The tech company threat to financial services

Posted on : 31-08-2017 | By : john.vincent | In : Finance, FinTech, Innovation

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We were interested to read the update from the World Economic Forum in their August 2017 publication “Beyond Fintech: A Pragmatic Assessment Of Disruptive Potential In Financial Services”. The report forms the third phase of work, started in 2014, into understanding the potential impacts of transformative new entrants to financial services, which fintech innovations were most relevant, the implications on consumers, existing providers, regulatory impacts and the infrastructure underpinning the future of financial services (such as blockchain).

Specifically, it considers;

  1. What are the innovations that have had the greatest impact since the report was commissioned?
  2. How have they changed the structure of financial services and how they are consumed? and;
  3. What are the broader implications for the sector?

At this point, it is important to note the contributors to the WEF report consist of a steering group and working group of senior leaders from mainly banks, insurers and payment providers, with some VC’s (largely at the working group level). That isn’t to detract at all from the findings, but is an important lens from which to consider the viewpoint (indeed, there are some points where the contributors are also presented as solutions to industry trend, such as “externalisation”).

So what are the conclusions? In a nutshell. whilst fintechs have so far failed to disrupt the status quo, they have “laid the foundation for future disruption”. In other words, we are still at the start of the beginning. No surprise really, given that whilst the barriers to entry in technology innovation have dramatically lowered, the implementation of there within the highly regulated, complex ecosystem of financial services has proved more challenging. Indeed, whilst changing the shape and approach to innovation has been a success, as well as raising the consumer expectation bar, the actual material changes have been largely periphery or improvements to existing infrastructures.

Whilst it is recognised that the incumbent players have responded to the pace of the fintech ecosystem, both by embracing startups and ideas, we don’t believe that this is as optimal as it could be. The report highlights that some firms have waited to see how new technology gain traction “before deploying their own solutions” is symptomatic of the issue. There is still an arms-length, protectionist attitude which pervades and is ultimately detrimental to the long-term business model of many financial institutions.

Of course, this is only human nature, and one might argue even more so in this particular sector.

The report cites 8 disruptive forces which have the potential to shift the landscape and competition in the coming years. Many of these are no surprise, from the power transferring to the customer interface (experience ownership) through to the reliance of financial institutions on large technology firms. The latter is something that we have written about a lot about over recent years, and we strongly believe that by accelerating technology partnerships and shifting delivery outside of the organisational boundaries, it would really benefit many financial services firms. Somebody will take the plunge and steal a march on the market…surely.

The report delves into the implications for different sectors (Insurance, Digital Banking, Lending, Crowdfunding etc.), what the end states might be and conclusions, such as in Investment Management the robo-advisors which are commoditsing the advisory value proposition whilst humans will still maintain a crucial role in products selection, particularly for high net worth individuals.

Let’s pick on Digital Banking though, just focus on a little. In this space the report highlights the importance of capabilities in customer-facing analytics and intelligence that are increasingly important from a competitive differential. Who are best at this, have a richness and, more importantly, a golden source, of data? The big four? The major insurance companies? Unlikely and, more importantly, the systems, people and processes are not going to change that in the short to medium term.

Given the conditions above, we are likely to see the usual technology companies that do excel in this space such as Google, Amazon, Facebook and the like (maybe Uber) chose to enter the market distribution of financial services products in the short term (see our prediction from 2011!). Whilst financial services firms establish technology partnerships with some of these tech firms, it is not a huge leap of thinking to have them pivot to providing competitive services very quickly. They have the data, the customer engagement, the brand, the scale and the capital to do this, plus the ecosystem of partners to plug any gaps.

Ah, but what about the regulators! From their perspective, we expect a softening of stance towards the distribution of products by tech firms, whilst having a close eye on the potential market dominance and systematic risk profile. In terms of the entrants, we already see technology easing the burden of regulation in the coming years, rather than employing an army of human beings, and the tech firms are again in the driving seat to benefit from this.

Maybe we are closer to “FaceBank” than ever.



Five minutes with…

Posted on : 27-11-2015 | By : Maria Motyka | In : 5 Minutes With, Cloud, Cyber Security, Innovation

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We are doing a series of interviews with leaders to get their insight on the current technology market and business challenges. Here in our first one, we get thoughts from Stephen O’Donnell, who recently took up the post of CIO for UK & Ireland at G4S.

Which technology trends do you predict will be a key theme for 2016?

“The key trend is the adoption of cloud technology moving from the SME market space, where it is already strong, to really making an impact in the enterprise space.

We’ve seen cloud and SaaS being adopted by smaller companies and now it will be adopted by bigger enterprises. We’ve also seen support for cloud based services from major system integrators and software suppliers like Microsoft, SAP and so on. The time for IT delivered as a service has come and the cloud is about to become all-encompassing across the entire IT world.

This has big implications in the ways that CIO’s and business leaders need to manage their systems, away from low-level management of infrastructure into the management of services and concerns about service integration.

Fundamentally it’s a bit like the Hollywood movie industry moving from the silent movie era to the talking era. Not all of the actors made it through – they did not have the skills and experience and I think this is what will happen in the IT industry. Some IT leaders will have difficulties, others will be more successful thanks to their deeper understanding of the business impact of IT, how automation and cloud based services can really help businesses drive competitiveness and agility, reduce risk and cut costs.”


You recently joined G4S as CIO, the worlds leading international security solutions group. What is your vision for the future of technology services there?

“G4S are adopting the cloud very aggressively. We have 622,000 employees, we’re a really large entity and we have stopped using Microsoft technology and are now using Google and the cloud instead. This consists of Google Apps for work, Google Docs for word processing, Google Sheets for spreadsheets and Gmail for email and collaboration platforms. In terms of the cloud, we use Google Drive for storage, everything is now in the cloud and we access it through a browser.

You have no idea how much simpler the world becomes. All of the complexities fade away. It’s now very much about managing the cloud contract and ensuring that the end-users are familiar with the technology and are appropriately supported. It’s very simple, it integrates extremely well with any device. We’ve seen very happy customer experience – whether using a chromebook, a Mac, a PC with a browser – people can access the systems in the same way and just as securely. Wifi capabilities in the office also become a lot simpler and we don’t have to be worried about highly secured corporate networks.

I think everyone would agree that the world is moving away from landlines to mobile communications. From standard telephone calls to IP-based telephone calls: using – in the consumer space Skype and WhatsApp, in the business space Google Hangouts, Skype for Business and so on – we see a massive adoption of that in business. We’ve really adopted Google Hangouts for collaboration and conferencing and have moved away from desk phones to cellphones.

Even when you look at the shape of our business… we have a huge number of people and the vast majority of them are working on customer site because they are security guards there, they do facility management, they’re doing cash in transit. They’re working in public services, working for hospitals… Having landlines just doesn’t make sense.

The whole company has gone mobile I don’t have a desk phone and – actually – you know what? I don’t miss it at all. I have a cellphone and it works extremely well, when I want to collaborate I use some of the internet-based tools like Hangouts. Equally –  why do you need a fax? When was the last time you’ve sent or received a fax…?

Migration from fixed to mobile has been a key change in the workplace and I’ll be surprised if more companies don’t adopt this. It’s all about simplifying the environment and being more economical.”


In your opinion, what are the greatest challenges IT leaders face in terms of securing organisations’ critical data?

“It’s a very relevant question. In the aftermath of the Paris attacks by ISIS someone said the terrorists only have to be lucky once and the authorities need to be lucky all of the time. I think the same applies to corporate and corporate data security.

Everyone is under absolutely intense attack and due to the complex systems, we have to make assumptions that, regardless what we do, some of our critical data will become exposed.

It could be through employees or through contractors whom we trust who might choose to do the wrong thing, or it might be via external agents, who manage to overcome our security systems either by using technology or by stealth, for example phishing attacks getting access to our data.

I think the key things are that we can put all the peripheral protections on our data: firewalls, secure data centres, the man guards on the gates etc. but we have to encrypt the data.

We have to adopt digital rights management so that we can restrict the data to those who are supposed to see it and ensure that anyone who steals it won’t be able to use it due to encryption.

If you can’t publish your corporate data on the internet and know it’s safe, then it’s not safe. So it really needs to be encrypted and protected. That’s the core principle.”


You spent two years at Broadgate, what was the most rewarding client project you delivered working with them as a consultant?

“That’s a really difficult question as all my projects at Broadgate have been quite exciting. If you don’t mind I’ll tell you about the highlights of the things that I did as a Broadgate Consultant.

I worked in the insurance business for as Chief Technology Officer and I took a massive 2 year development backload and cut it down to delivering in real time. My change programme involved taking the company from being a waterfall software delivery shop into being an agile delivery shop.

It involved the entire Development Team and Project Managers and the end result was that in a very short period of 6 months, we changed the business and its view on the IT departments ability to deliver. A very positive outcome.”


It’s interesting how your work was also about changing businesses’ view on the importance of IT protection?

“I very much agree. I think that very often businesses wrongly focus merely on cost-cutting.

It is also worth noting, that a radical process, such as operating model change can be difficult for incumbent teams to deliver. Bringing in a fresh pair of hands, someone who doesn’t have the business-as-usual activities to get on with and can focus on change really accelerates such projects and helps business.

At a large retail bank, I went into the voice communications department. The organisation was spending £55m a year on third party costs – telecommunications, calls etc.. My work there was to introduce a new operating model – consolidating business into a single telecoms entity and cutting costs. In a very short period of time (11 months), I saved the company £27m and simultaneously dramatically improved service levels offered by the business, so it was a real success.

Another engagement was really a short but exciting project at a wealth management client who had a business imperative to modernise their IT platforms. It was a really exciting piece of work working with the CIO and we made the decision not to modernise IT platforms but migrate functionality into the cloud. The piece of work I was set to do was responsible for the new cloud strategy: assessing costs, determine what the approach should be, identifying critical success factors and considering the things that might get in the way of the client executing on their vision.”


What do you see as the biggest technology disrupters in data centre services?

“Just like everything else in the world, IT is commoditising and lately we’ve seen this accelerating.

Everyone uses IT, the younger generation check their Facebook and Instagram several times an hour, it’s an absolutely essential business tool – try to work without email – absolutely impossible.

The industry commoditises and consolidates and IT is becoming a service. We see large global organisations delivering IT services that are ready to be consumed, you don’t have to self-assemble them. If you buy a car you expect it to come with tyres and a steering wheel. That’s not how IT has been consumed – you had to buy all the parts separately and assemble them. That’s changing. It is all commoditising, it’s becoming holistic, delivered as a service.”


Is Google the new Dr Johnson? The democratisation of spelling.

Posted on : 29-10-2015 | By : richard.gale | In : Innovation

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The recent re-brand of Google to Alphabet may be seen as a way to enable the group to consider different and more radical products. It started us thinking about Google and its hold over the English language.

Historically language evolved through word of mouth and then written. The English language was formalised  by Dr Johnson into dictionaries, currently the  Oxford English Dictionary being UK the  ‘bible’  – if a word makes it the new year’s edition then it has officially  ‘arrived’.

But now so many words are typed into the Google search bar. We have noticed, over the years, it is getting more sophisticated at guessing which word you meant to type when you misspell or type a word. Environment is a particular favourite of mine (even though I have programmed in COBOL….) but I don’t really need to worry too much if I type into Google as it still finds what I’m looking for.

So with this auto-correction in our search engines, our phones and our word & mail applications how important is spelling and should we really care too much? There are already alternative spellings for colour/color, program/programme etc. In fact the blogging application I’m using at the moment constantly tries to turn all my ‘s’s into ‘z’s. So as long as whoever the words are meant for can understand them is there a problem with spelling?

If enough people misspell tomorrow should tommorrow be the new correct way to spell it? Google has all this data stored in its servers and it would be interesting to see if some words are spelled incorrectly more often than not.

Language has a political element to it too. In 1806 the American Noah Webster created a dictionary, “An American Dictionary of the English Language” which introduced American English spellings and simplification of the language. The French have been famously defensive of their language, creating a multitude of words to protect against English and American ‘language imperialism’. Google’s innocuous search bar could bring far more change, more quickly to many languages. How long before language gets Googlefied (it’s a word according to Google)?

And on the subject of Google – This quote from the author of the first definitive dictionary could have been written for it…

“Knowledge is of two kinds. We know a subject ourselves, or we know where we can find information upon it.”
Samuel Johnson

The Internet of Things: A connected world

Posted on : 26-03-2014 | By : john.vincent | In : IoT

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The “Internet of Things” (IoT) is something that we haven’t really touched on yet in our monthly updates. However, whilst returning from a client meeting I saw an advert for Nest, the smart thermostat and smoke/co detector and, given the $3.2bn acquisition of Nest Labs by Google closed last month, I thought it was about time to explore the topic further.

Whilst he concept is not new (if you are old enough, you’ll remember the story of programmers connecting to Coke machines over the internet in the 1980’s to check whether they were stocked before deciding to make the trip down a few floors…) the term IoT was first used by Kevin Ashton, co-founder of the Auto-ID Centre at MIT in 1999, in a presentation he made to Procter & Gamble.

The best quote is one he made in an article for the RFID journal:

“If we had computers that knew everything there was to know about things – using data they gathered without any help from us – we would be able to track and count everything, and greatly reduce waste, loss and cost. We would know when things needed replacing, repairing or recalling, and whether they were fresh or past their best”.

So, where are we heading with the IoT? Well, if you look at the future in terms of a truly connected world with almost any object being equipped with internet capabilities, then the possibilities are almost limitless. Indeed, there have recently been a number of organisations churning out stats/predictions, including: 

  • Gartner: by 2020 the IoT will have hit 26 billion devices
  • IDC: slightly higher at 30 billion in the same timeframe, with a market spend of almost $9 trillion
  • Cisco: estimating a value of $14.4 trillion by 2023

Big numbers, but not unreasonable. Looking at last year, the number of start-ups developing products in the IoT category attracted investments of $1.1 billion across 53 deals last year (according to data from CBInsights, a New York-based venture capital research firm). This represents a 11% increase from the previous year. According to the data, these firms were predominantly focused  on projects such as health-care sensor technology, energy management and home automation.

So, what about the practical applications of IoT now? Well, if we head back to Nest then it’s a lot more than just having a smoke detector that doesn’t just get attention by frantically swinging a towel at it when grilling sausages 😉

You can connect to the thermostats throughout the house from a remote app, adjust manually or more importantly, detect whether anyone is in and then regulate automatically. On the smoke detection side they “speak” (or send alerts) rather than annoyingly just emit beeps, and are aware of environmental difference and severity of event.

This is the important piece which relates directly back to Ashtons vision. Indeed, Nest are working on a smart fridge which can use the same technology to turn up the fridge when no one is at home (as it knows the door won’t be opened).

Other practical examples are in the healthcare and manufacturing sectors. In the former, we already see sensors monitoring an individual’s vital signs such as heart rate, movement, blood pressure etc… and using this data either for personal fitness or medical analysis. There are plenty of smart, but simple, initiatives in this area.

One example of this is Hyginex. This start-up is tackling one of the biggest issues in healthcare, that of hospital acquired infections which lead to just shy of 100,000 deaths each year in the US. Of these, it is estimated that 80% are due to staff not washing hands. To combat this, Hyginex have developed a wristband which reminds them when to sanitise with special “over-bed sensors”  designating patient zones and soap and alcohol dispenser sensors interacting with the wristbands to monitor quality and duration of hygiene events. Simple and smart.

In manufacturing, the IoT has potential to radically redefine the supply chain and enable the leaders to provide more differentiated services to customers through a networked ecosystem. Ultimately this supply chain will be able to react intelligently to drive efficiency through changes in environment, circumstance, political landscape and the like. A way off maybe, but we are already seeing commercial telematics solutions delivering efficiency in fleet logistics.

Of course there are many challenges to overcome, not least being the never ending reliance on data and an increasing exposure to cyber-risk.

However, the IoT promises a very difference world from that which human beings have orchestrated so far. 







The War for Talent: A view from the front line

Posted on : 28-01-2013 | By : jo.rose | In : General News

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One of our readers contacted us following our publication of our survey, in particular regarding the war for talent and specifically how it relates to their experience in financial services. We thought it was an interesting insight…let us know what you think;


Seeing the item in the Broadgate Consultants 2013 Survey regarding the talent wars for technical staff that banks will find themselves in prompted me to describe my brief experience of being on the “front line”, and some suggestions on how to improve things.

There are several companies on the internet that allow talented computer programmers to compete to demonstrate their coding prowess by coming up with the most efficient algorithm to complete a particular problem. Winners get cash prizes, and the most successful participants get invited to an expenses-paid, in-person competition in the USA.

In order to raise my bank’s profile and attract technically skilled recruits, it was decided that we would sponsor the conference for a particular year and have recruiters on-site to interview potential hires.

Working within Investment Banking (even in technology), there is a certain assumption that we have the best talent, are the best paid, and that people need to convince us why we should let them work here. Speaking to attendees at the conference showed that this no longer holds true in all cases.

Our recruiters were used to recruiting a certain profile of technology candidate – one that was interested in investment banking, had interned at Goldman Sachs, and that “reads the FT for fun”.

In contrast, the typical conference attendee was a very, very bright Eastern European male in his early twenties, and speaking to them at the time, it became clear that Google was their employer of choice (anyone over a certain points threshold was guaranteed an interview there).

From their perspective, the benefits were clear. They would get all their meals (and even their laundry!) taken care of, they could roll into work at 2pm wearing shorts and code all night, and their potential earnings from options would beat anything that we could offer as a salary. They wanted to work on interesting computing problems, in an informal atmosphere, and be well rewarded for their efforts.

Clearly, our hiring efforts were not destined to be successful.

I’d suggest that if banks want to be an attractive employer for these types of candidates, then they may have to make some changes.

Firstly, the culture within IT Departments.  Developers have a reputation for being non-conformist, and sometimes the most talented are the most eccentric. Although deadlines need to be kept and deliverables met, assessment should be based more on the “what” rather than the “how”.

Meetings and bureaucracy is another source of irritation. At Facebook, if your keyboard breaks you can get a new one from a (free) vending machine. How long would it take to order one where you are now? Would you rather your employees were coding, or calling the helpdesk?

Another issue that a lot of banks face is the lack of a technical career path.  Typically, within a bank’s technology function, the only way to progress in terms of seniority and salary is by managing people. Some of the brightest and best technical people have no interest in this and would be happy to stay technical and work on harder and more significant technical challenges for their whole career.

Finally, there is the issue of “respect”. At a lot of banks, anyone not Front Office is treated as a clerk. However, as more and more of banking becomes a technology business, then developers have the capability to make revenue changing impact on the business lines they support and should be recognised for this fact.

Clearly, this doesn’t apply to all IT Staff, but for that top 1% of technical contributors, perhaps you should treat them less like typists, and more like quants.