Even prior to lockdown, many sectors including both tech and financial services, were considering more flexible working patterns as the norm. The pandemic has been the catalyst in some of this decision making with global tech brands such Facebook, Google and Twitter publicly announcing that they will not expect staff to return to the office until next year at the earliest, and in Twitter’s case, possibly never again.
Working from home has been achieved on a scale never seen before, and our sector must be credited with keeping business functioning as smoothly as possible during these difficult times. There will be a mind-set change, whether it be by employers or their employees, on how a working day looks when the pandemic is over. As remote working has proven successful, so a large-scale shift to flexibly working from home will become the norm for many individuals and businesses.
Digital focus here to stay – but focus on security, risk and compliance will be prevalent
But the pandemic has not just changed working our patterns; the ways people live their day to day lives has fundamentally changed over the past few months. Lifestyle, even exercise routines and how people purchase a diverse range of services, have all witnessed large scale movement away from traditional channels with far more activity in online transactions being seen. Could it be that these unprecedented times are finally leading us to becoming a truly cashless society with all the associated benefits that brings or are these just exceptional circumstances for exceptional times? Are these habitual changes only a current fad? Will the population move back to more traditional lifestyles following relaxation of lockdown and a slow recovery of confidence in the economy or are they here to stay?
The over-arching message from Silicon Valley currently is that the current lockdown will unleash a new and even faster wave of digital technological innovation.
With global heavyweights such as Amazon constantly moving the goal posts in terms of ease and efficiency of service, user expectations are rapidly evolving in almost every facet of life. This is the challenge laid down to technologists in financial services: how do you keep up and deliver a good experience at every stage in the customer journey which gives the borrower a similar digital experience to that which they experience on day-to-day applications and websites?
The improvements in service delivery and the benefits of removing ‘inconsistent’ humans from operational areas is only part of the story. The use of voice recognition biometrics for security checks and simple account accessibility is increasingly the norm, but as consumers become accustomed to on-demand service from their in-home virtual assistants, how soon will it be before we are using voice to make payments and transfers, or indeed be applying for mortgages through devices such as “Alexa”?
A lot will have to do with how secure people perceive new technologies to be. Despite widespread awareness programmes and coverage, some consumers still do not take the risk of cybercrime seriously enough, quite often, until they have been the victim of fraud. The COVID-19 pandemic has coincided with a significant increase in cybercrime and whilst the usual fingers are pointed at Russia, China and Iran, experts indicate bored students with ‘idle time’ on their hands could also be contributing. At the time of writing, there has reportedly been a 238% increase in cyberattacks specifically against the UK financial sector since the virus outbreak.
This also coincides, and is highly relevant, with the new spotlight that has fallen on operational resilience since December 2019, following the joint publication of a new policy summary and consultation papers by the Bank of England, PRA and FCA. The new proposals mean that firms will be responsible for ensuring their operations and infrastructure, including all outsourced services, are resistant to disruption.
Those working from home are probably more susceptible to compliance weaknesses. Call centres are also a clear area where staff are constantly engaging with customers, and where audit trails of activity are required to prove compliance with policies and procedures. The unfortunate truth is that human error is arguably the most significant contributor to operational failure. Given the ever-increasing complexity of financial services enterprise landscapes, the points at which failure is liable to occur are multiplying. It is through automation and closer supervision that human touchpoints can be phased back down and operational risk reduced.
To ensure our existing and new clients can audit these types of processes, PSL has entered into a strategic partnership with Yabber, part of the Rockstead Group. The purpose of the product is to ensure companies can improve service standards and adherence to compliance requirements. Yabber’s AI engine is backed up by Rockstead’s extensive due diligence experience. The platform analyses all customer conversations and provides analytical insight into compliance with all requirements and reporting of key risk areas. This data will be hugely important in many key areas such as adherence to sales, collections and complaint processes. For those who require portfolio due diligence, for areas such as securitisation, a 100% audit check is attainable in certain areas, versus the current samples currently undertaken.
Phoebus Digital Ecosystem
PSL’s recent tender processes heavily indicate that more clients expect a range of best-of-breed solutions across their architectural landscape, where a reliance on the transfer of data via APIs is a key deliverable to provide a seamless process in the end-user’s journey.
There remains a desire amongst banks, building societies and lenders to provide their customers with a digital, omni-channel platform ecosystem which enables customers to start their journey through one channel, but complete the process through a different channel when circumstances may have changed.
Best practice in omni-channel strategy can usually be found in the retail and entertainment sectors. Customers expect to shop via mobile, desktop or emerging channels such as voice, and expect to receive the same experience, products and services which are personalised and targeted to them. This is increasingly becoming the norm and will be reflected more in financial services moving forward.
Omni-channel potentially leans towards an eco-system made up of multiple suppliers. Many banking providers are now engaging with strategic partners who have specialist expertise in creating and delivering digital functionality which can be tailored to specific client requirements. Providers are also recognising that, given the relentless pace of change, the necessary skilled resources likely do not exist within their organisation.
On this basis, at PSL we have invested heavily in our strategic approach to offer a best-of-breed technology stack that will encompass the requirements of both existing and new clients. In 2019, we opened an award winning “Innovation Hub” to focus on market requirements both now and in the future.
The first major development was building out a suite of Open Banking-compliant APIs which permit the real-time, two-way transfer of GDPR-compliant data to and from the Phoebus solution to any third party system a client may want to use as part of their chosen ecosystem. This approach has proven very successful and means clients are able to utilise the proven robustness and capabilities of the Phoebus Loan and Savings platforms, whilst integrating with other non-core Phoebus solutions to provide a state-of-the-art, end-to-end solution.
An area which has been identified as being critical to clients for managing their customer expectations is customer self-service. The recent launch of the Phoebus self-service (PSS) portal has been received well in the market place. It was designed with digital ecosystems in mind and with APIs being integral to the delivery of the solution. Using two-way APIs, the solution becomes platform agnostic, meaning that potential clients do not need to use Phoebus servicing to be able to utilise this portal; operational benefits can be quickly gained irrespective of the host servicing platform used. Additional functionality is already in the pipeline and initial reaction suggests this will play a considerable role in helping reduce call volumes into already pressurised lender call centres.
Provision of non-core products to traditional providers
If digital, omni-channel eco-systems are to be delivered, software and services companies such as PSL must be willing to work with a number of third party suppliers, even where there may be product competition, to make delivery as smooth as possible for our clients. APIs will be key to the success of such integrations as will finding partners that complement each other and who share the same strategic vision.
The specialist bank and building society market has a growing requirement to provide digital current accounts, where perhaps they have only offered a traditional loans and savings account model previously. The rapid reduction in the use of cash, especially amongst the younger generations, means a large swathe of the population increasingly risk being alienated and underserved by those traditional high street providers which have been a mainstay of previous generations.
Customers of these institutions have many reasons for wanting additional, often secondary accounts. These range from those who want to make small item purchases ‘on-the-go’ or who want items which will not appear on their primary bank statement, through to brand loyal, digital savers, who want to have discretionary savings for specific events such as weddings and holidays. Low cost- of-entry digital accounts for youths and SME businesses are in high demand. Surprisingly, these seem to be two of the most under-served customer segments from traditional channels, especially given the minimal costs of raising retail funding from these sources.
PSL has recently established such a strategic partnership with digital banking provider FS Horizons, to provide the customers of our clients with a digital savings account which offers features such as savings’ wallets, a debit card and the ability to manage money in branch, online, or using a mobile device.
Conclusion
The COVID-19 pandemic has shocked the world and forced the rapid adoption of new human behaviours and business practices, including the introduction of new ways for how we all work, socialise and spend our hard-earned money. Some of these changes may be relatively short-term whilst others will become a permanent feature.
The UK financial services sector will respond as it has always done, through innovation and a desire to best serve the interests of its customers, employees and local communities. For some, this will mean continuing along the same track as before, whilst for others it will see the development of a new, more flexible operating model; one which deploys a digital ecosystem at the very heart of its business operations and is delivered through the support of best of breed, mutually beneficial strategic partnerships. Welcome to the new world!
Mark Smitheringale is Client Executive at Phoebus Software Ltd
