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How Engineers Are Helping Modernise Banking

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Cryptocurrency is the poster child of “disruptive technology”. But, there are other areas where software engineers must update business-as-usual in banking in order to survive.

According to one survey, 80% of bankers agreed that their institution “needs to complete an assessment over the next three years, but only 15% expected that to lead to a modernisation effort.” Security threats, the demand for mobile banking, and outdated core banking systems are all driving banks to consider massive overhauls to their information technology systems.

These are the biggest modernisation challenges facing financial institutions – areas where developers and remote software teams can play a significant role in keeping banks competitive.

Making Updates To “Legacy Structures”

In the same survey, 60% of bankers reported that at least one of their major technology challenges is directly tied to aging core systems. “Maintaining legacy systems accounts for 78% of a bank’s IT budget, and 70% of bankers feel their core processes cannot quickly adapt to change,” reports Ripple.

Over time, banks have resisted major changes to their core banking system, the backend system responsible for processing transactions, updates to accounts, and maintaining other financial records. Core banking systems are in charge of processing deposits, loans, and posting credits, as well as updating other reporting and ledger tools.

There’s no simple solution to updating a bank’s core system: it’s a massive technological undertaking, but one that banks must invest in to serve its customers well. Engineers can help banks develop an agile, consumer-centric approach to core banking.

There are multiple approaches to solving the problem of archaic core systems, and software teams can phase in iterative changes that evolve a bank’s core infrastructure without too much service interruption.

Modernising Fraud Protection

Fraud prevention remains one of the most difficult technological challenges facing banks as cybercriminals get more sophisticated in targeting consumers. To illustrate the challenge banks face in keeping consumer account information safe, Kasperky Lab hacked a “large, publicly-traded financial company in less than 15 minutes.”

To protect consumers from malware and fraud attacks, banks must shift from a reactive to a preventative operations approach.

Developers can help banks prepare by modernising the systems that store user data, moving information onto an encrypted cloud. IBM’s AI tool, for example, is said to offer a faster analysis of advanced persistent threats and attacks. Developers must integrate the latest technology into banks’ security systems to modernise.

Digital Account Opening

Developers will play a critical role in helping traditional banks keep up with the demands of customers on-the-go. Digital account opening is one process where developers and software engineers can have an immediate impact.

Many banks are capable of letting customers open an account online through a web browser. Yet, mobile-optimised account opening is an area where the industry has lagged behind. There are some very good reasons why this process is so difficult.

Application fraud and strict anti-money laundering laws make it difficult for banks to meet regulatory requirements. An, there are significant security risks: in 2018, banks faced a more than $31 billion in global fraud loss.

But developers who help banks modernise to provide DAO will have an immediate financial impact. One report found that 69% of those surveyed wish to perform all their banking through online and mobile channels. BAI found that around 75% of millennials and more than 65% of Gen Xers prefer to use a digital channel to open a deposit account.

The core consumer of the future will expect to be able to open an account, take out personal loans, and transfer funds from any device at any moment. Developers must find a way to build the infrastructure to allow banks to offer DAO.

KPMG Advisory Hires Graham Boffey

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KPMG has announced the appointment of Graham Boffey as insurance partner in its financial services consultancy team, effective October 01.

Graham is a senior partner in KPMG’s Insurance practice. He has over 25 years of experience in financial services, comprising the last 20 years in insurance and 15 at executive level across Life and Savings, General Insurance and Health.

Graham also has 10 years of experience on the GI and Life boards of Aviva, competing across all channels and lines of business, including the launch of the business process automation business, focused on turnaround and growth.

KPMG focus on clients’ big issues and opportunities by providing innovative approaches and deep expertise to deliver real results.

He recently served on the UK exec of Zurich for 18 months, leading distribution across Life and GI, launched a refreshed and successful protection proposition and a refocused commercial GI business.

KPMG LLP is a global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

In his new role, Boffey will work closely with Simon Ranger, head of insurance at KPMG, to support clients across the United Kingdom market.

Boffey brings considerable insurance industry experience and most recently acted as head of United Kingdom distribution at Zurich Insurance.

He began his career at IBM and Barclays, and spent more than a decade at Aviva, where he fulfilled many roles including chief executive officer of Aviva Healthcare, and, later, managing director of corporate benefits.

He is the Global Lead Partner for Aviva, having re-joined KPMG in October 2019 from Zurich.

Innovation Centre Launched to Help Entrepreneurs

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Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services.

Coworking space and innovation centre Plexal has announced the launch of a new accelerator programme.

Plexal’s OpenDoor initiative will support products, services and projects that make work more inclusive and enable under-represented groups to access better business and economic opportunities.

The accelerator programme will give entrepreneurs access to marketing and messaging support, business model development, tailored introductions to partners, investors and corporates, as well as access to the Plexal Community and coworking space.

An entrepreneur is an individual who takes the risk to start their own business based on an idea they have or a product they have created while assuming most of the risks and reaping most of the rewards of the business.

Accelerators provide intensive and time-limited business support for cohorts of start-ups, aiming to get them ready for investment more quickly than traditional incubators.

Plexal combine their open innovation approach with a community of fast-growth start-ups to help enterprises and the government unlock the potential of technology.

From live testbeds and start-up scouting to creating new technology, Plexal worked with some of the most influential government departments and global tech companies.

This includes popular brands such as IBM, Amazon Web Services, the National Cyber Security Centre and the Department for Digital, Culture, Media and Sport.

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TSB Bank Chief Paul Pester Forfeits £2M Bonus in Wake of IT Meltdown

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The chief executive officer of TSB bank will forfeit his £2 million annual bonus payment in the light of a mass IT failure that left thousands of customers locked out of their online accounts, as MPs accused the leader of being “extraordinarily complacent”.

During a bruising evidence session before the Treasury select committee, TSB chief executive Paul Pester and the bank’s chairman, Richard Meddings, said they had received 40000 complaints about the outage but did not know exactly how many of the bank’s 1.9 million online customers had been affected.

Meddings told MPs that Pester had volunteered to give up a £2m bonus associated with the migration to a new IT system, hinting that other executives could also have their bonuses slashed. But Pester could still receive up to £1.3m in other bonuses for 2018, on top of a further £1.3m in basic pay, benefits and pension contributions.

TSB Bank plc Logo

TSB Bank plc Logo

Pester declined to predict when the problems, which have been affecting customers for 10 days, would be fixed. The committee chair, Nicky Morgan, accused Pester of being “extraordinarily complacent” after he said the bank’s move to a new IT system, which triggered the problems, had mostly run smoothly.

Pester insisted that 95% of customers were now able to log in to the bank’s mobile app and website without problems.

However, MPs on the committee read out a series of emails and tweets from customers that indicated ongoing chaos. One customer said they had spent 14 hours on the phone to customer services, while another said they had been left unable to pay their gas and electricity bills and a third said they risked a house purchase falling through because they could not access bank statements.

Morgan questioned the notion that the IT problems were mostly fixed, saying customers had been put in an “impossible financial situation”.

The accountancy firm Deloitte is advising on the bank’s compensation strategy, while TSB has recruited IBM to fix the IT problem and the City law firm Slaughter and May to investigate the cause.