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Carbon Neutral and Net Zero: The New Disrupter-in-Chief

Source: Finance Derivative

Authored by Jason Matteson, Director of Product Strategy, Iceotope

When we think of market disruptors we typically think of a ride-sharing service like Uber or streaming services like Netflix or Amazon for just about everything else. The term “market disruptor” isn’t limited to products or services but can also include people and ideas. Sometimes it can even be a societal change that forces companies and organizations to reassess how they do business. The climate crisis is creating one such disruption.

Jason Matteson

Across the financial services industry, global banks and other financial institutions are announcing carbon neutral and net zero initiatives. In simple terms, carbon neutral is the balancing of carbon emissions, i.e. any carbon that is produced is balanced by the carbon that is removed, while net zero is ensuring that no carbon was emitted from the beginning of the process, full stop. All of the Big Six US banks have announced a variation of carbon neutral and net zero plans in the last 18 months. In addition, the UN-backed Net Zero Banking Alliance was created in 2021. It brings together more than 100 banks from 40 countries to align their lending and investment portfolios with net-zero emissions by 2050. The banks agree to set targets that “identify carbon reductions across priority economic sectors“.

The challenge comes in how to make those targets a reality. One place for financial institutions to begin is in their data center. For any organization looking to meet 2030 carbon neutral targets, decisions being made about data center infrastructure today will have a direct impact on the ability to meet those targets at the end of the decade. Servers, storage devices, network systems, etc. typically have a three to five year life cycle. Primarily this is to reduce risk and improve performance, but very quickly, the need to meet carbon neutral requirements will come into play. By 2023, data center administrators are going to be trying to figure out what architectures will be required, how their data centers have to be modified to support the next generation, and which technologies will allow them to meet these sustainability goals and objectives.

The good news is there are solutions banks can incorporate today that will make a difference. One solution is precision immersion liquid cooling. Air cooling technologies have traditionally been the default standard for data centers. However, the limits to air cooling are quickly being reached and air cooling is emerging as a larger portion of a data center’s power consumption. Liquid cooling techniques circulate small volumes of a harmless dielectric compound across the surface of the server. This removes nearly 100% of the heat generated by the electronic components. It also eliminates the requirement for server fans and air-cooling infrastructure. As a result, liquid cooling has the ability to reduce infrastructure energy use by 40%, water consumption by 90% and improve pPUE to as low as 1.03.

What happens within the data center, is only one area of concern for financial institutions, however. The Greenhouse Gas (GHG) Protocol is a widely used international accounting tool that divides an organization’s emissions into three different scopes. Scope 1 is direct emissions from owned or controlled sources or what the company produces themselves. Scope 2 is indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting company. Scope 3 is all other indirect emissions that occur in a company’s value chain. According to Fortune magazine Scope 3 presents the biggest challenge for the financial services industry. “For banks, the most crucial aspect of reaching ‘net zero’ isn’t achieving carbon neutrality in their own operations, known as Scope 1 and Scope 2 emissions, but rather ensuring the businesses they finance are carbon neutral too.” The upside is that we are likely to see real, long-term changes occur once investments get tied to these emissions targets.

In some regards, we may be on the cusp of a perfect storm. Carbon neutral and net zero are driving the push towards more sustainable infrastructure. New rules and regulations are likely to be introduced by governments around the world to give these initiatives further weight. Financial applications, like risk compliance and fraud detection, are pushing the limits of existing technologies and intersecting with these initiatives, opening the door even further for new alternatives, like liquid cooling. All of this requires bold leadership and now is the time for new approaches and new results.

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Business

Why email marketing remains one of the best forms of digital marketing

Crafting a strong email marketing strategy involves a real balance between creativity and making data-driven decisions, which, is just one of the roles undertaken by marketing and data company Go Live Data on behalf of its many clients.

Guiding some of the biggest corporates in the UK including Amazon Business, AxA and Premierline Business Insurance, Adam Herbert, CEO of Go Live Data, advises on the key components to a successful email campaign and why as one of the most effective marketing tools available, email still plays a crucial role in digital marketing:

Forming a direct means of communication, emails provides a and two-way access between businesses and their customers. And it may sound obvious to say, but unlike social media or other digital channels, every email allows marketers to reach their audience straight into their inbox, and this is where individuals are most likely to engage with the content they’re being shown.

Offering a high return on investment,  emails consistently deliver one of the highest ROI’s compared to other forms of digital marketing such as PPC and advertising. According to studies, the average is around £40 for every £1 spent, which is huge; and due to the low cost of email, its ability to drive conversions and to retain customers.

What’s more, with email segmentation and many personalisation techniques available, marketers can tailor their messages to specific groups of their audience, based on demographics, their behaviours, interests, and purchase history making them not only very targeted, but personalised too. The key is to deliver relevant content to subscribers, which means marketers can increase engagement, conversions, as well as customer satisfaction.

There are specific platforms which allow for automation, giving marketers the ability to set up automated workflows triggered by user actions and also means that marketers can deliver timely and relevant messages at scale, by nurturing leads, as an effective way to guide customers efficiently through the sales funnel.

Emails are also an excellent way to build customer relationships, by nurturing over time. By consistently delivering valuable content, exclusive offers, and personalised recommendations, businesses can strengthen the ‘bond’ with their audiences and increase brand loyalty. Email provides a means of two-way communication, which allows customers to send in their feedback, to ask any questions they may have and to  engage with a brand directly.

They are also a great way to drive traffic to your website, blog and social media, or any other digital channels connected to your business. By including attractive or compelling calls-to-action (CTAs) and relevant content, you can encourage subscribers to take action such as making a purchase, signing up for a webinar, or downloading a resource, which in turn will drive conversions and revenue for your business.

Email platforms offer substantial analytics and reporting functions that enable marketers to track the performance of their campaigns in real-time. Monitoring of key metrics such as open rates, click-through rates, conversion rates, and revenue generated, allows marketers to measure the effectiveness of their campaigns and of course make data-driven decisions to optimise and plan future activities.

Overall, emails are an integral component of a digital marketing and by leveraging email effectively, businesses can engage their audience, nurture leads, drive sales, and ultimately grow their businesses.

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Business

Conflicting with compliance: How the finance sector is struggling to implement GenAI

By James Sherlow, Systems Engineering Director, EMEA, for Cequence Security

GenerativeAI has multiple applications in the finance sector from product development to customer relations to marketing and sales. In fact, McKinsey estimates that GenAI has the potential to improve operating profits in the finance sector by between 9-15% and in the banking sector, productivity gains could be between 3-5% of annual revenues. It suggests AI tools could be used to boost customer liaison with AI integrated through APIs to give real-time recommendations either autonomously or via CSRs, to inform decision making and expedite day-to-day tasks for employees, and to decrease risk by monitoring for fraud or elevated instances of risk.

However, McKinsey also warns of inhibitors to adoption in the sector. These include the level of regulation applicable to different processes, which is fairly low with respect to customer relations but high for credit risk scoring, for example, and the data used, some of is in the public domain but some of which comprises personally identifiable information (PII) which is highly sensitive. If these issues can be overcome, the analyst estimates GenAI could more than double the application of expertise to decision making, planning and creative tasks from 25% without to 56%.

Hamstrung by regulations

Clearly the business use cases are there but unlike other sectors, finance is currently being hamstrung by regulations that have yet to catch up with the AI revolution. Unlike in the EU which approved the AI Act in March, the UK has no plans to regulate the technology. Instead, it intends to promote guidelines. The UK Financial Authorities comprising the Bank of England, PRA, and FCA have been canvassing the market on what these should look like since October 2022, publishing the results (FS2/23 – AI and Machine Learning) a year later which showed a strong demand for harmonisation with the likes of the AI Act as well as NIST’s AI Risk Management Framework.

Right now, this means financial providers find themselves in regulatory limbo. If we look at cyber security, for instance, firms are being presented with GenAI-enabled solutions that can assist them with incident detection and response but they’re not able to utilise that functionality because it contravenes compliance requirements. Decision-making processes are a key example as these must be made by a human, tracked and audited and, while the decision-making capabilities of GenAI may be on a par, accountability in remains a grey area. Consequently, many firms are erring on the side of caution and are choosing to deactivate AI functionality within their security solutions.

In fact, a recent EY report found one in five financial services leaders did not think their organisation was well-positioned to take advantage of the potential benefits. Much will depend on how easily the technology can be integrated into existing frameworks, although the GenAI and the Banking on AI: Financial Services Harnesses Generative AI for Security and Service report cautions this may take three to five years. That’s a long time in the world of GenAI, which has already come a long way since it burst on to the market 18 months ago.

Malicious AI

The danger is that while the sector drags its heels, threat actors will show no such qualms and will be quick to capitalise on the technology to launch attacks. FS2/23 makes the point that GenAI could see an increase in money laundering and fraud through the use of deep fakes, for instance, and sophisticated phishing campaigns. We’re still in the learning phase but as the months tick by the expectation is that we can expect to see high-volume self-learning attacks by the end of the year. These will be on an unprecedented scale because GenAI will lower the technological barrier to entry, enabling new threat actors to enter the fray.

Simply blocking attacks will no longer be a sufficient form of defence because GenAI will quickly regroup or pivot the attack automatically without the need to employ additional resource. If we look at how APIs, which are intrinsic to customer services and open banking for instance, are currently protected, the emphasis has been on detection and blocking but going forward we can expect deceptive response to play a far greater role. This frustrates and exhausts the resources of the attacker, making the attacks cost-prohibitive to sustain.

So how should the sector look to embrace AI given the current state of regulatory flux? As with any digital transformation project, there needs to be oversight of how AI will be used within the business, with a working group tasked to develop an AI framework. In addition to NIST, there are a number of security standards that can help here such as ISO 22989, ISO 23053, ISO 23984 and ISO 42001 and the oversight framework set out in DORA (Digital Operational Resilience Act) for third party providers. The framework should encompass the tools the firm has with AI functionality, their possible application in terms of use cases, and the risks associated with these, as well as how it will mitigate any areas of high risk.

Taking a proactive approach makes far more sense than suspending the use of AI which effectively places firms at the mercy of adversaries who will be quick to take advantage of the technology. These are tumultuous times and we can certainly expect AI to rewrite the rulebook when it comes to attack and defence. But firms must get to grips with how they can integrate the technology rather than electing to switch it off and continue as usual.

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Business

Recognising the value of protecting intellectual property early builds strong foundation for innovators

Innovation Manager at InnoScot Health, Fiona Schaefer analyses an essential facet of developing ideas into innovations

Helping the NHS to innovate remains a key priority during this period of recovery and reform. Even within the current cash-strapped climate, there is the opportunity to maximise the first-hand experience of the healthcare workforce and its knowledge of where new ideas are needed most.

Entrepreneurial-minded, creative staff from any discipline or activity are often best placed to recognise areas for improvement – the reason why a significant number of solutions come from, and are best developed with, health and social care staff.

NHS Scotland is a powerful driver of innovation, but to truly harness the opportunities which new ideas offer for development and commercialisation, the knowledge and intellectual property (IP) underpinning them needs to be protected. That vital know-how and other intangible assets – holding appropriate contracts for example – are key from an early stage.

Medical devices can take years to develop and gain regulatory approval, so from the outset of an idea’s development – and before revenue is generated – filing for IP protection and having confidentiality agreements in place are ways to start creating valuable assets. This is especially important when applying for patent protection because that option is only available when ideas have not been discussed or presented to external parties prior to application.

Without taking that critical initial step to protect IP, anyone – without your permission – could copy the idea, so anything of worth should be protected as soon as possible, making for a clear competitive advantage and ownership in the same sense as possessing physical property.

The common theme is that to be successful – and ultimately support the commercialisation of ideas that will improve patient care and outcomes – the idea must be novel, better, quicker, or more efficient than existing options. Furthermore, to turn it into a sound proposition worth investing in, it must also be technically and financially feasible. It isn’t enough to just be new and novel – the best innovations offer tangible benefits to patient outcomes and staff working practices.

Of course, even more so in the current climate of financial constraints, the key question of ‘Who will pay for your new product or service?’ needs to be considered up front as well.

Whilst development of a strong IP portfolio requires investment and dedicated expertise, when done well and at the appropriate time, then it is resource well spent, offering a level of security whilst developing an asset which can be built upon and traded. There are various ways commercialisation can progress and whilst not all efforts will be successful, intellectual property is an asset which can be licensed or sold to others offering a range of opportunities to secure a good return.

In my experience, however, many organisations including the NHS are still missing the opportunity to recognise and protect their knowledge assets and intellectual property early in the innovation pathway. This is partly due to lack of understanding – sometimes one aspect is carefully protected, whilst another is entirely neglected. In other cases, the desire to accelerate to the next stage of product development means such important foundational steps are not given the attention required for long-term success.

Good IP management goes beyond formally protecting the knowledge assets associated with a project, e.g. by patenting or design registration, however. When considered with other intangible assets such as access to datasets, clinical trial results, standard operating procedures, quality management systems, and regulatory approvals, it is the combination which will be key to success.

Early securing of IP protection or recognition of IP rights in a collaboration agreement, demonstrates foresight and business acumen. Later on, it can significantly boost negotiating power with a licensing partner or build investor confidence.

Conversely, omissions in IP protection or suitable contracts can be damaging, potentially derailing years of product development and exposing organisations to legal challenges and other risks. Failing to protect a promising idea can also mean commercial opportunities are missed, thus leading to your IP being undervalued.

Ideas are evaluated by formal NHS Scotland partner InnoScot Health in the same way whether they are big or small, a product, service, or new, innovative approach to a care pathway.

We encourage and enable all 160,000 NHS Scotland staff, regardless of role or location, to come forward with their ideas, giving them the advice and support they need to maximise their potential benefits.

Protecting the IP rights of the health service is one of the cornerstones of InnoScot Health’s service offering. In fact, to date we have protected over 255 NHS Scotland innovations. Recently these have included design registration and trademarks for the SARUS® hood and trademarks for SCRAM®, building and protecting a recognised range of bags with innovative, intuitive layouts. Spin outs such as Aurum Biosciences meanwhile have patents underpinning their novel therapeutics and diagnostics.

We assist in managing this IP to ensure a return on investment for the health service. Any revenue generated from commercialising ideas and innovations from healthcare professionals is shared with the innovators and the health board through our agreements with them and the revenue sharing scheme detailed in health board IP and innovation policies.

Fundamentally, we believe that it is vital to harness the value of expertise and creativity of staff with a well-considered approach to protecting IP and knowledge input to projects from the start.

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