2023

If there were any doubts about the need for scaling digital transformation urgently in banking, the pandemic dispelled them all. So, our banking trends outlook for 2021 stays with the 2020 theme of “scaling digital transformation.”

As always, they are grouped into business and technology trends.

Business Trends 2021

Trend #1: Scaling Digital Business Innovation

Banks can look at scaling business innovation along the three axes of product, process and people.

Product innovation, from design and development to delivery and distribution, should be digitized and scaled, both in terms of time and reach. The innovation cycle has to be crashed to match that of new-age providers, and reach needs to be improved from the previous 2-3 percent success rate to meet the new benchmark of 10 percent; this means banks must target not only their own customers but also consumers who buy their products from fintechs, retailers and third parties. Clearly, legacy banking processes will need to be rewritten to align with new demands, such as a much shorter time to market. Everything from test launches to customer selection will be a candidate for digitization. Finally, digital business innovation should focus on improving the quality and productivity of remote workers through reskilling, redeployment and digital enablement.

Trend #2: Scaling digital engagement

In marketing, a moment of truth is that time when a customer or user interacts with a brand, product or service to form or change an impression about it. Companies famed for their customer experience, such as Apple, Amazon and Google, know how to capture the 4 moments of truth in a customer journey – at the exploratory (zero moment of truth), engagement (1st), experience (2nd) and renewal (3rd) stages. Banks should also enrich the interactions at each moment of truth to retain the loyalty and advocacy of their customers. In a multi-industry analysis1 by McKinsey, banking industry leads with a staggering 73% of customer interactions being digital – It’s now time for banks to optimize their channel strategies and shift their focus to digital infrastructure and beyond.

Trend #3: Scaling operational transformation

Incumbent banks, suffering 50 to 60 percent cost-income ratios, are fast losing ground to their digital rivals, whose CI ratios hover in the 20 to 30 percent range. Before they slide further, these banks must scale operational transformation at speed and scale, starting with shedding non-core assets, divesting non-core competencies such as data center, infrastructure and network management, and cutting capital expenditure by subscribing to cloud-based services.

Trend #4: Scaling work, workplace and workforce transformation

Covid-19 has turned the concept of work on its head. With branches scaling down and customers banking on digital channels, many kinds of in-person work need to be transformed or digitized. The workplace, which used to mean the branch or bank office, is now more likely the home of the customer or bank employee. So, the task in 2021, is to align the workplace context to digital delivery, and support an increasing number of transactions from “non workplace” locations. Even the workforce has changed beyond recognition. In 2021, we expect banks will expand their workforce of career bankers to include short-term and part-time employees, workers from the gig economy, and people from diverse backgrounds. They may also need to rebadge, reskill and repurpose existing employees, such as direct marketing staff, whose jobs may have gone digital or been automated.

Trend #5: Scaling risk management

The economic crises of the past, whether it was the Asian currency crisis, dotcom bust or sub-prime financial crisis, dried up banks’ liquidity. But in the recession fueled by the pandemic, banks are facing both liquidity and solvency risks together for the first time. While they have learned to deal with liquidity risk over the years, they will have to find ways to mitigate the large-scale solvency risk that is staring them in the face. One thing to do is to monitor it from more than just a financial perspective; banks should also watch out for risk of insolvency at the hands of departing customers, employees and shareholders in the new year.

Technology Trends 2021

Trend #1: Scaling a shift towards composable architecture

Banks can be viewed as a composite of smaller living organisms in the form of a deposit wing, lending business, trade finance operations, payments unit etc. that are contributing and thriving on their own. In 2021, the focus should be on leveraging their cumulative capabilities for bigger benefits. A composable architecture enables this by allowing the strengths of one element to be leveraged to benefit the others. Migration to a composable architecture can be accomplished in chunks, component by component, without disturbing the business of the bank. This architecture future-proofs the bank by enabling it to respond to future challenges – such as a pandemic – with agility, and making it highly scalable. It is also intelligent enough to optimize things, such as the channel mix, through self-learning and provision its own server, infrastructure and memory requirements automatically using artificial intelligence, machine learning and pattern analysis. We expect banks to invest in composable architecture and take transformation to the next level in 2021.

Trend #2: Scaling a shift towards public cloud

By limiting the entry of personnel into data centers and forcing operations to go remote, the pandemic eroded the traditional advantages of owned data centers. This drove businesses towards the cloud, which now held all the aces – scalability, agility, cost-efficiency etc. In 2021 we expect banks to discard on-premise thinking in favor of a cloud-first approach, going progressively from a private cloud to a virtual private cloud under public cloud infrastructure, and from there on to a hyper-cloud and finally, a poly-cloud environment. Another benefit of shifting to this environment is access to a huge community of developers for external innovation.

Trend #3: Scaling API-led possibilities

This year, banks increased their use of APIs for reasons other than regulatory compulsion. When customers flocked to digital providers during the pandemic, it exposed traditional banks’ shortcomings in customer experience, engagement and innovation. The banks realized that they needed API-first thinking while building new applications in order to consume external innovations as well as allow third-party developers to build innovations on top of their (the banks’) services. We expect they will continue on this path in 2021, with domain/ business/ function-oriented APIs.

Trend #4: Scaling value with data and artificial intelligence

While AI has figured prominently in the last two or three year-end predictions, 2021 is when banks will go from experimenting with AI to generating real business value from it. This is the first time they will earn value from AI across the front, middle and back office – by reducing fraud, increasing efficiency and productivity, refining understanding of customer behavior, or targeting products and promotions at the right customers. In the new year, banks will scale AI solutions beyond RPA use cases to improve the business, add revenues and lower costs.

Trend #5: Scaling distributed ledger technology

Like AI, distributed ledger technology will also emerge from the experimentation stage to deliver business value in the coming year. An important example of value creation is inter-organization automation. Being highly secure, transparent and cost-effective, DLT-based networks are ideally suited to carrying cross-border payments, for facilitating trade finance transactions including documentation, and even for issuing centralized digital currencies. We believe the technology promises all this and more in 2021, when not just banks but even regulators and government bodies will leverage it to digitize land records and individual identification information, or to carry out capital market transactions. In fact, a huge use case could be to use DLT to maintain Covid-19 vaccination and supply chain records around the world!

For more insights on the 10 trends that are reshaping banking in 2021, click here.

Source:
https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/the-covid-19-recovery-will-be-digital-a-plan-for-the-first-90-days

By Ishan Manaktala, Partner, SymphonyAI

The FinCEN leaks this year understandably resulted in an immediate fall in the market and continue to have the industry scrambling as quietly as possible to improve their internal fraud detection to both ward off criticism and the possibility of more vigilant government oversight – and penalties.

The hot question, but the wrong one, is how seriously banks treat fraud. It’s foolish to pretend that criminals don’t use and abuse banks. The clear fact is that criminals try to launder money, and the banks try to detect these criminal efforts. Banks attempt to find patterns in suspicious activity. However, applying yesterday’s patterns to today’s crime is tough. The criminals, like counterfeiters or doping athletes, are always working to stay several steps ahead of the ability to catch them.

Bringing a knife to a gunfight

The financial criminal is incredibly innovative in findings ways to penetrate the system, to hide in plain sight. Money laundering for drug cartels, human traffickers, dictators, tax evaders and crony capitalists are far more sophisticated than the 1930’s persona of Bonnie and Clyde, robbing gas stations and small-town banks. Banks are brining knives and spears via legacy outdated systems to a gunfight of predictive modelling and machine learning.

The central point is – financial institutions fail in their efforts to fight fraud and money laundering if they go about it in a fundamentally archaic way – using manual methods and 20-year-old software. This sadly is too often the case today, as the FinCEN files revealed.

Investors, customers and regulators will be sceptical of bank officials’ statements touting more of the same, as they look to strengthen their reputations. More of the same means more automated systems spotlighting potentially risky transactions. But that only leads to false positives ever more inundating the same number of investigators at high volumes, making it harder to identify the real bad actors. More chaff, same wheat. A lot more hay, same number of needles.

Banks sending too many SARs is not the central issue. The volume of SAR’s is increasingly perceived as a mechanism for the banks to get regulatory cover. In fact, sending more reports may not mean more crime; the question is what crime is caught. Right or wrong, a future proliferation of FinCEN-like leaks will result in banks being blamed for excessive SARs. The real issue is finding truly criminal behaviour, so the regulators and police can act swiftly to catch the bad actors. Less hay, so you can find the needles.

I speak from past experience. As the former global head of trading analytics at a global bank, I can tell you that bankers know the problem on their hands. But it’s a question of where to direct energy and talent when challengers spring up everywhere.

As a current investor in the FinTech industry and board member of enterprise AI firm Symphony AyasdiAI, I’m putting my money literally on the potential of AI being able to digitally transform this dusty corner of banking, leading to a dramatic reduction in financial crime. Ultimately this benefits all of us.

Institutions can do this, given time, and I’m confident that they will – banks are savvier than recent headlines might lead you to believe.

Where is AI today?

Advanced AI software can indeed find the real financial criminals and correspondingly reduce false-positive SARs. Trials show false positives can be driven down 60 per cent. It is powerful to the point that banks can resist suspected money laundering far beyond what’s mandated by regulators. They can use AI proactively to raise their positive perception among investors and current and potential customers while avoiding reputational risk.

The question is, can banks both bring more digital access to customers and upgrade their data processes to stop fraud and money laundering? Do they have the agility and an efficient cost model to drive the change management for both simultaneously?

Change is hard. Major financial institutions resist fundamental, sweeping changes with good reason. Implementing new technologies can bring backlash. Large alterations such as introducing digital AI solutions to combat fraud and money laundering can be anathema to the old guard. Customers, as well, tend to cast a speculative eye toward promised fixes with a fear that operations could go spectacularly wrong. But the alternative is worse: the crime keeps going, and gets more sophisticated every year.

The alarm should be not of AI but of customers making hasty retreats due to the failure to activate new technologies. Institutions that do not embrace AI technology should rightfully fear colossal hacks and a slew of bad headlines followed by significantly damaged reputations and investors taking cover.

Yet not many will embrace this change, and as quickly as necessary. Those who cannot adapt will not survive. The criminals are virtually challenging the banks, “Catch me if you can?”. The market is watching like hawks to see who will win.

Ishan is a partner at operating company SymphonyAI. At Deutsche Bank, Ishan was the global head of analytics for the electronic trading platform. Prior to SymphonyAI, Ishan was COO of CoreOne Technologies.

 

Increasing clients per advisor and better advisory to each client – striking two birds with one stone

Industry at a leapfrog moment.
In 2019, the average wealth-per-adult reached a new record high of USD 70,850. About 1% of global adults are millionaires; they collectively hold 44% of global wealth. The number of affluent individuals (with assets of $250,000 to $1 million) is also increasing steadily; about 4 million new individuals are joining this group each year.

Wind in the sails.
An increase in the number of wealthy individuals is driving growth in the total investible assets around the world. Amidst these tailwinds, the wealth advisory departments continue to be a lucrative business for financial institutions. In 2018, the revenues were a record high of $694,000 per advisor in the USA. The fact that the biggest wealth management departments (by assets managed) happen to be closely related (if not subsidiaries & internal departments) to financial institutions with a long operational history. It seems like the incumbent financial institutions continue to be the trusted financial advisors and wealth managers for the global wealthy. However, their trust and continued patronage are likely to be put to test in the near future.

Rise of the new-age customers & competition.
In addition to the growing numbers in the ultra-high net-worth individuals (UHNWI) group, the great wealth transfer – the anticipated passing-on of $30 trillion in wealth from the elders to their younger heirs over the next few years, is poised to be a watershed moment for financial planners and wealth managers. The new-age investors tend to be generally tech-savvy, data driven, and well-informed about economic scenarios and opportunities. They are known to demand full-transparency, faster service, access to a full spectrum of products, and greater personalization of advisory and services.

While addressing the renewed customer expectation in the new decade, the incumbents must also compete with the new-age specialist investment firms. These FinTechs, with their digital-only propositions, are offering their platform and services (nearly) free of cost. While one may doubt their long-term profitability and viability, their ability to disrupt the established order of business cannot be ignored.

Wearing the strategic hat of versatility
It is obvious that each investor comes with a different set of needs and expectations. And, profitability-at-scale can be achieved only when the advisors and relationship managers can increase the number of clients and further grow the total asset under management (AUM). So, the question is ‘how to add new clients, whilst ensuring deeper engagement with each one of them at the same time.’

To address this conundrum, the forward-looking financial institutions are leveraging technology to create a digital platform capable of delivering omnichannel experiences for customers, data-driven insights for advisors, and automation of back-office operations. Such a platform will be vital to scaling the client-base, offer a broad set of products (across asset classes) and deliver on the promise of speed and convenience.

Improving customer experience (CX).
It is widely acknowledged that CX innovation helps in engaging and retaining customers. It is also a valuable differentiator between the financial institutions to earn customer loyalty. The CX reimagination usually includes a channel (often, a mobile app) for clients to monitor their portfolio of banking accounts, investment portfolios, and real-time valuations of their assets and liabilities.

Boosting advisor productivity.
Financial institutions must strive to empower their financial advisors with digital tools to understand their clients better, anticipate their needs, and offer quality-advice quickly. The platform must also unburden them of the repetitive and administrative tasks, so they can focus on advisory services. The digital dashboard (usually, an application accessible from a tablet or a laptop) must help advisors to manage and interact with their clients better. It must support common tasks such as risk-evaluation, client onboarding, portfolio monitoring, performance alerts, deviation notifications, portfolio rebalancing and reporting. The dashboard must also facilitate easy communication and collaboration between advisors and their clients, facilitate document management, schedule meetings, take notes and accelerate the process of approval management.

Streamlining front to back office operations.
Businesses today run at a fast pace. Financial institutions must embrace digitization and automation to step-up the overall efficiency of their wealth management offerings. The effective digitization of key back-office tasks like order management, transaction reconciliation, product cataloging, and commission calculation is key to providing a seamless CX for the clients.

Making the smart moves.
While technology can unlock new possibilities and accelerate the business transformation, the vision and strategy to drive it will differentiate the industry-leaders from the laggards. Various institutions are pursuing innovative initiatives to defend their clientele and growing their revenues further.

A popular strategy is to expand to an emerging customer-segment. Speaking about this trend at a recently organized webinar, Mr. Anthony Jaganathan, Senior Vice President, Head of Operations, Wealth Management at Emirates NBD opined that, “the wealth management offerings traditionally catered to the UHNWI and HNWI segments. However, over the last few years, the mass-affluent individuals and households are also demanding access to asset-classes and services that were hitherto unpopular in this category”. This democratization of access to wealth management services seems to be a universal demand and it’ll serve the incumbent institutions well to explore this opportunity expeditiously.

Another growth-hack is to bundle wealth products with premium banking services so that customers get an integrated experience. Axis Bank, a leading private bank in India, has found emphatic success with this go-to-market approach. In the context of entry of new-age competition, Mr. Satheesh Krishnamurthy, Executive Vice President EVP & Head – Private Banking, Premium & Third Party Products, Axis Bank said, “we believe the entry of new players will expand the market for everyone and it’s good for everyone in the ecosystem. Also, each institution can carve their own niche by leveraging big-data analytics and upskilling advisors to engage better with their clients”.

In the face of the changing business landscape and emerging opportunities, it needs to be seen how soon and how well the incumbent financial institutions adapt to the new-normal or concede ground to the new-age and specialist players. Either way, exciting times lie ahead.

****************************
An article by Abhra Roy, Product Head – Wealth Management, Infosys Finacle

Sources:
• Global wealth report 2019, Credit Suisse
• Great Wealth Transfer, Forbes

The Covid-19 pandemic, a sharp economic downturn, incoming regulations and emerging technologies all feature prominently on this year’s agenda – what does that mean for the treasury function? As treasurers look to safely navigate this formidable landscape,  what do these new priorities mean for them in 2020 and beyond?

By Ole Matthiessen, Global Head of Cash Management, Deutsche Bank

These are uncertain times for treasurers. Just as many began 2020 believing that their strategies were locked in and ready to go, the

economic picture for the year changed dramatically. The Covid-19 pandemic spread globally at extraordinary speed, moving day-to-day work out of the office and into people’s homes. As treasury made this transition to a remote way of working, the focus of treasury was shifting in tandem – a reaction to the rapidly changing macro-economic environment.

So, as treasurers look to navigate these challenges, what are their concerns and priorities for the immediate future and longer-term? To answer this question and more, the Economist Intelligence Unit’s annual corporate treasury report, in collaboration with Deutsche Bank, surveyed 300 treasury professionals over April and May 2020. It found that this year’s treasury agenda is now driven by three core priorities: the economy, regulations and new technologies.

A changing economic landscape

Coronavirus is undoubtedly shaping a “new normal” for corporate finance – one that will require the treasury function to implement robust forms of risk management. This need is reflected in the results of the survey; 43% of participants cite pandemic risk as a key concern in the short term, and 27% believe it to be a medium-term concern. Global economic growth and inflation/deflation risk – both of which are impacted by Covid-19 – also ranked highly.

So how is treasury reacting to this sudden shock? At the start of the pandemic, long-term cash-flow forecasts were quickly discarded in favour of short-term forecasts, giving treasury departments a more accurate and ongoing picture of their cash and liquidity. Then, as uncertainty surrounding interest rates and inflationary trends become more acute, treasurers have increasingly looked to diversify their investment portfolios.

Incoming regulations

Amid the fog, ensuring regulatory readiness always factors highly in the treasury agenda. This year, the focus hones in on the replacement of the London Interbank Offered Rate (LIBOR) and other Interbank Offered Rates (IBORs) – with 38% of respondents citing these as their top regulatory focus. The clock is ticking on LIBOR’s era as a global benchmark for lending and borrowing and, by end-2021, firms in the US and UK are expected to have completed the transition to alternative risk-free rates (RFRs). But with a variety of potential replacements still in play, combined with complications to project work brought about by the crisis, treasurers lack clarity over what the future may hold.

Emerging technologies

In the wake of disruption, treasurers are relying on technology more than ever – accelerating the digital transformation of treasury. With lockdowns and social distancing in place, cloud-based applications, which give businesses access to their systems and data remotely, have played a key role in facilitating “business as usual”. As this digital transformation advances, treasuries are also prioritising the skill sets needed to realise the full benefits of this data and technology. This year, 30% of respondents are confident they have all the skills required to manage the widespread technological change – up from 22% in 2018.

Opportunities on the horizon

With fading prospects for any quick return to normality, treasurers must continue to expect choppy waters for some time. A range of complications, including the virus, struggling economies, incoming regulations and emerging technologies, must be factored in to any successful treasury strategy. But the industry is equal to the task. Treasuries have access to the essential skills and tools to help them protect company cash while also extending their insight and strategic counsel to support corporate growth. Treasury has proved to be incredibly resilient in 2020 and, with the right strategies and partners in place, it can weather the storm until better days return.

Gary Dolman, Co-Founder and former CFO of Monzo, in conversation with Capdesk

Ahead of a webinar hosted by equity management platform Capdesk on the lessons learned by ‘startup to scale-up CFOs’, the equity management platform sat down with Gary Dolman, one of the Co-Founders of Monzo, who served as Monzo’s CFO from its inception in 2015 until February 2019.

– How did you find going from a relative ‘lone wolf’ finance lead in Monzo to managing a bigger team? Did your previous corporate experience make it easier?

Being a CFO in a startup is never easy. Right at the beginning of my startup career I was told that every week would feel like the most important week in the life of the company. How true that proved to be. Without doubt my time at Monzo was the most challenging of my entire career. It was also the most enjoyable.

As a ‘lone wolf’ you often feel so far from your comfort zone that you need a telescope to see where you’ve come from. However, it’s incredibly energising to work with a massively talented team that has no fear of taking on new challenges to drive the business forward. Their support and encouragement was truly commendable.

At times my prior experience could hinder rather than help me at Monzo, as everyone was encouraged to think about how you would set things up if IT was not a limiting factor. This was a very different scenario to my prior life in the corporate world where IT resources were limited by the number of skilled people and maintenance of legacy systems.

That said, the problem-solving skills I acquired in the corporate world stood me in good stead, as did my ability to spot and resolve problems quickly. And as the team grew, my previously learnt managerial skills came to the fore.

– What are the major changes in culture between an early-stage startup to a scale-up growth business?

In an early-stage startup, you can have ten people standing in a circle talking about their hopes and fears for the day ahead. You know everyone in the company by name and quite a bit of their history. People can rotate jobs and cover each others’ backs. People accept that all jobs need to be done and muck in.

At Monzo I folded up hundreds of letters with prepaid cards to send out to customers; I answered queries on the help desk. It was great fun and there was a real sense of teamwork. As the business scales and slowly becomes more departmentalised, that can’t continue. The challenge is to maintain the startup ethos of being willing to experiment – to try five different things to find the one that really works. As the customer base inevitably increases, experimentation is still possible, but it needs to be managed in a controlled way.

– What are the key challenges that a CFO faces during the startup and scale-up process?

A CFO needs to wear many hats. At the outset they might be a team of one or two that needs to be able to undertake many tasks, many of which they will be new to and, frankly, have little interest in. Running the payroll is a classic example of this. They may well utilise an outsourced accounting firm for core processes but certainly cannot abdicate responsibility. Like the rest of the organisation, finance needs to be lean and accept that ‘scrappy is happy’. Many finance professionals find this very challenging.

As the business expands the CFO must continually evaluate whether they have the people and the systems capability to keep in step with the business. Hiring good people takes time and effort and if they fall behind it can be hard to catch up. The CFO also needs to keep an eye on the technical debt that their department is building up and have a plan and timescale to rectify this. Wherever possible the CFO should look to use automation rather than people. However, this requires IT engineering time – for which there will be fierce competition.

I’d encourage all startup CFOs to find a mentor: someone who has been through it before, who can help them avoid the typical mistakes made in early-stage businesses.

– How can a company keep employees motivated and engaged as it transforms from a startup to a scale-up, eventually becoming a large enterprise?

Options, distributed as part of an employee share scheme, typically play a large part in motivating employees, especially when the company seeks to conserve cash and pay salaries below market value. As the business expands it will face upward wage pressure for a few reasons, including an org structure that requires hiring senior managers who have higher minimum cash requirements.

Strong communication between founders and management teams is necessary to make sure remuneration is allocated fairly between people. I’d recommend setting up an equity rewards scheme and having it regularly reviewed by finance and HR. The two departments need to be joined at the hip on this, because the fallout from a dysfunctional equity scheme can be huge.

One of the other challenges of moving beyond the startup phase is fitting staff to constantly evolving roles. There are some people who only feel comfortable in an early-stage startup and can feel displaced or resentful as company needs change. This is not a crime! It’s very helpful if this is discussed openly within the company. There’s no shame in saying “I’ve enjoyed this leg of the journey and I’d really like to repeat it elsewhere”.

Equally, if more senior people are brought in to deal with the demands of a bigger company, staff need to be reassured that this is not a reflection of their efforts or abilities but a natural part of the growth journey. When assessing employees, there are two questions: Is this person able to grow in pace with the company? Do they want to be part of a bigger (often by necessity more ‘formal’) business?

– What trends have you witnessed for startups over the last five years in terms of objectives and milestones, particularly with respect to balancing growth and profitability?

At the outset the objectives have remained the same: to gather together a strong team of co-founders, to identify a market problem and solution, and to obtain funding to deliver an MVP. Proof of product and market fit follows on from that and then it becomes all about de-risking the proposition by increasing your base of paying customers.

Four or five years ago the main objective at this point would have been growth in customer numbers. That shifted towards a focus on reaching positive customer economics whereby the marginal revenue from each new customer was in excess of the marginal cost. Scaling up the business would then mean that the fixed costs were covered in due course. More recently, there’s been an increased focus on the path to profitability as well as growth.

TODAY’S FUNDING ENVIRONMENT

– Do you believe Europe needs an angel investor revolution to become more like the US?

Based on my experience within the UK, I’d say the angel investor scene certainly needs improving. Some of this comes down to a need for stronger financial education at all age levels and the need to appreciate that angel investing has a part in anyone’s investment portfolio – no matter how small. Think of Crowdcube, where £10 can be the minimum stake.

I think attitudes towards failure in the UK need to change. If a business fails in the US, people view it as a learning experience for the entrepreneur. In the UK it is just seen as a failure. As a result, investors become paranoid about investing in a failed company – which speaks to the need for angel investors to take a portfolio view and also be mindful of the tax breaks that exist.

There are some very talented people who would be strong angel investors – both from a strategic and operational advising perspective – but are unwilling to enter the community without a warm introduction.

Finally, the regulation needs a major rethink. Currently we seem to operate in an environment in which a loss represents an opportunity to sue someone, despite the risk of loss being fully advertised. As an example, SIPP providers are totally against a person undertaking angel investing from their own pension assets for fear of subsequent legal reprisals. Given the long-term horizon of angel investing, pension assets should be a sensible source of angel investing – albeit as very much part of a person’s overall portfolio. Seemingly SIPP providers are unable to accept the statement that ‘I know what I am doing, I understand the risk of losing this money and want to proceed’. If this is the legal position, that puts us in a bad place.

– How do you think the funding environment has changed in the UK in recent years? Has it become easier to raise capital in general?

If we consider the years prior to COVID-19 I’d say that the position has improved, and that capital-raising has become more available and the channels to access it more diverse. I was fortunate enough to become a Venture Partner at Antler, a global early-stage venture capital firm that invests in the defining technology companies of tomorrow.

In the last two years, Antler has made 190 portfolio company investments across 30 industries and has opened offices in 14 cities across six continents. I was blown away by the quality of the people on the investment side and the entrepreneurs it backed. Antler is practically mining entrepreneurs out of the ground and turning them into the successful business leaders of the future.

– Do you think the government is doing enough to support the startup ecosystem?

Generally, I think the tax breaks and support for the startup ecosystem within the UK are strong. My personal gripe would be that being a startup bank has some unfavourable elements that need addressing, including:

• SEIS and EIS are not available
• EMI share options scheme is not available (the alternative CSOP scheme, in my view, is inferior)
• VAT on costs can’t be reclaimed
• Offsetting corporation tax losses is more difficult (a hangover from past sins of bankers in the 2008 financial crisis)
• Bank levy (again, fallout from the 2008 financial crisis)

THE FUTURE OF FINTECH

– As the rest of the world catches up with the UK in terms of fintech innovation, do you think its crown is under threat?

I don’t think the UK has a divine right to wear a crown of fintech invincibility. That said, in the pre-coronavirus world if you wanted to hire world-class talent – which is what Monzo aims to do – London was where people wanted to work.

– Looking at Monzo as an outsider now, what do you think are its biggest challenges and opportunities?

Monzo is a fantastic company. It began life only five years ago yet has grown to a customer base of over four million people. One of the most admirable things about Monzo is its brand. It has a net promoter score of 75, putting it way above its competitors, and won nine awards in 2019 alone.

As with a number of businesses Monzo has suffered headwinds due to COVID-19 but it has a very strong management team with a plan to move forward. That plan will include the expansion of revenue-generating channels to move to profitability but also continuing growth. The market for current accounts that make money work for the consumer is huge and I see no reason why Monzo cannot make further headway both within the UK and overseas.

By Capdesk

By Brian Coburn, CEO at Bridge

The ability of COVID-19 to dramatically change consumer buying behaviour continues to challenge the e-commerce world.

Lockdown restrictions, customer anxiety over physical spaces, and increased screen time across all demographics has created an e-commerce boom of unprecedented proportions. Online operations have been tested to the limits and even the most traditional businesses have found themselves forced to pivot and innovate to find new ways of engaging customers. For many retailers, e-commerce has gone from a secondary channel to becoming the primary connection to customers, which makes a strong, resilient online payment structure even more critical than ever to capture every possible transaction opportunity.

Amidst the chaos, many fledgling payment trends have accelerated and previously niche innovations have received a boost.

Consumers have been prompted to try out new or alternative mechanisms such as mobile wallets, payment services, person-to-person transactions and order-ahead apps as they adapt to the new, socially distanced ‘normal’. As much as we all want to see the back of this pandemic, it is unlikely we will see a full retreat from online retail and many of the new payment provisions that have swiftly gained popularity.

Now the ball is in the e-commerce court to catch up and keep customers spending online. It demands a reliable mechanism to minimise cart abandonment and incomplete transactions, the ability to take payments in more varied, innovative and flexible ways, and processes for collecting data to understand what has worked – or not – and why.

None of this is simple or straightforward. In fact, a relatively new term ‘payment orchestration’ is likening the need for management and integration of the many active parts and processes involved in transactions to the task of conducting an orchestral performance. It reflects the challenge of accommodating a growing array of customer payment preferences while also navigating the increasingly complex and fragmented integrations associated with needing to connect to different payment services.

In times of uncertainty, we look for what we can control. The same mentality is apparently behind the rush to stockpile toilet rolls in the early days of the pandemic. But through the lens of e-commerce, control – and resilience – are exactly what businesses need to shore up. With payment orchestration, vendors regain ownership of their payment platform and it puts the complexities of dealing with multiple payment service providers back under their control. E-commerce vendors can then achieve a much clearer, consolidated view of the whole payments infrastructure and support the speed, convenience, personalisation and trust that customers want from online retail.

In the ‘new normal’, these will be the most important influences on the ways in which people choose to shop and engage online and, ultimately, pivotal in the success of e-commerce operations.

Brian Coburn
CEO
Bridge

Bridge is a new payment orchestration layer for e-commerce enterprises that want to unlock the potential of existing and new digital payment services. Bridge has been created to put payment control in the hands of the merchant. Its single integration layer delivers more control over payment service providers, consolidates internal reporting, builds resilience and enhances the ability to test new payment innovations and opportunities at speed.