Volume 6 (2021-22)

Each volume of Journal of Digital Banking consists of four 100-page issues. Articles scheduled for Volume 6 are available to view on the 'Forthcoming content' page.

Volume 6 Number 1

  • Editorial
    Simon Beckett, Publisher
  • Papers:
    Building a new ecosystem: A bank’s journey through sustaining digital transformation, understanding AI and managing the galaxy of continuous change
    Nidhi Nikum, Principal Consultant, NextWave Consulting

    In October 2019, I delivered the keynote address to a room full of banking and financial services professionals on what to expect on a journey towards digital transformation (DT). At the outset I asked my audience if their business was in any of the following three categories — advanced stage of DT, somewhere in between or warming up to it. There was only one show of hand for ‘somewhere in between’, while the majority identified themselves as being at the starting stage. It did surprise me. Since then, however, the evolution towards DT has been rapid. Digital disruption has created a level-playing field for various ecosystems, with its own subsidiaries offering services and generating real business value. If your business is an early adopter of digital disruption, then you already know the value, but if you are among the early majority, the conservative or even the sceptic willing to cross the chasm, I really hope that you can find at least one useful takeaway from this conversation. I am bringing the spotlight back to ‘where to start’, ‘why digital principles are required’ and ‘understanding and building your own strategy for data, platforms and machine learning’ to rebuild your organisation by facilitating the use of agile methods by important players across your organisation. Find your ‘why’ to connect customers, business and technology seamlessly through an opportunity well guided by data and machine learning.
    Keywords: digital principles for banks, digital transformation, agile, machine learning, data strategy, platforms

  • Credit intelligence: A more robust alternative to current commercial loan modelling approaches
    Neil Kahrim, Director of Growth & Operations and Sean Hunter, Chief Information Officer, OakNorth

    Most commercial lending is based on a decision-making process and modelling approach largely unchanged by technology. By adopting a data-driven alternative that takes into account the fundamental differences between businesses, lenders are able to make data-driven decisions that will ultimately lead to better credit outcomes. This paper aims to briefly outline some of the limitations of the current approach to commercial lending and suggest improvements (collectively, ‘credit intelligence’), taking specific note of lessons of the current COVID-19 crisis and how this has transformed the economic landscape. It also provides a case study (OakNorth in the UK) where these principles have been implemented and notes the promising results so far.
    Keywords: credit intelligence, credit risk, portfolio monitoring, commercial lending, commercial banking

  • Is your IT strategy ready to support growth in your bank’s ESG investments and market offers? Can AI help solve what traditional IT cannot? AI-based strategy for ESG industrialisation
    Kovid Bhardwaj, Assistant Vice President, Société Générale

    This paper analyses the demands on integration and scalability that the Environmental, Social and Governance (ESG) theme has placed on financial institutions and how modern digital technologies can help banks quickly scale and solve this business need. It starts with evaluating both internal and external factors that are not only driving ESG but also radically altering banking business models. It then discusses at length the integration issues faced by banks in this sector. While keeping the nature of these integration issues at the centre, the paper goes on to evaluate why modern digital stack complemented with artificial intelligence offers a good architecture to industrialise ESG in a bank. Factors like a tenfold increase in ESG data, new ways of greenwashing and falsification of ESG efforts coupled with terabytes of unstructured data are some of the themes the paper discusses at length. It also looks at how artificial intelligence helps solve these issues. The idea is to enable and complement human intelligence by reducing the time and effort taken for investigation and thus bringing operational efficiencies to help analysts and management focus on more valuable services like advisory, structuring and executing ESG offerings. It also looks at the maturity and scalability of artificial intelligence (AI) in this area. The paper concludes by suggesting a practical and implementable blueprint for AI-based ESG workflow that can be industrialised at scale.
    Keywords: ESG, sustainability, responsible banking, strategy, artificial intelligence (AI), digital transformation

  • Innovation in the face of disruption
    Katharina Herrmann, Global Head of Platforms & Beyond Banking, ING

    The coronavirus crisis has accelerated various trends across industries, predominantly in favour of digitalisation and the need for innovation. Consumer behaviour is changing rapidly in response to the crisis, as customers expect their banks to mirror the personalised, quick delivery experiences offered by the BigTechs and the companies outside of the financial world. With regard to innovation in times of crisis, financial services companies are faced with a choice between a defensive approach, where they safeguard their current operations — already hugely under pressure — and an offensive approach, which is crucial to avoid losing relevance, market share and profits. The dilemma banks face concerns how saving costs and safeguarding their current operations while addressing immediate customer needs and investing in the future. This paper describes shifts in customer behaviour and explores opportunities for banks to disrupt themselves and invest in new business models with a focus on platforms.
    Keywords: platforms, disruption, digitalisation, customer experience

  • Business risk, collaboration and invisible banking
    Elliott Limb, Chief Customer Officer, Mambu

    This paper discusses how, faced with accelerating rates of change, banks must be able to adapt quickly, easily and at low cost. Agility has joined liquidity as a fundamental element in a bank’s risk score. Without it, the threat of systemic failure will never be far away. Many banks think technology will make them agile, and they are partly right. True agility, however, can be achieved only when the right technology is combined with the right mind set and the right business model. Without the last two, a bank cannot hope to get the most out of its investment in the first. Put them together, on the other hand, and a bank will be able to deliver what its more important customers want, when and how they want it, all the time. It will be able to work with best-of-breed third parties, swapping partners in and out. But it is not all down to the banks. Regulators, vendors and consultants must also rethink how they help banks become agile to minimise risk. Regulators must reassess their risk metrics to put agility alongside liquidity. Management and implementation consultants must find alternative revenue streams to five-year plans. Vendors must build truly cloud-native core platforms — available as software as a service (SaaS) and easily combined with offerings from third-party software specialists — rather than their current monolithic IT infrastructures that cover the whole banking process. When all this happens, the banking ecosystem will be truly agile, making them significantly less risky and therefore more sustainable. Technology can help banks adapt to rapid change, but it is not a silver bullet. Banks also need the right mind set and right business model to put the customer at the centre of everything they do.
    Keywords: banks, banking, digital banks, core platforms, core banking

  • OK Google, what is the future of voice in banking?
    Yvon Moysan, Academic Director, Master’s degree in Digital Marketing and Innovation; Chair, IESEG School of Management; Member Crédit Agricole Nord de France Digital Banking & Big Data; CEO, Saint Germain Consulting

    The adoption of voice and the multiplication of use cases in the banking sector are encouraged by the emergence of new technologies that have reached maturity (artificial intelligence (AI), voice synthesis, voice biometrics, etc) and by the expansion of the market for connected devices (smartphone, watch, speakerphone, etc). USA, India and China are among the leading markets. In the USA, roughly 1 in 4 adults now owns a smart speaker. In India and China, nearly 80 per cent of their populations have adopted voice technology. The banking and insurance sectors have several players in the field of digital voice technology, including American Express, Capital One, JP Morgan and Bank of America. This paper discusses two strategies which are used by these actors: the first is to offer its services on a new device, whereas the second is to create a virtual assistant with a real identity.
    Keywords: Google Home, Amazon Echo, Alexa, voice banking

  • RegTech: An untapped opportunity
    Mukund Umalkar, Fintech Partnerships, ING Neo

    This paper discusses a practitioner’s viewpoint on RegTech (Regulatory Technology) solutions for managing risk and compliance in an organisation. RegTech solutions, which represent an ever-growing category of start-ups and scale-ups, can create value by enabling organisations, both large and small, to efficiently and effectively navigate the complex regulatory landscape. Given significant spend due to regulatory enforcement actions, and investment to comply with regulatory requirements, RegTech firms present an untapped opportunity, especially in large organisations, where non-compliance can be costly. Given the unique constraints of the risk management and compliance activities, however, collaboration between large organisations and RegTech firms can be challenging and requires a unique approach. This paper discusses how to frame the concept of RegTech, important challenges of adoption and potential solutions and presents a perspective of how the future of RegTechs should evolve.
    Keywords: RegTech, FinTech, regulation, innovation, platforms, interoperability, data, AI, partnerships

  • The cyber arms race: How can CISOs win?
    Mark Weston, Co-founder, Regulativ.ai and Rajan Kashyap, Head Digital Solutions, Birlasoft Ltd.

    This paper discusses the trends in cybersecurity, especially in banking and financial services. Senior executives are concerned about the increasing attack vector with an exponential increase in the number of devices and its impact on their organisations’ security. A structured approach is needed to be only just security compliant but ahead of the curve. The paper presents a new approach and framework within which to govern cyber in three main areas: foundational, proactive and futuristic. It also lays out what it is to be a cyber leader, how to free up time to take the proactive measures that are necessary right now and to remain alert to futuristic threats.
    Keywords: cybersecurity, regulatory compliance, Blockchain, CISO, AI/ML, cyberattacks, IoT, security, banking, cyber maturity