q
What is Bitcoin’s fundamental value? That’s a good question
As it hits new highs, there is no shortage of bold predictions about Bitcoin reaching US$100,000 or more.
Often these are based on not much more than extrapolations by people with vested interests: the price has gone up a lot so it will keep going up. If it gets above its previous high, it must keep going up.
There is also “charting” or “technical analysis” – looking at graphs and seeing patterns in them. There may be fancy terms such as “resistance levels” and “Tenkan-Sen”. There is talk about “fundamentals”.
Let’s examine this last idea. Does Bitcoin have a fundamental value?
Calculating fundamental values
A fundamental value in traditional financial-speak means a value based on what return (or cash flow) is generated by an asset. Think of an apple tree. To an investor its fundamental value is in the apples it produces.
In the case of company shares, the fundamental value is the dividend paid from profits. A standard measure used by investors is the price-to-earnings ratio. In property, the fundamental value reflects the rent the investor earns (or the owner-occupier saves). For a bond, the value depends on the interest it pays.
Gold has a fundamental value also, based on its use for jewellery or dental fillings or in electronics. But this value is not why most people buy gold.
Fundamentals for cryptocurrencies
National currencies are different. Their value is in being a trusted and accepted unit of exchange.
In the past coins made with gold and silver had a fundamental value because they could be melted down for their precious metals. That’s no longer the case with fiat currencies, whose value depends solely on people trusting that others accept them at face value.
Most cryptocurrencies, such as Bitcoin, Ethereum and Dogecoin are essentially private fiat currencies. They have no corresponding assets or returns. This makes it hard to determine a fundamental value.
In September analysts with Britain’s Standard Chartered Bank argued Bitcoin could peak at about US$100,000 by the end of 2021. “As a medium of exchange, Bitcoin may become the dominant peer-to-peer payment method for the global unbanked in a future cashless world,” said the head of the bank’s crypto research team, Geoffrey Kendrick (a former Australian Treasury official).
Theoretically this could be possible. Globally an estimated 1.7 billion people lack access to banking services. But Bitcoin has been spruiked as the future of payments since its invention in 2008. It has made little progress.
There are at least two significant barriers. First is the computational grunt needed to process payments. Technology may overcome this. The second obstacle is harder: the volatility of its price.
Digital currencies that can maintain a stable value are more likely to become payment instruments. These include the existing stablecoins, Meta’s mooted Diem and central bank digital currencies, already operational in some Caribbean economies.
So far the only significant company to have accepted payments in Bitcoin is Tesla, which announced this policy in March only to reverse it in May.
The only country to adopt Bitcoin as an approved currency is El Salvador (which also uses the US dollar). But it is far from clear what benefits there are. The laws forcing businesses to accept the cryptocurrency have also led to protests.
Bitcoin as digital gold
If Bitcoin has no real value as a widespread means of payment, what about as a store of value, like digital gold? It does have this advantage over most of the “altcoins”. Its supply, like gold, is (arguably) limited.
One tool used by crypto enthusiasts to compare Bitcoin’s scarcity with gold is called the “stock-to-flow” model. This approach claims gold holds its value because the existing stock of gold is 60 times more than the amount of new gold mined each year. The stock of Bitcoin is more than 50 times than the new coins “mined” annually.
But this does not explain why Bitcoin’s price halved earlier this year. Nor does it have any theoretical basis in economics: prices don’t depend just on supply.
Some Bitcoin promoters predict higher prices on the assumption funds managers will eventually invest an abritrary proportion, say 5 per cent, of their funds in Bitcoin.
But such predictions implicitly assume Bitcoin, as the largest and best-known cryptocurrency, will continue to maintain its dominant position in the crypto market. This is not guaranteed. And there is no limit to the number of cryptocurrency alternatives.
Remember Bankcard? This credit card company once had 90 per cent of the Australian market in the early 1980s. It was defunct by 2006. What about MySpace? Before 2008 it was a bigger social networking site than Facebook.
Here we go again
In September The Economist argued Bitcoin “is now a distraction” to the future of decentralised finance, with rival blockchain cryptocurrency Ethereum “reaching critical mass”.
There are parallels between the Bitcoin bubble and the dotcom bubble of 2000, driven by overly optimistic assumptions about new technologies – and human greed.
Just as a few stars such as Amazon emerged from the wreckage of the dot.com bubble, so it is possible some applications of the block-chain technology underlying Bitcoin have enduring utility. But I doubt Bitcoin will be one of them.
John Hawkins, Senior Lecturer, Canberra School of Politics, Economics and Society and NATSEM, University of Canberra
This article is republished from The Conversation under a Creative Commons license. Read the original article.
How to maximise your AI investment
Wolf Ruzicka, Chairman, EastBanc Technologies
Artificial intelligence (AI) can be found almost everywhere in modern life. Whether you’re receiving financial advice via a banking app, shopping online or troubleshooting computer problems with tech support, AI is likely to play a part in your daily activities. Indeed, 50 per cent of respondents to McKinsey’s State of AI 2020 survey reported that their companies have adopted the technology in at least one business function.
With the size of the global AI market valued at more than $60 billion in 2020, it’s clear that an incredible amount of money is being poured into this technology. However, companies should be wary of the misconception that AI in and of itself will deliver a return on investment (ROI). With such widespread adoption, key lessons and best practices are emerging to help companies avoid common AI pitfalls and achieve ROI from their AI systems.
Most common AI mistakes
AI is not a switch companies can simply "flip on", and there’s no one-size-fits-all AI plug-in. Despite big investments and seemingly expert advice from knowledgeable vendors, many companies still make mistakes along the way. These mistakes have both tangible and intangible consequences, including loss of sales, unnecessary costs and, perhaps most importantly, a loss of end-user trust. Here are some of the most common mistakes made when deploying AI systems, and how best to avoid them:
Insufficient penetration: AI is more complicated to implement correctly than many companies realise at the outset. Designed to be part of a holistic business system, it will offer little benefit if only installed at a surface level. For example, many companies use AI in a chatbot function on their frontend. As these bots typically don’t have access to a company’s core systems, they are no help beyond the most basic of functions and are easily identified as non-human by customers. Without access to the right datasets on the backend, this use of AI will fail to make a meaningful impact on a company’s bottom line.
Incompatibility between different AI systems: Even those businesses that have incorporated AI into their core systems still aren’t guaranteed meaningful ROI. A company could be running multiple AI engines at once to support multiple business functions. Problems occur when these engines don’t communicate with each other effectively, or give conflicting results and advice.
Inability to go big: Small-scale AI will only offer small-scale returns. The inability to roll out the technology on a large enough scale holds many companies back from reaping the rewards of their investment. Interestingly, it’s often big organisations with unwieldy backends that struggle with this the most.
Vendor bias
Vendor bias is another reason why many organisations fail to get their money's worth after investing in AI. Companies traditionally outsource the entire job to a single vendor that delivers an end-to-end solution. However, such huge and abrupt system overhauls are costly, slow and very risky. Most pertinently, this approach also leaves the company with no control or autonomy over the systems they come to rely on everyday. Vendors also naturally prioritise their own technologies, meaning that the vast majority of products on the market are excluded, even if they would provide the best solution for clients.
In contrast, thanks to a robust AI ecosystem, companies can select best-in-class products that can be implemented in a seamless and modular fashion to meet their unique needs. You can’t just set it and forget it when it comes to AI. Systems should be flexible and adaptable to incorporate the best that today’s rapidly changing market has to offer.
“Ultimately, what you really need to understand is that the core of this problem lies in the core of your business, not the technology vendor’s business,” says Wolf Ruzicka, Chairman of EastBanc Technologies, which helps companies customise and better leverage their existing AI systems. “Instead of having this technology bias, you must own up to the fact that you need to own your own technology destiny."
The solution
Only the company itself can drive a modular custom approach that perfectly complements its unique goals, value proposition and customer needs. But most companies don’t have this skillset within their existing talent pools. That’s where EastBanc Technologies steps in.
With more than 20 years of experience, the Washington DC-based team of software engineers puts its clients in the driver’s seat by enabling them to design, build and own their AI systems. Supporting and empowering every step of the way, the EastBanc Technologies team helps companies build modular custom software that quickly unblocks problems and delivers impactful returns.
The EastBanc Technologies team starts by identifying a “killer feature” – the unique selling point at the core of the business model that draws the end-user in and evokes emotion. Once the killer feature is identified, an AI module is integrated to enhance that feature. When this first feature is working as it should, other business applications and functions are brought online around the killer feature, progressively cleaning up and connecting data streams throughout the business to the AI systems. Unlike the traditional model, this incremental approach prioritises organic permeation of AI. It is a fast, flexible and low-risk approach that's laser-focused on ROI.
“All that companies really have to do is commit to not outsourcing this fundamental addition to their business,” says Ruzicka. “[They can add] components gradually on a very granular level to become AI leaders in their respective spaces.”
For more information on EastBanc Technologies and its AI services and solutions, watch the video above or visit the company’s website.
INDUSTRY VIEW FROM EASTBANC TECHNOLOGIES
A revolution in the syndicated loan market
Axel Coustere and Stephen Ong, Co-Founders, HUBX
Over the past two decades technology has revolutionised several key areas of the banking infrastructure such as digital payments, mobile banking and back-office systems. However, despite the syndicated lending market running at $4.5 trillion per annum, it remains a puzzle as to why syndicate desks have continued to operate largely manually, until now.
Traditionally, loan syndication is a complex and slow endeavour, with numerous stakeholders, disconnected data sources and de-centralised communications resulting in disorganised deal management and inefficiencies. These issues have been exacerbated as deals have become bigger, more complex in structure, and involved much larger number of participants.
HUBX, a London based fintech, has partnered with Finastra and integrated its Syndicated Loan Solution with Fusion Loan IQ - the market leading back-office solution. The partnership delivers a truly digitised end to end solution for syndicated loans.
With pre-defined workflows, built-in communication tools and process automation, HUBX reduces manual front office processes of syndicated desks by 75 per cent.
Matching algorithms allow Arrangers to instantly conduct market sounding for a particular deal by accurately identifying which lenders are best suited to each particular deal. In-app communication tools allow seamless interaction between stakeholders, eradicating the need for email chains and offline conversations, while capturing valuable feedback from lenders to service them better in future deals.
HUBX believes that lenders should not only be in be in full control of their data but that data should be utilised to provide a better and more effective service. With advanced real time analytics for deal management, Arrangers will better understand their liquidity and distribution risk, optimise their lender network and be able syndicate more efficiently with other banks.
HUBX solves the complexity of protecting sensitive data while allowing specific deal data to be shared between banks, agents and lenders with its advanced user access permission system.
Realising the importance of interconnectivity to other internal systems within the bank, HUBX provides full flexibility to integrate across all systems through several APIs . This includes integrations with deal origination, KYC and asset servicing systems offering instant digital transformation and delivering a true end-to-end solution.
HUBX offers syndicate desks an easy to use, cutting edge technology solution that can be deployed and configured in hours. Arrangers will be able to manage all their clients, connect and work on deals with any bank, agent or lender in the market, all from a single platform.
The syndicated loan market is being revolutionised by digitisation, automation and the sophisticated use of data, driving a new direction for the way in which syndicated lending is managed.
HUBX and Finastra are revolutionising the syndicated loan market. Be part of it: visit www.hubx.capital.
INDUSTRY VIEW BY HUBX
Modernising management: how digital strategy improves transparency and efficiency
The digital age is transforming the way leaders manage their businesses and serve their clients. Companies at the head of the curve will reap the rewards, while the rest will be left behind
According to Forbes Magazine, 87 per cent of business leaders think digital will disrupt their industry, but only 44 per cent feel they’re prepared for the impending transition.
That’s good news for innovative leaders, because:
Continue reading to learn how a simple, targeted digital transformation can modernise management practices and boost a company’s bottom line.
Streamline workflows and manage operations with a OneStop Client Interaction Hub
Client-facing apps have been very much integrated into consumers’ day-to-day lives for things such as depositing cheques or booking healthcare appointments, but a OneStop Client Hub goes much further than that.
Picture a financial services company that gives its clients access to their own branded portal where they can call or text advisors (skipping the hold music), initiate trades, schedule meetings, sign legal documents electronically and complete anything else related to their business needs. Additionally, they would experience the added benefit of gaining full insight into the history of interactions. This paves the way for creating a better service experience.
A OneStop Hub is a digital solution that gives clients convenient access to end-to-end business service needs, all from their smartphones, tablets or desktops. It’s perfect for high-touch businesses where personalised relationships are paramount and client accounts need to be managed for quality service delivery.
Unprecedented transparency and efficiency
Digital transformation makes it easier for clients to connect and do business with companies, but that only represents half the equation. A OneStop App is a revolutionary approach to management because, until now, it hasn’t been possible to achieve this level of transparency and efficiency.
A OneStop App consolidates all customer communications in one centralised location. This empowers management to:
Digital gives executives and business owners a level of insight and control over their business that simply isn’t possible with antiquated systems. By consolidating every customer interaction on a OneStop App, businesses can completely transform their processes to reduce costs, retain customers, streamline workflows and dominate their market.
Companies can also tie task lists to any account to:
A OneStop Hub is a simple, straightforward digital transformation solution that offers tremendous return because it improves the client experience, while also enabling companies to streamline their internal processes for more efficient organisational practices.
Digital management & the just-in-time model
Just-in-time delivery is a model commonly used in manufacturing and logistics, but its reach is much broader than that. A retail store, for example, could use historical data surrounding product sales to order just the right amount of a certain item to keep up with consumer demand, without over-ordering items that won’t sell or inventory that will go to waste, such as perishables at a grocery store. This reduces costs and improves the bottom line.
The just-in-time approach is extremely effective in client-centric service industries such as banking, healthcare, real estate and other high-touch sectors. Clients in these industries have inquiries and requests around-the-clock, but it’s usually not economically feasible to staff companies 24/7.
Even during normal business hours, demand for client support fluctuates. Significantly reducing or eliminating hold-times would require over-staffing much of the time. Just-in-time service means answering clients’ questions in a timely fashion, within a timeframe that works for them. Digital technology makes this possible.
Modernise your business today with your own branded OneStop App, powered by Moxtra. Get started today with your secure digital portal.
INDUSTRY VIEW BY MOXTRA
Stablecoins: these cryptocurrencies threaten the financial system, but no one is getting to grips with them
Cryptocurrencies have had an exceptional year, reaching a combined value of more than US$3 trillion (£2.2 trillion) for the first time in November. The market seems to have benefited from the public having time on their hands during pandemic lockdowns. Also, large investment funds and banks have stepped in, not least with the recent launch of the first bitcoin-backed ETF – a listed fund that makes it easier for more investors to get exposure to this asset class.
Alongside this has been an explosive rise in the value of stablecoins like tether, USDC and Binance USD. Like other cryptocurrencies, stablecoins move around on the same online ledger technology known as blockchains. The difference is that their value is pegged 1:1 to a financial asset outside the world of crypto, usually the US dollar.
Stablecoins enable investors to keep money in their digital wallets that is less volatile than bitcoin, giving them one less reason to need a bank account. For a whole movement that is about a declaration of independence from banks and other centralised financial providers, stablecoins help to facilitate that. And since the rest of crypto tends to go up and down together, investors can protect themselves better in a falling market by moving money into stablecoins than, say, selling their ether for bitcoin.
A substantial proportion of buying and selling of crypto is done using stablecoins. They are particularly useful for trading on exchanges like Uniswap where there is no single company in control and no option to use fiat currencies. The total dollar value of stablecoins has shot up from the low US$20 billions a year ago to US$139 billion today. In one sense this is a sign that the cryptocurrency market is maturing, but it also has regulators worried about the risks that stablecoins could pose to the financial system. So what’s the problem and what can be done about it?
The problem with stablecoins
Initially introduced in the mid-2010s, stablecoins are centralised operations – in other words, someone is in control of them. Tether is ultimately controlled by the owners of the crypto exchange Bitfinex, which is based in the British Virgin Islands. USDC is owned by an American consortium consisting of payments provider Circle, bitcoin miner Bitmain and crypto exchange Coinbase. Binance USD is owned by Binance, another crypto exchange, which is headquartered in the Cayman Islands.
There is a philosophical contradiction between the decentralised ideal of cryptocurrencies and the fact that such an important part of the market is centralised. But also, there are serious questions about whether these organisations hold enough financial reserves to be able to maintain the 1:1 fiat ratios of their stablecoins in the event of a crisis.
These 1:1 ratios are not automatic. They depend on stablecoin providers having reserves of financial assets equivalent to the value of their stablecoins in circulation, which adjust with supply and demand from investors. The providers promise they have reserves worth 100 per cent of the value of their stablecoins, but that’s not quite accurate.
Tether holds 75 per cent of its reserves in cash and equivalents as of March 2021. USDC has 61 per cent as at May 2021, so both are some way short of 100 per cent. A large part of the assets of both operations are based on commercial paper, which is a form of short-term company debt. This is not cash equivalent and poses a solvency risk in the event of a sudden collapse in the value of these assets.
So what could derail the machine? Currently there is almost unlimited money in circulation, interest rates are still at record lows and with the US government having just voted to accept another economic stimulus package worth US$1.2 trillion, the supply of money is not likely to be reduced significantly any time soon. The only element that could challenge this abundance of money is inflation.
There are several possible inflation scenarios, but the market currently still considers the “goldilocks” scenario to be the most likely, with inflation and growth rising together at high but manageable levels. In this case, central banks can let inflation run at 3 per cent-4 per cent levels.
But if the economy overheats, it could lead to an explosive situation of high inflation and economic recession. Lots of money would be moved out of risky assets and bonds into safer havens like the US dollar. The value of those riskier assets, including commercial paper, would fall off a cliff.
This would seriously damage the value of the reserves of stablecoin providers. Many investors with their money in stablecoins might panic and try and convert their money into, say, US dollars, and the stablecoin providers might be unable to give everyone their money back at a 1:1 ratio. This could drag down the crypto market and potentially the financial system as a whole.
Regulatory actions
Regulators are certainly worried about the stability of stablecoins. A US report published a few days ago by the President’s Working Group on Financial Markets said that they potentially pose a systemic risk, not to mention the danger that a huge amount of economic power could end up concentrated in the hands of one provider.
In October, the US Commodity Futures Trading Commission fined Tether US$41 million for claiming to be 100 per cent -backed by fiat currency between 2016 and 2019. Bank of England Governor Andrew Bailey said in June that the bank was still deciding how to regulate stablecoins but that they had some “difficult questions” to answer.
Overall, however, it seems that the response from the regulators is still tentative. The President’s Working Group report recommended stablecoin providers be forced to become banks, but delegated any decisions to Congress. With several big providers and such a burgeoning international market, my worry is that stablecoins may already effectively be too big and disparate to control.
It is possible that the risks will reduce as more stablecoins arrive on the market. Facebook/Meta has well publicised plans for a stablecoin called diem, for instance. Meanwhile, central bank digital currencies (CBDCs) will put fiat currencies on the blockchain if and when they arrive. The Bank of England is to consult on a digital pound, for example, while the EU and especially China are also moving ahead here. Perhaps the systemic risks of stablecoins will be reduced in a more diversified market.
For now, we wait and see. The speed at which this unnerving risk has emerged is certainly a concern. Unless governments and central banks move up a gear on regulation, a 2008-style crisis in digital assets cannot be ruled out.
Jean-Philippe Serbera, Senior Lecturer, Sheffield Hallam University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
The insatiable desire for data in business today
Jody Glidden, Chief Executive Officer and Co-Founder, Introhive
It’s the age-old question. Which came first: the desire for data or the technology and tools to gather it? As the world of business moves forward, one thing is for sure: finding ways to uncover trends in data and turn that data into actions that can drive revenue and help businesses grow is critical. And our collective appetite has never been greater. One of the most used tools in business today is the customer relationship management (CRM) tool – the digitised version of a Rolodex with the propensity to be a company’s secret weapon for revenue growth.
But it could also be its downfall.
Historically, business leaders have had to rely on hunches – those gut feelings sharpened over years of experience and trial and error – to make business decisions, and have danced with risk and reward for employees to engage with their CRM platform. Often, companies fail to realise a return on their CRM investment as employees neglect to update records.
When CRMs are filled with inaccurate or incomplete data, revenue teams and business leaders must struggle to sort through the mess and make critical business decisions without seeing the full picture. Although companies made it work in the past, more and more business leaders today seek ways to improve their processes and customer data quality through technology.
Artificial intelligence-powered tools are rapidly becoming a must-have for businesses in today's knowledge economy. There has never been a time when we've had access to more information and the race for innovation is fast-paced across all industries. By leveraging AI and machine learning, businesses can make sense of the scads of information captured in their CRM, uncover trends, and make better business solutions.
Learn more about how AI can help your business grow and request a demo today at www.introhive.ai
Podcast sting music credit: ‘Rising Images’ by Philip Guyler (PRS), Audio Network
INDUSTRY VIEW FROM INTROHIVE
How AI is changing your CRM – and your business
Jody Glidden, Chief Executive Officer and Co-Founder, Introhive
Your business’s customer data is everywhere – in your teams’ email inboxes, calendars, IM platforms such as Slack and on social media – and, within those places, there are levels of data that offer invaluable insights into the relationships between an organisation and its network. And, in today’s knowledge economy, companies are seeking ways to make the most of this data to drive business forward.
For decades, companies relied upon their revenue-generating teams to manage their relationships manually, using Rolodexes and address books and logging notes in notebooks to be stored in filing cabinets. Aside from being time-consuming (and space-consuming!), this method of collecting and storing data was hardly conducive to gaining a 360-degree view of an organisation’s network. With today’s customer relationship management (CRM) tools, all of that information is stored digitally, and the data is readily available to be analysed and acted upon.
Problems arise when those CRM platforms are filled with inaccurate data, incomplete data and late data – the data that's added after the fact, like past an end-of-quarter deadline – skewing trends and making it difficult to gain the actionable insights teams can use to drive business forward. If your team neglects to log their meetings, sales calls and important communications in CRM, or only logs some of the information, it’s impossible to see the full picture.
But seeing the full picture is more complicated than simply having complete data – it’s about pulling multiple data sources and levels of data together, uncovering patterns and surfacing trends and other insights that can help your team make better decisions. This is where a reliable tech stack comes in.
Learn more about how AI can help your business grow and request a demo today at www.introhive.ai
Podcast sting music credit: ‘Rising Images’ by Philip Guyler (PRS), Audio Network
Relationship capital, the asset you're not measuring but should be
Jody Glidden, Chief Executive Officer and Co-Founder, Introhive
In your business, you know right off the bat that you need people to do specific jobs and that those people need tools to help them do those jobs well. It’s a tale as old as time: a butcher needs a knife; a typist needs a typewriter or computer; a car mechanic needs a wrench. Companies have long measured these forms of capital and considered it a success when reaching certain milestones such as doubling their headcount or onboarding the newest technologies. People and things are tangible forms of capital that can easily be seen and measured, but there is one form of capital that many companies forget about: relationship capital.
To understand relationship capital, you first need to understand what it is. Relationship capital is intangible capital. It can be an asset or a liability depending on how stakeholders view its performance.
It includes all kinds of relationships with customers, partners, suppliers, community, government, media, institutions, groups and anyone who has an interest in the success of your organisation. All these interactions involve the sharing of knowledge, the solving of problems and the creation of connections –and of brand and reputation. If it works, you’re creating value. If it doesn’t work, you’re destroying it. Here are some examples that will hurt your relationship capital:
To understand your organisation’s relationship capital, you must be able to identify, score and manage the relationships held by your team. In a perfect environment, all the relationships in your organisation would be stored within the CRM, kept up-to-date and carefully maintained.
INDUSTRY VIEW FROM INTROHIVE
Making time to implement AI-powered solutions when you don't have the time
Jody Glidden, Chief Executive Officer and Co-Founder, Introhive
There was a time when the only tools salespeople had access to were a Rolodex and a phone. Times have changed. The tools that help you gather and process the information needed to build relationships have advanced beyond imagination. Businesses are inventing the future of relationship-building and sales at every turn. However, this isn’t all good news.
Each new tool has traditionally brought with it a significant strain on the time and energy of an organisation. As you increase the number of tools within your tech stack, you often increase the workload of the very people you’re trying to help. No matter the industry – professional services, architecture and engineering, commercial real estate, tech, telco and more – AI-powered solutions can serve to automate processes, enrich the data you’re so carefully collecting and provide insights on the actions teams can take to generate results and, ultimately, revenue.
Businesses don’t have more time. It is a non-renewable resource. With traditional CRM, the process of adoption is often slow and painful because it is a burden for your team members. By working with super-users within your organisation, we help teams understand that implementing tools that automate, enrich, clean and coach is about maximising the one resource you can’t add: time. Your team wants to do their best work. They want to connect with customers. They want to understand needs. But they don’t have time to record and interpret the data that helps them do these things. How can you help your team understand that investing in adoption will save them time and drive revenue when their experiences with other implementations have told them otherwise?
You need to bring transparency to the process. Many tools are placed in the hands of your team without an effort to help them understand why they should use them. Through sharing what works and what doesn’t, celebrating wins and showing teams exactly what these tools are capable of, you can support the type of cultural transformation required to effectively implement and adopt new technologies.
At Introhive, we don’t make a CRM. We make CRMs work by automating the things that can be automated and providing teams with the insights they need to take the right steps to build trust, nurture relationships and grow their business.
To learn more and to see what this looks like in action, visit introhive.com.
How to push past fear and find success in digital transformations
Jody Glidden, Chief Executive Officer and Co-Founder, Introhive
Whether your company is in an industry where technological innovation isn’t front and centre or you’re in a mature tech stack with a robust set of tools, adopting new technology can be hard.
The former struggles with finding the right technology and bringing their team up to speed quickly so they can get the most out of new tools. The latter tries to overcome the challenges of integrating another tool into an already crowded infrastructure and workflow. But both of these businesses are looking for the same thing: how to increase productivity, reduce costs, and grow, nurture and protect relationships – all while increasing revenue.
Teams are frustrated by the location, organisation and credibility of data within their CRMs. Time, our one non-renewable resource, is lost as teams spend it entering, cleaning and interpreting data. Leaders require line of sight on who’s nurturing relationships, whether those relationships are thriving and what’s working in those areas. Traditional tools can provide that information but only at the cost of significant time and resources.
Relationships are often undocumented, hidden in emails and conversations that could provide key pieces of information because teams don’t have the time to slow down and enter data. The increased revenue from just a few conversations that have fallen through the cracks is often higher than the cost of the systems and tools that make it possible.
Imagine if knowing the contacts of your employees helped you close a $250,000 piece of business or if a leader knew exactly how their entire organisation was engaging with customers and could see, at a glance, where there were gaps and what was necessary to close them. Suddenly, leadership can focus on the actions that drive positive relationships with your customers. Those are the kinds of revelations we’ve seen from customers who have implemented AI-powered solutions.
Change is scary. It’s scary for businesses that are just now developing their technological identity and have to adjust to shifts in the way teams work and communicate. It’s scary for technologically inclined businesses that need to work within a system of tools they’ve invested in and implemented.
Work with your team to make sure you truly understand the pain points. Talk with peers who’ve gone through these sorts of changes to identify your challenges. Work with partners who are willing to explain how their product can answer the question that really matters: “How can we increase revenue?”
To learn more about how we can help you answer this question, check out introhive.com and reach out for a demo today.
Introhive and artificial intelligence: started from the problem, now we’re here
Jody Glidden, Chief Executive Officer and Co-Founder, Introhive
It’s rare for a start-up to understand its identity in the early stages. Start-ups are always evolving, and the story of Introhive is no different. The road has not been short, it’s not been particularly straight and there have been more than a few bumps.
Introhive began by looking at medium and large enterprises and wondering why sales teams seemed so busy doing things that didn’t seem to have very much to do with sales. If companies were lucky, sales teams were spending 20 per cent of their time painstakingly entering data into CRMs. For many organisations, CRMs felt like the junk drawer in your kitchen. There were a lot of things in there but rarely were they useful at the time.
In the unlucky companies, sales teams weren’t spending 20 per cent of their time inputting data – they weren’t inputting data at all. They saw it as a waste of time because they knew they would probably never see that data again, and they certainly wouldn’t use it. This is where we saw the possibility. What if you could use all that data?
What if you could create a tool that would take all the data inside your CRM and display it in ways that people could easily understand? What if you knew who was talking to who and how those conversations directly impacted organisational relationships and, ultimately, sales? Would people take the time to enter all that data if it helped them do their job?
From there, we went further. We realised that by connecting communications systems, we could automatically log interactions and begin to surface the health of relationships through insights and actionable advice. Everything started with a very simple problem and we’ve been working on the solutions ever since. The harder the problem, the fewer the number of people willing to try to solve it and we used that time and space to our advantage.
These solutions have evolved into a powerful, easy-to-use system that does most of the work while you’re busy taking care of business. Implementation plans are lightweight and straightforward, which allows us to deliver results almost immediately.
Even better than the outstanding tools we’ve developed over the years are the people we’ve brought on board to help build and share them with the world. We’ve got an incredible team of full-time recruiters and we exercise patience. We seek out people that are focused on creating the right product for our customers. Our team is made up of driven individuals that love to learn and there’s still so much to discover in this continuously emerging category. We’re up to the challenge.
Operational reporting needs a makeover
In its ideal state, operational reporting supports the critical day-to-day performance of a business, enabling leaders to drill-down into the data to assess operational effectiveness and drive better business decisions.
However, it’s in desperate need of a makeover. According to a recent survey of 500 finance decision makers across the US and EMEA, only 11 per cent of respondents are happy with current operational reporting tools. Further, respondents cited a need for technical skills (47 per cent), time to generate reports (46 per cent) and the inability to access the right data (28 per cent) as the three main pain points when using operational reporting tools.
Too manual, too slow, too limited
According to the survey, 76 per cent of operational reporting currently happens in Excel – an inefficient, manual approach to accessing necessary data.
Relying on spreadsheets poses multiple challenges. When operational reports are exported to Excel for variance analysis, it runs the risk of confusing the accounting team, particularly if the report was generated by non-accounting personnel. These Excel-based reports are error-prone, require more time to navigate drill-down issues, and expose challenges with multi-currency reports if different global offices are trying to analyse them.
Furthermore, the reliance on Excel reveals worrying trends. In the same survey, fewer than a quarter of finance decision-makers were creating reports that are all (or mostly) interactive, with 45 per cent of respondents saying that interactive reports are considered harder to produce than static reports.
Even more of a concern in today’s age of digital transformation, the role of automation is very limited, with only a third of decision-makers producing reports that are all or mostly automated. However, of those, more than three quarters were satisfied with the report output, which points to the huge value delivered by automated operational reporting.
Seeing the value in automated and interactive reporting
Finance teams struggle to invest time in exploring the role of automation in the operational reporting process, and must rely heavily on their IT departments to create reports. According to the survey, 71 per cent of decision-makers said their IT department was involved in creating or modifying recurring reports.
But there is a huge appetite for automation. It cuts down on time and staff needed to generate a report. It improves the accuracy of data: automatic, recurring reports keep information up to date. Automation also reduces error and allows you to view a wide range of data from various sources.
Lastly, automation cuts down on time spent creating a report. Half of decision-makers generate reports in four hours or less but, depending on the type of report, 14 to 24 per cent can still take five to eight hours to complete this type of work. Automating operational reporting greatly improves efficiency by removing the mundane and repetitive elements of reporting workflows.
The time is now
Quality reporting is critical for departments across a business to make operations more productive and efficient. The challenge is that finance users have been unable to access the data they need to create reports that suit their requirements without involving IT staff. This ongoing challenge results in teams defaulting to the outdated and unproductive standby: exporting data into Excel and manually creating reports.
As companies look for a competitive advantage, they’re turning increasingly to data inside their own operations to find it. By seamlessly integrating multiple data sources, automating the creation of visual, customised reports, and enabling users to drill down into transactional data for a deeper understanding of how to drive the business forward, companies will unleash the full potential of operational reporting.
Daf Llewellyn is the General Manager of EMEA for insightsoftware, a global provider of financial reporting and performance management solutions for the office of the CFO.
How iwocaPay is reinventing B2B payments
Legacy payment technology has held back B2B businesses for years. But today, fit-for-purpose digital solutions are providing a route forward.
The business-to-business (B2B) payments market was worth well over $850 million in 2020. And it’s expanding fast: with a growth rate of more than 10 per cent a year, it’s predicted to reach nearly $70 billion by 2030.
An increasing demand for and supply of digital solutions is contributing to the sector’s surge in value. Most recently, the pandemic has encouraged organisations to streamline their processes as a way of bolstering profits.
Business owners are realising that the methods they use to take payments impact the overall effectiveness and success of their business. With better technology, there are now better ways of taking money. These go beyond just relying on bank transfers or cards – the latter of which have never been great for B2B thanks to their inflexibility, high costs and delayed payouts.
Digital payments services and embedded finance products such as iwocaPay are capitalising on these trends. This is because they solve a number of problems B2B businesses typically face.
iwocaPay makes it easier for the B2B retailer
Existing payment and finance solutions haven’t worked well together historically - making B2B payments hard to get right.
B2B suppliers need to provide a simplified and cost-effective payment experience, as well as offering flexible payment terms – this requires expertise in providing finance and taking payments.
On the payment side, 80 per cent of B2B businesses still rely on bank transfers to get paid. Bank transfers are cheap but carry friction. In fact, B2B suppliers could get paid twice as quickly by offering a digital payments solution. However, the main alternative, card payments, comes with expensive fees, delayed payouts and chargeback risks.
But a lack of good payment methods is only half the problem. Payment terms have always been a crucial part of B2B transactions. B2B businesses are twice as likely to offer payment terms as B2C businesses – typically of at least 30 days. While extra time to pay helps their customers manage cashflow and make larger purchases, this cashflow burden is usually pushed onto suppliers, who are forced to take on the risk and underwrite their customers. This problem is substantial. The average SMB is owed more than £10,000 at any one moment. B2B businesses are frequently exposed to long payment terms which adversely affect cash flow, making it harder for them to grow, or sometimes even survive.
The good news is that this is changing, as new, better fit-for-purpose B2B payment options emerge. One of the first to launch in the UK, iwocaPay helps to solve the B2B payments problem by thinking beyond just the payment – addressing both the payment experience and the payment terms. With iwocaPay, B2B businesses get a cost-effective, frictionless payment solution with built-in 90-day payment terms. Suppliers can offer their customers the flexibility to choose how and when they pay – either there and then or over three months. And any customer can pay instantly with a two-click solution built on secure and seamless open banking technology. It has all the cost-effectiveness of a bank transfer, with the bonus of being even easier to use than a card. Business customers can spread the cost over 90 days, while their supplier gets the funds in full as soon as they complete check out. Using this holistic solution, iwocaPay brings the best of payments and finance to the point of transaction. As a bonus, it all syncs up to accounting platforms such as Xero to make reconciliation automatic.
iwocaPay makes it easier for the customer
iwocaPay also makes things easier for businesses that are buying from other businesses. How? B2B buy-now-pay-later.
Most business customers need access to credit as a way of enabling their organisations to grow – a process which is usually clunky at best. With traditional banks frequently refusing them this credit, many businesses look to suppliers to provide it instead. So if the suppliers don’t have this offering, they may lose the sale. In fact, research in iwocaPay’s paper Levelling the “Paying” Field shows that as many as 22 per cent of small businesses say they have not worked with a supplier because of their payment terms.
However, offering credit can be very risky for both suppliers and their customer: the supplier takes on most of the credit risk, while their customer takes on operational and reputational risks with no guidance on affordability.
By offering built-in payment terms, iwocaPay can provide immediate access to credit in a way that dramatically reduces these risks. Affordability checks take place, without impeding the customer experience. This creates a smooth process that satisfies business customer expectations by emulating the experience they have as ordinary consumers when they are shopping online. It’s B2B buy-now-pay-later at its best.
eCatering works with thousands of foodservice operators, supplying them with all kinds of professional catering equipment, from commercial refrigerators and freezers and stainless steel kitchen furniture to cooking equipment and food prep machines. Our customers in the hospitality sector were heavily impacted by the lockdowns: many needed new equipment for their reopenings after spending a lot of time being out of action, but because of extreme downtime and big losses, businesses found themselves unable to pay for items outright and needed alternative payment methods to be readily available. With traditional banks frequently refusing them this credit, many of these restaurants, hotels and pubs looked to their suppliers – such as us – for alternative finance options. So we adapted quickly to try to support them, and began offering financing solutions for them on the equipment we sold. We did this through iwocaPay, which allowed us to offer built-in payment terms and provide immediate access to credit for our customers. It meant we were able to start offering foodservice operators a buy now, pay later service. Operators were able to get the equipment they needed straight away, but were able to spread the cost of it over 90 days, with the first 30 days free. It’s become a very popular option for our customers. Being able to use a stable pay-later method helps both us and them with cash flow as the industry recovers from the pandemic.
Catering equipment supplier – eCatering – tells us why they use iwocaPay
iwoca: building the future of the payments industry
iwoca's success is demonstrated in the fact that the lender has made finance available to well over 50,000 small businesses. Lara Gilman, co-lead at iwocaPay, said: “Despite the pandemic we've continued to invest heavily in expanding our capabilities to offer the most appropriate product to businesses, when and where they need it.”
The future of the payments industry is flexibility, powered by technology. Buyers want the frictionless and simple payment process that iwocaPay enables. Suppliers need to access their funds quickly and unlock money tied up in invoices: iwocaPay allows them to get paid faster with funds from sales in their account instantly. And both suppliers and customers want flexible payment terms to be available to a wider range of buyers, something that becomes possible because iwoca is taking on the credit risk.
Unlike traditional payment methods, iwocaPay brings together instant payments, free transactions and flexible financing. By eliminating the stress of getting paid, it allows SMEs to focus on what they’re good at: growing their business.
iwocaPay is part of a suite of products. With recent UK pandemic-linked products such as the Coronavirus Business Interruption Loan Scheme (CBILS) and the Recovery Loan Scheme (RLS), iwoca has built out the capability to provide larger and longer-term loans which some businesses need when making bigger investments. It recently launched a Revenue Based Loan, which is proving very popular with small businesses and embedded finance partners. With Open Lending, iwoca is now reaching more than two million businesses where and when they need it through embedded finance partners. And now, with iwocaPay, it has created a first-of-its-kind B2B checkout product which gives buyers control of the payment terms they want and gives sellers peace of mind.
The flexible terms that can be offered through iwoca’s digital solutions are increasing sales and improving customer relationships for B2B suppliers. This is because iwocaPay blends the best of finance and payments – suppliers get paid immediately and buyers get the flexibility they need.
To find out more about how iwocaPay can transform your customers’ payment experience, get started here or contact salesteam@iwoca.co.uk.
INDUSTRY VIEW FROM IWOCA
The company driving the future of cross-border bank payments
Riccardo Capelvenere, Founder and CEO, Currenxie
New trends were emerging in global commerce well before the Covid-19 pandemic accelerated them. Cross-border bank transactions were already on a fast-track journey and the market is currently valued at nearly US$21 trillion, with a 90 per cent compound annual growth rate. Global payment remittance flows currently sit at US$120 trillion.
The sheer scale of the cross-border bank payments prize is considerable. And – in a post-pandemic world that’s seen a rise of digital nomads and gig workers and a surge of international online sales and cross-border trade – it’s predicted to grow exponentially in the coming months.
Yet despite their importance in our increasingly connected world, cross-border bank payments remain expensive, slow, opaque and inaccessible to many who rely heavily on them to conduct business.
For example, SMEs – who form the backbone of local economies – are trading more frequently across borders, growing at 2.3 times the rate of large corporations, especially in emerging markets. But nearly half are turned down when trying to open a bank account due to the strict requirements set by traditional banks who are better geared towards serving MNCs. Those who do manage to open an account are forced to pay exorbitant wire transfer and currency conversion fees.
Driven by these increasingly globalised small businesses and the staggering growth of ecommerce, the gap between traditional business accounts and the needs of the market is widening. A more accessible and cost-effective solution is needed that is digital and global by nature.
Making cross-border bank transactions as pain-free as possible
Riccardo Capelvenere knows the pain of international payments well, as his family has been a supplier of Italian wine in Hong Kong since the 1960s. He and his wife Alison, both Goldman Sachs alumni, knew the exact difference their platform could make when they founded Currenxie.
The Hong Kong-headquartered fintech uses its cloud-based technology to make cross-border services such as wholesale foreign exchange and borderless bank payments accessible to any business. With the company’s Global Account platform, clients can tap into the vast global network of banking partners the company has established.
Wherever they do business in Currenxie’s ever-growing network, clients can immediately access their own virtual bank accounts to make seamless payments and enjoy the convenience of a multi-currency digital wallet that makes all their funds available to them, anywhere, anytime.
Foreign exchange is offered at the real interbank rate, providing a rare level of transparency as well as affordability. Clients can receive instant virtual Visa cards to cover any other expenses.
The result is that businesses of all sizes, from all corners of the globe, can move swiftly into new markets without burdensome fees and restricted access to fundamental payment needs. It means there is a system for global payments that can keep pace with advancements that are breaking down borders to trade, such as ecommerce marketplaces and purely digital services.
The value and choices created by borderless trade are now shared by all.
Access global commerce with Currenxie
‘Dataraising’ – when you’re asked to chip in with data instead of money
Fundraising appeals are part of everyday life, both online and off.
Requests for financial donations arrive by snail mail, email, social media and text messages. Cashiers at chain stores and supermarkets ask if you want to chip in for charitable causes. If you’re in the U.S., you might also be getting nearly constant texts asking you to contribute to political campaigns.
In my book “How We Give Now,” I explore how acts of giving extend beyond donating money to nonprofits, including an interesting trend on the rise that I call “dataraising.” It’s a term I coined while writing the book to describe nonprofits or researchers soliciting donations of data.
Perhaps surprisingly, dataraising is not entirely new. Medical research, for example, has long relied on volunteers to participate in clinical trials to gather enough data to study a disease.
The steps to participating in clinical trials – signing up, learning the protocols, agreeing to contribute your data – were developed to limit the harms that can follow when researchers just take people’s data. These protocols, imperfect as they are, distinguish informed data donations from the usual online data experience, in which companies’ terms of service afford them extensive claims to data while leaving individual users few choices and even less recourse.
There are apps for this
One reason for the growth in dataraising is that it is becoming easier to do for technological reasons.
For example, Apple launched Research Kit in 2015. It’s a set of software protocols that lets medical researchers design studies that use data directly from a person’s iPhone.
To participate in phone-based research, people download an app for a study. The best studies use consent processes that aren’t the usual legal forms with one of those “I agree” buttons at the end. Instead, these consent processes ask people to use their phone in ways that will generate only only the specific data researchers are collecting.
For example, the consent process for a study on Parkinson’s disease might ask you to swipe your fingers across the screen and then put the phone in your pocket and walk across the room. These actions generate data that shows signs of tremors in the hands and movement.
A 2021 industry study of mobile health apps counted more than 1,500 research projects based on digital health data with ResearchKit up to that point.
Android users can also participate in similar studies using Google’s Health Studies App, which launched in 2020.
Some apps are for the birds
But data donations facilitated by technology power more than just medical research.
Apps such as eBird, run by Cornell University’s Ornithology Lab, and iNaturalist, a collaboration between National Geographic and the California Academy of Sciences, rely on donations of cellphone photographs to power their biodiversity databases.
Civic science initiatives, also known as citizen science initiatives, assist with everything from water quality monitors to butterfly counts. These initiatives rely on contributed data, as do many genealogical websites.
Dataraising is also making it easier to document the history of specific communities.
For example, the Densho Archive, an online repository of historical artifacts related to the U.S. internment of Japanese Americans during World War II, contains donated photographs, letters and newspaper articles.
Other forces driving this trend
Legal changes, organizational innovation, social movements and increased attention to the harms of concentrated data are also playing a role in the spread of this practice.
In the United Kingdom, ride-share drivers can contribute their data to the Workers’ Info Exchange. Known as WIX, it uses the aggregated, analyzed information to protect workers’ rights and fight back against “robo-firing” – when companies design algorithms that automatically fire workers without any human involvement.
Organizations like WIX depend on people’s having access to their data, a right guaranteed by the European Union and in California through the California Consumer Privacy Act.
Helping solve vexing problems
As digital systems become more critical to everyday life, donated data can help answer more kinds of questions.
The consumer advocacy organization Consumer Reports is dataraising by collecting assorted cable TV bills. This data will help the group’s sleuths evaluate corporate claims about broadband speed, access and prices.
Mozilla, the nonprofit maker of the Firefox browser, has launched a browser plug-in called Rally. It makes it easy to share data over the internet with academic researchers.
And Kaiser Health News and National Public Radio have teamed up to conduct “Bill of the Month” investigations. Through this collaboration, the news outlets’ journalists are analyzing and reporting on the hidden fees and mysterious charges that are rife in the U.S. medical system.
When dataraising falters
The easier it gets to collect data from anyone, the more important it becomes to plan for troublemakers, provide people with tools to control their information, and make sure that participants treat one another with respect.
The iNaturalist app, for example, is used in a lot of classrooms, and students love to pull pranks, tagging their fellow classmates as bugs or snakes. Because it’s used globally, cultural and linguistic competence is key. What may seem lighthearted in one context can be deeply insulting elsewhere.
Digital data shared through online networks – especially those dedicated to public goods – require careful attention to protect participant safety. For example, people may want to donate data regarding how far they walked but not where they went. Although phone default settings may make it easiest to transmit location data and leave it up to researchers to calculate the distance traveled on foot, to make user safety a high priority, apps could calculate distance on the phone without transmitting someone’s location.
It’s also important to aspire to equitable access to people who want to donate their data for these purposes, which is hard since not everyone owns a smartphone. And I believe that those involved in these studies should meaningfully give consent that can be retracted at any time.
Over the years, participants in the civic science movement have created resources and manuals to promote good data governance and limit harassment of the people taking part in these efforts. Their goal is to enable equitable participation, make data security a priority and let individuals control their data. In some cases, protecting the identity of those who donate data is critical.
There are dedicated community managers and tiers of training for those who use iNaturalist, along with rules for the curators who manage its website, for example.
Voluntary practices like those are valuable. But in my view, the donation of data should be regulated. There are plenty of experts with professional and lived experience in online harms, data rights, community building and philanthropy to inform such efforts.
Megan Price of Human Rights Data Analyst Group contributed to the ideas discussed in this article.
Lucy Bernholz, Senior Research Scholar of Philanthropy and Civil Society, Stanford University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
The simple and innovative digital solutions shaping the future of banking
The future of banking is digital. Around the world, banks have become more ambitious, more expansive and faster to adopt digitally driven, experience-optimised banking operations. The banking experience as we know it has changed, and banks have no option but to evolve to keep up and ensure their continuity. In Kuwait, the impact of this global shift in philosophy and approach can very much be felt across the banking industry.
This is why Burgan Bank – the youngest commercial bank and second largest by assets in Kuwait – has made the strategic decision to revamp its business and reengineer its banking experience to cater to the needs of the modern Kuwaiti customer. Building on its strong foundations in the corporate banking sector, the bank is focusing on elevating and enriching its retail customer offering, with an improved banking experience and enhanced service levels across all touchpoints.
As part of this major shift, a few years ago Burgan Bank made a significant investment in a comprehensive retail banking platform, powered by Clayfin, a specialist digital banking solutions provider. The new platform is designed to offer an enhanced and more personalised digital experience to customers, ensuring a seamless and consistently high-quality experience across all mobile and online touchpoints. With investments in this – and other digital tools, platforms and solutions – the bank is looking to position itself as a premier digital banking provider in Kuwait.
“We wanted to take Burgan Bank’s digital offering to the next level,” says Khalil Al-Qattan, Head of Digital Transformation at the bank. “Our previous online platform and mobile app were limited in the features and the experience they offered. Hence, we partnered with Clayfin in order to revamp our customer journey as an enriched experience bringing added-value services to our customers.”
Today, customers can access a wide range of services from any internet-enabled device without visiting a branch. “Previously, customers used to come to branches to do the simplest tasks, such as update their civil ID, contact details or even open accounts, but that is no longer the case,” says Al-Qattan. “In general, the pandemic accelerated the delivery of digital initiatives worldwide and in Kuwait, especially in the banking sector. Our fast-tracked development brought a completely new banking solution to our customers, allowing them to access and manage their finances easily around the clock. With just a few clicks, customers now have the option to open an account, initiate payments, collect money instantly and can even view their account details and receive app notifications right away. Moreover, they can track specific financial goals and check their net worth, in real time through their preferred channels, in addition to monitoring their daily expenses using more personalised services. The fact is that the mobile app interaction has become more simplified than ever before.”
The adoption of this digital banking solution has resulted in a higher app rating – currently standing at 4.5 – making it one of the top-rated banking apps in Kuwait. “We are driven by our customers and their satisfaction is our ultimate goal,” says Al-Qattan. “Positive reviews and high ratings simply serve as a testament to our detail-oriented approach to customer service. In fact, customer interactions and positive engagement across channels have improved significantly, an eight-fold growth to be exact, since launching the new app with Clayfin.”
“The insights from both the online platform and mobile app gave us a holistic view of customers interactions and engagement, through surveys and feedback, to constantly improve our performance to deliver the right journey as a whole,” adds Al-Qattan. With the new platform in place, Al-Qattan believes Burgan Bank is repositioning itself among the top banks in Kuwait and setting the right track towards regional growth and development, and offering a range of digital added-value services beyond those normally expected. “We pay attention to the details, the overall look and feel, to the interface and the user experience – including the transactions journey – to simplify the banking experience,” he says. App updates are more frequent than ever, he adds, as general fixes and ongoing enhancements will always lead to a better experience.
Burgan’s digital transformation journey doesn’t stop at delivering an efficient online platform. The bank also has future plans to offer “Electronic Know Your Customer” (eKYC) capabilities, for example. With Samsung Pay already rolled out, other upcoming advancements include linking up mobile payments, with many more initiatives already in the pipeline. “Customers are starting to have a different view on how banking works. Nowadays they don’t even need to carry their wallets anymore, simply using their smart devices to perform payments. This has made it our ultimate goal to make transactions and processes as easy, simple and smooth as possible,” adds Al-Qattan.
Clayfin’s platform undergoes regular review and upgrades to reflect their product philosophy of keeping it simple, secure, pervasive and scalable. “The entire financial services industry is moving towards open banking, particularly in Europe and India,” says Karthik Raman, Chief Innovation Officer at Clayfin. “We have made sure that we are completely API-enabled so we can connect seamlessly with the external ecosystem to bring in more services to banks and their customers.”
As a testament to Clayfin’s execution and innovation capabilities, Burgan Bank has expanded its brief to significantly augment its prepaid banking capabilities, helping it to meet its financial inclusion objectives. The module was built by Clayfin using the latest technologies on the React Native framework, leading to a significant improvement in the user interface, which leads to better user experience by reaching out to more segments of society.
Clayfin has been working in the financial services industry for more than two decades, with over 80 implementations, and works across multiple geographies. The company provides cutting-edge digital solutions for both retail and corporate customers, across various channels.
“Clayfin was not just a vendor for us but a great partner,” concludes Al-Qattan. “Bringing innovation and value-added products and services are the key differentiations towards growth and success.”
To find out more about how Clayfin could support your financial services organisation with its digital transformation journey, visit www.clayfin.com.
INDUSTRY VIEW FROM CLAYFIN
Should CDOs acting as pillars of strategy consider DataOps?
Logan Wilt, Chief Data Scientist, Luxoft
Business leaders already understand that AI is woven throughout our lives and is critical for competing in increasingly digitalised markets. Intentionally or not, chief data officers and executive leaders in data and engineering have found they are key pillars of their organisation’s transformation journey.
A successful CDO equips their business leaders to establish a “data-to-insights, insights-to-action” value chain where needed and worth the investment. After enabling this with modern data platforms and data culture, many can still fall short in actually utilising “data as an asset”. A key reason for this is the lack of standards and CI/CD practices required to make new value from data and analytics clearly defined and sustainable.
So how might DataOps overcome these challenges? Whereas standard DevOps may function to break up silos between software development and operations, DataOps practices break up silos between data scientists, data stewards and the business stakeholders that rely on their output. An expertly crafted production and deployment pipeline for the core building blocks of your data operations can give business leaders the feedback and visibility needed to make rapid and informed strategic decisions.
This enables executives to shift from a mindset of “We have problems with data” to “We have problems with decision-making; what role does data play?”. This approach to building a more rigorous data strategy can help manage the complexity of modernising data budgets, architectures and operations.
For companies where machine learning plays a critical role in their strategy, MLOps represents a further level of modern data operations, designed to break down silos between data scientists and machine learning engineers. MLOps leverages and enriches DevOps principles to address the specific challenges introduced by the complex interlink of code, data and machine learning models that drive AI applications.
When we help customers establish MLOps capabilities, it is never simply about establishing new capabilities for machine learning. It is always about validating how enhanced collaboration between machine learning engineers and data scientists can play a critical role in driving business outcomes. These could be, for example:
For CDOs and business leaders at the intersection of data strategy and corporate strategy, the implementation of DataOps can be remarkably accelerating and illuminating. If you can achieve reduced deployment times for system or platform enhancements, visibility into investments in data strategy and a resilient data culture supported by personalisation and automation, you can future-proof your data operations into a foundation that is agile yet integrated with the core IT estate.
For more information, please click here.
How digital architectures can ease banking transformation
Many banks believe that they will be in a position to deliver great and differentiating CX within the next few years. This optimism is rooted in ongoing transformation efforts: various Forrester surveys during the past decade have shown that between 71 and 87 per cent of global financial services firms were executing a transformation programme, or planned to start within two years after the survey. Why do so many banks have little to show for these efforts?
Layered digital architectures help foster change
Banking platform transformation is like a series of brain surgeries on a fully awake patient in a dark room. But digital target state architectures such as Forrester’s digital banking platform architecture (DBPA) help make these transformation challenges more manageable.
Let me explain the concept of DBPA in a nutshell. It’s about splitting what’s traditionally considered core banking (and further back-end solutions) into two decoupled elements: the lean core and the digital core. The lean core focuses on data availability and consistency. On top, the digital core delivers domain-driven, highly coherent, decoupled business capabilities (for example, for the domain’s customers and accounts) using data that the lean core provides via APIs. Technology teams in banks will find that this approach:
Learn more about Forrester’s 2022 European predictions, which includes banking
by Jost Hoppermann, VP principal analyst, Forrester
INDUSTRY VIEW FROM FORRESTER
Confronting the hard truths and easy fictions of a CBDC
As global central bankers study whether they can issue a central bank digital currency (CBDC), the question of whether they should do so has received relatively less attention. At the Federal Reserve, though, a cost-benefit analysis appears to be underway, and the results are not encouraging for CBDC acolytes.
Any CBDC comes with a fundamental, grievous flaw that its proponents generally seek to elide: currency held in a digital wallet is unavailable for lending. It is thus unlike commercial bank money – the digital dollars you hold in your bank account – which can be loaned out, with only a fraction of the deposit held in reserve. (Hence: fractional banking.) CBDC is a digital mattress. Given that the average loan-to-deposit ratio for banks is generally around 1:1, every dollar that migrates from commercial bank deposits to CBDC is one less dollar of lending.
In good times, banks could seek to retain those deposits by paying higher interest rates, but of course, that permanent rise in funding costs would translate into a permanent rise in borrowing costs for businesses and consumers. However, the larger problem is what happens in bad times like 2009 and 2020, when corporations and money managers seek to de-risk as much as possible. Last March, that meant selling trillions of dollars of risk assets and holding them as bank deposits. With a CBDC, that would mean transferring trillions of dollars of bank deposits to CBDC – with the loss of a few months’ interest on that deposit of no consequence (at least in part because rates would be plummeting). Lending would have ceased; lines of credit could not have been funded. As Randal Quarles, Vice Chairman of the Fed, recently summarised, “[A] Federal Reserve CBDC could create considerable challenges for the structure of our banking system, which currently relies on deposits to support the credit needs of households and businesses. An arrangement where the Federal Reserve replaces commercial banks as the dominant provider of money to the general public could constrict the availability of credit, fundamentally alter the economy and expose the public to a host of unanticipated, and undesirable, consequences.”
No one has suggested any solution to this fundamental problem. To stop the potential bleeding, European Central Bank Executive Board Member Fabio Panetta has proposed capping CBDC at €3,000. But with any cap of that size in place, a digital euro would be useless as a commercial payments vehicle: even consumers would need a bank account for larger transactions.
Meanwhile, any potential benefits from a CBDC appear to fade away under analysis:
An answer to the threat of China to the dollar’s hegemony? Fed Chair Jerome Powell dismissed this notion at a recent Federal Open Market Committee press conference: “We’re the world’s reserve currency… because of our rule of law; our democratic institutions, which are the best in the world; our economy; our industrious people; all the things that make the United States the United States… And, of course, we have open capital accounts, which is essential if you’re going to be the reserve currency.”
An antidote to the rise of cryptocurrencies? As Vice Chairman Quarles observed, “Bitcoin and its ilk will… almost certainly remain a risky and speculative investment rather than a revolutionary means of payment, and they are therefore highly unlikely to affect the role of the US dollar or require a response with a CBDC.”
Stablecoins? They are not a risk to the dollar, as they are denominated in dollars and backed by dollar assets. Of course, stablecoins in their current form do pose massive consumer protection problems and potential financial stability risks, as most are in substance opaque prime money market mutual funds. But the solution to that problem is regulation, not a new US currency, and multiple regulators are quite focused on being part of that solution.
A need to modernise the payments system? Vice Chairman Quarles recently noted an ongoing revolution in faster payments, stating, “[The] general public already transacts mostly in digital dollars –by sending and receiving electronic balances in our commercial bank accounts… The Federal Reserve provides a digital dollar to commercial banks, and commercial banks provide digital dollars and other financial services to consumers and businesses. This arrangement serves the nation and the economy well… In summary, the US payment system is very good, and although it is not perfect, work is already underway to significantly improve it.”
Thus, as Governor Christopher Waller recently concluded, “After exploring many possible problems that a CBDC could solve, I am left with the conclusion that a CBDC remains a solution in search of a problem.” And, one might add, a solution with potentially massive costs for the US economy.
To learn more, visit our website.
by Greg Baer, President and CEO, Bank Policy Institute
Why governments should embrace the power of Fintech
When the World Wide Web was born, it was an incredible development with immense power to change the world as we knew it, even though we were limited by 56k dial-up connections that meant even simple text-based pages could take several minutes to load.
Right now, fintech is like this early internet, while the banking sector is the dial-up connections that both enable and constrain its development and applications. The main difference is that some of the most impactful fintech developments can be implemented entirely without traditional banks.
Digital currencies and the impact they can have on the public sector are strong examples.
There is a perception that digital currencies are a tool of criminals and terrorists. This view is widely propagated in banking circles where there is real concern that digital currencies threaten to make traditional banking services obsolete. Like all the best deceptions, this characterisation is based on a few grains of truth. Of course, criminals and terrorists do use digital currencies, but that’s not the point. They also use smartphones, but no one is arguing against them. And like smartphones, digital currencies provide law enforcement and counter-terrorism agencies with new tools to track, trace and convict.
Setting aside these misconceptions, digital currencies have the potential to do immense good in the world. But while major companies are embracing them, the same cannot be said for governments and the wider public sector.
We see a perfect example of this in the controversial cuts to foreign aid that the UK government recently pushed through. We know that the government needs to start pulling back on spending after the huge financial impact of the COVID-19 pandemic, but wouldn’t it have been better if the savings needed could have been achieved without the humanitarian impact caused by simply reducing the aid budget?
In fact, the government did have that option.
Long before Facebook dreamed up its digital currency, a UK firm had created a safe and regulated digital currency, BiPS. An expert delegation to the government met with officials from the now-disbanded Department for International Development and showed them exactly how a digital currency like BiPS could be used to eliminate fraud, theft and excessive transaction costs. Better results could be delivered for the people who needed the aid, and the savings would run to billions of pounds per year.
In other words, the UK could have restructured its aid programme to give greater impact for the communities it helps while at the same time saving the Treasury significant sums. More than that, by using digital currency in this way, the UK would have immediately become a genuine world leader in the delivery of foreign aid, potentially multiplying the benefits many times as other developed countries followed suit.
And the benefits are far from limited to the delivery of foreign aid. Using a digital currency like BiPS could also eliminate benefit fraud, establish local currencies that keep more money circulating in local economies, drive community investments in social or environmental projects and almost entirely wipe out the high cost of moving money around.
The reasons for government reluctance to embrace digital currencies are unclear. Perhaps ministers don’t understand the full potential of the technology, or perhaps it’s simply politics and the influence of lobbying.
Regardless of the reasons, tides of change can’t be held back forever. From climate change and child poverty to pandemic management, the world is facing greater challenges than ever before and digital currencies and hundreds of other fintech developments are powerful weapons we can’t afford to ignore.
Many countries have embraced these technologies so enthusiastically they have not just overtaken the UK but have left us so far behind that our infrastructure is at real risk of slipping from a Champions League contender to the relegation zone of League 2.
Fintech initiatives like digital currencies provide transformational opportunities that will undoubtedly change the financial landscape dramatically. Banks that resist the change and concentrate on “fighting the threat” to traditional practices will become obsolete. Only those that embrace the technology may survive and even thrive. So far, most seem to be sitting on the fence and trying to do both.
What’s really needed is for government to finally consider the benefits offered by fintech and how it can protect public money and change citizens’ lives for the better.
by Richard Hallewell, CEO, CIPFA CPRAS Technology Procurement Association
Inflation: why it is the biggest test yet for central bank independence
Central banks are being tested by the recent resurgence in inflation, with the US recently reporting an annual rate of inflation of 6.8 per cent, the highest in nearly 40 years. The question they are all asking is whether this inflation is temporary (“transitory”) or persistent.
If it is only transitory, it would be counterproductive to deal with it aggressively. If central banks tighten monetary policy unnecessarily by sharply raising short-term interest rates or quickly unwinding those government asset purchases (known as quantitative easing or QE) which supported many economies during the Covid economic shock, it will needlessly push back the recovery.
Central bankers’ public statements all hint at the difficult decisions ahead. The chair of the US Federal Reserve, Jay Powell, signalled recently that the strong US economy combined with rising inflation meant the Fed would “taper” its QE asset purchases more quickly (they are currently due to end by June 2022).
The Bank of England is due to end its asset purchases this month, and Huw Pill, the chief economist, has indicated that “the conditions now existed for him to vote for higher interest rates”. The European Central Bank’s chief, Christine Lagarde, has struck a more dovish note, saying it is unlikely the ECB will increase interest rates in 2022, despite inflation well above its 2 per cent target, as it considers it transitory. It is unclear whether the ECB will extend its QE programme beyond March 2022.
So how significant is the current inflationary shock, and what are its causes?
Inflation causes
Today’s inflation is due primarily to the disruption the pandemic has caused to key global supply chains. In sectors like electronic goods and vehicle production, bottlenecks and shortages of key inputs such as semiconductors emerged as consumer demand recovered more rapidly after the first pandemic wave than suppliers could keep up with. Similarly, shortages of shipping containers and freight capacity have increased costs.
The rapid economic recovery in 2021 has also put pressure on energy prices, especially spot gas prices in Europe. Meanwhile, there have been labour shortages to contend with: the UK and US are among those nations that seem to be seeing labour-force participation falling due to people retiring. The UK and certain northern European economies have also not been seeing enough of the short-term migrants that they need for sectors like hospitality and goods transportation. When there are fewer workers available, employers have to pay higher wages to fill posts.
Inflation expectations
How should monetary policy respond? For central banks, the key question relates to inflation expectations. If consumers and businesses believe that inflation will continue at similarly high levels, as they did in the 1970s, they will try to incorporate it into wage claims and in setting future prices. Inflation will then become more persistent.
What is the evidence for these “second-round effects” on wages and price-setting? There is some evidence from consumer surveys and bond prices that inflation expectations in the US, eurozone and UK have increased marginally in the latter half of 2021, but they still seem contained.
One difference with the 1970s and 1980s is that labour markets are more flexible, in the sense that trade unions have less wage-bargaining power in the private sector, and there is greater international competition as a result of globalisation. Rather than setting off a wage-price spiral, rising prices might therefore be absorbed by wages falling in real terms (meaning they would increase below the rate of inflation).
That depends on the Covid supply disruptions being temporary, as ultimately, with tightening labour markets across most countries, employers would eventually have to pay wages that keep pace with inflation. Unfortunately, the omicron variant is a sign that as Covid becomes endemic, economic recovery might be punctuated by occasional disruptions and further supply shocks, potentially increasing the pressure on employers to pay higher wages.
Central banks and independence
The key to gauging whether inflation remains transitory will be future labour market and expectations data. Suppose that by early to mid-2022, inflation appears to be dissipating, central banks might only need to increase rates gradually to anchor expectations.
But if the data points to inflation remaining stubbornly higher than central banks’ inflation targets (say 4 per cent-5 per cent) for a longer time-horizon, it would be evidence that a wage-price spiral has set in. Central banks would then have no alternative but to substantially increase short-term interest rates and reduce QE – potentially reducing economic activity until wage and price increases moderated. As we know from the 1970s and early 1980s, this can cause painful recessions, leading to unemployment.
At any rate, QE needs to be ended carefully. It has created extra demand for government bonds and increased the supply of money available to invest in other assets such as stocks, so tapering has the potential to cause volatility in these markets. This is likely to be compounded by investors selling stocks in the belief that tighter monetary conditions will mean less economic growth.
The QE purchases have also greatly enlarged central banks’ balance sheets. For example, the Fed balance sheet has increased from around US$4 trillion (£3 trillion) to US$8.7 trillion since the start of the pandemic. Besides tapering, this is going to have to be unwound. It can either be done very slowly as QE-debt matures, or – if central banks feel they need to tighten monetary policy more aggressively – by selling these bonds on to the market. This might mean selling at a loss, in which case governments would have to rebuild central banks’ balance sheets. By making central banks dependent on governments in this way, it might compromise their independence.
There is also a more immediate challenge to central-bank independence, which was granted several decades ago to stop monetary policy being subject to political interference and to reassure the markets that inflation would be kept under control. Yet just because a central bank sets rates independently of government, it may not be immune from external pressures during a major economic crisis. Central bankers could succumb to political and media pressure either to move too fast on tackling inflation, or too slowly to preserve the economic recovery.
Some central banks like the Bank of England look set to hold fire on interest rates until early 2022 – despite the comments from Huw Pill – given the uncertainties surrounding the omicron variant. The ECB is similarly holding steady. So all eyes will be on the Fed on Wednesday 15 to see if it is going to taper QE faster than previously announced. For the time being, I would argue that it would be better to wait. The next few weeks will give us more data on both inflation expectations, but also on how Covid might continue to affect our economies.
Anton Muscatelli, Principal and Vice Chancellor, University of Glasgow
This article is republished from The Conversation under a Creative Commons license. Read the original article.