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Tackling digitization in financial services? Add these inspiring books to your reading list

Written by Allison Karavos on . Posted in Blog. No Comments on Tackling digitization in financial services? Add these inspiring books to your reading list

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Tackling digitization in financial services?
Add these inspiring books to your reading list

Whether your organization is just starting out on a digital journey, you’re an expert on digitization in financial services, or anywhere in-between, learning from leaders in the industry can help inspire you to think about things differently!

At Provenir, I spend my time working with a huge range of people, from those who work in organizations exploring their digital options, to employees of what can only be described as digital disruptors, and one thing is clear: Digitization isn’t a one size fits all situation. Learning something new every day from these amazingly creative and talented people has inspired me to expand my reading list this year and delve into some additional perspectives.

And, I thought I’d share the first 5 books on my list with you! These books, covering everything from data analytics to the banks of the future, are a great resource for anyone in the financial industry:

The Model Thinker | Provenir

The Model Thinker: What You Need to Know to Make Data Work for You

Data has the power to transform your risk decisioning processes, so this fascinating book, The Model Thinker, from social scientist Scott E. Page is at the top of my reading list. When it comes to making credit decisions in today’s digital world you need to gain a much deeper understanding of what the data is trying to tell you, “anyone who has ever opened up a spreadsheet packed with seemingly infinite lines of data knows, numbers aren’t enough: we need to know how to make those numbers talk.”

The Model Thinker covers linear regression, random walks, and many other models, but perhaps the most fascinating method discussed is the ‘many-model paradigm.’ This “shows the reader how to apply multiple models to organize the data, leading to wiser choices, more accurate predictions, and more robust designs.”

A fantastic option for anyone in financial services, providing a practical toolkit to teach business users, scientists, analysts, writers, and more, how to leverage data to make more informed decisions.

Emotional Banking

Emotional Banking: Fixing Culture, Leveraging FinTech, and Transforming Retail Banks into Brands

As one of the leading influencers in the FinTech industry Duena Blomstrom needs no introduction and her new book—named after her method and philosophy—Emotional Banking, speaks straight to our human, and tech, hearts. Why? Because at Provenir, we’re huge believers that talent, not just technology, is at the core of creating world class digital experiences.

Anybody working in financial institutions that are looking to leverage technology to drive client interactions will benefit from reading this book. It’s easy to forget, especially in today’s digital-first world that, those emotional connections with customers can be the difference between an average experience and a brand-building moment.

With Emotional Banking, Blomstom promises to explore key questions including, how can banks find their way into customer’s hearts? Is inertia in banking a result of a broken internal culture? What is FinTech and why does it matter?

For those looking for practical advice it concludes with “examples of best practices and a hands-on approach on how to change the inertia, become a brand and make customers fall in love with their bank.”

Breaking Digital Gridlock | Provenir

Breaking Digital Gridlock: Improving Your Bank’s Digital Future by Making Technology Changes Now

Digitization isn’t just limited to large financial institutions, even credit unions and community banks need to take the digital journey.Breaking the Digital Gridlock by John Best aims to help smaller financial institutions “make the shift to digital—even without a seven-figure consulting budget.”

This book piqued my interest for a number of reasons, including its promise to emphasize how organizations can maintain the culture, services, and features valued by their customers while embracing digitization.

With a focus on real-world strategies to take “the leap without tearing your organization apart,” this book should be on your radar if you’re working in a community bank or credit union that is looking to begin their digital journey.

The expert advice shared by industry innovation leader, Best, covers embracing technology at key points in an organization’s evolution, “how FinTech partnerships and strategic technology acquisition can foster new growth with minimal disruption, and how project management can be restructured to most effectively implement any digital solution and how to implement and leverage analytics.”

Digital Human | Provenir

Digital Human: The Fourth Revolution of Humanity Includes Everyone

It’s impossible to ignore a book that sells itself as “a visionary roadmap for the future, a timely guide on how to navigate the world of finance as we create the next generation of humanity.”

Chris Skinner, author of the thefinanser.com, has added another book to his already impressive list with Digital Human. Why is this book on my reading list? Because this all-in approach is something both myself and the Provenir team truly believe in, “Digital is not merely a “bolting on” of technology to produce results faster and cheaper, but a complete rethinking of common business practices and notions of efficiency and customer engagement.”

Watching businesses embrace change is one of the most rewarding aspects of my role, so I’m always interested to gain new perspectives on how financial institutions can leverage technology to drive transformation. Digital Human offers a “timely guide on how to navigate the world of finance as we create the next generation of humanity,” with insights covering: rethinking business models, implementing the right technology, and a roadmap to digital success.

Banking Everywhere, Never a Bank | Provenir

Bank 4.0: Banking Everywhere, Never at a Bank

For someone working in financial services, no reading list would be complete without a book authored by the fantastic Brett King. So here it is: “Bank 4.0 explores the radical transformation already taking place in banking and follows it to its logical conclusion. What will banking look like in 30 years? 50 years?” Isn’t that the question that we’d all like to know the answer to?

Banks are facing an increasingly challenging future and the “coming Bank 4.0 era is one where either your bank is embedded in your world via tech, or it no longer exists.”

The final book in King’s Bank Series explores the future of banking and the role that technology will play in that story. Bank 4.0 promises to help readers identify the low-friction, technology experiences that are undermining existing products and how technology will shape the future of the industry. It also looks into how FinTechs are using psychology, behavior, and technology to disrupt the banking industry. “Bank 4.0 takes you to a world where banking will be instant, smart and ubiquitous, and where you’ll have to adapt faster than ever before just to survive. Welcome to the future.”

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3 Things Telcos Should Know About Alternative Data

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3 Things Telcos Should Know
About Alternative Data

Business models are changing — and rapidly.

Apologies, because you probably knew that.

But it’s happening much faster than we think, whether it is timed to product design shifts or concepts like the Internet of Things, or changed models like servitization. Some have even estimated that a standard enterprise business model changes every 2.5-3 years. The main revenue source may stay the same, but the plan underlying said revenue source shifts essentially every seven quarters.

Primarily a product-driven industry, we see this shift happening in Telco now. As devices become more expensive for an average consumer, telco caters to a built-in audience by way of financing offers. It’s somewhat of a servitization model in its own right: a product (the phone) bolstered by a service (the financing so that you can afford the phone over a period of time).

Financing makes sense as a new revenue stream for telco companies, but it opens up some new challenges too: namely, if you weren’t a lending institution before, how do you make decisions around financing and credit of different consumers? What if they have a non-existent credit history? What then?

Here arrives “alternative data.”

1. What is alternative data?

Don’t worry: it’s not like “alternative facts.”

The easiest definition: information that is not found in the files maintained by the three major credit reporting agencies. For example, some elements not kept in major CRA files include:

  • Telco
  • Utility information
  • Property record information
  • Social media footprints

Alternative data is actually a much bigger slice than you might think. Yes, 190 million Americans have a FICO score, and that’s by far the majority. But consider this: 28 million Americans are credit retired, new to credit, or lost access to credit — and 25 million have no credit bureau record. There’s more, too: while 92% of Americans have a cell phone, only 2.5% of consumer credit bureau files have telco information. It’s the same with utilities: 60% of U.S. residents pay utilities, but just 2.4% of files have this information.

Telco, utility, and lease/property information is often highly indicative of credit trustworthiness but just isn’t tracked at the conventional levels.

2. How do you pull alternative data?

Largely through public record data sources, although you can also search people’s social media profiles.

While social media is not as direct a correlation with credit trustworthiness, it can give you an idea of the person’s activities and habits, especially around check-ins. However, as more and more companies embed with Facebook, Twitter, Google, Instagram, et al. concerning immediate purchase (think “Buy Now” buttons), there will be more financial information tied to people’s social media accounts.

This concept is still getting to scale in the U.S., but one of the initial growth areas of alternative data was Indonesia, sometimes considered “the Twitter capital of the world.” There are 78 million active Internet users in Indonesia, with north of 50 million on both Facebook and Twitter. You won’t find that profile information in conventional lending approaches, no; but it’s still highly valuable.

Or is it?

3. Does alternative data work?

Yes. To wit: in one study where auto lenders decided to use alternative data in their decisioning processes, 40% of those rejected via “no-file” and 30% of those rejected via “thin-file” were found to have credit trustworthy scores when you considered these alternative data sources.

Is this a case of “not everyone is on the grid?” Yes, that’s part of it. The other part is that human existence is not stagnant. We’ve done things one way for so long when evaluating credit trustworthiness, but the world has changed dramatically, and we have access to much, much more information. Shouldn’t we be using it to make better decisions?

The Secret to Consumer Lending Success

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Financial Inclusion & Alternative Data in LATAM

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Financial Inclusion & Alternative Data in LATAM

Expert Insights into 2020 Wins & Improvements

Leading experts in the Latin American fintech ecosystem, are joining us to provide their perspectives about one of the most important issues facing the financial industry during these challenging times—financial inclusion and the use of alternative data.

Provenir and CredoLab present the eBook: “Financial Inclusion & Alternative Data in Latam – expert insights into 2020 wins and improvements” to explore:

  • How the fintech industry has transformed during the past year
  • The opportunities 2021 brings in the area of financial inclusion.

Through the expertise of recognized financial experts in the region, the eBook explores how traditional banks and financial companies have readjusted their credit scoring and how they can help power financial and social inclusion.

Read insights from:

Ignacio Carballo, Research Economist, and Director Fintech Ecosystem & Digital Banking at UCA

Marcel Van Oost, Financial Advisor and Fintech Startup Founder with the collaboration of Marcial Gonzalez Fraga, Fintech Investor

Clementina Giraldo, Dots & Tech CEO & Founder

Bruno Diniz, Fintech Advisor, Managing Partner at Spiralem and Book Author: “The Fintech phenomenon”

Sebastián Olivera, Montevideo Fintech Forum Founder and WeFintech Co-Founder, the Iberoamerican
Women Network

Read the full insights:

English
Spanish
Portuguese

Ten Companies Using Alternative Data for the Greater Good

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Credit Where It’s Due – Stand-Out Financial Services Initiatives of 2020

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Credit Where It’s Due –
Stand-Out Financial Services Initiatives of 2020

Hark, what’s that sound???

No, it’s not angels singing, it’s the world breathing a collective sigh of relief that 2020 finally has one foot out of the door!

It’s been an unpredictable year. The Covid pandemic fundamentally changed the way we go about our daily lives, from where we work, how we shop, and how we interact with people, to how we manage our money. Many if not all industries have taken a hit, and financial services are no exception.

In what felt like an overnight shift, cash became dirty, bank branches were made off limits, and financial hardship became a reality for many previously stable businesses and families. As an industry that exists to serve customers with the products that best meet their needs, the ‘customer-centric’ mantra of many hit its first major test…

The result? Some failed, some passed, an elite few shone.

It’s those shining examples that I want to focus on today to bring 2020 to a close. Let’s give kudos to the financial services organizations whose efforts helped support families and businesses throughout the year. The resiliency, creativity, and adaptability of the teams at these incredible companies helped keep the world turning with human-centric digital-first banking experiences:

  • Starling Bank – Starling lent £1.4bn to over 40,000 UK businesses through the government-backed BBLS and CBILS funds. They moved quickly; getting accredited on 7th May and lending on 11th May. Their Coronavirus Support Hub has also been widely praised by business owners. At the start of the pandemic, Starling recognized the logistical challenges that self-isolating customers could face earlier than others and quickly launched their Connected Card – a second debit card that personal account customers could give to a trusted friend or family member to buy groceries and essential goods on their behalf. At a similar time, they also launched their virtual Never Home Alone program, to help staff and their families adjust to being at home, providing a support hub of physical and mental health tips and shared experiences.
  • Chime – US-based mobile bank, Chime, piloted a way for its users to receive their federal $1,200 stimulus checks instantly. They recently closed fundraising that valued the company at $14.5bn, making it the most valuable American fintech start-up serving retail customers. Chime has more than tripled it’s revenue and transaction volumes in the last year from customers pivoting to mobile banking services. A key differentiator lies with their checking accounts that give access to paychecks two days early and allow free use of an overdraft facility. This flexibility has resonated with customers throughout the pandemic, who are increasingly choosing to shift their primary banking accounts to Chime.
  • Ualá – Argentinian digital start-up bank Ualá launched three years ago. Their mission: to disrupt the LATAM banking space and address the challenge of financial inclusion in a region where only 54% of the adult population have a bank account and cash is still king. That balance is now shifting, and with demand for digital money services booming in recent months, Ualá’s financially inclusive customer onboarding has helped grow its user base of distributed cards to 2 million. Following growth in Argentina and a total $200m raise, Ualá recently announced an expansion to Mexico, staking their intention to be the next Latin American unicorn and lead a revolution that will change the way people see and understand their personal finances.
  • Admiral insurance – Back in April, at the outset of the UK national lockdown, car and van journeys ground to a halt and Admiral Insurance took the decision to rebate £25 to each customer through its Stay at Home refund policy in recognition of reduced claims—the only UK insurer to do so. This cost the firm £110m, but resulted in an increased retention rate of 81%, up from 68% last year – saving acquisition costs for over half a million customers. Large savings were experienced across the insurance sector and the firm hit the headlines in the summer when, as a thank you for their hard work throughout the pandemic, departing Chief Executive David Stevens gifted a £10m bonus windfall to Admiral’s 10,000 staff.
  • BBVA – BBVA moved quickly to offer special assistance to consumer and small business customers impacted by the ongoing Covid-19 pandemic, including ATM fee refunds, payment deferrals, extensions and waivers on existing loans and lines of credit, and many other offers. They also set up a $35m Covid-19 relief fund to boost the global response to the virus’s initial hit. The fund helped medical centers and hospitals around the globe through the purchase of medical equipment and supplies. In compliance with local health authorities, the fund has helped distribute 2,400 ventilators, 25,000 items of PPE, and nearly a million face masks to 265 hospitals across the BBVA footprint, with a portion of the fund allocated to helping older people and vulnerable families.
  • DBS Singapore – In response to the spread of Covid-19, DBS Singapore introduced a range of support measures and financial assistance to affected customers, including complimentary insurance coverage and home-loan-payment relief for employees in affected industries. SMEs were supported with a six-month property-loan deferment, temporary loan bridging, an extension of import facilities, digital account opening, and next-day, collateral-free business loans. The bank also launched health and education-related tools, such as online doctor consultation, online video-based lessons for kids, and taxi street-hail contact tracing. These services were tremendously popular and their free Covid-19 hospital cash insurance policy, for example, recorded more than 52,000 sign-ups a day at its peak.
  • Kuda – Nigeria’s digital-only bank, Kuda, is pioneering a new breed of financial institutions in the country! Nigeria has seen the use of digital banking services increase throughout 2020 with Kuda tripling the number of daily customers onboarded. This has led to a recent $10m seed fundraise, tipped as the largest of its kind in Africa. Kuda also launched a Covid-19 fund to help buy and distribute food and other essentials to people badly affected by the economic impacts of the pandemic in Lagos. Launched in April, the fund received an initial contribution of 500,000 naira from Kuda before being opened to the general public.
  • Covid Credit – 11:FS, Credit Kudos, Fronted
    It started with a single tweet on a Saturday morning back in March from Simon Taylor at 11:FS. The UK government had announced furlough support measures for full-time workers, but there appeared to be little plans in place for the 5m self-employed workforce to access these funds. A big piece of the puzzle was missing, and Simon quickly coordinated response from over 35 individuals from the fintech community, including Credit Kudos and Fronted, who together built an open banking journey, self-certification process, data capture, and ID verification – wrapped up as Covid Credit. Within 48hrs a functioning service was set up ready to present to the government and made available to the whole UK self-employed community. Truly inspiring. You can read the full story here.

The events of 2020 and the impact of the pandemic have been far-reaching, for the financial services industry it has provided the impetus needed to fast-track the transition from offline to online. The acceleration to serve and support customers in a digital way is a theme that is here to stay and set to continue. Businesses are racing to embrace digital transformation and the innovative teams behind these companies are finding incredible ways to use technology to power their human-centric, digital banking experiences.

The Provenir team and I would like to say a huge thank you to the people who’ve worked the extra hours and gone the extra mile to help keep the world turning throughout 2020.

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Enhancing Collections Strategies with Predictive Analytics

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Enhancing Collections Strategies
with Predictive Analytics

It’s just over 30 years since The Simpsons first aired. The show built a reputation on predicting the future; Presidencies, Super Bowl wins, mobile phone technology, Olympic feats… even accurately depicting London skyscrapers, almost 20 years before construction. In a world where truth can often be stranger than fiction, these moments have manifested themselves into real-life. Rather than complex data-driven insight, it was the astute cultural awareness of Matt Groening et al that formed the basis of these ‘predictions’. A keen eye and razor-sharp interpretation of social nuances, cultural insight, and intuition to look at things with a wide lens to determine predictive outcomes.

The world has undoubtedly changed in recent months. In today’s challenging landscape, banks and financial organisations are aware that it’s now as important as ever to make fast and well-informed credit decisions for onboarding new customers; largely driven by increased competition and a rise in customer demands for fully digital processes. But, in a time of economic instability, where financial stress is being experienced by a growing number of households, proactively managing existing customers as effectively as possible is a high priority for lenders; enhancing collections strategies through data insight and predictive analytics is now essential to this process.

Today’s reality is that an increasing number of customers have become, or are becoming exposed, with a reduced or uncertain-level of income and a recent history of payment holidays across multiple products. A recent study from Transunion highlights that 53% of UK consumer household income has been impacted, with 68% now concerned with how they are going to pay current bills and loans. When asked which bills are most concerning, credit cards (37%), mortgages (24%), personal loans (22%), and car payments (18%) rank high. These concerns are undoubtedly being shared by an ever-growing number of global households.

The industry is facing challenges and change. The existing customer-base is concerned about meeting repayments, and many are faced with reduced income or redundancy in higher impacted sectors like hospitality, travel, and engineering. Adaptation is now required from both borrowers and lenders to ensure the best outcomes are achieved through the collections process. Lenders need to be equipped to handle increased volumes of cases and mitigate losses, all while building strong relationships with customers who need their proactive support. We recently launched our latest eBook where we outlined some of the key ways predictive analytics, supported by technology, can combat the increasing challenges faced by collections teams. Through early-warning triggers, predictive models, ML solutions that deliver default rate predictions, and wide-ranging real-time data sources, lenders can access advanced capability when it comes to predicting delinquencies and deploying multi-channel customer communication strategies. Banks and lenders can no longer rely on credit bureaus alone to inform their collection strategies or time-delayed manual assessments to identify higher-risk customers.

Supported by technology, here are my top three actionable methods that businesses can adopt to increase their ability to predict and enhance their collections strategies:

  1. Proactively predict delinquencies: Actively monitor accounts for early-warning triggers that could signal impending trouble, such as increasing credit line usage, changing payment behaviour, change in income, and decreasing credit scores. Deploy predictive models to determine which combination of factors often lead to customers entering the collections process. Using batch, real-time, or hybrid processing methods, risk can be identified early by using predictive risk scores and teams can work with customers to ensure the best outcomes.
  2. Optimize payment/settlement offers: Empowering your team to make the right offer at the right time is an essential part of every collection’s strategy. Agents need to be able to see and analyse all data – from all accounts that have previously defaulted across the portfolio. Analytics tools can rapidly gather and assess this data to predict the optimal offer. Predictive analytics can help agents understand what percentage of debt is normally recovered in similar cases and set the benchmark for likely repayment amounts that can be achieved – supporting lower write-offs and protecting loan loss reserves.
  3. Optimize contact strategies: To create brand-defining customer experiences, collections teams need to adopt sophisticated and cohesive collections strategies powered by insight. All relevant data and information that informs the best contact method needs to be in one place and easily accessible. This will allow analytics models to be implemented easily, taking into account all documented customer interactions. In a time when customers are choosing which debts to prioritize, creating a brand experience through the tried-and-tested channels (phone, text, email, in-app), can improve engagement, willingness to pay, and customer retention.

We are now in a place where instantly accessible and accurate predictions are now achievable for lenders. With diverse, rich data sources and powerful technology to provide the razor-sharp interpretation of data and insights, lenders can widen the lens on the collections process to maximize the best outcomes for all customers; from Springfield US to Sheffield UK.

How to Take Your Collections Team From Hero To SuperHero

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Employee Spotlight – Kerry Cleary

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Employee Spotlight – Kerry Cleary

Welcome to the team Kerry! You’ve recently joined Provenir as Head of Data Partnerships… can you tell us a bit about your background and your role?

My background is in Fraud and Risk; working with market leading companies, including time spent at a leading UK credit reference agency. I have experience working with partners to create and maintain successful business relationships within the industry and across multiple sectors.

We have some hugely exciting product initiatives being undertaken across the business, being delivered by a talented team. Innovation is part of Provenir’s DNA and we have an unrivaled track record of integrating hundreds of traditional and new data sources for global clients. As Head of Data Partnerships, I am leading an exciting and unique new initiative that will bring these data providers together and make it easier to access rich data sources within a single tool… watch this space!

What does a typical day look like for you?

A typical day involves exploring and researching the market and building relationships with key industry and market leading global data partners who will play a huge part in the success of this new initiative. I’m working very closely with different teams across the business; from sales and marketing to the development teams, to ensure we are all aligned and working as successfully as possible.

What three words would you use to describe your role?

Exciting: Being part of a company and team that are talented, successful, and passionate about what they do, really brings excitement to the role.
Rewarding: The hard work that is involved in our new and exciting product initiative is beginning to show exciting results. It is very rewarding seeing this dedication paying off and forming the foundations of what is certain to be a global, industry-leading product!
Challenging: Who doesn’t love a challenge! My role as Head of Data Partnerships is a new role here at Provenir and is a fantastic new challenge for me. No day is the same with new and exciting challenges to tackle on a regular basis.

What’s your favorite part of your job so far?

Being new to Provenir, I would say my favorite part of my job so far is getting to know the business and talented teams and exploring how we all work together from all corners of the globe. Working as part of one big team creates a positive work environment and the support received from everyone is amazing!

If you could choose anyone, who would you pick as your mentor?

Whilst I could choose many mentors, a close friend of mine has always been a fantastic mentor for me and has provided support and guidance to me for many years. I strive to live by her example of hard work, passion, kindness, and enthusiasm for life and success.

What’s the best piece of advice you ever received?

‘You are responsible for your own success and happiness’

What are the most exciting developments/opportunities you’re seeing in the industry?

As part of my role, I spend a lot of time researching the market and looking for ways Provenir can support our customers and continue to provide the best-in-class customer experience. How data is accessed and used can have a significant impact on our clients and their business strategies. Making that rich and diverse data easily accessible is the driving force behind innovation here at Provenir.

What’s your most memorable facepalm moment!?

I’ll keep that one to myself for now ha ha!

What is your biggest achievement to date – personal or professional?

Professionally – I have worked very hard over the years to build a successful career and I am very proud of where I am today.
Personally – My biggest achievement by far in life is being a Mum to my Daughter Mary! I could not be prouder of the job I am doing in raising a happy, healthy, and clever little girl!

Connect with Kerry on Linkedin here

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Avida Finans: CIO Insights

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Avida Finans: CIO Insights

In the first part of a series of guest Q&As with our regional customers, Jenny Larsson, Chief Information Officer at Avida Finans talks to our very own Patrick Radise about Avida’s journey, adapting to trends and challenges in the market, choosing Provenir technology and nurturing tech talent.

Can you tell us about Avida Finans, the markets you serve and the products that you offer?

We are a Swedish credit market company that since the start in 1983 has focused on offering loans to individuals and corporates in the Nordic region. At Avida we are unique. We want to be seen as a professional compliment to larger banks and a responsive partner that helps private individuals or companies realize their plans. Our business is growing and we currently have 115 employees working out of our offices in Stockholm, Oslo, and Helsinki.

What challenges or needs did you face in your industry that led you to look for a decisioning solution like Provenir?

Time is a critical factor for us; our customers expect an instant decision at the tip of their fingers. This requires a solution that can automate processing and models. We also had a disbursed system landscape and saw an opportunity to act smarter and faster with one platform that could plug into multiple areas.

What types of data are you using to determine credit decisions? How has Provenir’s technology helped your team access new data and build new credit risk models?

We use application data, internal data, credit bureau data, and other sources in order to perform a full credit assessment of each application. The main advantage of the Provenir Platform for us is the combination of ease of use, suitability, and flexibility when it comes to integrations, plugins, and speed. In turn, this means we can develop models in a more agile manner.

How has Provenir’s technology helped to enhance your speed-to-decision application process and customer experience?

We’ve enhanced our models which have resulted in improved accuracy overall – a fantastic result which helps both our customers and the company. In the past, we had models embedded into systems that have required different software engineers and suppliers, more effort, and longer lead times to update. With Provenir this is now in the hands of our analytics team, it’s more visualized and easily configurable, which in the end, shortens time-to-market.

In addition, we have also built a strong partnership with Provenir where their team really understands our product and provides excellent support.

What trends do you see developing in the market and how are these driving your vision and shaping your innovation plans?

It’s an interesting market at the moment, a lot has been turned upside down. However, general trends persist – digitalization, the expectation from customers that every interaction is instant and smooth. We’re also a small player with highly-skilled colleagues and ambitious plans; to make them come true we’re continuously removing mundane tasks so we can focus on the things that matter most for us and our customers. Data is another trend and at Avida we’re building a lot of insight through data to be able to make real-time decisions on our business.

Finally, what’s it like to work at Avida Finans? How do you nurture tech talent and what advice would you give to someone starting out their career in finance technology?

No day is the same. We’re small and entrepreneurial, this means that everyone matters and can make a difference. This motivates everyone at Avida where we change and improve things constantly.

From a tech perspective, we want to try out new technology and continuously update the solutions and infrastructure so it’s further ahead than the market in general. We believe that this develops the talent at Avida but also attracts external talent. We’ve been on a journey for the past 2 years where we’ve raised the bar significantly, everything newly developed is made through microservices in the cloud, we’ve moved a lot of infrastructure to the cloud, automated processes etc… the list goes on. People that join us typically like the entrepreneurial side, the possibility to grow and make an impact and finally they are attracted by the technology landscape.

In terms of advice for someone starting their career in finance technology; firstly build your technical foundation – be curious and make sure you find people in your organization that are smart and can share knowledge. Secondly, it’s important to understand your business and your customers to deliver the right solutions, make sure you understand the processes, and what’s important for the company to be successful.

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Portfolio/Credit Line Management In the Age of Covid 19

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Portfolio/Credit Line Management
In the Age of Covid 19

Greetings from Provenir. My name is Brendan Deakin, Vice President of Sales at Provenir, Inc. I hope all who choose to read this blog post are faring well during this historically challenging time, and are remaining safe, healthy, and productive. This is especially true for those who are living and working in hard hit areas like New York, Michigan, Italy, Spain, and many other areas where the virus has caused every element of society to stop operating in a normal fashion. Our thanks should also go to all of the first responders, doctors, nurses, and other front-line medical staff who risk their lives to ensure we weather this storm as quickly and efficiently as possible.

The Covid-19 pandemic has caused all of us to re-evaluate how we operate across our personal and professional lives.  The ability to separate work/life activities has become an hour by hour proposition for many of us. From the simple process of ensuring our conference bridge/web-based meeting tools work when needed to balancing homeschooling and other home/dependent care demands against that of our respective occupational responsibilities, we are all being tested like never before. As I look across our business here at Provenir, I could not be prouder of our collective team in its ability to quickly and effectively transition to a virtual work environment, all while continuing to support our global financial services clients during a tumultuous time, one ripe with uncertainty. We were and are well prepared for this, and have flawlessly executed our business operations strategy against very trying circumstances.

As the Coronavirus Pandemic expands, our banking and lending clients will have a unique opportunity and role in helping consumers and businesses cope with the economic downturn associated with Covid 19 and need to be prepared to help customers weather these tough conditions. Besides protecting its own employees and service providers in their branches and offices from the physical health threat of the virus, banks need to ensure their business and consumer customers are offered payment extensions or other relief programs, but only as far as their credit policies and balance sheets will allow. Given the disparate impact this pandemic will have on small businesses and consumers, financial services organizations will need to pay particular focus on account management/credit line management and collections strategies which are tailored uniquely to each client’s circumstances, while at the same time helping shore up their reserves and balance sheet.

While there is not a “one size fit’s all” strategy for banks, lenders, and payment companies, we believe those that focus on the following key account management tenants will retain more loyal, profitable customers during this cycle while shoring up their balance sheet to take advantage of market conditions as they improve. The following capabilities should be top of mind for today’s credit risk executives:

  • Digitization:  Leverage your digital servicing capabilities to drive more consumers/small business customers to adopt internet and mobile servicing offerings, where and whenever possible. This is especially important for those clients who have been hesitant to adopt these services in the past. Gains made here will help reduce client attrition, improve customer satisfaction rates, all while opening up additional channels to engage and collect from consumers struggling under the financial burdens created by this pandemic.
  • Evaluation: As conditions change, for better or worse, it will be vitally important for lenders to evaluate new business rules and decision strategies in real-time/near real-time in order to drive better economic outcomes for the bank and their customers alike. While this is especially true during the Covid 19 pandemic, constant re-evaluation of your credit strategies should become the “new normal”. Those lenders that can execute this new reality will be well positioned during this downturn, and more importantly, as conditions improve.
  • Segmentation:  Explore each existing customer relationship by the nature and level of impact associated with Covid 19. This can help cluster customers and frame proactive Account Management strategies designed to not only aid the consumer during a trying time but limit the bank’s exposure to future delinquencies and charge-offs. Programs should be highly targeted to each account/consumer and can include short term payment extensions, new credit lines, fee waivers, collections treatments, and other strategies.

These and other thoughtful strategies, when executed through the right mix of data and technology, can help today’s risk management executives support their consumer and small business accounts through this Covid-19 crisis while limiting the threat to their firm’s balance sheet or the broader financial system as a whole.

Thanks for taking the time to read this!  Spring is upon us, and I wish you all nothing but the best for the remainder of 2020 and beyond.

Stay Safe!

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Will Social Distancing Propel Latin American Financial Institutions Towards Digitization?

Written by Allison Karavos on . Posted in Blog. No Comments on Will Social Distancing Propel Latin American Financial Institutions Towards Digitization?

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Will Social Distancing Propel Latin American
Financial Institutions Towards Digitization?

Just a few weeks into this crisis, the outlook, and vision of what was intended for the financial market in Latin America, was dramatically advanced. And based on these changes, experts argue that it is time to trust technology more and to adopt and accelerate its use in the products and services that various financial institutions market.

What are the advantages of Fintech? The answer is obvious: you can offer products and services, and acquire clients without having them on-site, that is, without having to appear at a bank or go to a certain physical location. However, only a small percentage of the market knows what a Fintech is, and these clients always fall back on the opportunities that traditional banks can offer them. The Fintech industry, in this period of COVID-19, will need to go through an era of education and drive to generate awareness and exposure among its potential users, to stop being a “nice to have” and finally become a reality. The Fintechs, without question, are here to stay.

The path, in the Latin American market, will be to digitize those “not digitized” and will possibly mark a trend for banks: to offer digital accounts with no monthly maintenance cost (as many Fintech companies do today) to unbanked clients. From this financial inclusion, these users would have easier access to funds from Coronavirus donations.

With the rise of open banking, Fintechs will focus on partnering with traditional banks or other entities to help them in the digitization process, empowering banks to move from an in-person model to a digital model. In the case of risk management, the trend will also be for Fintechs to help Latin American financial institutions on the path and process towards digitization. The Coronavirus will undoubtedly generate an increase in the use of digital technology in the Latin American market, and banking from home will be more useful than ever.

From a financial standpoint, technology will allow financial institutions to offer and market products in an agile and effective way. From a business perspective it will contribute to the “digitalization journey” and the growth of Fintech businesses and other financial institutions. But, perhaps the biggest motivator for taking the digital journey is that financial services organizations can better support clients through difficult times, like the current period of upheaval that Latin America and the rest of the world are going through. It is essential to have software focused on instant risk decisioning that can make it possible to grant any type of financing/credit in real-time, so that customers can access funds quickly.

The operationalization of risk models will also become a fundamental element in successful digitization, especially as financial services businesses expand their use of non-traditional data. These data sources feed innovative risk models that allow more advanced and accurate risk assessments to be made when authorizing payments or making credit approvals, without the support of traditional data, such as credit bureau scores.

The current Coronavirus crisis presents an opportunity to embark on the kind of innovation that the Fintech ecosystem in Latin America needs and, of course, to publicize what these companies offer. Right now, remote work and the possibility of working from home are changing the routine and the way we operate in our daily life. Digital and, therefore, technology will become a fundamental resource for our businesses, increasing both the reliance and the value technology solutions bring.

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Global Roundup – Innovation Opportunities in Financial Services 2020

Written by Allison Karavos on . Posted in Blog. No Comments on Global Roundup – Innovation Opportunities in Financial Services 2020

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Global Roundup –
Innovation Opportunities in Financial Services 2020

In our last blog, Provenir sales executives from around the globe shared snapshots of the biggest changes to happen in the financial services industry in their region in 2019. This time our teams based in North America, Latin America, Europe, and the Asia-Pacific region, share their thoughts on what 2020 will bring for the industry. We asked:

What innovation opportunities will lenders be exploring in 2020?

The Americas

Brendan Deakin, Sales Executive – Northeast US Region

Based on what I saw at Money 2020, it appears the industry is going to be very focused on Fraud/Cyber crime over other innovations. However, this is only a subset of the key priorities faced by banks in 2020 and beyond. I would suggest we’ll see more of the same in 2020 as in 2019.

a. Product Personalization – more and more digital product offerings and channels, where banks will market and serve consumers and SMBs uniquely (1 to 1) vs. as a segment or group.
b. More and more partnerships between established/legacy banks and FinTechs to build unique value propositions for various consumer segments. I would also bet there will be some consolidation in this space as well.
c. Payment innovation globally will continue to advance. I see the use of smart appliances (fridge, cars, IP enabled devices of all kinds) as payment tools. I also see more convergence within the POS space, where merchants, payment networks and others continue to give consumers choice at the register.

Dominic Schaffer, VP of Sales – Western US Region

The recent joint statement from the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the National Credit Union Administration, announcing support for the use of alternative data in credit underwriting will fuel more innovation in lending. The sub-prime and thin file markets will see the biggest benefit with better loan products and services available for consumers and an improved customer experience. The challenge will be for businesses to effectively use alternative data to make more informed decisions and manage risk while complying with federal regulations.

Julie Mannella, Director of Sales – Canada

2020 will see lenders cutting costs by moving away from legacy systems and building the technology stacks needed to improve efficiency and support single-platform engagement. Given the rapidly evolving landscape of big data and access to the same, it will also be important to contemplate the architecture of these systems to connect to many types and sources of new data becoming available.

Gaston Peralta, Director of Business Development – Latin America

2020 in Latin America offers huge innovation opportunities, especially as lenders harness alternative data, social identity, and technology to derive credit scores.

The opportunity to reach more and more of the underbanked market using technology is immense…The areas that will see more growth are the ones who make the most intelligent use of data and expand the use of AI.

We will see a new era of advancement for the use of technology in the form of regulations and the launching of RegTech. FinTechs can benefit from the expansion of regulations if they capitalize on their flexible technology and digital-first approach to respond quicker than traditional banking institutions to the new rules.

Additional monetization opportunities are available to innovative organizations who commoditize services as well as products. For example, the low cost of FinTech could convert previously neglected banking services into very effective financial products.

Europe

Chris Kneen, Regional Sales Manager – United Kingdom

There has been an explosion of data in the last couple of years and the banking sector is currently one of the top investors by industry in big data and analytics solutions. The amount of data being generated is vast and unprecedented via card transactions, cash withdrawals, e-commerce and credit scores. Understanding how that data can be used, within a regulatory compliant framework, will be critical to staying competitive in 2020. I expect the sector to continue to invest heavily in data science and intelligence functions to really understand the value that can be gained.

There has also been a significant growth in the ‘buy now pay later’ e-commerce sector with Klarna leading the way globally. There are some huge benefits to the consumer, the purchasing experience is slick and it has changed the way merchants operate online. This growth is set to continue with new entrants looking to compete in this sector and push innovation further. Importantly, I expect there will be additional oversight and scrutiny from the regulator to prevent increasing levels of consumer debt and increase awareness of the risks in borrowing.

Marcus von Rahden, Regional Manager – Central and Eastern Europe

The fintech and traditional banking ecosystem is growing quickly in strength across many European cities including Krakow, Sofia, Amsterdam and Vienna. Klarna have recently announced their move to create a tech hub in the heart of Berlin as a centre of innovation. We also have clients that are exploring the use of social media to facilitate direct consumer loan applications – this is really exciting. These cities are attracting exceptional talent from across the world and I see the sector growing stronger with the development of new disruptive technologies. The combination of big data analytics, cloud tech and machine learning has the potential to change the whole banking industry in faster and more disruptive ways than ever before.

Inigo Rodriguez Navarro, Regional Sales Manager – Iberia

There is some really interesting work been done on machine learning and this is an area I see lenders developing further throughout 2020. Through their brands Plazo and Moneyman, ID Finance have developed lending products to SMEs and the underbanked that that are built on sophisticated machine learning technology. Using this technology to address financial inclusion is really exciting for the industry. Business and consumer lending remains the main area of focus for customer innovation, but I believe there’s an opportunity to translate this across other sectors including utilities and insurance.

Patrick Radise, Senior Sales Executive – Nordics and Baltics

A major driver for banks in 2020 will be a strategic response to PSD2 EU regulation. Almost every bank seems to be massively increasing their levels of investment in innovation in their digital channels and partnerships with FinTechs.

Automation and speed will be essential to compete as we move forward and AI/ML can be a key part of the technology for achieving that. To add value to the end customer, I believe leading banks and FinTechs will be the ones that integrate AI/ML/Automation into all parts of the bank based on the customer journey and experience for a proactive lending service.

Regulation for AML/Fraud is likely to drive digital development/payments and automation.

Asia-Pacific

Tim Kerslake, Account Director – Australia and New Zealand

In 2020 lenders, including existing credit/debit card providers, will need to either adopt or respond to the rise of Buy Now Pay Later financing. A number of existing firms are looking at ways of doing so, such as CBA partnering with Klarna and Latitude Financial Services launching LatitudePay. I expect others to respond.

Several neo banks received banking licenses and established themselves in the market in 2019. In 2020, we will see their offerings launched in more detail, and beyond transactional and saving services we should start to see more financing/lending offerings come into the market.

Open Banking is scheduled for 2020, it will provide greater data access for assessing lending, particularly for neo banks and FinTechs.

Patrick Tan – Regional Sales Director – Singapore

With more than 400 million people using the internet every day and over 80% of it on their mobile phones, there is a significant demand for mobile wallets, mobile payment apps and mobile banking. The governments in Southeast Asia are pushing for a cashless economy. Vietnam’s government has also made a target to become cashless by 2020, while Indonesia aims to be the largest digital economy by 2020. There are other sub-sectors in fintech like insurtech (insurance technology), regtech (regulatory technology) and robo-advisory personal finance platforms, that are still continuing to emerge.

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