Let’s take a look at what the experts think about financial services in 2019. If you’re anything like us, your calendar is filled with financial events, and we kicked off the very first episode of The Shape of Money at the Queen Elizabeth II Centre in London for the BSA Conference.
I personally enjoyed listening to journalist Jo Coburn present her thoughts on the political implications on financial services. But it was with Robin Fieth, CEO of the Building Societies Association, where I got a positive soundbite about having a positive outlook.
“There’s a huge amount to be positive about! We’ve seen it today in the latest quarter results coming out … In an incredibly competitive mortgage market, at a time when everyone is talking about the sector being squeezed, we’ve written 57% of net mortgage business in the first quarter of this year, against our natural market share of about 23%. And that’s a trend that has been carrying on quarter by quarter, basically since the crisis.”
And in episode three, I spoke to Jerry Mulle about what’s ahead for building societies over the next two years. Can we be optimistic?, I asked him.
“Every time I do this, I’m slightly over-optimistic on the speed of change. Genuinely this time, I think there’s enough traction out there to see some quite big changes. To go back to my comment about open banking earlier, that provides the opportunity for societies to be able to use data in a very constructive way to make the journey much easier. The vast majority of reasons for building societies to do this is around mortgages. A process of applying for a mortgage is an arduous task just because there are so many people in that ecosystem. The sharing of data, the ability to move across an ecosystem very easily and quickly – to be able to reduce the average timescale of 43 days to get that mortgage – and sifting that data through, dealing with different providers, whether that’s a solicitor or a broker, to ensure the customer only has to input data once and we make the journey much easier for the consumer. I think that’s going to be the main focus. There’s so much more we can do.”
A lot of the optimism around building societies undergoing digital transformation is because of open banking. This is a topic that divides opinion depending on which side of the fence you happen to sit: whether you’re a startup with the agility to take full advantage of the opportunities, or whether you’re a large, traditional financial institution that’s resistant to change, or tied up in regulation.
Of course, it’s never black and white. For customers, all they want is a fast service that feels as simple to use as Netflix. I interviewed the CEO of accountancy software FreeAgent, Ed Molyneux, in episode seven. While we inside financial services may get caught up in the bubble of open banking, I think he put his finger on what open banking means to the average consumer.
“I think open banking hasn’t had a lot of impact from a consumer point of view yet. People don’t necessarily see the point. I think accounting software is a particular case in point, where there is such an obvious advantage to having transparent access to bank transaction data. It’s sort of the heart of the accounting ledgers. There aren’t many other obvious use cases for open banking.
“A lot of people think about aggregating multiple accounts together so that you can see what’s going on across multiple accounts. That is a useful thing. But really, doing the work of building a picture of people’s finances and being able to help them get the best out of all the different products and services that they have, that system is yet to be built. I know there are several companies that are having a good old go at building towards that – it’s the holy grail of what everyone’s trying to do – but that’s not around yet.
“Most people see open banking as technology that’s still in need of a solution, and most consumers don’t yet understand what the possibilities might be until somebody shows them. It hasn’t been a spectacular success from a “this is amazing, open banking has changed my life” point of view, because there haven’t really been the applications built on what is essentially an industry specific infrastructure piece.”
Artificial intelligence, and small business progress
For us inside the bubble of technology, it’s an exciting time to be in financial services. If you’re not talking about artificial intelligence these days, where are you hiding? From voice technology to data mining, AI will play a huge part in the next few years as technology advances and more and more financial institutions implement AI into their business strategies.
Right now, companies are using it for a number of different things, and we put this to Louise Beaumont, executive chair of Signoi, at Money2020 Europe 2019 in Amsterdam. Here’s what she said about AI in episode two …
“Some companies are using it to understand the marketplace and define strategy. Some are using it to understand how their brand is resonating in the marketplace, and tweak or refine it. Some are using it to generate new brands completely. Some are using it to understand how to better market and communicate, and some are using it for new product design, innovation platforms, engagement with customers, to crack customer experience, competitor wargaming … you name it!
“It’s as broad as your imagination. Some people are using it as a productivity tool, because it’s basically accessing huge amounts of data, but consuming it in a way that allows you to move fast. It kind of separates you surgically from the problems around your propensity to assume – your prejudice. It releases you from that.
“Everything we do is around revealing what’s in the data. For 20 years, as human beings, we’ve been trained by those big tech titans to search. What search does is just limit you down to the things you’re looking for. It allows you to miss completely all the big, interesting things that are happening there, because you forgot to ask because you didn’t know.”
I asked Andy Bishop from Lloyds in episode five about whether small businesses are being left behind when it comes to technology …
“I think the commercial environment is probably catching up with the retail environment, and certainly catching up very fast. But I go back to the key driver behind that, which is that our retail – our personal experience – will be driving our commercial decisions as well. My experience of, for example, Amazon … I’ve got that experience, therefore when I’m running my own business going forward, my expectations are that my business experience can equally look like my Amazon experience, particularly for smaller, less complex transactions. Equally, I would want access to specialist support, particularly for more complex needs, and equally strategic support and wider business support.”
Collections and mental health
We work very closely with credit and collections companies. The impetus is on helping people better manage their finances should they become burdened with debt, and the forward-thinking collections companies are using artificial intelligence.
I spoke to Mark Buckley from the Credit Services Association in episode four. Some of the biggest topics in the collections sector revolve around technology in general, and connecting the dots when it comes to helping people while improving debt recovery performance. Trust is a primary concern among a lot of people, particularly older people, when it comes to technology. Or perhaps it’s a misconception that older people struggle with technology?
“I think there’s a misconception – I think you’re right with that. Obviously, the simpler it is to use, that’s better for everyone. Particularly me! I’m a bit of a dinosaur with technology myself! Just because it’s simple to use doesn’t mean we compromise on security, and ensuring that everyone’s data is protected. We’ve got GDPR, you’ve got the cybersecurity side of things, you’ve got hacking, you’ve got all the conversations going on with regards to how data is collected – the FaceApp thing being particularly prominent at this moment in time. Just because it’s simple doesn’t mean that security should be compromised.”
There’s also the approach to mental health to consider when it comes to managing debt. In episode eight, Merlyn Holkar from Money and Mental Health shared his thoughts on the links between debt and mental health problems …
“Yes, it’s a really strong relationship. If you don’t have a mental health problem, about 5% of those people are going to have a debt problem as well. That rises to about three and a half times, to about 18% of people with a mental health problem. If you’re a bank or some other kind of creditor, that means half of your customers who are in debt are also likely to have a mental health problem. We think it has some really profound implications for the way we should design those kinds of services.
“There’s been lots of improvement, but I think there’s definitely more they can do. I think lots of financial services companies are really improving their understanding of different sorts of vulnerability, but we think that, particularly with mental health, there are some key things they can do.
“One of the big things would be to think about accessibility. We’re quite used to talking about accessibility for people with physical health problems or sensory conditions. There are lots of parallels here. There are lots of particular accessibility needs that people with mental health problems have that aren’t always met.
“One common one is about the way we communicate. People with mental health problems often have difficulties with particular communication channels. Half of people who have experienced a mental health problem can really struggle to use the telephone to get in touch with financial services providers. For others, it can be different. It could be a problem with face-to-face contact, or it could be struggling to open the post. If your service isn’t equipped to meet those people’s needs, it can be really difficult. If the only way to get in touch and query your account is by telephone, that could be almost completely inaccessible to some of your customers with a mental health problem.”
Cybersecurity and data protection
So who’s doing what in cybersecurity? And who’s looking after our data? In episode six, Nick Murphy and I chat about GDPR and data protection. Nick is from 3 Lines of Defence Consulting, and when I asked him about who’s responsible for protecting our data, this is the anecdote he shared …
“One of the senior guys at 3ldc overheard this wonderful conversation on the train, and he won’t mind me repeating this as he’s quite proud of overhearing it. There were a couple of cleaners on the train and they’d worked for an estate agency firm and one of them said, ‘You’ll never believe it. I got in trouble with the manager. We were clearing out some of the rubbish from the bin and putting it in clear plastic bags and putting them on the street.’
“Nothing was shredded. A policeman came along, looked at these clear plastic bags and could quite easily see the bank statements and PII data in these bags (personally identifiable information). He went in to see the manager and said, “You do realise this is technically illegal”. The cleaners got into trouble. If you are going to do that, at least use black plastic bags, not clear plastic bags!
“Again, that wasn’t malicious. They’re just doing their job. They’re told to clear the bins. Someone in the office should have shredded it, but it comes back to that point where it’s not malicious, but it’s that human factor again.”
So clearly everyone’s responsible for protecting our data! But of course regulation is there to ensure there are guidelines, and to ensure that when we go through the complicated process of buying a car, for instance, with many third parties to deal with, our data is being looked after. It’s a long road ahead. What advice does Nick have companies asking for people’s data?
“We’re a year in now and there are two main things to look at as a company that has data. Be aware and understand why you’ve got it, be aware of and understand the service you’re offering, and constantly review the data you hold. You may hold data on someone you don’t need anymore. Clear it out. Delete it. Gone are the days when you can just say, ‘Oh it’s stuck in a filing cabinet, it doesn’t really matter’. No. If you’re not providing a service and you don’t have to hold it for legal reasons …
“Going back to what we said at the beginning, if you start to do this, you may not be able to clear all of it out. But if you’re aware of it and something happens where the ICO come after you, you can say you are in the process of clearing the data out: ‘We did hold records for 15 years and only needed them for three years, but we’re in the process of clearing it out.’ If someone makes a complaint, at least you can show or understand how you should be compliant and you’re actually making steps towards that.”
Diversity and inclusion in financial services
Last but certainly not least, what role does culture play in customer-centric digital transformation? It’s one of those subjects that’s often misunderstood, but we believe it’s an essential part of revolutionising and updating your business practices.
You can’t reduce culture down to a simple algorithm. It’s a complex formula that takes time and patience to get right, and you need a bit of luck too. However, there are symptoms that you can address to begin the journey to getting your own business culture on the right path.
If you only listen to one episode of The Shape of Money, I would advise listening to episode four, where Leda Glyptis from 11FS covers the complexities at the heart of diversity and inclusion in financial services. Here’s a snippet …
“I think that there’s a whole host of things. Let’s take it at different levels. You should reward people for similar experience in similar jobs the same way, irrespective of where they came from. If you can’t do that, you have a fairness issue. If you have five people doing the same job and you pay them differently, chances are that these people will represent those inclusion challenges if you look at them, but the real issue you’re facing is a fairness issue. So deal with that one. The second is, when hiring, look for the best person. But when you look across the team and the best people look the same, you either have a sourcing issue or a bias issue.
“I have no issue with the best candidate for the job being a straight middle-class white man. They will be the best person for quite a lot of jobs. But if they are the best person for every job, you either have an issue in hiring or an issue in sourcing candidates. So you need to address both. If your issue is with sourcing candidates, and you’re finding that actually you’re diversifying the way you’re sourcing candidates, and you’re still not seeing the diversity, then you need to create access. It doesn’t solve it for today, but it solves it for tomorrow.
“You hire people and you help them upscale. That’s the only way to break it. They will pay you back a million times over with creativity and freshness of thinking that diversity brings to the table, no matter what that diversity is. And it could be somebody who has an unusual background in terms of their education, or returning mothers, or people from the local community who wouldn’t normally have access to this industry … and you give them access? No. There’s no easy fix! It will take time and it will take money!”
See you in 2020
While we were never going to dig too deep into so may fantastic topics in this roundup episode, I hope you’ve picked up a flavour of what we discuss here at ieDigital.
Many thanks again to all of the wonderful guests on the show in 2019. We wish you a very Merry Christmas, and look forward to you subscribing on Apple Podcasts or Podbean for more of the same in 2020.