Gerry Gibney

Gerry Gibney
Gerry is Senior Industry Strategist for the financial services industry, with over 25 years' experience in banking and investment management. Before OpenText, he worked at Fiserv Investment Services Group and Microsoft. He is a Certified Financial Planner (CFP).

Crashing the ‘Gentleman’s Club’ GDPR in Financial Services

GDPR in Financial Services

The EU’s General Data Protection Regulation (GDPR) comes into force on May 28, 2018. Any organization whose customers include EU citizens will be affected. GDPR is the most far reaching data protection legislation so far created and is set to impose new levels of rigor of business process and data management capabilities within Financial Services firms. PWC recently described the approach of many firms to data transfers as a ‘gentleman’s club’ of informal agreements. This is only one area of Financial Services where GDPR will dramatically change business operations. GDPR gives EU residents unprecedented control over their personal data – and personal data is defined so widely it includes web behaviors and cookies and anyone can request this information from any organizations with which they interact. A quick look at the insurance industry with its historic under-investment in systems highlights the challenge where firms don’t really know what data they hold, where it resides and how they’re currently using it. I don’t want to go into the details of GDPR legislation – you can access some great resources here, but I will take a brief look here at some important implications for Financial Services. Consent and transparency The issue of customer consent is perhaps the hottest GDPR topic for Financial Services. Consent, as defined by GDPR, must be ‘freely given, specific, informed and unambiguous’ (GDPR para 32) and often ‘explicit’. Your customer must know why they are giving consent, what they are consenting to and that they have given consent. You can no longer gain consent for one thing and then use the data for a range of other applications. Each data use will need an individual consent. There is still some discussion whether ‘implied consent‘ or ‘legitimate interest‘ can still be used to defend the use of personal data. It is safer to use the GDPR approach to ensure that you are compliant and not caught up with details in constant litigation. Transparency becomes key when dealing with customers to ensure that you can defend consent that is ‘informed and unambiguous’. Financial Services firms will need to re-visit their customer-facing contracts. Your contract terms must be plain and understandable. If a regulator can suggest that the contract imposes too high a degree of technical knowledge, it is unlikely that they will agree consent was given under GDPR. Data Transfers and data supply chain Although consent is gaining the attention, data transfers must be an area of major concern for Financial Services. Modern organizations have established what can be described a data supply chain and you will now need visibility and control of how third parties – clients, suppliers, brokers and partners – use personal data of your customers. Where data transfers are necessary, you must manage the risks inherent in these transfers and ensure that your customer’s details are properly protected by these third parties because, in many cases, you will be more responsible for their breaches than they are. New contract terms will need to be created to manage third party relationships to mitigate this risk. If we accept PWC’s description of data transfers as a ‘gentleman’s club’ then GDPR represents a good opportunity to reassess your Information Governance structures. The ability to control the acquisition, management, retention and disposal of all information – both structured and unstructured – across your business operations helps reduce risk. Sound information governance can facilitate compliance with GDPR and your other regulatory requirements. Data portability and the right to be forgotten EU residents will now have the right to receive all their personal data, that they have previously given, in a commonly used and machine-readable format. The key idea is to be able to switch service providers with ease. Even though Financial Services firms in many EU countries are already used to porting data between suppliers, the breadth of information – beyond demographic and account information – requires that all organizations will need to ensure they can bring all customer information together. The real reason for this approach comes under the right to data portability – an individual has the right to demand that every instance of information on them, held on every business application, portable device and communications system, back-up server and Cloud service that your company uses, to be transmitted to another data processor “without hindrance”. The ‘Right to be Forgotten’ means that the data subject can also ask for you to remove all the personal data that you hold on them. If you cannot justify holding the data then it has to be deleted. This is likely to impose a new normal. The current approach for most Financial Services firms is to hoard data to exploit its value across customer experience and business operations. Now firms will have to hold as little information as possible, for as short a period as possible and delete the information as soon as possible. Big data and ‘profiling’ This raises the question whether GDPR signals the end of Big Data. There is little doubt GDPR imposes specific constraints on ‘profiling’ which it defines in GDPR Article 4(4) as ‘any form of automated processing of personal data … to analyze or predict aspects concerning that natural person’s performance at work, economic situation, health, personal preferences, interests, reliability, behavior, location or movements’ Leaving aside the growing use of predictive analytics to drive personalized customer services, many established business processes such as the insurance industries use of telematics in the underwriting process is potentially under threat. As customers continually show a demand for personalized service, Financial Service firms need to find a way to continue Big Data activities in a way that is GDPR compliant. The first approach will be around ‘explicit consent’ so that you have the right to use data for the specific purpose. However, another area to examine is the use of ‘anonymization’ and ‘pseudononymization’ of data as a means to retain personal data beyond its primary use for deployment in trending and locational analysis. If you haven’t started to properly prepare for GDPR then you may already be behind and opening yourself up to the danger of major fines. You’ll need to appoint a Data Protection Officer, establish a cross-functional team to access the full impact of GDPR across your organization and provide a comprehensive and honest audit of where you are today. You’ll also need to consider exactly how you are managing the data and content within your organization. The days of multiple instances and duplications of unmanaged customer information in various applications and databases is over. A centralized strategy for the management of enterprise information – underpinned by a flexible and scalable Enterprise Information Management (EIM) platform – is needed to ensure GDPR for large, global Financial Services organizations.

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Digital Transformation Just Can’t be Doing More of the Same

digital transformation

Einstein famously described insanity as repeatedly doing the same thing and expecting different results. Recent research from Gartner found that the Digital Transformation efforts of many Financial Services firms were, in effect, hoping that “doing ‘more of the same’ will equate to improved performance”. While this isn’t insanity, it’s not exactly transformational either. There has been a great deal of investment throughout the Financial Services industry to provide an omnichannel digital customer experience. But this  has yet to reap the expected benefits of Digital Transformation. Gallup has noted: “Although banks are offering more channels, they are not realizing desired outcomes such as reduced costs and higher customer engagement.” The principle reason for this is that, in many cases, banks have simply used digital technologies to underpin the business processes that were already in place. They have been able to make small efficiency improvements but nothing that is transformative. Recently, noted that digitization efforts had not really altered the core products and services offered by traditional banks. This is a statement that’s equally true in other areas of Financial Services such as Insurance – if not more so. Insurance remains 50-year-old business processes, information siloes and legacy systems that no longer meet business needs. Any organization will struggle to build the extensible, collaborative and agile business structures in those circumstances. They inhibit financial services firms fully benefiting from Digital Transformation and from delivering excellent customer experience. McKinsey suggests that this requires a two-pronged approach – Digital and operational – with the first step being to move beyond the product and service departmental silos that have so long underpinned the Financial Services model. The consultancy recommends that the business should be aligned to the key customer journeys for the firm. This recognizes that a customer journey – such as opening an account or making a claim – encompasses a number of business functions, processes and IT systems. Customer-facing journeys for a bank according to McKinsey, can typically be divided into seven categories: signing up for a new account; setting up the account and getting it running; adding a new product or account; using the account; receiving and managing statements; making changes to accounts, and resolving problems. Similar journeys can be easily mapped for Insurance firms or Investment brokers. Digitization – both of customer experience and day-to-day operations – is one of the five ‘levers’ necessary to achieve the Digital Transformation required to a customer-centric model, according to McKinsey. It sits alongside lean process design, intelligent process automation, advanced analytics and business process outsourcing. While it’s undoubtedly true that all are necessary to maximize investment in Digital Transformation, trying to do everything at once is extremely risky. An early focus on digitization is my preferred approach for a number of reasons. First, it offers a number of operational and cost ‘quick wins’. Just replacing paper-based processes with digital ones increases productivity and efficiency while reducing the cost associated with manual processing and paper storage and management. Making content digital – especially when you can bring structured and unstructured data together – can significantly reduce risk and facilitate effective compliance. This may sound very much like ‘doing more of the same’ but it isn’t. I believe that digitization is the foundation upon which other McKinsey levels are built. It is difficult to imagine how you can apply advanced analytics and intelligent process automation unless you have full control of the data within your organization. Gartner suggests that digital maturity for Financial Services companies requires that CIOs focus their firm’s participation in an expanded ecosystem that includes customers, competitors, suppliers, regulators and stakeholders from other industries. This allows for better customer connection and engagement – as well as driving innovation – within the dynamic digital markets that all Financial Services firms are facing. It also requires a sound digital platform upon which to build these new connections and services. Let me give you an example. OpenText, SAP and Delaware Consulting have recently been working with an insurance company in Asia. The firm had over 800 different types of correspondence – which totaled over 50,000 separate documents that were all printed and mailed each day. The company realized that it could make huge cost and productivity improvements if it could replace its paper-based correspondence. That was only the start. The company set about using its digitization program to radically alter how it engaged with customers. It built a completely new level of experience for its customers based around a self-service portal that went much further than simply automating the exchange of document types. Customers can receive information, ask questions, upload documents and administer their accounts. Each customer now has a personalized portal that they can access any time, anywhere and through any device. Digitization has been a foundation for this insurance company to deliver true Digital Transformation. The firm implemented the OpenText™ Extended ECM (xECM) solution to create a centralized repository of all customer information. Its agents now have a single source of truth on every individual. They now have up-to-date, real-time information when dealing with customers. The program has given the firm the ability to take an enterprise-wide view of the systems and services it needs that can help target its operations towards the specific journey of each of the customers. Digital Transformation has to be built from the ground up. It starts with replacing paper-based processes but it must gone much further. Digitization is the platform to create the business innovation and customer engagement for success. In its 2017 CIO Agenda, Gartner found the banking CIOs lagged behind other industry leaders when it came to investing in Digitization. The company recommended that Financial Services firms should dedicate as much as 40% of their IT budgets to Digitization by 2018. We can be certain that consumer demand will continue to grow and competition will continue to accelerate through digital-only financial service providers. Perhaps Gartner’s estimate will yet prove to be too conservative.

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Beyond the Tipping Point: The Role of Digital in the Financial Services Customer Journey

financial services

Something very significant happened in late 2015. It happened quietly and I guess many people didn’t even notice. For the first time, there were more mobile-based transactions than from traditional bricks-and-mortar branches. The tipping point had been passed. More importantly, it was the customers and not Financial Services firms that determined when it happened. So if your customers are going to choose how and when to engage with you, you need to be able to offer services at each stage of the digital customer journey. The same trend towards new channel adoption is beginning to play out with mobile and online banking. In 2015, the amount of mobile transactions in retail banking grew by 54% compared with only 2% for online. We’re not yet at parity but we’re not far away. Atom Bank is an excellent example of what mobile-only Financial Services can look like. The success of the new branch-based model of Metro Bank in the UK, however, illustrates something that should be perfectly obvious: customers want to consume services the way that best suits them – often the way they are simply most comfortable with. Financial Services organizations – whether banks, insurance firms or investment houses – need to be aware of this fact. This thought occurred to me as I read a recent report entitled ‘The evolution of Financial Services’.  It mainly looks at the effect that Digital Transformation is having on what it calls “traditional, challenger or disruptor” Financial Services companies. It talks a lot about customer experience but, in the end, it actually focuses on the communication channels. But customers don’t really care about channel – that’s simply a means to an end – they care about simplicity, transparency, fairness and security. And, they expect that from their provider before they have even bought something through to the day they leave – and beyond. Financial Services companies have worked hard to create a single view of the customer – with varying degrees of success – now they need to create a single view of the digital customer journey.  Here are my 4 top tips to building excellent customer experience: The world’s gone digital. It just forgot to tell some important people! There is no doubt that mobile banking and insurance apps are changing the way that many people consume financial products. And the smartphone is the firm favorite of the Millennial. But Forbes has pointed out a small paradox. Although 80% of retail customer transactions were through self-service applications, more than half of US banking customers had visited their branch within the last six months. Incredibly, a lot of people still prefer their statements printed out and mailed to them. So omni-channel isn’t always a process of channel migration and Digital Transformation isn’t always about replacing paper documents with electronic equivalents. For most Financial Services companies, the requirement is for a flexible and agile infrastructure that allows a mix of channels from which customers can select. It requires a means of managing content so that digital data management is combined with traditional document and records management. In this way, firms can deliver the experience customers expect. Simple, secure and satisfactory. The three S’s for Financial Services success It is always tempting to think we should always be looking to ‘surprise’ or ‘exceed expectations’ but customers seem to want something much more grounded. Within Financial Services, they want products that are simple and fair (no hidden fees or unnecessary jargon). More widely, customers simply want to be satisfied with their experience – which can be defined as you doing what you say you’re going to do – and that is also the best way to build loyalty. This is, of course, easier said than done.   I think that an Enterprise Information Management (EIM) platform to collate and coordinate all customer data and gives everyone – including your customer themselves – access to the right information whenever they need it. Personalization is most powerful when it moves beyond marketing Digital marketing has had a major impact in Financial Services. Organizations have begun to maximize the value of the data they have. It allows them to better understand and connect with customers. Being able to personalize and create marketing around their life events leads to much more targeted and successful campaigns. But, here’s an interesting thing: customers are happy to give you permission to use their data for personalized marketing purposes – although most don’t really want to. They do, however, actively want you to personalize their purchase and support experiences. This is something that requires a fresh approach to how Financial Services look at Big Data. There needs to be a move towards real-time data analytics without which one industry expert said: “data warehouses become white elephants that serve a very specific purpose“. It’s not the Channel. It’s the consistency that’s important Here’s a popular myth: People hate contact centers. No, they don’t. What they hate is the poor experience that pretty much everyone has had when dealing with a contact center. If your experiences had been nothing but great then I bet you’d love contact centers. So if you can provide an excellent customer experience – and ensure that it’s consistently great regardless on which channel your customer uses – then the idea of the traditional customer service scenario – Press 1 to descend into a deeper layer of hell – can be consigned to history. Customer Communications Management provides a solid foundation for delivering consistent, targeted and personalized communication whichever channel or channels your customer prefers. Gartner has suggested that 89% of companies will compete mainly on the quality of the customer experience they provide. There’s no doubt that digital is transforming the business processes of Financial Service firms and how they engage with their customers. But successful companies will be the ones that understand that excellent experience is based around customer preference. You’re going to need to know what customers want as they move along their buying journey. Additionally you must deliver the personalized experience that appeals to each of your individual customers – not just the ones that like exciting new technologies!

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Banking Technology Trends: Overcoming Process Hurdles

Financial analytics

Editor’s Note: This is the second half of a wide-ranging interview with OpenText Senior Industry Strategist Gerry Gibney on the state of the global financial services industry and its technical needs.  The interview has been edited for length and continuity. Unifying Information for Financial Reporting I heard a lot of discussion at the SIBOS 2016 conference in Geneva around financial reporting. Banks face procedural hurdles, especially if they’re doing merchant or commercial banking.  A lot of them still have manual processes. In terms of the procedures, the bigger the bank, the bigger the problem. That’s because the information is often in many places. For example, different groups from the bank may approach their corporate banking customers to buy or use a service or product – which is great, but they have to track and report on it. Often in the beginning, these separate group reporting processes are manual. Eventually, they’ want to automate the reporting and join the information to other data sources, but that’s the big challenge – it takes time to assemble and coordinate all the information streams and get them to work as an internal dashboard.  A similar challenge is creating portals to track financial liquidity. Another example is where clients ask for specific reports. The bank don’t want to say no, so they have to produce the reports manually, often as a rush job, and in a format that the client finds useful. The challenge is to take large amounts of data and summarize so you can give people what they ask for with the periodicity, the look, and the format that they want. Embedded Visualizations for our Customers’ Customers That’s where we come in. A lot of the value we offer with OpenText Analytics is embedding our analytic and visualization applications in a client’s own application so that they can offer dashboards, windows, reporting and so forth, to their own internal or external customers. The beauty of our embeddable business intelligence or analytics piece is that no one on the business side has to see it or work with it. It offers functionality that can be applied as needed, without having to make IT adjustments on your part or requiring people to enter data into bulky third-party programs. Tremendous capabilities are suddenly just there. Users can build a data map that automatically gathers and manages data, then organizes and reports it – in any format required, whether visual via charts and graphs, or numeric, if you prefer. Plus, it has powerful drill-down ability. Flexibility to Cope with Regulatory Shifts The other aspect of reporting is reporting to regulatory agencies. After the Great Recession and the banking crisis, governments worldwide have been stepping up their efforts in regulating the financial industry. Not just nations – local governments also. In fact, the fastest-growing department in every bank now is regulatory compliance. There are ever-increasing workloads, more workflow but without more people to deal with it. The problem for the U.S. government is that it presents a moving target. Dodd-Frank controls and the Volcker Rule, required banks to end proprietary trading. There is potentially a new level of risk from government changes in requirements and the need for banks to produce new reports, even sometimes on things that they weren’t aware they needed to report on. Banks and other financial institutions need a reporting solution that enables quick and easy production of whatever information government regulators are asking for.  An ideal reporting solution will maximize the flexibility in how you can look across both unstructured data and all the structured data in multiple silos. This is a good use case for ad hoc analytics and reporting – the power to create new types of reports whatever regulators may require. Financial Analytics: Understanding Your Customer Another analytics-related topic I heard at SIBOS was the need to understand customers better and how to identify a good target customer. This is top-of-mind for banks. I’m amazed that people gather streams of data in their CRM systems and then don’t use it. Often their CRM systems are stand-alone, not connected to anything. They might contain information that’s extremely valuable and could enhance their efforts. For example, sales efforts, proposals, and pitch books. They could tie these things together, and then analyze their findings to correlate sales resources to the results. With a unified analytics flow, you can drive business by managing client relationships, figuring out through advanced analytics who is the best candidate for up-selling or cross-selling, as well as identifying new customers. Finding new insights by searching all these CRM systems is a tremendous value that analytics, especially embeddable analytics from OpenText, can deliver. Analytics can have tremendous amount of value to business operations and make them more efficient, productive, and profitable. You can’t ask more than that. To learn more about how OpenText Analytics can help the financial services industry unlock the business value of existing data, consider our Webinar, “Extracting Value from Your Data with Embedded Analytics,” Wednesday, Dec. 14, at 11 a.m. Pacific Time/2 p.m. Eastern.  Click here for more information and to register.

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Banking Trends from SIBOS: Technology Solutions to Tame Rampaging Workflows

banking trends from SIBOS

Editor’s Note: Gerry Gibney, Senior Industry Strategist at OpenText and resident expert on the financial services industry, was recently interviewed on the banking trends and technical needs he discovered at SIBOS (the annual trade show hosted by SWIFT, provider of global secure financial messaging services).  I always come back from SIBOS having learned new things, it’s one of the largest banking events in the world and this year, one of the big topics was domestic payments. Many people aren’t aware that for large banks, corporate internet banking payments represent around 24% of their revenue. They benefit from payment money while it is in their hands and they can charge fees for the payment services. It’s a big market because payments have to be made, whether regular payments such as rent and utilities on buildings or one-time money transfers. And they add up. For bigger banks, we’re talking several hundred million dollars each. Of course, they would prefer to keep that balance in their bank or extract it over time. I see a big role for OpenText here. Our BPM solution can be deployed to help with business networks, so banks can manage the workflow, the processes, and the controls. Managing the controls is important because with the SWIFT processes (payments and messaging), issues include: Who is authorized to send the money? Who else can do it? Who else can approve it? What if that person leaves? How do we add them into the system or remove them? Automating Banking Workflow Our own experience at OpenText is typical. Every year, our company  goes through the payment permissions updating process. What do we need to know? What do we need to get? How do we get it? Where do we apply it? How many accounts are responsive? Doing business in, say, Hong Kong, Shanghai, or Japan, we may have 10 or 20 people with different signatory levels, each needing to sign an eight page statement. Eight pages times 10 people, every year, for every account – that’s 80 pages per account every year, and that’s typical of many companies. A company might well have several hundred accounts with just one bank, and this has to be managed every year, with ever changing rules, like regulators now requiring the CFO’s home address for example. Another workflow example is client onboarding, which has to be done every time. Even if the customer has 200 accounts and they want to add number 201, you still have to go through the onboarding process. So all the information is out there in different places, who knows how well protected it all is? OpenText’s security capabilities, our ability to add workflow, control workflow, minimize, and automate it, adds a lot of value. OpenText is also a SWIFT service bureau. We help with payments reporting, via EDI and our Business Network, to enhance what banks do. We help banking in many areas, across all our solutions – for example, with analytics, on the content side for unstructured data, or helping with records management, which is strong on compliance. With embeddable analytics we can gather all sorts of information, whether it’s for bank employees internally or their clients and customers. This information can be transformed into reports, perform sophisticated analysis, and help companies find new ways to get revenue from it. It can also help to track things more efficiently, comply with government regulations more easily, and improve bottom line without increasing operating costs. In summary, it can be a tremendously powerful component of a bank’s overall offering. The second half of this interview will be published next week.

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Fintech at SIBOS: From Everyday Banking to Science Fiction


In late September, we were at SIBOS 2016, the annual trade show hosted by SWIFT. It’s a major showcase for innovative financial technology (“Fintech”), featuring the latest news and analysis about banking and electronic payments. Over 8,500 people attended this year, with Eurasian, Middle Eastern, African, and Chinese banks showing a stronger presence than in the past. The show was in Geneva, and we were struck by the contrast between the timeless beauty of the Alpine setting (snow-covered Mont Blanc looming over the skyline, Lac Leman at the foot of our hotel, and our daily commute passing vineyards) and the dynamic, even futuristic, requirements of the financial industry in the 21st century discussed at the conference. SIBOS has been morphing as SWIFT seeks out new directions. It offers a showcase for Fintech through its Innotribe program, continues to develop electronic communications standards for a wide range of uses, and this year was focusing more on cyber-security (after hackers exploited a SWIFT weakness to steal $81 million from the central bank of Bangladesh’s account at the Federal Reserve) to defend the SWIFT electronic transaction platform. We also heard a lot of buzz about new Fintech developments such as cybersecurity and artificial intelligence (e.g. creating algorithms that could manage simple investment portfolios as well as most human advisors). Blockchain: From cyberpunk to competitive advantage Of all these new technologies, blockchain was a key discussion at SIBOS. The conference was full of questions about blockchain: How does it work?, what does it mean for us?, how will payments be affected?, who is working with it?, and what are the real security issues? “Blockchain” is a type of distributed, online database that keeps a permanent, tamper-proof record of financial transactions. It was created to settle trades in Bitcoin, the virtual currency, and has since become popular for deals in “real” currencies because all parties can track the transaction securely, with no need for third-party verification. SWIFT is interested in blockchain technology even though – or maybe because – it could pose strong competition to SWIFT’s own secure payments service, which can take days or weeks to settle a complex transaction. Fintech competitors using blockchain are forecasting that they will be able to cut transaction time down to near-zero. “Let’s get it done” However, what interested us most about SIBOS 2016 is that despite all that buzz, there was still a core of business as usual – practical, “let’s get it done” business. The banks still face the same issues: “How do we do this payments business faster, cheaper, and take better advantage of the relationships it creates?” For example, client onboarding continues to be a challenge for many banks, and we provide a lot of value in this area. We had many discussions about how OpenText helps banks to improve their overall compliance, get to revenue sooner, and achieve higher customer satisfaction rates. We also had conversations about the wealth of data that banks have and how they can enable better use of it, for both themselves and their customers. While they may be experimenting with new technologies driven by the Fintech boom, the practical business in the next cycle will be in establishing value from the networks and relationships already in place. OpenText’s role in the new Fintech world Naturally we feel OpenText has a role to play here. To start with, OpenText™ Analytics solutions help financial companies extract more value from their information by liberating it from the many separate silos it’s often housed in and integrating these various streams of information into a complete, accurate picture of investment performance, customer satisfaction, user experience, or response to various marketing incentives. Our message attracted a lot of interest at SIBOS, where we had great meetings with clients and prospects. One of the highlights was our Oktoberfest party co-sponsored with SAP, It was a great success with more than 260 people attending. Next year, SIBOS will take place in Toronto, Canada’s financial capital – not far from our corporate headquarters in Waterloo.  Who knows what strides the Fintech world will have taken by then?

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