance both coordination and cost management? We believe sharing data is the key. Integration can be driven with increasing efficiency when data is at the core of the bank’s operating model. To effectively and efficiently share and use data means being a smart technologist, employing new technologies and a coordinated approach across the business.

     

    The post Meeting banking risk management coordination challenges appeared first on Accenture Banking Blog.

    Accenture Banking Blog

     
  • @fintechna 3:35 am on May 20, 2018 Permalink | Reply
    Tags: 7e00ff, , , , eager, ,   

    Bank employees are eager to collaborate with machines 

    Ancient Greek playwright Aeschylus wrote that “When one is willing and , the Gods join in.” In my first post of this series, I pointed out that executives believe their are resistant to AI and that, on average, only 26 percent of their workforce is ready to work with intelligent technologies. We think that pessimism is misplaced, as our survey of bank employees indicate that they are more willing and eager to work with AI than their bosses believe.

    need to seize this opportunity and leverage their employees’ enthusiasm for AI.

    Bank employees are eager to collaborate with machines fintech

    Of the more than 1,300 bank employees from large organizations who participated in our Future Workforce Survey, 40 percent are very confident in their abilities to work with intelligent technologies (vs. 33 percent cross-industry). Just over two-thirds said they believe AI will create opportunities in their work, while 72 percent expect it to make their jobs simpler. The majority foresee improved career prospects, while two out of three think AI will improve their work-life balance. Despite this optimism, they know these benefits won’t accrue automatically and 75 percent say it’s “important” or “very important” that they develop their skills to be able to work with AI over the next three to five years.

    Our research identifies three primary ways in which will enable people to work more effectively:

    1. Machines will amplify the capabilities, effort, and impact of humans by allowing them to be smarter and more productive. For example, the combination of customer service chatbots plus live customer service representatives (CSRs) intervening where needed, will allow each employee to greatly increase their impact, both within the organization and with customers and partners.
    2. Machines will give humans the ability to interact with powerful databases and computing engines in unprecedented ways. Humans will be able to leverage insights that will enable meaningful personalization and support better decisions in areas like credit risk management or fraud detection.
    3. Machines will help bank employees better embody everything that the bank stands for. By converting principles, policies and processes into consistent human practices, interactions and experiences, machines will help the bank’s people understand what to do, when, and in which way. More than that, they will bring the vision of the bank to life in the form of a multitude of everyday actions.

    Banks need to seize this opportunity and leverage their employees’ enthusiasm for AI. Their people are not only impatient to thrive in an intelligent enterprise that can disrupt markets and improve their working experience; they are also eager to acquire the new skills required to make this happen. Yet, somewhat surprisingly, only three percent of bank executives said their organization plans to significantly increase its investment in training programs in the next three years. This low level of commitment, at a time when a new era of work is imminent, will radically curtail their ability to deploy and benefit from AI at scale. This is the primary disconnect at the heart of our survey findings and a wake-up call for bank executives.

    Banks fully capitalizing on human-machine collaboration depends on their ability to fundamentally reimagine work. It means redesigning jobs as people move to project-based work. It means refreshing traditional job descriptions and thinking more about the tasks and the interactions between humans and machines in executing those tasks, rather than traditional job descriptions. It also means ensuring that almost all bank employees are conversant with new IT skills and can master new tasks. The employees are willing and eager, so the c-suite gods of the banking industry must now join in to give them the help they need to thrive in the world of the intelligent enterprise.

    I invite you to read the complete survey.

    The post Bank employees are eager to collaborate with machines appeared first on Accenture Banking Blog.

    Accenture Banking Blog

     
  • @fintechna 3:35 pm on May 18, 2018 Permalink | Reply
    Tags: , , 7e00ff, , , , , ,   

    Q1 2018: U.S. credit card issuer snapshot 

    Guest blogger Paul Sammer reviews U.S. consumer use of cards to pay for transactions, fund loans, and receivables and transaction volume in Q1 .

     

    As purchase volume and receivables continued to rise during the recent quarter, several issuers reported material increases in returns resulting from tax reform. Read more about the key themes and notable happenings below.

    Key themes

    • Purchase volume in Q1 2018 continued to increase at a significant pace year-over-year, along with strong growth in receivables.
    • Chase, Capital One, Bank of America, and American Express reported robust purchase volume growth year-over-year, while American Express, Discover and Capital One led in terms of receivables growth.
    • cited increased consumer confidence and tax reform as drivers of strong purchase volume.
    • Loss rates continued to normalize although several banks suggested that losses may be stabilizing.
    • ROAs were bolstered by tax reform, which had a substantial impact on reported returns.

    Investment is ongoing in digital, mobile and self-service capabilities.

    Notable Happenings

    Transactions:

    • American Express and Citi complete sale of Citi’s $ 1.2 billion Hilton portfolio to American Express.

    New Partnerships:

    • Starbucks launches a new with Chase; Synchrony announces partnership with Crate and Barrel to offer a new private label credit card and co-brand card; Alliance Data and Lucky Brand agree to introduce a new private label credit card; Synchrony becomes preferred financing partner for Mahindra Powersports.

    Partnership Developments:

    • Due to retail partner bankruptcies, Synchrony replaces qualifying Toys “R” Us credit card accounts with a 2 percent cash back Mastercard and Alliance Data closes Bon-Ton accounts; Synchrony announces that it plans to onboard the PayPal Credit portfolio in 3Q18.

    New Products/Features:

    • Amazon introduces 5 percent back at Whole Foods on Amazon Prime Rewards Visa card; Chase announces new ultra-premium Marriott Rewards Premier Plus card and Amex announces new ultra-premium SPG Amex Luxury card (with single loyalty program branding coming in 2019).

    Mobile & Tech:

    • Synchrony invests in Payfone, provider of identity authentication in digital channels; Goldman Sachs acquires credit card startup Final.

    Industry trends (based on non-retail card issuers in scorecard section)

    Q1 2018: U.S. credit card issuer snapshot fintech1 Total receivables for non-retail issuers at end of 1Q18. 2 Total purchase volume of non-retail issuers in 1Q18. 3 After-Tax ROA excludes Wells Fargo, Chase, Bank of America and US Bank, which do not report credit specific income. 4 YoY = Year-over-year change versus 1Q18. 5 QoQ = Quarter-over-quarter change versus 4Q17. Note: Purchase Volume is reported volume for the quarter (it is not annualized or TTM)

    Scorecard—Q1 2018 ($ in Billions)

    Q1 2018: U.S. credit card issuer snapshot fintech
    1 Chase no longer discloses an ROA measure directly attributable to Card Services. 2 Citi: Purchase volume includes cash advances. Citigroup data includes Citi-Branded Cards and Citi Retail Services. 3 Capital One: U.S. card business, small business, installment loans only. Purchase volume excludes cash advances. 4 Bank of America: Receivables, purchase volume, and net loss rates are for U.S. consumer cards. 5 Discover: includes U.S. domestic receivables and purchase volumes only. Restated: ROA reflective of Direct Banking segment (credit card represents ~80% of loans) and implied U.S. Cards tax rate of ~22%. ROA denominator estimated from total loans ended figures.
    6 American Express: Changed reporting method as of 1Q16. Figures are for U.S. Consumer segment only and exclude small business. 7 totaled $ 343M as of 1Q18, compared to $ 309M in 4Q17 8 A/R and PV for Retail Card unit only. 9 Loss rates and ROA include all of SYNCHRONY ’s business lines (i.e., Retail Card, Payment Solutions, and CareCredit). Retail Card accounts for about 70% of total receivables. 10 Average Receivables.

    We are excited to share Q1 2018: Credit Card Issuer with you. Stay tuned for next quarter’s analysis.

     

    Q1 2018: U.S. credit card issuer snapshot fintech

    Paul Sammer, Manager

    Q1 2018: U.S. credit card issuer snapshot fintechQ1 2018: U.S. credit card issuer snapshot fintech

     

     

     

     

    The post Q1 2018: U.S. credit card issuer snapshot appeared first on Accenture Banking Blog.

    Accenture Banking Blog

     
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