Blockchain is hot, but where’s the beef?

In spite of the hype—news of blockchain developments and its associated Bitcoin currency has become nearly ubiquitous—large-scale enterprises have been slow to adopt the emerging technology that promises to disrupt and improve a wide range of industries from finance & banking, insurance and real estate to cybersecurity and even music.

Companies have played with it; they understand what blockchain does and how it works. Their innovation labs have participated in proof of concepts (POCs) and may belong to one or more industry consortiums created to vet the technology, but they haven’t taken the next step and implemented the technology for any mission critical apps.

How FIs can transform to ride the digitalisation wave

Banks and insurance companies that are able to transform themselves will be well placed to benefit from digitalisation. However, most companies remain unprepared.

According to a 2015 pan-European survey by Arthur D. Little, financial institutions are less adapted to digitalisation than the cross-industry average. Although most companies have undergone considerable investments in order to update their IT capabilities and architecture, other key functional aspects are lagging behind, organisation being one of the most critical ones.

GFRC: Bringing critical functions together

Post-mortems of the financial crisis concluded that certain practices had infected banks with a near-fatal case of myopia. Each segment, or silo, within an organisation – whether a business or product line, geographic jurisdiction or category of risk – was the master of its own limited domain; no one was clearly and unambiguously responsible for assessing the big picture as far as risk and performance were concerned. A holistic approach to Governance, Finance, Risk and Compliance (GFRC), can help banks looking to combat antiquated organisational structures and technology, adapt to the new regulatory landscape.

Foremost among the responses to the financial crisis was Basel III, the governance guidelines proposed in 2010 by the Basel Committee on Banking Supervision, revised and expanded since then and in the process of being implemented worldwide. Beyond Basel III, institutions must contend with European Union initiatives, including the latest iteration of the Capital Requirements Directive (CRD IV); the Markets in Financial Instruments Directive (MiFID), for investment services; the European Market Infrastructure Regulation (EMIR), covering derivative instruments, etc. Firms are also implementing principles revised by the International Accounting Standards.

Challenges to implementing dynamic pricing in financial services

Legacy IT systems

The roadblock to real pricing execution lies in bank legacy core systems. Just a reminder, legacy systems are costly. A study by IBM suggests that rigid legacy systems cost the industry $200 billion annually, and siphons off roughly 20% of pre-tax profits. 

Let that sink in for a moment. 

The strategic importance of dynamic pricing in financial services

At its foundation, dynamic pricing is simply flexible pricing based on current market demands for a particular product or service. It is second nature to the hospitality and travel industries, even the retail goods market, where algorithms account for competitive pricing, supply and demand, time of day, and on-demand service spikes to affect an ever-changing real time price and profit margin. 

But in banking, dynamic pricing is a different story: more of a Utopic dream than a reality, with some nuances unique to the industry. 

A common banking disease that can lead up to $67bn loss in a year: fraud

Fraud is big business, costing the banking industry $67 billion per annum, according to the Association of Certified Fraud Examiners. It’s a problem no one can afford to ignore as firms struggle to recover from the global financial crisis and the world’s major economies teeter on the edge of recession. Most worrying of all, its incidence is escalating.

NetGuardians has recently partnered with Temenos to compile a comprehensive e-book, A-Z of Banking Fraud 2016. This e-book outlines the what, why and how of fraud; exploring the size of the issue, who commits it and, most importantly, what can be done.

Banking and financial services technology world, unite!

IBS Intelligence has launched a new global platform – IBS Chat – dedicated to increasing conversation and knowledge sharing within the financial services industry as a whole.

IBS Chat aims to bring industry participants together to exchange views and ideas, ask and answer questions on all matters relating to banking and financial services technology.

Sibos: day one round-up

@Swift

Sibos 2014 kicked off in Boston with the focus inevitably on regulation, standards and the build-up to the much anticipated plenary which revealed Swift's pricing strategy.

Why are P2P payments slow on the uptake in the US?

© www.zafin.com

After speaking with Chris Burfield from FIS about the vendor’s recent person-to-person (P2P) payments project at US-based Everbank, a question arose: why are these types of services slow on the uptake in the US?

Have European banks given up on core banking system replacements?

© www.itrw.net

Despite the emergence of new technology and increasing competition, it seems the replacement of core banking systems is not on the agenda for European banks. Instead, banks are investing in niche IT projects to not only maintain their existing systems, but to introduce incremental changes, which can provide a quick return on investment (ROI) and meet their business and consumer needs.

SAP Financial Services Forum: The inside track

This week’s SAP Financial Services Forum in London was a reminder of the supplier’s strengths and weaknesses in this sector. It was also a reminder of just how far SAP has moved in the last few years from its Walldorf and ERP centricity. In part through some major acquisitions, of course, it is now far more diverse and international than it was, with this also a key reason for almost ten per cent of its revenues now coming from the financial services sector.