What is the #state of #banking #innovation today? Each year, we poll the industry to find out. #Bitcoin mania has died down in the #fintech world, and the conversation has shifted to technologies like voice banking, payments, and alternative credit scoring. This year, the pressure for #banks to innovate is high, as banks no longer […]
Bank Innovation
#Realtime #payments (RTP) is great for the consumer, but what about for the #banks? Will realtime payments lead banks to lost revenue on transfer fees or fines from bounced checks? That is likely. But real-time payments will also open doors to new revenues possibilities, thanks to data from realtime transactions. “What we’re really talking about is […]
Bank Innovation
#Finastra‘s #banking #platform offers a way for financial services institutions to innovate faster, and way for #fintech firms to partner with #banks.
Financial Technology
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?
#Solving the delivery #conundrum means addressing three areas: People, #Technology and Process.
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).
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.
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.
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 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.
To successfully scale application delivery, we recommend focusing on:
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.
The post Solving the delivery conundrum appeared first on Accenture Banking Blog.
Card-issuing platform #Marqeta #sees a lot of potential in working with challenger #banks across #Europe, and to fuel this #opportunity, the Oakland, Calif.-based company took in $ 45 #million in #funding, Jason Gardner, founder and CEO, told Bank Innovation. Investors in this funding round include VC firm ICONIQ Capital and Goldman Sachs. The new round, announced today, […]
Bank Innovation
The United Nations’ set of principles to help change the way the world uses and manages water, opens with a profound statement: “Water is precious, fragile, and dangerous…Water and its sources must be respected, because, if neglected, it has the power to harm, divide or even destroy societies.”
#Technology can be a lot like water. It’s prized for its ability to #hydrate business and society, and we’ve seen its beneficial impact on the world’s unbanked. Between 2011 to 2014, the World Bank reports the number of unbanked individuals dropped by 20 percent—thanks to mobile offerings from #banks and mobile money service providers. In China, technology has moved a cash-driven society to one that had $ 15Trn in mobile payments last year, accounting for two-thirds of the global total. Yet, technology can also be incredibly disruptive and fundamentally change industry structures, creating winners and losers in the process. Think Netflix and Blockbuster; Uber and the highly regulated taxi industry; Expedia and travel agencies.
In banking, both old and new industry players need to understand and respect the impact of fast-proliferating technology—if they are to both tap it for its transformative power and avoid being set adrift in an ocean of competitive sharks.
In our recently released Banking Technology Vision 2018 report, we highlight #five emerging technology #trends that could each spark the next wave of industry disruption. Even in markets that currently look stable and profitable, #bankers must be prepared to deal with the threats and opportunities arising from #these trends to ensure that they are truly future-ready.
Inaccurate, unverified data will make banks vulnerable to false business insights that drive poor decisions.
One of the trends is the emergence of artificial intelligence as a member of the bank workforce, working next to humans in a symbiotic relationship as co-worker, collaborator and trusted advisor. Nearly 80 percent of bankers in our survey believe that this will happen within the next two years. This is fresh water cascading on what is often a technologically dry element of a bank’s operation, where employees lack the innovative capabilities at work that they use and enjoy in their personal lives. AI as a more visible, trained and accountable co-worker can help bank workers perform their work more efficiently, deliver service that builds customer trust, and drive business growth.
Just as water must be clean to be useable, so must data. Eighty-one percent of bankers said they are basing their most critical systems and strategies on data. Yet, 28 percent said that they do not validate or examine the data they receive from ecosystem or strategic partners most of the time, and five percent said they do not validate at all or rarely do. Inaccurate, unverified data will make banks vulnerable to false business insights that drive poor decisions. Banks can address this vulnerability by verifying the history of data from its origin onward—understanding its context and how it is being used—and by securing and maintaining the data.
I invite you to read our full report, Banking Technology Vision 2018: Building the future-ready bank.
The post Bankers, these five tech trends hold properties to hydrate traditional business appeared first on Accenture Banking Blog.
How much would you discuss with Erica, Nomi or Eno? And no, those aren’t #people, but virtual assistants provided by some of the largest #banks in North America. Artificial intelligence has become a hot topic, and even more so in relation to chatbots and virtual assistants. But just how comfortable is a customer speaking to […]
Bank Innovation
The EU’s Second Payment Services Directive (#PSD2)—and the #European 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 #payments in Europe. PSD2 and RTS open up #banks’ 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 (#APIs).
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.
Payment initiation opens up: For payment initiation, the NextGenPSD2 framework offers, amongst others, SEPA #Instant 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, #technology 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.
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.
The post Will PSD2 APIs and instant payments change the game in European payments? appeared first on Accenture Banking Blog.
#Innovation for the sake of problem-solving (rather than for its own sake) is the way U.S. Bank’s Dominic Venturo approaches his role of chief innovation officer. The bank has a comprehensive outlook on investing and researching emerging #technology trends through its innovation team, Venturo said. The bank approaches its innovation plan by looking for “interesting […]
Bank Innovation
Application programming interfaces (#APIs) open up a rich world of data exchange to #banks, #fintech startups, and consumers. Large banks such as #Wells #Fargo are operating with a growing number of APIs for third parties to connect with, and it’s #changing the way customers interact with the bank. There is also a growing ecosystem of […]
Bank Innovation
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