Finance Function Trends

Part
01
of three
Part
01

Finance Function - Trends

Some trends in the finance function within banking organizations or other industries include the changing role of chief financial officer and the shift towards digitization and automation.

CHANGING ROLE OF CHIEF FINANCIAL OFFICER

OVERVIEW
  • As an evolution of the finance function, the role of CFOs is shifting from being a reactive and external change responder to an internal change driver that is spending most of its time (70%) liaising with stakeholders, developing strategy, anticipating trends, and keeping up with competition.
  • According to Deloitte Finance 2020 perspectives, "the CFOs are under constant pressure to provide strategic insights to their organizations to help make better decisions." The CFOs and their finance units are delivering data-driven insights to support smarter business decisions and engaging in superior future prospects based on business goals.
  • The changing business dynamics has lead to a transformation in the role of CFOs from being a number cruncher to a value driver that is more fundamental to operations, wherein around 41% of them spend their time on activities not related to finance and propelling data-driven decisions throughout the company.
WHY IT IS A TREND
BRANDS MANIFESTING THIS TREND
  • Robobank Asia is a leading cooperative bank whose CFO, Niels Boudeling, highlighted the insights on the adaption of the changing landscape of his responsibilities. Today, he is more engaged in facing a changing competitive environment, becoming involved in strategic decision-making, resolving internal conflicts, and long-term value creation via the stimulation of the company to locate brand-new opportunities.

SHIFT TOWARDS DIGITIZATION AND AUTOMATION

OVERVIEW
  • Finance teams are evolving, with more organizations becoming dependent on data-driven decisions, which is compelling the teams to adapt lean models and data analytics for improved customer insights and higher productivity.
  • The Deloitte report shows that most of the organizations have implemented integrated ERP systems in their financial systems, along with embracing cloud, which offers highly scalable and quickly deployable services that has improvised the team performance, such as modifying the spreadsheets to high graphical visualization tools for process and analytical tasks.
  • Organizations moving towards digitization and automation have made 25% of the finance teams work more efficient, as around 70% of the finance team respondents found that this change leads to remarkable returns on investment.
WHY IT IS A TREND
  • Repeated mentions by various industry research reports indicated this as a trend and highlighted the changing mindset of organizations towards digitization and automation and multiple industries adopting the change and implementing it throughout their finance systems for better data-driven analytical decision-making purposes, along with gaining return on investments.
BRANDS MANIFESTING THIS TREND
  • A global industrial company (brand name not disclosed) leveraged digital technologies such as Oracle Cloud, along with combining the finance team's internal processes through automation (RPA) technology, which supported in the simplification of the finance function and allowed it to perform with improved effectiveness and efficiency.
  • A multinational financial services company in insurance and asset management (brand name not disclosed) generating more than €100 billion in revenue globally resolved its challenge of transforming its finance function by administering an overall digital transformation road map, including deploying a full SAP finance solution, which further assisted it obtaining its ideal finance function.

Research Strategy:

To obtain the trends in the finance function within banking organizations or other industries, we leveraged credible industry survey reports. Through sources, including Deloitte Finance 2020 Perspectives, EY Survey, McKinsey and others, we found the insights on the trends mentioned repetitively by industry experts relating to the changing role of CFOs and the shift towards digitization and automation. These trends have a considerable impact in the market and represent a modification being adapted by various organizations related to their finance function due to changing business dynamics and to attain a better return on investments.

Furthermore, by exploring various news articles from sources, such as FT, Business Insider, and Biz Journal, and relevant case studies through publications from Oracle, PWC, BCG, and others related to the organizations that are manifesting these trends, we were able to locate the requested details.
Part
02
of three
Part
02

Finance Function - Case Studies

Banks around the world are implementing innovations in finance functions such as payments, ledgers, and account opening. Innovations in blockchain technology, robo advisors, and customer onboarding are explained in case studies of Barclays Bank, Citizens Bank, and OCBC Bank of Singapore.

Blockchain at Barclays Bank

  • "Blockchain" is a new technology that stores digital information (the “block”) in a public database (the “chain”).
  • Barclays is experimenting with blockchain technology in two ways. (1) Bringing financial institutions "closer together and make global collaboration easier", and (2) Creating "efficiencies in the way the bank processes data."
  • Blockchain technology is attractive to Barclays and other banks because of the problems it solves: it reduces risk in wholesale markets and it better connects commercial banks to central banks.
  • Barclays has explored many interesting uses for blockchain", including simplifying payments infrastructure, using "smart contracts to standardise post-trade processes, and efficiently connecting parties in trade finance and syndicated lending."
  • At Barclays, blockchain can substantially improve data processing that occurs "when the systems at different institutions, which previously required inefficient reconciliation due to variations in their different internal processes and data formats, can now remain synchronised automatically through distributed ledger technology."
  • Billions of dollars in banking expenses will be saved in the banking industry through blockchain technology, according to Barclays spokespeople.
  • Blockchain technology is an innovation because it reduces inefficiencies in banking processes, saves money, and increases the speed of transactions.

Robo Advisors at Citizens Bank

  • "Robo Advisors" are software innovations that provide individualized "digital investment advice, [and] offer investors automated, algorithm-based portfolio management with minimal intervention...." The technology makes decisions based on a user's answers to basic questions.
  • Citizens Bank instituted a robo advisor service in 2017 to help small investors with their investment needs.
  • The problems that robo-advisors solve include reducing investment staff time by handling repetitive inquiries and small accounts, and reducing costs for investors. "Robo-advisors usually have significantly lower account minimums and assets-under-management fees are typically half those of fully managed accounts."
  • Customers have the choice to use solely automated advising, or combine automated advising with consultations with a human financial adviser.
  • Robo Advisors are innovative because they make use of Artificial Intelligence (AI) to automate a financial task: explaining the investment process to customers and selecting investment options that fit each customer's generic needs.

Multiple Innovations at OCBC Bank, Singapore

  • OCBC was named the best bank in Asia in 2019, largely because of its multiple innovations in banking technology and customer services.
  • "OCBC Bank was the first in Singapore to enable customers to use their voice to perform banking transactions and access services, and the first in Singapore to enable cash withdrawals at ATMs using QR codes."
  • OCBC Bank was "the first bank in Southeast Asia to launch a robo-investment service." The robo advisor service helps customers to start investing without becoming a client of a large company and talking to human advisors.
  • OCBC made use of new technologies to streamline the process of becoming a bank customer. With the new technology, customers can "instantly open and use a new bank account, leveraging MyInfo and OCBC Bank’s digital KYC process." The digital bank applications and instant approvals led to substantial growth in OCBC's savings account assets. Customers can also get "instant approval of online applications for products like personal loans and credit cards."
  • The new technologies solved several problems. They allowed OCBC to eliminate costly and time-consuming customer authentication procedures done by hand, and install simpler, faster processes that customers liked. Because opening account was simpler and faster, more customers opened accounts, leading to growth in OCBC's assets on deposit.
  • The new technologies implemented by OCBC Bank are innovations because OCBC Bank was the first Asian bank to use them to streamline banking finance processes.


Part
03
of three
Part
03

Finance Function - Best in Class

Two of the most widely-used best-in-class improvements in banking finance functions are distributed ledger technology through blockchain, and artificial intelligence (AI) automation of certain customer services. These improvements increase efficiency of financial reporting, reduce risk, and manage working capital.

Distributed Ledger Technology in Banking

  • Commerzbank, CME Group, CITI, and dozens of other banks have tested and implemented blockchain technology to improve their finance functions.
  • Distributed Ledger Technology (DLT) "allows a bank to view the collateral in its ledgers in real time, send cash or securities with one click to a clearing house, and receive an immediate acknowledgment, regardless of the current technologies they are deploying." These information access improvements streamline and increase the speed of local and international transactions.
  • In March 2019, German bank Commerzbank and LBBW conducted their "first test transactions on the blockchain platform for trade financing called Marco Polo."
  • The Marco Polo Network addresses critical issues in international trade, using blockchain technology to streamline transactions, improving the process of international banking in the modern global economy. "Each year, hundreds of trillions of dollars in goods, assets, credit, and money change hands in support of global trade."
  • "The Marco Polo Network operates on the first distributed trade finance platform powered by blockchain technology. The Marco Polo Network gives its members new risk reduction "solutions such as receivables discounting, payment commitment and payables finance programs."
  • The Marco Polo Network is a best-in-class example of an improvement in a finance function in banking, because it provides instant information and reduces risk for the institutions that use it. It automates trade, speeds up transaction settlement time (which otherwise takes days), and frees up money that under the old systems would be tied up waiting to be sent back and forth between the parties.

Artificial Intelligence (AI) in Banking

  • U.S. Bank, Wells Fargo, BBVA Compass and Banco Popular are some of the banks that have invested in robotics and artificial intelligence "to streamline work processes and establish more uniform procedures."
  • Banks are investing in AI because of the potential cost savings. "The aggregate potential cost savings for banks from AI applications is estimated at $447 billion by 2023, with the front and middle office accounting for $416 billion of that total".
  • 75% of survey respondents at banks with over $100 billion in assets reported using AI strategies.
  • The most popular ways AI is being used so far in bank operations are "chatbots in the front office and anti-payments fraud in the middle office...."
  • Bank of America's chatbot Erica can "remind customers of recurring payments and whether or not [the] payment is scheduled after their due dates," "flag recurring payments when they are higher than expected", "lock and unlock a customer’s debit card on request", and perform other functions. These functions have increased customer satisfaction.
  • Artificial Intelligence incorporated into banking processes has already saved money for banks, and improved customer satisfaction. Thus it is an example of a best-in-class finance function advancement.

Research Strategy

We were unable to find statistics on the amounts of money saved by individual banks that had implemented the new technologies of distributed ledger and artificial intelligence. We read industry articles predicting that money could potentially be saved, that time could be saved, and that certain types of jobs could be eliminated or reduced by implementing the technologies, but individual banks had not yet reported specific figures for these savings. The technologies are very new and implementation is taking place at this moment, so it is likely that the full financial impacts for banks won't be known for a few more years. We looked for annual reports from banks to see whether the reports mentioned innovations in technology and whether money had been saved by such improvements. Bank of America's annual report for 2018 mentioned technology improvements, but did not document any savings in costs.
Sources
Sources

From Part 02
Quotes
  • "1. Bookkeeping and Payables/Receivables Bookkeeping is the most basic financial activity in a company. Before a business owner ever considers hiring a CFO, they bring in a bookkeeper, who tracks all of the transactions in the organization, covering both sales and expenses. As the organization grows, they might hire more specialized payables and receivables clerks, to take over functions such as corresponding with vendors and suppliers, above and beyond recording transactions."
  • "2. Financial Reporting and Control Financial Reporting and Control is the function that takes raw accounting entries and transforms them into usable and comparable financial statements. Requiring far more judgment than the bookkeeper’s role, this function involves everything from ruling on how to implement accounting principles to designing financial processes of the organization, selecting accounting systems, liaising with external auditors, and ensuring that there are no gaps or oversights in existing processes."
  • "3. Tax and Compliance Running a business involves paying tax, and paying tax means doing a lot of calculations and filling out a lot of forms....the Tax and Compliance function will make sure all of the government forms and filings are sent complete and on-time to the taxman. A strong Tax and Compliance function will go one step beyond simple compliance, and will find ways to minimize tax, so as to maximize the company’s net income."
  • "4. Strategic Planning and Financial Planning & Analysis. FP&A regularly creates strategic and financial plans that forecast what financial results (sales and expenses) will look like in future periods. Then, they compare actual results—prepared with the assistance of the Financial Reporting and Control function—to determine areas where the business can improve. With this “variance analysis” complete, they can then prepare more accurate forecasts for the future."
  • "5. Treasury & Working Capital Management The key role of Treasury is to make sure that the company doesn’t run out of cash. This means, among other things, forecasting the upcoming working capital (receivables, payables and inventory) needs of the company, investing surplus cash in short-term instruments to generate modest interest income, and managing currency risk."
  • "6. Capital Budgeting Capital Budgeting is the function responsible for selecting between the various uses of capital, or capital projects. Capital Budgeting develops business cases to evaluate and identify the most effective projects. A strong Capital Budgeting function will not only forecast project benefits, but will also track these benefits over time to determine whether the use of capital was as effective as originally anticipated."
  • "7. Risk Management Risk Management is a function that is rapidly developing after the financial scandals of the early 2000s (Enron, WorldCom, the Great Recession and Lehman/Bear Stearns collapse, etc.). In the financial services industry, the function is particularly central as most institutions run with a high amount of debt (leverage).... Risk Management takes a hard look at some of the key risks faced by the company—currency, interest rate, market, operational, legal, etc.—and tries to quantify the possible impacts so that they can be mitigated as much as possible."
  • "8. Corporate Development & Corporate Strategy. sourcing and analyzing mergers & acquisitions deals, raising debt and equity financing, making capital structure decisions and providing insight into high-level strategic decisions such as entering a new market."
Quotes
  • "the primary function of a financial system is to facilitate the distribution and deployment of economic resources in an uncertain environment. the six basic functions performed by the financial system. "
  • "Function 1. Clearing and Settling Payments. Banks and other depository financial intermediaries fulfill this function thru wire transfers, checking accounts, and credit cards. "
  • "Function 2. Pooling Resources and Subdividing Shares. From the perspective of firms raising capital, the financial system provides a variety of mechanisms (such as security markets and financial intermediaries) through which individual households can pool their money to form larger amounts of capital."
  • "Function 3. Transferring Resources Across Time and Space. Serving this function are intermediaries like banks involved in financing corporate investments and housing, insurance companies and pension funds in financing corporate investments and paying retirement annuities, and mutual funds. "
  • "Function 4: Managing Risk. Through private sector and government intermediaries (including the system of social insurance), the financial system provides risk-pooling and risk-sharing opportunities for both households and business firms. "
  • "Function 5. Providing Information. Price information is important as it helps coordinate decentralized decision-making in various sectors of the economy. This is easily provided by a financial system. To manifest this function of financial markets, individuals and businesses are permitted to trade financial assets. An additional latent function of the capital market is to provide information useful for decision-making. Interest rates and security prices are information used by households or their agents in making their consumption-saving decisions and in choosing the portfolio allocations of their wealth."
  • "Function 6. Dealing with Incentive Problems. When one party to a financial transaction has information that the other party does not, or when one party is an agent for another, the financial system could find a way to deal with these incentive problems. A well-functioning financial system minimizes the incentive problems that make financial contracting difficult and costly. These problems arise because parties to contracts cannot easily observe or control one another, and because contractual enforcement mechanisms are not costless to invoke. These contractual “frictions” take a variety of forms: moral hazard, adverse selection, and information asymmetries."
Quotes
  • "1.Open APIs. 2. Advanced Analytics/AI/Machine Learning 3. Conversational Interfaces (Chatbots, Voice 4Device Interfaces. 5. Cloud Processing 6. Mobility and Wearables 7. Robotic Process Automation 8. Internet of Things 9.Blockchain 10. Quantum computing 11.Augmented and virtual reality "
  • "1. Serving a Segment of One According to Accenture, “Many banks have initiatives aimed at targeting demographic-based clusters such as young people, Millennials or older people, but some banks are now targeting customers based on lifestyles, values, aspirations, mindsets and underserved needs.” In 2019, many banking organizations will go beyond personalization by segment, to develop individualized communication and experiences for the segment of one. This is the ultimate level of innovative personalization allowed through data, advanced analytics and digital technologies. This level of personalization involves clustering a customer base with advanced criteria, where human-centric, design-thinking pillars and CRM tools help banks and credit unions match needs to solutions in real-time. One of the forgotten keys to success with segment-of-one personalization is estimating the potential customers’ willingness to pay for this added value."
  • "2. Expansion of Open Banking More and more regulatory bodies globally are requiring banking organizations to enable customers to share their data securely with third parties to power new financial services and increase competition in the banking industry. By making account and payment data available through secure application programming interfaces (APIs), consumers have greater freedom and control in how they interact with their financial service providers. The understanding and leveraging of the innovation potential of open banking will allow legacy financial services organizations to build on their existing customer relationships. By giving customers choice and control of their own data, first-mover banks and credit unions can become leaders in an era of increasingly personalized financial services."
  • "3. Commitment to Phygital Delivery With the high cost of a traditional branch network and the increasing number of transactions moving to digital channels, more and more traditional financial services companies are introducing digital-only banking entities. Some banks are launching digital-only banks to collect deposits, while other financial firms are using digital platforms to provide lending, investing and specialty services. In each instance, the focus is on innovative customer experiences and increased value to the consumer, supported by customer data and advanced analytics that can personalize engagement."
  • "4. AI-Driven Predictive Banking One of the most exciting innovation trends in 2019 will be the continued movement to predictive banking. For the first time time, the banking industry can consolidate all internal and external data, building predictive profiles of customers and members in real time. By moving from a rear-view-mirror perspective of customer communication to services deployed by robo-advisors and AI-driven chatbots, financial institutions will provide consumers with value through ‘next-best actions’ as opposed to blind selling of products. This transformation may also result in the elimination of specific traditional products (checking, loans, payments) with the emergence of universal cash management solutions that address all needs in an integrated service."
  • "5. Payments Everywhere The payments industry has been, and will continue to be, one of the most dynamic areas of innovation in the banking industry. Impacted by changing consumer expectations and driven by technological advances, innovation will continue to come from traditional financial institutions, fintech firms and big tech players. As the infrastructure of payments continues to evolve, innovation will move the payments industry from a series of specific products to part of everything consumers do. Differentiation will be driven by data, technology and delivery, changing the dynamics of how and where we pay and receive payments. Payment innovation trends will occur in conjunction with the Internet of Things (IoT), point of sale (POS), mobile wallets, cryptocurrencies, and the blockchain. The impact of this innovation in payments will be a decrease in the ability to differentiate on back-office capabilities, a decrease in transaction fees, and an increase in the importance of differentiated user experiences and the application of a vast array of data. Payment insights provide the foundation of consumer and small business behavior, positioning those organizations capable of processing vast amounts of payment data as the best to serve consumers in the future."
Quotes
  • "Blockchain has changed the way people think about money. Barclays started exploring how to leverage the technology over four years ago because of the wide number of potential applications the bank saw in it, way beyond blockchain’s best-known application in cryptocurrency."
  • "Dr Lee Braine, of the bank’s Chief Technology Office, explains: “Our role is to cut through the hype and identify where the real ‘diamonds’ are. Our focus has been on identifying the use cases for blockchain that will change the way we do business for the better, by simplifying processes and removing inefficiencies across our industry – ultimately for the benefit of our customers and clients.”"
  • "The prevailing view is that blockchain will cause two main shifts in the way Barclays does business. The first is in its broad potential to bring financial institutions closer together and make global collaboration easier. The second is by creating real efficiencies in the way the bank processes data."
  • "“To some extent, the first shift around industry collaboration is already happening,” says Braine. “This was partly because the initial hype around blockchain and cryptocurrencies created a ‘fear of missing out’, but mainly because the investments needed to create new industry systems only really have viable business cases when the industry collaborates.”"
  • "Among other collaborations, Barclays has recently announced that it is one of the investors, along with other major financial institutions, in the creation of Utility Settlement Coin, a new digital cash instrument that is implemented on distributed ledger technology and connects commercial bank money to central bank money. The aim of this venture is to introduce greater efficiency and reduce risk in wholesale markets."
  • "“The second shift is in product and process innovation,” says Braine. “Barclays has explored many interesting uses for blockchain: these include the simplification of payments infrastructure, the use of smart contracts to standardise post-trade processes, and efficiently connecting parties in trade finance and syndicated lending."
  • "“For us, the real value of blockchain lies in the substantial improvements to data processing that can occur when the systems at different institutions, which previously required inefficient reconciliation due to variations in their different internal processes and data formats, can now remain synchronised automatically through distributed ledger technology. The prize on offer as we solve these types of problems could amount to billions in industry savings.”"
  • "While blockchain technology itself is not regulated, the different applications of the technology require different sets of rules."
  • "One way to test and learn is through the use of a ‘sandbox’. This is a tool created originally by the Financial Conduct Authority and now adopted worldwide, that allows the testing of innovative new ways of using blockchain in a safe space, with the ultimate goal of understanding what is and is not permitted within regulatory rules."
  • "And blockchain is also changing life beyond financial services. In aviation, for example, it’s changing the way people buy plane tickets, and in healthcare, it’s helping to make storage and access to medical records safer and more efficient."
  • "For Barclays’ customers and clients alike, the innovations from these companies will mean quicker and more secure services, and the efficiencies that could result in cross-sector blockchain adoption could also see falls in the costs of doing business – as information can be securely synchronised in real time. "
Quotes
  • "When we say the words “block” and “chain” in this context, we are actually talking about digital information (the “block”) stored in a public database (the “chain”)."
  • "Blocks store information about transactions like the date, time, and dollar amount of your most recent purchase from Amazon. (NOTE: This Amazon example is for illustrative purchases; Amazon retail does not work on a blockchain principle as of this writing)"
  • "Blocks store information about who is participating in transactions. A block for your splurge purchase from Amazon would record your name along with Amazon.com, Inc. (AMZN). Instead of using your actual name, your purchase is recorded without any identifying information using a unique “digital signature,” sort of like a username."
  • "Blocks store information that distinguishes them from other blocks. each block stores a unique code called a “hash” that allows us to tell it apart from every other block. Hashes are cryptographic codes created by special algorithms. Let’s say you made your splurge purchase on Amazon, but while it’s in transit, you decide you just can’t resist and need a second one. Even though the details of your new transaction would look nearly identical to your earlier purchase, we can still tell the blocks apart because of their unique codes."
  • "When a block stores new data it is added to the blockchain. Blockchain, as its name suggests, consists of multiple blocks strung together. In order for a block to be added to the blockchain, however, four things must happen:"
  • "A transaction must occur. That transaction must be verified. [A] network of computers rushes to check that your transaction happened in the way you said it did. That is, they confirm the details of the purchase, including the transaction’s time, dollar amount, and participants. That transaction must be stored in a block.That block must be given a hash. When that new block is added to the blockchain, it becomes publicly available for anyone to view—even you."
Quotes
  • "Robo-advisors, or digital investment advice, offer investors automated, algorithm-based portfolio management with minimal intervention since the platform utilizes technology rather than active management by a traditional financial planner. Robo-advisors provide a simple, intelligent investing option for all investors, whether you’ve been building your wealth for decades or just getting started."
  • " 73% of people who use automated investing as their primary service said they are satisfied or very satisfied with their robo-advisor, according to a 2016 study conducted by Investopedia."
  • "When you open an account, you’ll be prompted to answer a series of questions to help the platform understand your age, risk tolerance, and goals. Based on your answers, the platform generates an asset allocation recommendation"
  • "After you set up an account, your portfolio is continuously monitored and rebalanced based on your tolerance for risk and other factors. Some robo-advisors provide access to a professional if you would like a periodic review of your portfolio or seek advice on your financial plan; other robo-advisors are fully automated and do not offer access to a financial planner."
Quotes
  • "Citizens Bank today announced the launch of its digital investment and advisory platform, SpeciFi from Citizens Investment Services. With the introduction of SpeciFi℠, Citizens can now offer customers a unified view of their banking and investment accounts from their online banking homepage. "
  • "The fully digital investment advisor service, offered by Citizens Investment Services and its sub-advisor, SigFig Wealth Management, LLC, provides customized investment guidance and portfolio management. Citizens is the first large regional bank to offer a fully integrated digital banking and wealth advisory offering."
  • "“We think SpeciFi is a game-changing service that will make investing more accessible to a larger set of customers, while providing an entirely personalized and integrated banking and investing experience,” said John Bahnken, president of Citizens Bank Wealth Management. “This represents another example of our promise to provide customers with tailored solutions that help them reach their potential.”"
Quotes
  • "Citizens Bank becomes the first large regional bank to offer a fully integrated digital banking and wealth advisory service free to its customers. The new service will go online at the end of September for customers in New England and parts of the Midwest. "
  • "Some industry experts would say that banks are especially primed to capitalize on the robo-advisor trend because of their massive footprint in the markets that are attracted to low cost and convenient virtual advice – primarily investors with minimal assets who don’t have access to financial advisors."
  • "Robo-advisors have been successful in large part because they are the anti-institution, bringing low cost, accessibility, personalization, convenience, and transparency to a big portion of the American public that spurned big banks and Wall Street firms following the crisis."
  • "Citizens will be the first bank to offer fully integrated online management, allowing its customers to manage both their banking and investment accounts on one platform. Customers will also be able to link any of their other investment accounts for complete online tracking of their investments."
Quotes
  • "OCBC Bank (Oversea-Chinese Banking Corporation Limited) is a financial company headquartered in Singapore. In 2010 the bank was the largest local bank in Singapore by market capitalization. OCBC Singapore operates through a network of more than 530 branches with representative offices in 15 countries, including Singapore, Malaysia, Indonesia, China, Hong Kong SAR, Japan, Australia, the UK and the USA."
  • ""
Quotes
  • "Most recently, OCBC Bank was the first in Singapore to enable customers to use their voice to perform banking transactions and access services, and the first in Singapore to enable cash withdrawals at ATMs using QR codes."
  • "OCBC Bank was the first bank in Southeast Asia to launch a robo-investment service that enabled customers to start investing and growing their wealth in a simple and self-directed way."
  • "OCBC Bank was the first bank in Singapore to allow customers to instantly open and use a new bank account, leveraging MyInfo and OCBC Bank’s digital KYC process; digital applications and instant approvals of OCBC’s most popular savings account, the OCBC 360 Account, have since grown three-fold. Also available is instant approval of online applications for products like personal loans and credit cards."
  • "OCBC Bank has earmarked $14M to roll out its new-age ATMs and digital service kiosks at 35 branches by 2020. This will enable customers to get their banking done without having to queue. Fifteen per cent of over-the-counter branch transactions have since been migrated from the teller counter to these machines."
  • "The FRANK by OCBC banking programme created in 2011 remains the only programme in Singapore to provide millennials with banking products and solutions designed for them as they go from being students in tertiary education to entering the workforce as young professionals. FRANK by OCBC offers millennials deposit accounts, credit and debit cards, insurance, investment products and study loans."
  • "OCBC Bank has been named the World’s Best Consumer Bank by international financial publication Global Finance. This comes on top of the ‘Best Bank in Asia-Pacific’ title that Global Finance awarded to OCBC Bank in April 2019. "
Quotes
  • "The banking landscape has been changing very significantly in response to the evolving forces of customer expectations, regulatory environment, technology adoption, changing face of competition and so on."
  • "One of the biggest challenges in online account opening is high abandonment rate. As per a Signicat survey5, approximately 40% of online applications never get completed and get abandoned midway by the customers. Account opening is a tedious job for the customers and requires a lot of effort for them to provide their details, documents and so on. The digitally savvy customers do not wish to spend time and effort in selecting a product and then providing long trail of information about themselves to get the product. "
  • "Asian banks are leveraging biometrics for various purposes like authenticating a customer while onboarding, transaction processing, logging customers to secured networks and so on. Some banks in Singapore like OCBC, Maybank and BBVA have been early adapters of this technology."
  • "OCBC Bank has partnered with ThetaRay to use its AI solution to identify potentially suspicious transactions. The solution has reduced the volume of transactions reviewed by AML compliance analysts by 35% and increased the accuracy rate of identifying suspicious transactions by more than 4X. "
From Part 03
Quotes
  • "APQC conducted a case study research project throughout 2018 seeking best practices from organizations transforming their finance and accounting functions, and found some common themes shared among the organizations that we studied. Organizations on the journey to building a best-in-class finance function exhibited the following characteristics:"
  • "1) Align finance with business and organizational strategy. ... finance functions are transforming traditional cost structures, economic models, and reporting processes, as well as stepping into a central enterprise role in driving value and strategic investments."
  • "2) Centralize finance transaction processing to gain bandwidth for business partnering. "
  • "3) Create one standard for end-to-end finance processes. Top-performing finance functions emphasized standardizing end-to-end finance processes regarding activities, accountability, tools, data and reporting, formatting, and measurement."
  • "4) Instill strong process governance. "
  • "5) Apply organizational improvement techniques to finance. "
  • "6) Ensure finance professionals have the necessary new skills to thrive. shift from transactional and reporting competencies to more advisory and analytical ones. As a result, finance needs data-savvy, technologically literate analysts, strategists, statisticians, programmers, machine learning experts, and data miners. "
  • "7) Build a strong bench of finance leaders."
  • "8) Offer self-service tools for the business. Increasingly available digital tools such as advanced analytics and machine learning, AI, robotics process automation, blockchain, cloud computing, and cognitive computing are enabling finance functions to automate large parts of their reporting processes, reduce time spent on transactional processes, and provide more mature analytical capabilities"
  • "9) Leverage digital tools to automate manual tasks and facilitate analytics. Digital tools help finance functions reduce errors, hasten and optimize processes, improve compliance, and integrate data sources for better reporting, planning, forecasting, and analytics. Using tools such as robotics process automation (RPA) and machine learning, the finance function becomes a broker of information and an engine for analytics that feeds decisions across the enterprise. The better-utilized resources enable finance to generate value, open up capital, and improve organizational efficiency."
  • "10) Monitor and benchmark performance. [It is] critical for finance functions to monitor and measure a balanced set of KPIs such as cost, productivity, cycle time, and efficiency against internal, industry, and best-practice benchmarks."
Quotes
  • "Citi and CME Clearing have implemented a real-time distributed ledger platform developed by Baton Systems, a payments technology provider. The solution allows a bank to view the collateral in its ledgers in real time, send cash or securities with one click to a clearing house, and receive an immediate acknowledgment, regardless of the current technologies they are deploying. "
  • " The blockchain-inspired software could materially reduce the cost of back-office operations and speed up margin funding times. Currently, banks have to set aside capital as they wait for collateral to be settled; this platform could potentially free up billions of dollars in capital if trade times can be reduced from days to seconds. “This technology allows us to eliminate manual touch points, reduce email traffic, and avoid logging into multiple portals,” said Stephen Marx, Head of Futures, Clearing, and Collateral Operations at Citi. “The capabilities in the funding and collateral space create efficiency and improve productivity for our clients.” "
  • "“We are pleased to support technologies like these, which aim to provide capital efficiencies to customers,” said Sunil Cutinho, President of CME Clearing. "
  • "Baton Systems is exploring other uses for the API-driven platform, including allowing clients access to distributed ledgers to shorten the cycle for collateral substitutions. "
  • "As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. Around the world, CME Group brings buyers and sellers together through its CME Globex® electronic trading platform. "
Quotes
  • "A group of European banks has announced that they have completed a series of cross-border financial trades through a jointly developed blockchain platform."
  • "According to an announcement on Tuesday, the live transactions on We.Trade were executed over the past five days between 10 companies and were facilitated by four partner banks. HSBC, one of the nine institutions involved, claimed that three of its clients took part in the platform test. Built on IBM’s Blockchain Platform, We.Trade was established by Deutsche Bank, HSBC, KBC, Natixis, Nordea, Rabobank, Santander, Société Générale and UniCredit, in a bid to boost the efficiency of cross-border financial transactions."
Quotes
  • "Cross-border payments Most international payments systems pass a payment through multiple banks en route to the final destination. While this provides important security benefits, it also makes the payments expensive, slow, and uncertain—the amount of money that will arrive on the other end is unknown until the payment actually shows up. Blockchain-powered cross-border payments could address many of these shortcomings, and many banks are already using blockchain in this way. More than 100 have signed up with XCurrent, the blockchain-based messaging system developed by the fintech firm Ripple. XCurrent allows banks to coordinate the transfer of money within seconds."
  • "Anti money laundering (AML) and know your customer (KYL) Blockchains are secure, immutable, distributed ledgers of transactions. This makes them potential magic bullets for complying with KYL and AML regulations and serving as trusted repositories of identifying information. Banks including India’s ICICI Bank are experimenting with using blockchain to improve KYL, while banks in Singapore are implementing blockchain for AML. These are five of the most common ways blockchain is being applied in the world of FS right now."
Quotes
  • "Blockchain — or distributed ledger technology — can be much quicker, cheaper and more certain in sending money between currencies than the traditional correspondent banking system on which Swift is based. Often transfers via Swift pass through multiple banks before reaching their final destination, making them time-consuming, costly and lacking transparency on how much money will arrive at the other end. "
  • " Santander is one of more than 100 financial institutions that have registered with Ripple to use its blockchain-based messaging system, known as XCurrent, which allows banks to co-ordinate the transfer of money between currencies in seconds. "
  • "Swift has launched an upgraded service, called Global Payments Innovation, which is being used by 165 banks. In some payments corridors, such as US-China, GPI accounts for four in 10 transactions. "
Quotes
  • "When one speaks about Blockchain, the first thing that comes to mind is the disruption it can bring to the banking sector. China’s biggest banks, including the Industrial and Commercial Bank of China (ICBC) as well as China Construction Bank Corporation (CCB), have reportedly been using Blockchain platforms to streamline the sale of their products. "
  • "in May this year, Infosys, along with seven Indian banks, set up the India Trade Connect, a Blockchain-based trade network. The aim was to increase transparency, and better manage risks in trade finance operations. "
Quotes
  • "Commerzbank (Germany) German bank Commerzbank and LBBW conducted the first test transactions on the blockchain platform for trade financing Marco Polo. As you can see from the press release, the deals involved financing the supply of products from the leading pump and valve manufacturer KSB SE for the technology company Voith. The details of the order and delivery of the products were agreed between the companies through the Marco Polo infrastructure, and the bank of the purchasing company provided a conditional payment commitment. After the product was shipped, the relevant shipment information was entered into the blockchain system, where reconciliation with previously reached agreements was automatically carried out. After reconciliation, the payment process was started. Thus, the complexity and laboriousness of the process of exchanging information and trade finance were significantly reduced while maintaining the security of the transaction."
  • "Future plans are related to the implementation of transactions entirely on the Marco Polo platform, for which it is planned to integrate with client ERP systems, as well as to join transport and insurance companies to Marco Polo, which will expand the available range of services. Today, Marco Polo platform partners with 25 banks...."
Quotes
  • "(Nov 2019)Today, Commerzbank announced that it has completed a test using distributed ledger technology (DLT) for post-trade services. The bank, along with exchange Deutsche Börse and asset manager MEAG, settled a securities transaction with blockchain-based tokens. Commerzbank then used these cash tokens as collateral as Eurex Clearing’s Central Counterparty."
  • "“After our first collaboration with Deutsche Börse in March 2019, we are pleased to jointly reach a further milestone in using DLT for post-trade-services in capital markets. We will continue to work on these topics to provide our clients with market-ready solutions,” said Benjamin Duve, Head of Custody and Direct Market Access at Commerzbank AG."
  • "Apart from the repo transaction, Commerzbank is an active member of the Marco Polo trade finance network, involved in pilots with LBBW and, last week, Alfa-Bank. It has worked on machine payments with Daimler, digital payments with Siemens, and completed a DLT forex transfer. The bank is also involved with collateral management blockchain HQLAX, which was jointly developed and backed by the Deutsche Börse Group. As an exchange, Deutsche Börse has recently launched its digital asset bank Sygnum. Sygnum was built with Swisscom and licensed by FINMA."
Quotes
  • "Bank of America announces that it is joining the Marco Polo Network, the largest and fastest growing trade finance networks leveraging Corda distributed ledger technology to provide transformative solutions to global trade participants. "
  • "Bank of America is a long standing provider of trade and supply chain finance solutions, with offices spanning Asia Pacific, EMEA, Latin America and North America. It is also a leader in digital banking and regularly introduces innovations that leverage the bank’s annual $3bn new technology initiative fund. This year, the bank was named North America’s Best Digital Bank by Euromoney for the second consecutive year. "
  • "The Marco Polo Network operates on the first distributed trade finance platform powered by blockchain technology. It offers its members access to innovative risk mitigations solutions such as receivables discounting, payment commitment and payables finance programs. The initiative aims at making trade finance more transparent, smarter and better connected and is championed by new technology providers TradeIX and R3."
  • "Other members of the Marco Polo Network include BNP Paribas, Commerzbank, ING, LBBW, Anglo-Gulf Trade Bank, Standard Chartered Bank, Natixis, Bangkok Bank, SMBC, Danske Bank, NatWest, DNB, OP Financial Group, Alfa-Bank, Bradesco, BayernLB, Helaba, S-Servicepartner, Raiffeisen Bank International, Standard Bank, Credit Agricole and National Bank of Fujairah."
  • "As the network continues to grow, so too does the growing number of use cases blockchain technology presents in transforming financial markets. Trade finance is one such area that is set to benefit the most from the promise of blockchain and the increased efficiencies it can bring. "
Quotes
  • "Trade is the lifeblood of the modern global economy. Each year, hundreds of trillions of dollars in goods, assets, credit, and money change hands in support of global trade."
  • "In late 2017, a group of the world’s foremost financial institutions and technology companies TradeIX and R3 launched the Marco Polo Network to change this. The network is addressing critical issues from across the sector, leveraging blockchain technology to support new solutions and providing seamless connectivity right out of the corporates ERP system."
  • "Existing systems are woefully inefficient, siloed or still paper-based and many of them have not improved for decades. They introduce bottlenecks and create unnecessary cost, time, complexity, and risk in every step."
Quotes
  • "Discussions, articles, and reports about the AI opportunity across the financial services industry continue to proliferate amid considerable hype around the technology, and for good reason: The aggregate potential cost savings for banks from AI applications is estimated at $447 billion by 2023, with the front and middle office accounting for $416 billion of that total, per Autonomous Next research seen by Business Insider Intelligence."
  • "Most banks (80%) are highly aware of the potential benefits presented by AI, per an OpenText survey of financial services professionals. In fact, many banks are planning to deploy solutions enabled by AI: 75% of respondents at banks with over $100 billion in assets say they're currently implementing AI strategies, compared with 46% at banks with less than $100 billion in assets, per a UBS Evidence Lab report seen by Business Insider Intelligence. Certain AI use cases have already gained prominence across banks' operations, with chatbots in the front office and anti-payments fraud in the middle office the most mature. "
  • "Banks can use AI to transform the customer experience by enabling frictionless, 24/7 customer interactions"
  • "The three main channels where banks can use artificial intelligence to save on costs are front office (conversational banking), middle office (anti-fraud) and back office (underwriting)."
  • "Front- and middle-office AI applications offer the greatest cost savings opportunity across banks. "
  • "Banks are leveraging AI on the front end to smooth customer identification and authentication, mimic live employees through chatbots and voice assistants, deepen customer relationships, and provide personalized insights and recommendations. "
  • "AI is also being implemented by banks within middle-office functions to detect and prevent payments fraud and to improve processes for anti-money laundering (AML) and know-your-customer (KYC) regulatory checks. "
Quotes
  • "U.S. Bank, Wells Fargo, BBVA Compass and Banco Popular are among the banks that have centers of excellence deploying robotics and artificial intelligence to streamline work processes and establish more uniform procedures. The largest banks are automating work anywhere they can, especially routine work like cutting and pasting data from one app to another. Use of AI and robotics will only grow provided banking regulators become more open-minded about them."
Quotes
  • "Bank of America piloted its popular chatbot, Erica, with company employees in late 2017. The bank made the chatbot available to Rhode Islanders several months later, and by June 2018, all of Bank of America’s customers could download the Erica app on the company’s website."
  • "Erica can purportedly: Alert customers if their spending habits for the month will likely bring their balance to zero up to seven days in advance. "
  • "Remind customers of recurring payments and whether or not they’re payment is scheduled after their due dates"
  • "Flag recurring payments when they are higher than expected. "
  • "Lock and unlock a customer’s debit card on request"
  • "JPMorgan Chase invested in technology and introduced a Contract Intelligence (COiN) “chatbot” designed to “analyze legal documents and extract important data points and clauses” in 2017. Manual review of 12,000 annual commercial credit agreements normally requires approximately 360,000 hours. Results from an initial implementation of this machine learning technology showed that the same amount of agreements could be reviewed in seconds. "
Quotes
  • "Finance functions include bookkeeping and payables/receivables, financial reporting and control, tax and compliance, Strategic Planning and Financial Planning & Analysis, Treasury & Working Capital Management, Capital Budgeting, Risk Management, and Corporate Development & Corporate Strategy."