Data driven insight at Vocalink

We interviewed Marc Corbalan from Vocalink about AML Insights: data driven innovation that delivers real benefits to customers.

AML Insights (Anti Money Laundering Insights) from Vocalink won the Rising Star Award at Market Gravity's Corporate Entrepreneur Awards in November 2018 - a proven concept with the potential to make a significant impact.

So who are Vocalink?

  • Vocalink are a Mastercard company, acquired by them last year
  • They operate payments infrastructure between banks in the UK, processing 12 billion payments per year
  • Those payments are highly structured. High volume, high structure payments react well to advanced data science treatments such as machine learning and artificial intelligence
  • 4 years ago, Vocalink created a company which creates products out of the analysis of this data for banking clients , UK consumers and other businesses

AML Insights is one of the most successful products that Vocalink has created. Fraud is a huge problem in the UK, with money launderers typically transferring sums to one account and then quickly breaking that sum down through multiple transfers to different accounts, with different banks. This process is then repeated by the secondary accounts to make tracking the money incredibly difficult. Fraud figures in the UK are very high: in the first half of 2018 the total value scammed from people was £145 million.

What does AML Insights do, and how does it work?

  • AML Insights is a network product - enabling suspicious payments to be traced, even if the payment is split between multiple accounts and across different banks.
  • The product creates a visual map of when and where the money has moved, and is also able to pinpoint individual accounts known as 'money mule' accounts, which are used to transfer stolen funds.
  • This works to disrupt the networks by which fraudulent money is being dispersed. Making fraud more difficult therefore acts as a disincentive.
  • The tool can reduce the amount of time that fraud analysts spend looking at accounts by adding flags to those suspicious accounts. Contrary to perception, this has actually caused fraud teams to expand, because they have more information available to them.

"The majority of banks are competitive. Fraud teams see collaboration as the way to raise the bar. That uniqueness of banks collaborating with each other through fraud has created a good environment for us to work together. "
Marc Corbalan, Vocalink

How did Vocalink test AML Insights?

  • AML Insights invited anti fraud teams to the data lab, matching them with payments experts, data science and products experts
  • Extensively piloted the technology with real (offline) data
  • Presented the results to banks and waited for their approval before applying it to the live data
  • Used a feedback loop: the algorithm finds the accounts that it thinks are suspicious, these are then assessed by a fraud analyst. Through that feedback loop, the system becomes more and more accurate.

AML Insights is a world-first product and has attracted a lot of attention with other countries and other markets. They're currently working to see how they can deliver this technology to those businesses and customers.

If you'd like to learn more about Vocalink, or AML Insights, take a look at their website here

To listen to our dulcet tones on the podcast, you can find us on all the podcasting apps, or here


Corporate Innovation: from launch to 500,000 registered users with Yolt

"If you do things that are already known, you’re not innovating. New territory comes with making mistakes." - Frank Jan Risseeuw, Yolt

Hello friendly blog readers. I’m trialling a new format of the blog this month. If you find the podcast a little tl;dr, (too long; didn’t read) then you can now use this blog post to catch up in an easily digestible format. And if once you’ve read it, you want to have a listen, as always you can find us here.

This month, Ben and I spoke to Frank Jan Risseeuw, the CEO of Yolt, on their journey from an idea at ING 2.5 years ago, to 500,000 registered users and a plan for European expansion.

What is Yolt?

  • Yolt is a new money management ‘aggregator’ app which has just reached 500,000 registered users in the UK.
  • Why the UK? Yolt was launched here first because Frank Jan said it’s the capital of FinTech innovation, with a large appetite to test new apps. There’s also a wide banking landscape and a real opportunity to bring a digital only banking app to the market.
  • However, Yolt have recently launched a closed Beta test in Italy and France to see how the product will grow in this market.
  • The Yolt journey began in 2016 at ING, when the new open banking legislation was coming into play. ING wanted to capitalise on this and saw an opportunity to create a ‘bank without the balance sheet’. 

Many a corporate innovation or new idea never get off the ground. What is Yolt’s recipe for success? For Frank Jan, you need to have the following:

  • A clear purpose
  • A good plan
  • The trust of investors or the company backing the concept 
  • The right culture, which he defined as: the right people, who have the freedom to work and deliver 
  • Belief and trust in your idea: not bringing in new features and ideas every week – but sticking with the idea and having regular check-ins 
  • An ambitious yet resilient attitude – understanding that you need to get things to market quickly, in order to learn. When you do things that don’t work or make mistakes – that’s all part of it. 

ING had an idea, and Frank Jan took the role of CEO and started to build his team. What did he look for in the people he was bringing onboard?

  • People who can see the big picture, and understand the purpose of what you’re trying to achieve
  • People who can make traction, always taking small, agile steps to get things done
  • People who strive not for 99% but for 100% when the time comes

How did Yolt approach testing?

  • Test and learn cycles were employed throughout the process, starting with discussions with customers about their attitudes and thoughts on money management
  • Continuing to run focus groups and testing around the topic of ‘Unthink’, as Unthink Money is Yolt’s tagline, to continue to engage customers
  • Building a community of power users who were very invested in the product
  • A flexible roadmap of planned features which would change depending on customer feedback

And finally, here’s a picture of the Yolt team accepting their Excellence in Innovation Award at the CEAs this year. Well done Yolt!


Studio B, innovation lab, banking innovation lab,

NEWS: Driving digital disruption with Studio B

Thanks to the power of a continuing partnership, it's all systems go this month as we help Clydesdale and Yorkshire Banks to launch Studio B - the UK's first design-led banking innovation lab on Kensington High Street.

Working with the Banks’ innovation team, our talented team has helped design, implement and launch the UK’s first experiential banking innovation lab – Studio B.

Studio B invites and encourages members of the public as well as squads of next generation innovators and talented young designers to come in and test, trial and provide feedback on new technology, develop new products and ideas and share insights on their banking behaviours.

 

Studio B, banking, innovation lab
The Studio B banking innovation lab on Kensington High Street, London

 

Located on Kensington High Street, London, squads will take part in timeboxed sprints and apply their perspective to set challenges in order to create solutions to customer problems. They will work with and design technology to meet the needs of the next generation of banking customers. Applicants can apply to join the studio through social media, design blogs, and creative networks and will be judged on their creative thinking and ability to work in teams via a short video interview.

There will be interactive experiences as well as banking facilities and self-service branch technology to give visitors an immersive experience while allowing them to carry out practical banking activities using new technology.

 

Studio B, banking, innovation lab
Studio B offers visitors an immersive experience.

 

Studio B, banking, innovation lab
The Studio B innovation lab space is both inspiring and functional, it is as much a factory, as it is a showroom – designed to deliver, not just to imagine.

 

Nick Sherrard, managing director Market Gravity Edinburgh, led the project. He says: "Studio B will be a unique experience featuring retail, experiential and interactive activities with a programme of creative and informative events to engage with audiences. It’s exciting to see the concept come to life and it’s great to work with such a forward–thinking team bringing disruption and innovation to the banking sector. We’ll be exploring voice recognition, Artificial Intelligence, Virtual Reality, Internet of Things, blockchain and other innovations set to disrupt the sector even further. Exciting times ahead!"

Helen Page, Group Innovation and Marketing Director, Clydesdale and Yorkshire Banks, says: "We want to create the next generation of banking services delivered by the next generation of users. Studio B is our way of reaching out to identify the challenges within banking and to draw out creative and innovative ideas for solutions.

"With the development and launch of our super smart banking service "B" in 2016, and now Studio B, Market Gravity continues to be a brilliant partner. Their experience in banking innovation and disruptive new propositions perfectly complements the ambition and creativity within Clydesdale and Yorkshire Banks. For us, pairing our tech partners with invited guests and members of the public will give us real insights into customer problems and together we will devise solutions that fit into modern, and future, lifestyles and we’re excited to see new ideas brought to market very soon."

If you'd like to read a fuller story and understand how we created Studio B - click here.

For more information about B and Studio B - click here or head to Studio B on Kensington High Street, London.

 

 


open banking

Open banking disruption and SMEs – where to next… for traditional banks?

Small and medium business owners are desperate for the disruptive changes which open banking will deliver - even if most don't know they are coming yet. Banks should think about how to turn open banking from a challenge into an opportunity. One way to address key business customer needs is by opening a “data dialogue” with them now, before others own this conversation.

Established banks are facing a perfect storm

Technological innovation and regulatory changes are lowering the entry barrier for financial services companies. Nimble newcomers are no longer held back by stringent compliance and banking license requirements. They are also not encumbered with huge infrastructure costs. They can deliver the modern, easy, personalised, and integrated service that retail – and particularly business – customers have not been getting. SME owners are increasingly frustrated with the contrast between their financial experiences as individuals and as businesspeople.

Customers worldwide are increasingly open to receiving financial services from non-banks. Look at PayPal, Apple Pay, TransferWise. Even the mobile payments revolution in Africa, which bypasses the traditional banking relationship. Now the upcoming EU PSD2 open banking regulations will compel banks to let in third parties via APIs (Application Programming Interfaces). They will have access to customers’ account information, and will be able to make payments on their behalf. Suddenly a traditional bank looks like a bland money safe. And customers cherry-pick providers who offer them delightful experiences around their finances, that are just the right fit.

The UK Government is happy to speed up these changes. The Competition and Markets Authority is introducing reforms to force more competition into small business banking. It wants to address low rates of bank switching and product comparison. Nesta – a UK innovation foundation – is running the Open Up Challenge. It’s a contest for fintechs to take advantage of the transparency and healthy competition PSD2 will enable. Their mission is to transform how small businesses “discover, access and use business-critical financial services”. Crucially, five large UK banks are contributing to a customer data sandbox which entrants can use to test their technology. Such participation is very encouraging, but it also looks like a slight case of “being made to play nicely”…

Banks were slow to understand and respond to business customers’ needs

The rapid pace of technological and regulatory change left banks alarmed about being lapped by competition that didn’t even exist ten years ago, and struggling to decide on the best way forward.

Another reason to worry is that fintech newcomers have really listened to customers, and are addressing their main banking issues. Traditional banks have either not been listening, or listened but for various reasons haven’t done enough about it in time.

I recently heard a great webinar on business banking disruption. The panel participants included Sigridur Sigurdardottir (Chief Customer and Innovation Officer at Santander UK), Pete Steger (Head of Business Development at Kabbage), Luka Ivicevic (Co-founder and Head of Growth at SME-focused bank Penta), and George Bevis (Founder and CEO at SME-focused bank Tide).

Several interesting UK challenger banks were discussed. They all had one thing in common. They’re solving key small business banking frustrations that I’ve heard from Dublin to Hong Kong:

  • “My bank doesn’t know me and my business. They waste hours of my time, and can’t offer relevant financial support”. CivilisedBank has an elegant solution – a fluid network of “local bankers”. This replaces branches and relationship managers (who are only available to larger businesses anyway). It says: “business banking happens where you do business. Our Local Bankers come to you. You’ll always speak to someone you know - your personal banker or their support team”. This kind of thing is what can get SMEs to consider switching banks.
  • “Computer says No” decisions. SMEs feel hamstrung by banks’ inability to accurately judge their creditworthiness. They find that banks are unwilling to take a chance on their potential, and make rigid decisions based on sometimes limited history. Oaknorth describes itself as “the bank for entrepreneurs, by entrepreneurs”. One of its key promises is a dialogue between entrepreneur and lending decision maker. This avoids categorical yes/no decisions read off computer screens.
  • “I can’t plan because I can’t get quick decisions from my bank”. Oaknorth is focussed on continuity of lending. It’s one of the main reasons SMEs are afraid to switch banks. It’s also why they are drawn to venture capital investors who are seen as more committed. CivilisedBank promises to “run in real-time [so] you and the bank access up-to-date information for faster, better decisions”.
  • “I wear many hats in my business, and need to feel in control of everything – but there isn’t enough time for all my responsibilities”. Coconut is a bank account for freelancers and the self-employed. It “works out your taxes, tracks your expenses and helps you get paid on time”. This is a good call in light of the huge increase in UK sole-trader businesses. It’s fuelling demand for integrated services, allowing one person or a small team to run a small business more efficiently.
  • “I get nothing back for my loyalty to my bank”. I’ve heard from many SMEs that while they consider themselves loyal to their bank, they don’t feel it’s reciprocated. Lintel is a digital bank which differentiates itself on ethics and rewarding loyalty. Its customers will receive a bonus based on average account balances.
  • “Personal banking is dead”. Here I see a generational divide. Established SMEs do mourn the almost-extinct local bank manager who knew them by name. Younger ones have rarely known one. They are realistic, even cynical, about their mostly transactional “relationship” with their bank. The webinar panel discussed whether entrepreneurs will stop caring about “personal banking” completely, and value speed and efficiency above all. I personally doubt this. It’s true that saving time on admin gives entrepreneurs more for doing what they are good at, and enjoy most. But there is a risk with fully automating banking. Especially those aspects involving some discretion, faith, and relationship building - like lending. It could make banking convenient most of the time, thanks to apps and snazzy UIs, but even more frustratingly impersonal when it’s the last thing an SME owner needs. CivilisedBank’s Local Bankers are a response to this. And Sigridur Sigurdardottir stresses that SME customers should always be able to pick up the phone and talk to Santander!

Will banks out-fintech fintechs?

Currently banks – established and new – are pursuing several (related) ways to keep up with the competition:

  • Opening themselves up to “plug-in” services via APIs. Penta has embraced this. It’s aiming for an open platform to “enable creative app writers, for customers to benefit from great services”. Mobile-only bank N26 is creating a bolt-on ecosystem which is already looking beyond core financial services, to insurance and lifestyle.
  • Full partnerships. Santander has partnered with Kabbage to provide its SME lending in the UK. Santander chose to partner with a fintech delivering excellent customer experience in a particular area. Kabbage partnered with an established bank to benefit from its brand recognition and trust. Barclays is opening Rise, a huge co-working space to “match fintechs with business challenges we we face as an incumbent bank”. Market Gravity is currently helping another global bank implement similar partnerships as part of our work on its business banking proposition.
  • New digital banking platforms, allowing banks to do creative things with customer data, including through APIs. Monzo built its own platform. Atom Bank partnered with FIS. Market Gravity is helping 10X create a universal platform, built on open banking principles. It will allow banks to deliver very personalised financial experiences to their customers.

A potentially disruptive threat is from non-FS service providers already engaged with SMEs and doing something really well. “Could Xero apply for a banking license, or partner with Kabbage?”, asks Luka Ivicevic from Penta. This could create a one-stop-shop for banking, lending and business / financial admin – making banks less relevant. Watch this space… In my own research I see accountants pushing their SME clients towards cloud packages like Xero. These allow them to keep a closer eye on clients’ finances and to act as an adviser. Accountants have SMEs’ ears, and I can easily see them recommending “Xero Bank”.

It’s not yet clear whether banks will be strengthened by the rush to collaborate with fintechs, or fade into the background. They could become difficult to tell apart, and lose their grasp on the customer relationship. What is the right thing for a bank to do? Become an app store and allow a universe of fintechs to plug in and serve any customer need imaginable? Pursue tactical partnerships to become best-in-class for certain customer types? Rebuild themselves on top of a new banking platform? Or just serve as the “plumbing” infrastructure in some completely new banking environment?

Banks should open a “data dialogue” with business customers

Customer data underpins all these new conversations about the future of banking. George Bevis from Tide sees the very definition of banking changing to acknowledge that it constitutes a huge “data hub” of any business. I believe that there will be a rise in data processing platforms which will enable SMEs to glean insights from all the data they generate, helping their growth. All sorts of interesting data sources will also be coming into play. This is happening already – Kabbage makes lending decisions by using customer data which Santander can’t.  However, there are still important legal questions to resolve. Who owns the data – customer or bank – and who can access it? Pete Steger from Kabbage points out that this is a hot issue in the US – so we may be leading the way with PSD2 in Europe.

I think more banks will take steps in the right direction by opening  a “data dialogue” with their SME customers. This will give both parties real-time awareness of a company’s cash flow and banking behaviours – and of how these affect its credit score and borrowing options. Businesses could be guided towards optimal financial health. They should be better able to quickly secure credit that suits their needs. Market Gravity and a major Irish bank recently developed an SME working capital proposition based on this thinking.

Open banking is a challenge and an opportunity for traditional banks

Now is a crucial time for banks to formulate a clear strategy to survive and thrive in the new world of open banking. How to take advantage of the best of what’s already out there, and upcoming changes? How to reflect their own unique strengths and identity?

And above all – how to understand customers’ changing needs and expectations, and translate it all into products and services that result in delightful, long-term engagement?

Open banking is an opportunity for a long overdue reset of established banks’ relationship with their customers. A client with their eyes firmly set on this opportunity recently told me: “We want to be the most-loved bank in the UK.” Are you aiming this high?

 

Igor Zakhleniuk, Insight Lead, Market Gravity

Market Gravity partners with the most ambitious companies across Europe, Americas and Asia to create and launch breakthrough propositions that make their customers’ lives better.

Get in touch with me at igor.zakhleniuk@marketgravity.com to talk about where your company wants to go next.


NEWS: Exploring AI innovations in finance

A workshop aimed at financial services organisations is taking place in London to help business leaders understand and explore opportunities within artificial intelligence.

The session, ‘AI in finance: exploring innovations in machine learning and automation for financial services’, will be held at Atlantic House, on Wednesday 9th November and will see 15 speakers deliver practical and educational presentations and facilitated discussions.

Expert speakers include Peter Sayburn, co-founder and CEO of proposition design consultancy, Market Gravity, who will deliver a facilitated discussion on robotics for manual process automation. He will lead debates on where the human touch is and isn’t needed, outlining potential cost-savings associated with robotics and how it can improve service quality, accuracy and scalability. He will also consider how it can become an alternative to standardising business processes and facilitate integration among disparate systems.

Peter is an entrepreneur, investor and author who has worked with some of the world’s foremost financial services businesses. He is passionate in the belief that if large companies are to live and grow in the digital age they must create a culture of innovation and embrace new technologies, such as AI, to stay ahead in the competitive marketplace.

Peter says: "Artificial intelligence represents a huge opportunity for the finance sector and it’s important for organisations to get involved and embrace the technology. It can improve the efficiency of their processes, meet consumer demand for speed, personalisation and convenience, and allows businesses to launch innovative new products and services to compete with new challengers and entrants to the financial services sector.

“This event brings together experts to share knowledge, experience and predictions on what’s coming up in the near future for AI and where the market is going. I’m delighted to be presenting alongside leading innovators from the financial services and tech sectors and look forward to some lively discussions.”

Marie Walker, director and co-founder of Event Creation Network, designed and organised the AI in Finance event. She says: “London is a hub of fintech innovation with hundreds of organisations developing exciting new products and services and AI is one of the technologies driving these innovations forward. Research from TABB Group Services highlighted that over two thirds of financial service firms believe AI will become hugely important in the coming years and around 34 per cent of businesses are carrying out proof concepts in the space. The event promises to be informative and compelling, giving attendees practical steps to explore regulatory compliance, customer service, financial forecasting and manual process automation.”

The workshop will feature an impressive line-up of additional speakers including Devika Thapar from IBM Watson, Hamish Leiper from Standard Life, Guillaume Vidal from Walnut Algorithms and Clara Durodie from Cognitive Finance.

The AI in Finance workshop takes place on Wednesday 9th November at Hogan Lovells, Atlantic House, London EC1A 2FG. For a list of sessions and workshops and to book your ticket, visit http://ai-finance.com.


NEWS: Challenging the challengers

Market Gravity’s Paul Bowman shows banking industry how to act like a challenger.

The banking industry is facing a challenging time as established high street banks attempt to re-find their niche in the marketplace and keep up with today’s fast-moving digital trends. The new breed of challenger banks is turning banking on its head but Paul Bowman from Market Gravity believes big banks can also bring their offerings into the digital age by embracing new, disruptive technologies and changing their ways of working to think and act like a challenger.

Paul, partner and Edinburgh managing director at the proposition design consultancy, will present at the RFi Group Global Digital Banking Conference on Thursday 16th June along with Helen Page, propositions and marketing director at Clydesdale Bank and Yorkshire Bank. He will outline why a traditional long term strategy is no longer relevant and how organisations need to think in weeks, not years. His presentation will cover the concepts of proposition sprints, mission culture and empowering people, learning how to pivot and how to encourage progress over perfection. He will discuss a breed of ‘new challengers’ and explore how bigger players can combine their experience and heritage with innovation and technology to stay ahead in this competitive marketplace.

Market Gravity demonstrated how this is achievable on its work with Clydesdale and Yorkshire Banking Group on the launch of B – a customer-design-driven current and savings account that works within a smart app. B is a UK first and promises the fastest account-opening process and a host of features designed to enhance customer engagement and retention. Existing customers can make the transition into mobile banking and younger, tech-savvy users will be attracted by the new experience.

Helen Page will discuss the importance of digital banking to the future of retail banking and how listening to customers and offering new, fresh approaches can help to drive new digital banking experiences.

The RFi Group Global Digital Banking Conference takes place on Thursday 16th June at The Banking Hall, London. For full details on the conference, visit the website.

Read the story on how we helped Clydesdale Bank and Yorkshire Bank create B to become a new challenger.

Want to become a new challenger?

Paul and the Market Gravity team can help you become a new challenger.
Get in touch to find out how.

Email Paul Bowman