Financial Inclusion, Digital Inclusion and Tech Displacement

In 1999 I worked at a major High Street Bank with the teams who developed Mobile Banking Via SMS  Who would have thought that as a consequence to us thinking, ‘wouldn’t it be cool to get you balance on your mobile phone’ that it would contribute to the decline of the High Street? From getting your balance by text on a Nokia 3310, fast forward 20 years to the Banks opening up more and more services to their customers via the Smart Phone Apps that we all use on a daily basis. This combined with Telephone Banking has led to reduced branch usage and therefore Branch closure. At the end of 2017 in the UK there are about 9500 bank branches a reduction of about 600 on 2016 with about 500 to close in 2019.

Branch closure then has a knock on affect to Small Businesses. A small Business can not afford to close their doors for an hour round trip to their nearest branch. Which means that Businesses may choose another location. In a report for Scottish Government , by mapping bank branch closures against postcode lending data, it found that bank lending to small firms fell by 63 per cent on average in postcodes that lose a bank branch. This figure grows to 104 per cent for postcodes that lose the last bank in town. “On average, postcodes that lose their last bank in town receive almost £1.6 million less lending over the course of a year,” the report concluded.

Where Banks have left the High Street, Communities feel Financially Isolated, It causes major concern for Small Business and people who are Digitally Excluded i.e. those with Little to No Access to Technology and therefore have to travel to a Bank. Within affected communities there is strong feeling that banking should be viewed as a basic part of the local infrastructure and therefore should be available as standard provision.

Add to the Banks shutting down

  • 75% of rural and 10 % of urban areas do not have satisfactory broadband
  • 9 million adults in the UK have never used the internet
  • 1 million adults living in social housing that are offline
  • 27% of disabled adults (3.3 million) had never used the internet

Offline households are missing out on estimated savings of £560 per year from shopping and paying bills online.

Cash: is still the second most popular payment method,(just behind debit cards) accounting for 34% of all payments last year. Around 2.2 million customers mainly used cash for their day-to-day shopping in 2017, although nine out of 10 of them had a debit card they could use, but cash is still an important part of their daily spend preferred by many.

Combine Branch Closure with Cash machines disappearing at a rate of 300 a month, with rural areas hardest hit. As Link ATM Network has lowered the fees it charges to Banks and Building Societies. experts are warning that it could mean closures of free-to-use ATM machines across Britain if they become unprofitable to run, leaving access to cash for millions of people in doubt.  There are 957 areas in the UK with at least 500k customer dependant upon benefits whose cash machine is more than 1km away. The Customers who use “pay for” Cash Machines, regularly incur charges of between £3.70 and £9.25 a week.

Potential closures of Bank Branches and Free Cash Machines risk leaving whole communities without access to cash, harming over two million people who are dependent on cash for their day-to-day shopping.

The Financial Services gap is widening between the Technical Haves and Have Nots – Digital Exclusion. In addition to High Street Closures, the latest Regulations of PSD2 (Payment Services Directive 2) leading to Open Banking in the UK,  allows regulated 3rd parties to access your Bank Account data to deliver a regulated service if you have provided consent to do so. The services currently being provided using Open Banking protocols are for example Comparison Engines, Personal Financial Management apps which can determine trends in your spending habits, or Apps to identify personalised offers. These latest Apps and Services are obviously not available to those who don’t have access to Tech.

As a society we need a way to ensure that advances in Technology and changes to the High Street, do not exclude people from the latest innovation in Financial services.  How do we as an industry ensure the poorest in our society, those that don’t have tech or can’t afford tech, can access the range of comparison engines to get cheaper deals, can take advantage of Digital Payment options to gain discount, and find the best deals, that are readily available to the rest of us? Do the Tech and Financial world have an obligation to provide the tools to ensure accessibility for all and if so how do we work together to ensure Financial Inclusion?

As a footnote, I’m currently Working with a Consultation group in Manchester to define Tech Displacement and how you assess the disruption of your Innovation on People and Places and we are looking to develop  a toolset to evaluate. We are at the start of the this consultation period, so please follow me on Twitter to find out how we progress or maybe to trial our toolset for us. @NJMarham


 

References:

https://www.cdrc.ac.uk/case-study/measuring-the-impact-of-online-shopping-on-high-streets-across-england

http://www.parliament.scot/S5_EconomyJobsFairWork/Inquiries/BC025-SFE.pdf

http://www.parliament.scot/parliamentarybusiness/CurrentCommittees/108241.aspx

Fintech Bites!

On the 19th of September we had our first ‘Fintech Bites’ meetup, hosted at the premises of The IDco, a great new Fintech and Sopra Steria partner that focuses on Open Banking. The main theme was Digital Identities in Financial and Public Sectors. This was a soft launch event, with over 30 Financial Services professionals in attendance, including a number of representatives responsible for Fintech and Innovation from RBS, Lloyds and HSBCFintechThe evening commenced with myself, Sopra Steria Consultant Taz Juozokas, introducing the meetup story and what we have in store for it in future. This was followed by UK Fintech Director Colin Carmichael talking about the Fintech Scotland ecosystem and what the key roles of each of the partners in Scotland are (Sopra Steria was announced as a Fintech Scotland partner in June 2018 with Managing Director of UK Consulting Melba Foggo on the Board of Executives).

The IDco were next to speak, with Digital & Open Banking Expert Andrew Garden and Digital Marketing Specialist Jimmy McLellan providing some great insight into their offerings.

Andrew gave a short overview of the interesting work The IDco has been doing in the digital identity space, as well as their future plans for KYC and AML automation for the Financial Services sector. He also showed us a demo of NoMo – a new digital finance management app. NoMo allows the customer to understand how well they are doing with finances and recommends spending based on this. It also does payment aggregation and alerts with personalised messages. You can test the private, beta version here.

Sopra Steria tech partner Wallet.Services closed the event, with speakers including Chairman Rab Campbell and CEO Stuart Fraser.

Rab covered the concept of blockchain and the work Wallet.Services have been doing with the Sopra Steria public sector. The audience was thrilled to learn about zero knowledge authentication enabled via distributed ledger technology. He also talked about their projects for Oil and Gas companies in Aberdeen, as well as the innovative work they have been doing with Citylets and partners regarding the safe sharing of rental information across the lettings market.

Wallet.Services created a digital identity on blockchain, which allows the registering of housing tenants rent payments in order to build their credit history.

The event has received great feedback from the audience and some interesting discussions were had afterwards. I would like to thank everyone who attended the event and showed an interest. Look out for more to come across the UK!

Got a great idea? Come and play in the sandbox!

It’s all change in banking!  I’ve worked in Banking IT for more than 20 years and never has the pace of change been so quick.  Now, rather than the traditional ‘Big Names’ always coming up with new ideas and technologies, new start ups and FinTech’s are seriously getting in on the game.  The rapid developments in Coding languages, IAAS (Infrastructure as a Service), the falling cost of IT and new, innovative and highly collaborative ways of working has meant that Innovators can develop new technologies using real user data to design and develop existing, highly desirable services and solution – and get them to market in record time.

A major catalyst is the European Open Banking Directive.  This encourages new, disruptive players to get involved to develop and deliver new Banking functionality which is outside of what would be considered traditional Bank servicing.

What’s more, the UK Open Banking Implementation organisation has developed an agreed set of API’s (Application Programming Interface) that TPP (Third Party Providers) can utilise to access Bank data. This means that both the Banks and FinTechs have the opportunity to exploit and develop new Applications to compare banking Product sets and aggregate Customer and Account data across the Banks.

So how should a FinTech with a great application idea (and a brilliant team) get started?

Today, Industry sandboxes offer a new way forward.  FinTech’s can now develop, test and prove ideas, producing a robust Proof of Concept using an industry sandbox.   A sandbox enables start ups with new product ideas to accelerate development and testing using test bank data so that innovative ideas can get to market quickly and cost effectively.  Many established banks are getting in on the ‘sandbox’ initiative, Danske Lloyds and Nationwide all have a Developer Portal giving access to code examples and other helpful documentation.  Leading banks including Allied Irish, Barclays and Royal Bank of Scotland have all invested in Sandbox technology which FinTech’s can access.  This means that FinTechs can prove API’s work with Industry approved data, using Production like Test Data always throws up Use Cases that you did not consider.

New entrants are also making it easier to get involved. Avaloq and Starling Bank actively encourage innovation with their Developer Platforms.  Both deliver access to their test data and have a wealth of documentation with a  much greater range of functionality.  Starling even let individuals test by accessing personal own account to prove instant value and engagement. Not sure where to start?  Why not take a look at GITHUB. It has code examples, collaboration projects to listen, learn and grow ideas and discussion forums covering every stage of the development lifecycle.

Or why not check out Open Bank Project Berlin?  This Project is the leading Open Source API and App store for Banks. It’s open source APIs and surrounding ecosystem of tools, together with a pro-active Fintech developer community helps banks rapidly engage with the next generation innovators safely and securely.

You know that brilliant idea you had last night? What’s stopping you?

Bridging the gap: how Fintechs and ‘big business’ can work together

by Colin Carmichael, UK Fintech Director

Everyone’s talking about Fintechs – but what does ‘Fintech’ really mean?  It’s a generic term that loosely groups a number of innovative technical organisations within Financial Services.

As the Fintech director for Sopra Steria, I believe I know all about Fintech. To me, Fintech is all about change – introducing new, fresh ideas and ways of working – and making them happen. I’ve worked in financial services across the UK, Europe and further afield for many years – and organisations of all sizes find it hard to change; the bigger the organisation – the greater the challenge. Change means that organisations have to think and act differently to introduce brand new ways of working to deliver desirable services to their customers.  The customer really is king and new products and services need to be built to their wishes (rather than the ‘old fashioned’ way of creating a product and selling it hard). What’s more, new, faster technology and access to huge amounts of data have made this issue more acute as it’s raised customer expectations. Put simply – there’s so much to think about and to do to get ahead and stay ahead.

Organisations need to keep up with the very latest ideas – and still deliver a reliable and robust service. And it’s a fact that incorporating new technology is how they will do it. So why is it so challenging for Fintechs and big players to work together? All too often, Fintechs struggle to get their ideas to the right decision makers – and established businesses are nervous of too much change.

The biggest hurdles are often company politics, internal structures, old processes and course – the difficulty of incorporating brand new ideas into ‘old’ systems. For Fintech’s, it’s tricky to get the right contacts at the right level – and to also ensure their ideas are brought to life safely and securely.  For banks and insurers, introducing new, untried and tested ideas is hugely risky and it can take a long time – as well as effort and money to get it right.

What’s needed is a bridge between the Fintechs and the more traditional organisations – to help them to work productively together. Organisations like Sopra Steria have platforms that are at the heart of many of today’s large businesses – and they also understand existing processes, procurement and politics which often stand in the way of getting things done. By working together, Fintechs, established players and platform organisations can listen to and learn from each other, in order to fast track innovation and get the results they need – quickly and cost effectively.

So, my advice to banks and insurance companies as well as the Fintechs is to work and collaborate with a platform provider from the start. Fintechs can safely test and prove their worth in ‘virtual factories’ using real systems and data – and financial organisations can be confident about bringing the best and brightest ideas to market without huge risk. It puts new Fintechs in touch with established players – and accelerates change. And that’s what we all want.

So, maybe, we shouldn’t be using the term ‘fintech’ to refer to just new and upcoming technology companies. After all – aren’t we all Fintechs? Perhaps instead we should be focusing on partnerships and collaborations between new technology companies, established organisations and the role platform players have to accelerate change.

It really is true. It’s not what you know but who you know that makes all the difference.

New banking… new thinking

They say money talks.  Well in the world of banking, that is often true.  But now, new entrant and challenger banks can breathe a sigh of relief.

Know your customer. It’s the oldest adage in the world but still the most valuable. But understanding the needs, wants, expectations and behaviours of today’s highly demanding and digital customers is tricky for all organisations – and most especially banks.

Banking has transformed (and then some!) in the last 10 years. In the past, banks designed services and customers took what was available. Inertia ruled – and customers largely stayed loyal. Now all that’s changed. New, exciting, personalised banking services are constantly emerging – and the bank that truly understands what different types of customers want and need now and in the future gets ahead and stays ahead. Standing still is not an option! The message is clear; if banks don’t provide the services, security, flexibility and innovation that its customers want and need – they will vote ‘with their feet’ and move to another bank that does. Simples!

But understanding complex customer behaviours, financial requirements and market developments requires highly sophisticated and often complex analysis. It’s a fact that there are some great analytics solutions on the market but until recently, these were incredibly expensive and beyond the reach of all but established banks or ‘well heeled’ new entrants. This put new banks at a disadvantage and hampered them from designing new, responsive, highly personalised solutions. But now that’s changed.

From today, advanced highly sophisticated analytic capabilities will be within the reach of ALL banks.

How? Sopra Steria, a European pioneer in digital transformation, has just announced that it has become a SAS Managed Analytics Services Provider (MASP). This will enable us to offer cutting edge, high-end analytic solutions at a cost effective price point for new entrant banks.

We will include ‘Gold level’ SAS cloud-based analytics solutions as part of our Modular Digital Banking (MDB) solution. This innovative end-to-end, fully functional digital banking solution delivers a ‘step change’ in banking service analytics capability, enabling new entrants to increase their agility and responsiveness.  Key features include:

  • A real time decision engine with integrated marketing automation and advanced analytics
  • Advanced visual analytics capability to create descriptive and predictive models
  • Enterprise grade development environment to ensure organisations can meet regulatory compliance requirements both now and in the future
  • Data modelling as well as data integration, quality and management capabilities

Interested?  Take a look at the Sopra Steria and SAS strategic partnership and find out more about affordable, advanced and innovative analytics that can help you make better decisions faster.

What are your thoughts? Leave a reply below, or contact me by email.