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The Leumi Group has launched a new digital platform, named Pepper, that allows customers to manage all of their banking activities entirely via mobile and with no account fees: from on-boarding to performing common banking transactions, including ordering credit cards and checks, transferring money, taking out loans, managing savings deposits, and more.
Pepper is based on artificial intelligence technology that helps customers better manage their finances and make the most of their money. The technology allows Pepper to get to know its users, customize relevant content, and offer a personalized banking experience that differs from person to person.
Its user experience provides customized content that includes personal consumer tips and insights, real-time updates on expenses, summary and analysis of expenses on a daily/weekly/monthly basis, comparisons with peers, instant alerts for duplicate charges, relevant news articles and live updates all in a simple, friendly interface. The app also offers live customer service by professional bankers available around the clock (24/7) via video chat, online messaging, or phone.
Pepper’s online on-boarding process takes only eight minutes and can be done from anywhere and at any time convenient to the customer. Following this brief process, customers will receive an update on their account and credit facilities directly to their mobile phone. Once registered, customers can order a credit card and check books free of charge.
Pepper is currently available to domestic customers in Israel. It joins the free mobile payment app “Pepper Pay” which was released to app stores several months ago. Pepper Pay allows customers of all Israeli banks to transfer money to any beneficiary from their mobile phone contact list, in a quick and friendly manner – with no fees.
Towards the end of 2017, Leumi will also launch the “Pepper Invest” mobile app, which will enable trading in securities.
BNY Mellon, has appointed Bridget E. Engle as senior executive vice president and chief information officer reporting directly to CEO Gerald Hassell.
In this position, Engle will lead the company’s Client Technology Solutions group, which provides critical technology platforms and applications. She will be responsible for setting the strategic direction and execution of the firm’s technology agenda. This includes advancing the firm’s NEXEN digital investment platform, investing in and integrating the bank’s applications, accelerating its digital and agile development efforts, and attracting and developing top IT talent.
Engle has more than 30 years of experience at AT&T, Lehman Brothers, Barclays Capital, DTCC and Bank of America.
Engle’s prior roles at Bank of America include the consumer bank’s chief technology officer, chief information officer of consumer technology and operations, and, most recently, chief information officer of Bank of America’s Global Banking and Markets businesses.
She was listed in Crain’s 100 Most Influential Women in New York and named one of Forbes technology Top Power Women
Pendo Systems has announced that Ruth Wandhöfer, global head of regulatory and market strategy at Citi, has joined its board. Wandhöfer is a banking regulatory expert and one of the foremost authorities on transaction banking regulatory matters, said Pamela Pecs Cytron, CEO of Pendo.
“Her reputation has been built around her ability to drive regulatory and industry dialogue while developing product and market strategies that integrate with an evolving regulatory and innovation landscape.”
“Pendo first came to my attention when I attended [SWIFT’s] Innotribe in 2015. Back then, I was impressed with both their approach to the market, as well as their innovative technology platform. I’m even more impressed that in two short years they’ve grown in leaps and bounds and have now been adopted by 25% of the systemically important financial institutions (SIFI’s),”Wandhöfer said.
Wandhöfer is active in several European regulatory bodies. She chairs the European Banking Federation Payments Regulatory Expert Group, the European Payments Council Payment Security Group and the Global Public Policy and Regulatory Affairs Committee of BAFT. She is also a board member of the EPC and the EBA Association, a member of the European Commission Payment Systems Market Expert Group (PSMEG), a member of the European Biometrics Advisory Council and of the UK Payment Systems Regulator Strategy Forum.
In her spare time, she mentors FinTech start-ups in London and the U.S., while pursuing a Ph.D. in blockchain/distributed ledger technology in relation to financial market infrastructures. She is also a founding member of the Global Blockchain Business Alliance and a Fintech Fellow of the Centre for Global Finance and Technology at the Imperial College Business School London and a fellow lecturer at Queen Mary London School of Law.
She was named as one of 2010’s Rising Stars by Financial News and named in Management Today’s 2011 35 Women under 35 list of women to watch.
Attribute it to Swedish mistrust of credit cards and internet commerce, combined with the Nordics’ rapid adoption of mobile whose small screens do not make entering credit card details easy.
Swedish shoppers didn’t like using their credit cards online, and they wanted to see that a store sent the right color and proper size before they paid. So Klarna let them buy and choose to pay in 14 days; all they need to do is enter their name, birthday and address. Of course it helped that in Sweden that was enough information to get a person’s income and so Klarna could run risk assessment. The company pays the merchant immediately, regardless of how the sale goes, and then collects from the buyer. The buyer can decide to pay with a credit card, direct bank transfer or use credit from Klarna. which lets buyers pay over 6 to 12 months.
Now it is expanding into the U.S.
“Klarna increases the average order value by 30% to 60%, said Stefan Weitz, Chief Product and Strategy Officer at Radial which provides its own payment guarantees and also offers comprehensive warehouse and shipping services for internet commerce.
“Consumers will buy more if they can pay over time.”
Small and mid-size merchants and let Klarna handle their whole checkout experience, something attractive to apparel and shoe sellers who are getting hit with chargebacks For a large enterprise which wants a fully customized site and has chargebacks under control Klarna can offer its delayed payments service — Try before you Buy, said Brian Billingsley, Klarna’s CEO for North America.
“We let consumers, after they have entered their shipping details, buy and have it shipped before they have to give any payment credentials.” That has great attraction for fashion, shoes and apparel where shoppers often buy more than one of an item, try it on and send back what they don’t want. It’s also popular with debit card users because the money doesn’t come out of their account until they decide what to buy; they don’t have to wait days for a refund after they return some items.
The company uses behavioral tools, geolocation, data, time of day and even keystrokes to decide what to offer buyers while making it as simple as possible for them.
With the user’s email and zip code it can quickly determine if it has seen the buyer on another shopping site and pre-fill her information and show what options are available. Entries that are typed in all letters raise or are entered at 3 a.m. may indicated higher risk, said Klarna co-founder Niklas Adalberth in an interview printed in Chris Skinner’s recent book Value Web. Someone ordering Champagne is a better risk than someone buying beer, he added.
Billingsley said Klarna has kept U.S. losses lower than the company’s plan as it builds up customer data and its risk experience.
“In Sweden or Germany we leverage our own credit bureaus. In the Nordics we have seen almost every consumer of legal age, so we are quite confident in our own data sets. In Sweden we see about 70% of the people who shop online we can identify so they don’t have to enter bill, ship-to or payment data. We make it almost Amazon [at any store].”
Credit data is very specific by market, he added, and the company collects SKU level data on every transaction.
“An iPad will be high risk in any market; some shoe brands are higher risk than others.”
Each market has its own rules on data, data privacy, know your customer (KYC) and in the U.S. on multiple types of discrimination.
“Merchants come to us and we can issue credit in nine markets; no one else can do that,” he explained. “We comply with each market. Our merchants who leverage that most are global merchants, where U.S. companies are selling to Europe or Asia, or Asians selling to the U.S., they can take advantage of us and use credit or local payment methods.”
It used to be that merchants had to achieve a certain size before they tackled cross-border sales, but no longer.
“Now they expect that as soon as they get a web site they should be able to sell to the world. No merchant in the UK that doesn’t sell to surrounding countries.. In ecommerce, you have to sell globally to be competitive. Only a few things are holding small firms back — customs, tax and shipping, and there are companies that can help with those.
Klarna has seen merchants sharply increase their percentage of completed sales, rather than abandoned shopping baskets, he said. The desktop payment experience is not a good fit for mobile.
“You have to type so many fields with your thumbs.”
Finance executives are taking risk personally, and they are turning away from some business opportunities they think are too risky, according to Thomson Reuters Regulatory Intelligence’s fourth annual global Conduct Risk survey.
It found that nearly a third (29%) of financial executives say their firms have declined potentially profitable business opportunities due to culture and/or conduct risk concerns, compared with 37% of respondents at global systemically important financial institutions (G-SIFIs). The G-SIFIs are ahead in most culture/conduct categories because they have been working at it longer, the report suggests.
Concern by financial executives about the risks of personal liability appears to be affecting the strategic business decisions they make, concluded the Thomson Reuters survey report. It suggested that increased actions by regulators worldwide are beginning to change behaviors of decision makers at banks, brokerage and asset management firms and insurance companies.
“The frank concerns and views shared by participants reinforce challenges their peers face in all financial services sectors,” said Stacey English, head of regulatory intelligence at Thomson Reuters and a co-author of the report. “Neither culture nor conduct risk are new concepts but this year’s survey emphasizes how both remain at the top of firms’ and regulator priorities, directly impacting strategy as they face greater prospects of personal liability.”
The biggest firms have been working on conduct and culture for a long time, said English. Progress appears mixed in the survey partly because cultural conduct is difficult to define and implement — it is very qualitative.
“Regulators have never defined it and they won’t define it,” she said.
The report said that: “There seems to be a widespread regulatory recognition that, while cultural change is the overriding objective of financial regulation, it cannot be changed by regulatory fiat…Regulators have chosen not to define the term ‘conduct risk’, preferring instead that firms should do so in a way that is meaningful to their businesses.”
Most executives (87%) at G-SIFIs agreed that continued focus on culture and conduct risk will increase personal liability, compared with 73% at other firms. The disparity is potentially the result of a lack of consistent definition for culture and conduct risk.
Once again, respondents ranked culture, ethics and integrity (59%) as their top three concerns of conduct risk, followed by corporate governance and tone from the top (52%), and conflicts of interest (49%).
The biggest challenge for financial institutions, English added, is the pace of regulatory change — a four-fold increase in the last four years, plus political uncertainty with Brexit and the election of President Donald Trump.
Financial institutions need compliance monitoring, internal monitoring, complaints analysis and awareness of what their customers and staff are saying. In a field as difficult to define as conduct and culture, it’s probably inevitable that a report based on a survey will seem a bit nebulous.
For example, the report includes selections from some annual reports.
Wells Fargo, 2015: “Our risk culture also seeks to foster an environment that encourages and promotes robust communication and cooperation among the Company’s three lines of defense.”
Statements of values are not enough
John Stumpf, chairman and CEO at Wells, resigned in October over a long-running bank practice of opening accounts for people without their permission. The board required him to forfeit $41 million in unvested equity. Oh well, so much for risk culture.
Barclays, 2015: Conduct risk: Detriment through inappropriate judgment in execution of business activities. Its CEO, Jes Staley, is facing disciplinary action for trying to discover the identity of a whistleblower, twice.
The survey said that responsibility for compliance has shifted from the board to compliance teams at many firms. The compliance teams own the policy and implementation, but at the same time responsibility has to be at the very top, the report concludes.
“Culture in particular has become the holy grail this year as regulators recognize that all good things, in behavioral terms, flow from getting culture right,” according to the report.
ING, the Dutch bank that had to withdraw from retail banking in several foreign markets during the financial crisis, is re-entering the UK retail market with an app called Yolt which lets users manage their finances with different banks for different financial services in one place.
The app integrates the users’ bank accounts (including savings and credit card accounts) in one mobile dashboard. It also lets them know how many days are left until pay day, predicts their bank balance based on their direct debits and points out any significant changes in their spending patterns. The functionality is similar to what Simple and Moven offer, although they provide the service for a single bank account.
The app was developed in-house by ING’s Innovation Office in Amsterdam.
“We built the aggregator in the way that people think about money; how long is it before their pay date; how much are they spending and what is the risk of their going overdrawn,” said Ignacio Vilar, ING’s chief innovation officer.
Since January, the team has tested, designed and validated the proposition with UK consumers and a large group of wholesale banking colleagues. The official launch is expected next year under a separate brand ‘Yolt’, endorsed by ING. It will become available on iOS and Android in the coming months.
“We believe we have to reinvent the way we are providing customer service; this is where becoming a platform and the place to go is core to our strategy,” said Vilar.
In last week’s strategy update to analysts and investors, CEO Ralph Hamers stressed the Banks’ ambition to continue to be a leader in digital banking, offering a better customer experience by moving to open platforms and new ecosystems.
The current issue of Fortune (September 15, 2016) has a list of the fastest growing companies in the world, and 28 are banks and other financial institutions.
Okay, Facebook is on the list too, at Number 3.
The opening note says “The behemoth banks have sometimes been vilified by protesters or scorned by politicians.” [Obviously written before the long-running Wells Fargo abusive behavior finally gained national attention.] “But here’s a different kind of responses, as customer-focused competitors rise up. Such rejuvenation is crucial for the economy…”
The list includes Bear State Financial, Banc of California and CU Bancorp which has a tight focus on Los Angeles and Orange County. Many of the banks are laser-focused on a small community for both deposits from, and lending to, locals firms and individuals.
The list also include the Intercontinental Exchange (ICE) which bought the New York Stock Exchange, which ranks just below Simmons First National Bank of Pine Bluff, Ark but above Bank of the Ozarks, in Little Rock.
It’s an intriguing list that suggests the usual focus on high tech finance may be missing some alternative business models and profit opportunities.
A new analysis of technology trends from Capita Technology Solutions and Cisco reveals a strong disconnect between nine key trends, including the Internet of Things and big data, and the ability of businesses to implement the technology to realize those trends.
Among the key findings is a disconnect between the apparent relevance of a trend compared with the number of decision makers who say their industry has the skills to implement it.
For example, while 70 per cent of IT decision makers said the Internet of Things (IoT) was relevant to their business, almost three quarters (71 per cent) said they did not have the skills to identify the opportunities for growth offered by IoT, while 80 per cent they did not have the skills to capitalize on the data received from IoT. Just 30 per cent said it was being implemented.
Similarly, nine in 10 businesses said big data was relevant to their business, but it was being implemented in fewer than four in 10 businesses (39 per cent) and 64 per cent did not have the skills to recognize how they could use big data within their business.
The report identified several key barriers to implementation of IoT, the most prevalent being the perceived risk of security breaches, issues surrounding data governance and overcoming problems created by adapting legacy IT systems.
Legacy IT infrastructure was the top barrier to the implementation of big data, along with data governance issues and cost.
Adam Jarvis, managing director, Capita Technology Solutions, said: “It’s clear that there are several important, technology-led trends which have the capacity to transform the way business is done,” said Adam Jarvis, managing director, Capita Technology Solutions.
“While it is encouraging that levels of awareness around the strategic benefits of those trends are high, these results suggest more needs to be done to support businesses and help them close what is a substantial skills gap.
“Without the necessary skills and infrastructure needed to implement trends such as IoT and big data, businesses across the board will suffer long-term competitive disadvantage; it is up to us as an industry to find the best and right ways to deliver that support,” he added.