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Why visibility and control over spend are key for fintechs’ survival in the current climate

By Ian Johnson, SVP Market Development at Soldo

2021 was a record year for fintech investment, with funding numbers across Europe hitting a staggering $31.6 billion in the second half of the year alone. However, with the UK now facing the worst cost-of-living crisis in 60 years, after energy-led inflation reached a 40-year high and triggered a worse than anticipated economic slowdown, investors have faced a reality check and the fintech sector is being hit. In the first half of 2022, fintech investment dropped to $26.5 billion – highlighting that funding isn’t as free-flowing as it once was. High valuations and IPOs that followed the 2021 boom are now declining, and fintech heavyweights like Klarna, for example, saw their valuation drop 85% from $45 billion to just $6.7 billion earlier this year.

It has become clear that, despite a brief golden period of post-pandemic spending, the double blow of tightening budgets and rapidly rising costs from inflation means that UK businesses have to prepare to deal with the aftermath.  

The first instinct for companies struggling to adapt to change is to cut costs – and we saw fintechs initiating a wave of layoffs as they struggled to raise their next funding rounds and VCs put a pause on writing checks. By managing spend tightly, finding cost efficiencies and freeing up time by removing manual tasks, companies can become more productive, agile and can remain competitive in an uncertain economic environment. To do this, finance teams need full visibility across all areas of the business, in real time, and can control spending for people and teams. In short, having a complete picture of spend will give teams the confidence and flexibility needed to adapt to this unpredictable climate. 

Businesses are held back by manual finance processes

Yet while this seems straightforward, many finance teams are held back by processes that have been built on top of earlier processes – meaning a lot of the work they are doing is manual and laborious.

It may not come as a surprise to learn that, according to Soldo data, two-thirds (64%) of finance teams in technology companies do not use a spend management platform, while a third (36%) state they make purchases on behalf of their company every week. Without the full visibility of spending going on within the business, finance teams simply can’t understand what’s coming in and importantly, what’s going out.

Why automation is the answer to modernising spend management

For businesses to survive, let alone see growth in this current climate, it’s key they turn to automation and modernise their business spend management – revolutionising the way they work. Business spending and expenses can often be an invisible drain on a company’s finances, which if left unchecked is a huge problem for a growing business. In the same research from Soldo, it was revealed that a third (32%) of respondents rely on reimbursements and a quarter (26%) rely on petty cash.

The data also showed in businesses with more than 1000 people, over a third said their department spend is between £1,000 – £10,000 per month. Without some form of automation in place, tracking this large amount of spend involves a lot of manual input and paperwork, including spreadsheets, paper receipts, reams of bank statements, and reimbursement forms. These manual methods of tracking and auditing a constant stream of significant payments will make it harder to control, track and report on company spend and will increase the risk of mistakes or gaps in the data that come from manual data entry.

Time back to spend on strategic tasks

Spend management can be time-consuming, almost a quarter (23.5%) of finance teams spend a full day each month just processing expenses. Instead of wasting days putting together company-wide expenditure and spend data with manual methods of spend management, easy spend management technology will allow teams to spend their time taking action supported by accurate data.

That’s a lot of time and effort that could be saved and put to better use – for example, strategic thinking to help the business save in the current climate.

Work with automation, not against it

Better use of time often means understanding where repetitive, menial tasks are being performed and looking at ways of making them more efficient, hence the role of automation. But for automation to become widely accepted, some narratives need to be addressed. For example, there is a belief that job roles may be replaced with automated software, whereas in reality, the exact opposite is true.

Finance teams should aim to work with automation rather than compete against it. When businesses get the right mix of human and automated work, processes are more efficient, and individuals are freed up to focus on more useful tasks like data analysis or forecasting. The data they are using also becomes more accurate and more reliable – meaning more precise predictions. And because the data is richer, decision-making is better too. 

Thanks to the deep insights, high-quality data, and informed forecasting that technology unlocks, finance teams can be strategic advisors to businesses. A great example of this is Marie Myers – HP’s CFO who has also taken on the role of Chief Transformation Officer – adopting automation to transform many business functions. As Marie points out “data analytics is increasingly important to provide insights that help us be more strategic partners to the business and to help HP make data-driven strategic decisions.” It’s a great example of what many CFOs and finance leaders are looking for – being better prepared to guide their business into the future rather than being fearful of what it presents.  

Whether it’s the cost-of-living crisis, a recession or an unforeseen hurdle not yet on the horizon, finance teams must ensure they are devising and implementing strategies that provide the adaptability needed to overcome any challenge. With the adoption of technology, businesses can modernise finance teams and empower them to play a strategic role – guiding the business to success whatever the scenario.

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Business

2024: THE year for customer experience enhancement

Source: Finance Derivative

Rob Paisley, Director, Banking and Financial Services, SS&C Blue Prism 

How recently have you relayed to someone the immaculate service that your tax office, bank or insurance company provided you with? From renewing a bankcard, buying a house or undergoing an investment fund transfer, financial organisations are not noted for their NPS scores.

Nowadays, banking customers find the service inconvenient, due to errors, hidden fees, delays and fund-accessibility issues to name a few, not to mention that financial organisations must compete in a world where online shopping is only a few clicks away. In fact, in terms of satisfaction, customers rank their streaming and parcel delivery service higher. Highlighting the general dissatisfaction is the TrueDigital Quotient, standing at a meagre 25%, emphasising the consensus amongst customers regarding transactions processed wholly through digital channels.

And, while large financial organisations and banks are addressing enlarging customer satisfaction, decreasing operational costs and steering revenue growth by using artificial (AI) solutions at a future time, wouldn’t a more reasonable solution be to manage digital processes through investment in existing intelligent automation (IA)?

Neobanks and digital banks leverage intelligent automation for faster customer journeys. This includes ‘know your customer’ checks, digital onboarding, and seamless processes, catering to both digital and traditional customers effectively – meaning customers can get what they want quickly and without pain. For younger customers, this means digital banking, while traditional customers are provided with better service at a physical location that includes digital offerings.

In banking and finance, most companies think of RPA-IA as an efficiency tool, but significant opportunities often unexpectedly arise when they start to deploy it. Often, it’s the customer experience that benefits most as it’s not just about efficiency. Automation software can help re-imagine your offerings with the customer at the center of it. Amidst the AI rush, revisiting foundational basics before proceeding may be prudent, as IA establishes essential groundwork often overlooked.

Repeated shortcomings for the banking customer

From routine tasks like mortgage applications to specialised services, such as closing accounts, infrequent or one-time customer experiences, significantly shape long-term loyalty and recommendations.

Let me paint you a picture with a tangible example of why people might take their business elsewhere, to illustrate how today’s predominantly young customers are not brand-loyal, and seek the easiest route to fulfil their needs swiftly.

If you join a cloud-based digital bank that has no branches, all transactions will likely be delivered by a 24/7 customer support hotline. Certain banks like this also don’t do checking accounts, only high yield savings CDs and loans which many people are attracted to given preferrable interest rate offers. This all sounds great, but you still run into the infancy of some of these technologies.

To do a mobile cheque deposit, we’ve had clients say it might take 14 days to clear. That’s not good enough. Even two days isn’t good enough given the technology available for these processes. It may also require the customer to write a restrictive endorsement on the back of the check saying it can only be deposited at the specific bank. Once the endorsement is written, it can’t be taken anywhere else other than that bank. If they reject it, they don’t have branches, so customers can’t walk in and talk to a human being and talk to someone.

Anything that improves time to resolution in a self-service fashion on a digital channel helps, but in reality, it’s a dichotomy. How can you have a cashless society until you solve basic issues like that one? It’s a pain to transfer out and you don’t really want to, but lethargy is inherently baked into the system so anything that can speed up the process is going to improve the customer experience.

Dissatisfaction often goes unvoiced, with customers silently departing without notice. Many companies remain unaware until weeks later, indicating a blind spot in recognising and addressing evolving customer behaviour.

With so much money at stake why are organisations struggling to get it right? This year, customer experience takes center stage, with forward-thinking companies investing in process intelligence, business orchestration and automation. Those lagging lack measurement tools and awareness of their shortcomings. Banks excelling in this realm employ more than 500 digital workers and meticulously measure outcomes, while others trail behind with fewer than 10 or none at all.

Cash no longer reigns supreme

Northern Europe boasts the largest global digital banking market, with Sweden dominating with a 98% cashless economy. Nordea, a leading bank in the region, spearheads this transformation by prioritising customer-centricity around the concept of ‘the idea of something better’ through cutting-edge mobile and digital banking solutions. Despite its 200-year legacy, Nordea embraced online banking early on, and in 2015, it adopted banking automation software to revolutionise its operations. Some six million transactions are processed by its digital workforce, including simple tasks such as new card requests, reducing errors and costs, allowing Nordea to tailor its services based on customer preferences.

“It’s one of the key aspects where we want to be the leading bank. We have invested a lot into our mobile bank, which is regarded as the best in the Nordic markets,” says Ossi Leikola, Head of Operations at Nordea. “We also believe very much in a personal relationship with our customers – that’s why we’re very interested in omni-channel.”

Through Nordea’s employment of almost 400 workers and 450 automated solutions for its 10 million customers around the globe, customer satisfaction levels have transformed. Subsequently, by using SS&C Blue Prism intelligent automation, the bank is positioned as a regional leader.

Where customer experience is concerned, efficiency is crucial to retaining loyalty. Companies providing customers with prompt, precise interactions excel in the industry. Intelligent automation solutions streamline transactions, enhancing customer satisfaction, and therefore loyalty. In the current informed market, banks should prioritise use of tools on enhancement, or risk reputational damage to the organisation.

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Business

Money laundering red flags: How to identify and combat financial crime

By Andrew Doyle, CEO, NorthRow

Money laundering, the process of disguising the proceeds of illegal activities as legitimate funds, is a grave financial crime that undermines the integrity of financial systems worldwide. 

When you consider that the National Crime Agency estimates that £10 billion of illegal money is laundered each year in the UK, financial institutions and regulatory authorities have a responsibility to be more adept at recognising the red flags indicative of these illicit activities. Understanding these warning signs is crucial in the ongoing battle to maintain financial integrity and protect the economy from the corrosive effects of money laundering. 

So, what exactly are the warning signs?

Unusual transactions

Financial activities that deviate significantly from a customer’s known income or business patterns is a clear warning sign. This can include large deposits, withdrawals, or transfers that seem inconsistent with their profile. 

Financial institutions need to scrutinise transactions in the context of their knowledge of the customer’s usual financial behaviour, risk profile and the nature of the business relationship. Any significant deviation should prompt a closer look to determine if the activity is legitimate or if it signals something more sinister.

Unexplained source of funds

Large sums of money appearing in a customer’s account from private or unfamiliar sources should raise immediate concerns. It is vital to look at how they acquired these funds and request supporting documentation such as bank statements, recently filed business accounts, or official documents like property or share sale records to verify any such transactions. 

When cash transactions are involved, the difficulty of tracing the origin of funds increases, making thorough due diligence even more critical. In such cases, the institution must ask whether the source of funds aligns with their knowledge of the customer and if there are any indications of criminal involvement.

Rapid movement of funds

When funds are swiftly transferred without a clear and justifiable business purpose, it can suggest an effort to conceal the true origin of the money. Sudden and unexplained changes in a customer’s transaction patterns, such as an abrupt increase in activity or a shift in transaction types, should also raise suspicion. These deviations may indicate attempts to disguise the nature of financial activities.

PEPs

Transactions involving Politically Exposed Persons (PEPs) are particularly high-risk due to the potential for corruption. PEPs include individuals holding prominent political positions and their close associates, who may be more susceptible to engaging in corrupt activities. These individuals often have access to substantial funds, making it easier for them to participate in money laundering schemes. Financial institutions must exercise enhanced due diligence when dealing with PEPs to mitigate the risk of being used to launder illicit gains.

Inconsistent documentation

Inconsistent documentation is another critical indicator of potential money laundering. This can include altered or forged documents, incompatible details between different records, or paperwork that does not align with the nature of the transaction. These inconsistencies suggest a lack of transparency and honesty in financial dealings, potentially indicating an effort to hide illicit origins or intentions. Financial institutions should be wary of any documentation that appears tampered with, or that provides conflicting information about a transaction.

Refusal to cooperate 

When customers are uncooperative or evasive in response to requests for additional information or documentation, it should raise immediate concerns. Avoiding straightforward questions about the purpose or source of funds, failing to provide necessary documents, or showing reluctance to clarify details can indicate a deliberate attempt to conceal illicit activities. Financial institutions must be prepared to report suspicious activities to the appropriate authorities for further investigation.

The presence of one or more of these red flags does not necessarily confirm money laundering but definitely warrants closer inspection. Financial institutions in the UK are legally required to implement robust procedures to detect and prevent money laundering. These measures include conducting thorough customer due diligence, continuously monitoring clients for any adverse changes to their risk profile, and reporting suspicious activities to relevant authorities.

Recognising and responding to money laundering red flags is essential for maintaining the integrity of the UK’s financial system. Financial institutions must remain vigilant, ensuring they have the procedures and expertise necessary to detect and address suspicious activities. By doing so, they can play a crucial role in combating financial crime and safeguarding the economy from the detrimental impacts of money laundering.

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Business

The Human Advantage: Turning human-centred leadership into commercial success

By Helen Wada

We are living in a world where AI is becoming more prevalent, the economic environment is as challenging as it has ever been, yet organisations are at the same time being asked to become more “human-centric” and focus on their people.

A shift from performance to people

The 1980s and 1990s were characterised by a relentless performance culture, where metrics and outcomes were paramount. Autocratic leadership of the past gave way to a more collaborative approach as we entered the 21st century and we saw technology begin to disrupt the way in which we worked. Deliver more with less, work in a different way, grow the top line and reduce costs and technology was driving efficiency and growth.

Helen Wada

Today, as we look forward to 2025 and beyond, technology is once again shifting the dial, but there is also a real shift towards people, we are moving into a new era. The Human era.  Helen Wada, a top UK top executive business coach, who has spent more than 25 years in the corporate world working across professional services and with global organisations, is witnessing firsthand the need to prioritise the essentials of being human. 

The pandemic brought this sharply into focus as we think back to how so many within all kinds of professional settings kept the wheels in motion at a time of fear and uncertainty. Medical workers, civil servants and retail workers all continued while others were told to stay at home. Since then, there has been a significant shift in focus on prioritising humanness unlike ever before, yet the commercial imperative remains – and in some instances the commercial pressures are felt even more than before the pandemic.   

Combining the need to drive growth  while building a human centric culture

One of the main challenges businesses face is finding the middle ground between human-centred initiatives and commercial goals.

In March of this year, Forrester explored what human and technical skills will matter most to B2B Marketers…”Technical and AI analytical skills will no doubt have a crucial role to play, but those in B2B customer facing roles must develop soft skills such as self-efficacy, cognitive abilities, empathy and excellent communication. These human skills are vital for building strong relationships with clients, collaborating with team members and adapting to changing market dynamics.” In addition…we need leadership skills and business acumen….The reality is we need to think about developing that whole person.”

A Gartner survey conducted in 2022 found that 90% of HR leaders believe that to succeed in today’s working environment, leaders must focus on the human aspects of leadership. However, only 29% of employees report that their leader is a human leader.

According to Helen’s philosophy, these “human skills” that sales leaders require align completely to those that she developed through her executive coach training back in 2015.  Helen had always shied away from sales, preferring to focus on her technical expertise and delivery.  Yet, after training as an executive coach, she found a new confidence in having open-ended conversations with customers, building relationships and creating insight and value through the quality of her conversation and challenge.

This got her thinking, was there a way that coaching could prove to be the bridge between human-centric leadership and commercial focus

The Harvard Business Review, along with many other reports has highlighted the role of quasi-coaches; leaders who blend coaching with their managerial roles as pivotal to successful leadership.  But can this be taken one step further.

The sales leaders of tomorrow, not only require their technical expertise, their ability to collaborate and work with AI, they require these human skills, to connect with customers, be curious and create value.

Human-centred leadership in practice

Human-centred leadership requires an approach that looks at everyone as individuals. It is important to understand a person’s aspirations, values, and what drives them. This can be difficult where development programmes are delivered at scale with a one-size-fits-all approach.  Common coaching skills can be developed, yet the outcome of a coaching conversation is always personal and unique.

By themselves adopting a coaching mindset, leaders can demystify complex issues and foster a culture that supports both personal and professional growth. Helen’s thesis asserts that human-centred and commercial cultures do not have to be separate. Instead, they can “coexist harmoniously through coaching. By developing leaders as coaches, organisations can scale human-centric practices, as well as provide the skills required to foster commercial relationships, where connection, curiosity, challenge and collaboration are at the heart of working together.”

Scaling human-centric practices

At the heart of a coaching culture is the creation of personal responsibility and accountability.  Coaching, by its very nature encourages others to grow and thrive, creating a culture of trust and responsibility for everyone to play their role in their own personal growth and development.

By starting at the top, Helen highlights that coaching provides a framework that equips leaders with the skills to understand and support their teams effectively, as well as having better conversations with their clients, whether external or internal to the business.

This is particularly relevant in professional service or partnership environments, such as accounting, law, or engineering, where technical expertise is valued for promotion to a certain point, but to reach the next level of leadership requires an ability to build a different type of relationship with customers – often exploring areas outside of their comfort zone.

Coaching and coaching skills also support individuals deal with uncertainty, as Helen explored with a fellow coach, Paul Golding in her podcast Human Wise.

The HUMAN Framework

Helen has created a framework that encapsulates the essence of human-centred leadership, based upon coaching principles

H: How you show up

U: Understand yourself and others

M: Mindset

A: Act & Adapt

N: Next steps

By working with this framework,  leaders and executives can have a practical way to embrace a way of operating that fosters a human-centric culture with a commercial lens. The best outcomes for you, your team and your business.

The benefits of investing in coaching are both qualitative and quantitative. Qualitatively, individuals understand more about themselves, they gain confidence and develop stronger leadership capabilities.

Stretching these skills into commercial conversations translates into quantitative benefits   where companies can see tangible commercial outcomes resulting from an increased confidence in the market, new relationships, new opportunities, and an uptick in revenue and profitability.  All resulting from deeper, connections and human relationships.

Helen’s approach to coaching emphasises that making the human advantage your commercial advantage is not just beneficial, but essential to business success in today’s human-centric world.

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