Consequently, because this is a Microsoft-owned blog site I will no longer be posting content here. To continue following news about solutions for financial services and the impact of Microsoft technologies, please contact my colleagues in the Worldwide Financial Services team.

Many thanks to you all for reading and commenting over the past few years, especially those of you I have had the privilege of meeting and discussing industry and technology perspectives. In addition to contacting my colleagues, please also feel welcome to follow me on Twitter and LinkedIn.

1. Standardize the Data

Corporate treasury staffs deal with many systems and applications: multiple bank cash management solutions, internal ERP, and perhaps dedicated treasury management systems, as well. The plumbing required to deliver corporate bank statements around the world in a timely manner is even more complex as many variances occur in the types of data needed (even within standards), country capabilities, and timing of statement delivery. Add in intra-day updates and the picture becomes increasingly complicated.

Microsoft group treasury acts as an in-house bank to over 250 country subsidiaries. To streamline reporting we implemented SWIFT ISO-XML 20022 for bank statement reporting covering over 99 percent of global cash. This initiative to implement a standardized format using BizTalk Server improved efficiency and delivered auto-reconciliation and auto-posting capabilities because of the standardized data structure.  We placed priority on achieving electronic cash visibility and mobility by effectively managing the company’s bank account infrastructure, with the end goal of reducing cash held in high-risk locations.

2. Make Data Actionable

“Spreadsheet” is an innocuous name for an extremely powerful finance tool. Despite the plethora of systems in treasuries, the reality today (and foreseeable future) is that Microsoft Excel remains the default go-to application for cash positioning and financial analysis. So at Microsoft Treasury we turned Excel into our interactive business intelligence (BI) dashboard for a complete view of cash and bank operations. And you can do it too, with tools already in Excel.

After implementing ISO-XML 20022 to gain electronic visibility into cash balances at any given moment, the next step at our treasury was to implement Microsoft business intelligence (BI) tools to analyze and interpret the data managed in a SQL Server database. Real-time visualizations that show cash positions and risk profiles dynamically over time make it much easier to see and assess risk, and determine appropriate mitigating actions. The Power View visualization capabilities of Excel in Office 365 allow for interactive graphs, charts and maps that allow the treasury team to summarize cash balances by counterparty, currency and geography.

Most likely you already have the ability to do this same thing. These BI dashboards are an integral component of standard Office 2013 and Office 365 productivity tools.  SQL Server is used by most enterprise IT organizations.  The deployment and user experiences are something treasury teams around the world will already be very familiar with – and are consumable across multiple devices; from desktop to laptop to tablet.

At Microsoft we have seen clear benefits to this integrated strategy.

• Visualize data for better decision making. With these dashboards, immediate, graphical representation of complex data is available in a form that allows the treasury and CXO leadership team to make strategic decisions. Self-service BI using the visualization capabilities of Excel PowerView empowers decision makers and allows IT to focus on data management.

• Improved working capital. Due to real-time cash forecasting and position analysis, treasuries should expect improved forecast accuracy and feel more confident implementing just in time funding for subsidiary operations and so minimize idle cash balance in bank accounts.

• Increased invested cash and investment income. With the ability to review cash balances by various dimensions and the ability to have improved cash flow forecast, a treasury should be able to transfer cash in non-interest bearing accounts to an investment portfolio allowing better risk-adjusted return on the cash.

In order to remain competitive it is incumbent on banks to develop new and innovative services and solutions that add value to the treasury user. In other words, tools that help a treasury run more effectively. Why not leverage the Microsoft tools treasuries use today?

Cybercrime costs businesses billions of dollars every year, and financial service institutions are at an especially high risk. Malware and Trojans deployed to consumer devices and corporate workstations alike puts the identity of individuals at risk, and makes the theft of funds a real problem. At a personal level, identity theft is a harrowing experience and at the corporate level, the idea that malware might be used to fraudulently initiate multi-million dollar funds transfers keeps treasurers and heads of information security up at night. It seems every week there is news of new hacks at major banks, but the reality is that every major bank in the world receives multiple hack attempts on a daily basis.

Microsoft takes a very foot-forward stance to this, starting historically with the Trustworthy Computing (TWC) initiative established by Bill Gates back in 2002. TWC was founded in response to malware that was dramatically and negatively impacting the internet. This initiative reinforced Microsoft’s “security by design” approach in our software development activities. Since 2009, Microsoft has led efforts to disrupt the world’s largest and most notorious malware.  We’ve partnered with a diverse range of private and public sector participants to disrupt these major drivers of global cybercrime.  Fast-forward to Sibos 2014 where we will introduce you to Microsoft’s Digital Crimes Unit, or DCU, the team behind the scenes of these efforts within Microsoft. This is an international team comprised of more than 90 attorneys, investigators, forensic analysts and business professionals, based in 30 different countries, working to transform the fight against cybercrime. This group plays offense against global criminal organizations seeking to profit from cybercrimes. The DCU proactively works with law enforcement agencies around the world such as INTERPOL, the FBI and EUROPOL to identify, shut down and bring to justice cybercrime perpetrators – in whatever country they hide.

But how do we do this? We think of it as the ultimate big data project. The DCU uses Microsoft’s BI technology, including Power BI for Office 365, SQL Server and the Azure cloud platform to identify and track malware attached to infected IP addresses – and then to trace the origins of the malware to the source.

At Sibos this year we were especially excited to announce a continuation of our front-footed approach to cybercrime with a bilateral sharing agreement. At Sibos, the DCU team is announced a partnership with the Financial Services Information Sharing and Analysis Center (FS-ISAC) to make available our Cyber Threat Intelligence Program (C-TIP) feed to its member companies. Why is this important? Because every time the DCU team disrupts malware, there are thousands if not millions of IP address affected, and some of those may belong to a financial institution and can be compromised in other ways. As this pilot initiative expands, member banks will be able to see if any of their IP addresses have been infected and take immediate action. This provides additional security and peace of mind.

We can’t do this alone – and we invite all major financial institutions to join us to fight the good fight.

I recently returned from a business trip to China and Japan where I had the privilege of meeting several major banks to discuss Big Data and business insights in financial services. I was keen to understand the key business opportunities they believed that investments in big data would support, and also the challenges they faced with implementation.

The key areas of focus resonated well with the business priorities I hear in the US and Europe:

• Customer and Product Analytics - to understand sentiments and usage to build a stronger lifetime view of a customer.
• Risk Analytics - to move toward real-time risk analysis and become more interpretive of risk rather than reactive to past events.
• Financial Performance - to predict impact on the business through a better analysis of costs/revenues and building simulations for the impact of cost cuts.

These core scenarios were equally pervasive in China and Japan, although I did notice an interesting cultural difference. The banks in China were much more open to discussing ideas and concepts with their peers (competitors) than the Japanese banks. Those in Japan viewed the promise of big data as something to be fiercely protected and a means to gain competitive advantage. Although the analysis and insights gained can and should lead to competitive advantage, banks also share some common challenges. The impact of big data - whether the massive amounts of structured data in systems, the explosive growth in new forms of unstructured data, or harnessing data streams from the cloud and social feeds is a huge challenge. What I saw in China was a mutual agreement of the areas that big data would provide value. Breaking that down a little further, where they shared information was in how to move beyond the 'what' and understand the 'how' to solve the problem. It is hard to overstate the volume of data in question in China - even by US banking standards. With a population of 1.35 billion, and a middle class as large as the entire population of the US, China has a massive banking population. One bank I talked to is based in southern China and is considered a tier 2 bank, yet has 50 million credit card customers.

With such large volumes it is almost impossible to start a big data project from the data upwards. One of the new practices I am seeing emerge is to start thinking about the questions banks want to answer, and then look at the data required to answer or interpret those questions. As an example, banks in all countries can learn from the approach taken by RBS Group in the UK. By working with Microsoft's Analytics Platform System the bank is mapping business customers' transactions across the globe to build a correlative view on GDP trends; and therefore a more qualitative view of risk which can be leveraged in multiple ways.

Whether dealing with big data in Japan or any other country, banks that start to ask innovative questions of data will be first to gain the benefits of a data and analytics program.

In recent years, we’ve seen two key roles in financial institutions rise to the forefront of business strategy: the Chief Risk Office, and the Chief Marketing Office. Although facing different priorities, these two executive offices have a common area of interest as they work to transform the financial services business: data analytics. While the CIO’s office continues to be just as important as before (maybe even more so as disruptive technology and consumerization trends reshape IT priorities), the industry is fast realizing that bringing data-driven insight to every decision maker in a financial institution in a timely manner can have a transformative impact.

Microsoft recently commissioned an IDC study (results in infographic below) to better understand what businesses globally—including the financial sector—stand to gain by propagating such a data culture across their organization. The numbers were almost unreal. 

• Over the next four years, the research showed that financial services institutions and related companies worldwide have the potential to gain more than $309 billion in value over a four year period from data, or what we call the “data dividend.” 
• Of that amount, $131 billion of value is forecast to come through improvements in areas such as human capital, IT optimization and regulatory compliance measures – including risk management.

Realizing the full potential of this data dividend will require that financial institutions no longer settle for status quo. As conversations in the C-suite of major financial services organizations begin to take off about how to get more “data smart”, a few guiding principles to keep in mind below: 

1. Take your data to school: There is a difference between the raw data that lives within an institution’s data repositories, and actionable insight that can help drive business outcomes. This nuance is especially critical in making decisions for banks, capital markets firms and insurance companies that are seeking to monetize data by building new services, better understand customer preferences and risk scenarios.
2. Power (BI) to the People: To fully tap the “data dividend” that our IDC study projected for the financial services industry, data-driven decision making needs to travel out of C-Suite and IT hallways and into every corner of your organization. This is where tools like PowerBI in Microsoft Office 365 can help deliver on the promise of self-service BI.  Although IT must retain control of data, bringing tools for analysis and interpretation of insights to the hands of business users and served up through applications they’re already familiar with (such as Excel) can help foster a data culture across your entire organization.
3. Don’t Start with a Big Data Solution Looking for a Big Data Problem: It’s easy to get caught in the big data hype and embark on ambitious technology investments that you have to justify while you’re looking for a problem to solve. Thinking about data management and what can be collected in an enterprise data warehouse is akin to putting the cart before the horse. Start, instead, by identifying key business problems where data-driven insight could drive the biggest impact. That exercise should very quickly help you identify what are the missing technology and data pieces in your puzzle.  
4. Choose Your Data Platform Wisely: Any big data initiative you take on will serve multiple masters. Your IT organization will care about security, risk compliance, scalability, elasticity and overall robustness of the data platform you choose to build on. The C-Suite will want to be able to work with a single source of truth that provides the most comprehensive, end-to-end, consumable view of business health and risk. And business decision makers will prioritize ease of interpretation of data above all else so they can deftly build key learnings and takeaways into future recommendations. By choosing a modern, cloud-based data analytics solutions that covers your needs comprehensively—from cloud data storage to analytics to data visualization capabilities in familiar productivity tools, all employees can participate in fulfilling your company’s vision.

 Whatever your business imperative, the right data—big, small, or any other kind—surfaced at the right time and with the right decision maker to drive impactful action is your ticket to a piece of the $309 billion data dividend opportunity that our IDC study identified. Unsure where to start? See how Microsoft’s big data and analytics solutions can enable your business transformation here.

I recently returned from a business trip to China and Japan where I had the privilege of meeting several major banks to discuss Big Data and business insights in financial services. I was keen to understand the key business opportunities they believed that investments in big data would support, and also the challenges they faced with implementation.

The key areas of focus resonated well with the business priorities I hear in the US and Europe:

• Customer and Product Analytics - to understand sentiments and usage to build a stronger lifetime view of a customer.
• Risk Analytics - to move toward real-time risk analysis and become more interpretive of risk rather than reactive to past events.
• Financial Performance - to predict impact on the business through a better analysis of costs/revenues and building simulations for the impact of cost cuts.

These core scenarios were equally pervasive in China and Japan, although I did notice an interesting cultural difference. The banks in China were much more open to discussing ideas and concepts with their peers (competitors) than the Japanese banks. Those in Japan viewed the promise of big data as something to be fiercely protected and a means to gain competitive advantage. Although the analysis and insights gained can and should lead to competitive advantage, banks also share some common challenges. The impact of big data - whether the massive amounts of structured data in systems, the explosive growth in new forms of unstructured data, or harnessing data streams from the cloud and social feeds is a huge challenge. What I saw in China was a mutual agreement of the areas that big data would provide value. Breaking that down a little further, where they shared information was in how to move beyond the 'what' and understand the 'how' to solve the problem. It is hard to overstate the volume of data in question in China - even by US banking standards. With a population of 1.35 billion, and a middle class as large as the entire population of the US, China has a massive banking population. One bank I talked to is based in southern China and is considered a tier 2 bank, yet has 50 million credit card customers.

With such large volumes it is almost impossible to start a big data project from the data upwards. One of the new practices I am seeing emerge is to start thinking about the questions banks want to answer, and then look at the data required to answer or interpret those questions. As an example, banks in all countries can learn from the approach taken by RBS Group in the UK. By working with Microsoft's Analytics Platform System the bank is mapping business customers' transactions across the globe to build a correlative view on GDP trends; and therefore a more qualitative view of risk which can be leveraged in multiple ways.

Whether dealing with big data in Japan or any other country, banks that start to ask innovative questions of data will be first to gain the benefits of a data and analytics program.

Hans, thank you for taking some time to discuss BIAN and the role of standards in the banking and payments industry.

Colin, it’s my pleasure.

In case some readers haven’t come across BIAN first hand, how would you describe the BIAN value proposition for banks and technology vendors?

As we all know, times they have been changing. In our industry we need to look closely at our IT spending.  In the old days that was not an issue, today it is.  We all want to get the most value for each dollar or euro spent. As of today we see a lot of spending at integrating off the shelf products into our existing IT landscape. If we want to reduce these costs the industry should be provided with an open reference model that includes generic service definitions. If both the banks and the vendors comply with that standard, a huge financial and technical issue will be solved. BIAN wants to achieve that.   

SWIFT Sibos is an event almost synonymous with standards. How do BIAN standards relate to the work being done at SWIFT for payment standards?

As you mentioned in your introduction Microsoft is a founding member of BIAN and so is SWIFT. When SWIFT joined they donated the ISO20022 meta-model and the underlying tooling to our association. As you all know ISO 20022 is focusing on B2B. We extended that meta-model to the A2A space, so the BIAN Meta-model is fully aligned with ISO200022 on which the payment standard is based.

There are many other organizations that have put forth standards in banking. I see you write and talk about ‘Real Standards’ – what do you mean by that?

The success of a standard determined by a combination of factors. Progress and adoption are the most dominant ones. You need to publish at short and regular intervals improvements and enhancements of the standard so the industry knows that the organization is still active and vibrant. Standards that are not applied, does not serve a purpose, is standards for the sake of standards. So usage of the standards by the industry, as is done with the BIAN Standard, makes it a real standard.

Other than visiting the Microsoft stand (D108), how can people who may not be at Sibos also contact you to find out more about BIAN and the benefits of membership?

I would like to encourage everybody to visit www.bian.org and take a look at the available material. All the published material can be downloaded for free! Since our release last February our deliverables are available for non-members in HTML and for our members in UML. This allows interested parties to browse all material, drill down and so on. At our home page one can also find our members testimonials and webinars.

Can people make an appointment to meet you at Sibos?

Of course, everybody who would like to meet me our any of the BIAN representatives at SIBOS just drop me an email at hans.tesselaar@bian.org and I’ll set up such a meeting at our stand D108 or any other place that you will prefer.

Hans, many thanks for your time today, and I look forward to seeing you in Dubai!

Chris. Thank you for taking some time to discuss some of the trends you see happening in the industry today.

Thanks Colin. It’s a pleasure.

What kind of business changes do you see happening to the payments world?

There are so many changes, but if I had to pick one that is the most impactful, I’d say the collision of the Retail and Financial Services over the past five years. Both industries - and the world at large – have accepted that the future of payments is all going to happen on phones and mobile devices. However, both industries have been largely struggling to figure out how. We've seen enterprises in both industries rush to make investments in an effort to stay more relevant, but unfortunately, those investments were with a plethora of different startups with point solutions and new business models.

After lots of trials, the realization is now hitting that payments is really all about how effectively you can capture and manage data about consumer shopping habits. Retailers and banks have concluded that they need a platform that can handle all the end points, not just the simple transaction.

I imagine that imposes some technology challenges and considerations….

Indeed. Enterprises in both the Retail and Financial Services industries that have implemented lots of point technologies and are now having trouble maintaining all the various end points, but are hesitant to throw out their legacy systems. In order for financial brands to stay relevant, legacy backend systems like CRM systems, banking applications, etc. have to be made more agile to reach consumers; on the Retail side standalone applications to handle couponing, loyalty, offers etc are not at where they need to be. On the banking side specifically, there is current realization that the best way for banks to stay relevant to consumers is to be more involved in the shopping and buying experience beyond just the transaction. Banking applications have a wealth of information about consumer needs - however the systems that contain all this data are not agile enough to get these institutions fully involved.  This is where our modularized platform can help.

What technologies are key to solving these challenges?

FreedomPay in collaboration with Microsoft really studied the trends and we strongly believe a platform approach is what is needed. What’s happening today is very similar to historic trends that prompted technology players like Microsoft to introduce other types of platforms in the market place. For example, prior to the .NET platform being released over ten years ago, Microsoft saw a really strong need for enterprises to reduce huge costs in maintaining lots of point solutions in the enterprise with different technologies.  The same thing has happened with payments over the last five years. Every point or proprietary solution means a corporation has to maintain a set of technology experts in house to maintain those systems and move to new versions. FreedomPay has a consistent platform to handle challenges across the payments value chain - from building digital wallet solutions, to managing offers and incentives to making sense of all the "big data" with robust business intelligence tools. Through our partnership with Microsoft we've been able to use baseline technologies like .NET, Azure cloud technologies, Office, etc. to provide strong solutions which are making a difference with customers.

Microsoft is showcasig the concept of a Payments Platform as a Service at Sibos and I see FreedomPay as key in enabling that offering. What advice would you give banks considering such an approach?

Lots of banks are really struggling to figure out how they can transform their architectures into state of the art next generation systems where they can add more value to their merchant customers and keep their brand top of wallet with
their consumers.

On the surface it looks like a massive problem with huge costs.  The way to solve this is not just a technology issue - but also the methodology and approach used.  The reason why we built a cloud based, componentized and modular framework is because we recognize banks want to leverage existing investments and have a phased, cost effective approach to the end state. We know banks can’t just toss out old systems, implement all new infrastructures, and we set out to build a platform that allowed banks to leverage their existing investments. Our technology can extend the value of those investments and modernize legacy systems to enable strong participation.  In collaboration with Microsoft, we will take banks through a very systematic process to envision their next generation architectures and map relevant technologies that can add value (versus replace) existing investments. The best advice is engage with Microsoft and FreedomPay in one of our Architecture
Design workshops where we will identify current gaps, start with the highest priority areas and develop a solid technology framework to get to the end state.  It's always good to start small and then consolidate legacy systems over time. This is the most cost effective and makes the most business sense.

Other than seeing Payments Platform as a Service solutions at the Microsoft stand (D108), how can people who may not be at Sibos also contact you to find out more about FreedomPay and your payments and your commerce solutions?

Send requests to sales@FreedomPay.com  and we will be happy to set up time on the calendar to find out more about the problem at hand, provide more details on our solutions and recommendations on a cost effective path forward.

Chris, many thanks for your partnership and your time today, and I look forward to seeing you in Dubai!

Thank you, Colin! Looking forward to seeing you there!

In the 'consumer edition' of the blog - also on Finextra, I suggested that banks can reinvigorate their payments brand and influence customer loyalty by integrating incentives and offers to their payments solutions. The premise is that banks are missing out on an opportunity to become more influential in where people shop and what they buy, rather than just how they pay. Offers can be driven by analytics into a combination of historical payments information and big data analysis of demographics, location positioning and peer group analysis. Such a strategy requires more than an offers solution, or a mobile banking app. It requires a platform strategy for building and integrating enterprise grade payment solutions with data analytics, an offers platform, and a host of mobile devices. However, banks have the opportunity to deliver far more than just offers to a retail banking customers. This edition looks at the value banks can take the same payments modernization initiative and drive value (and in turn loyalty) to their business and merchant customers.

When acting almost as a 'Groupon' for behavior-linked offers, banks can also drive a complete new range of services to their business customers - small businesses in particular. Most of the current card-linked offers programs are designed to drive the offers of major retailers and merchants - typically those that may be payment acceptance customers of the bank in question. But what of small business and merchant customers? Business customers need more from their banks - they need solutions that help them operate more efficiently and solutions that help them grow their revenues. How can a bank add such value to the chain of local bakeries it services? By creating new product that helps small businesses compete with mega-retailers. 

A Platform for Commerce
By taking the platform approach - rather than just an offers engine (which is valuable in its own right), the bank can offer business customers a white-labeled incentives and payments service. The bakery in this example can create its own offers and incentives for seasonal items, regular customers, or to attract first time customers from the competition. The bank - through analysis of payments and spending patterns - then acts as the distribution vehicle of those offers through its online and mobile banking channels to the retail customer base. data analysis can also show the business customer how successful the uptake of their offers has been, and help them target new potential customers. In this case the 'platform' not only delivers offers to consumers, it is driving offers created by small businesses on the bank's payments platform service. If I was a small or medium business, I would be thrilled if my bank helped me compete to grow my business in this way! 

Leading banks will integrate this to their merchant acceptance solutions and so use commerce to complete the value chain between their business and consumer lines of business.In fact - I call this Payments Platform as a Service - a transaction platform then allows businesses to build offers, retail customers to 'clip' offers to their phone, and then redeem then at point of sale of the business in question. Merely providing offers to retail banking customers isn't enough to transform payments and grow the bank's bottom line - but using a platform to connect retail customers directly to business customers just might be.

Meet us at Sibos
At Sibos Dubai, I welcome the opportunity to debate this topic with you, and our team looks forward to showing you solutions that leverage the payments transaction to increase customer loyalty and lower customer churn across the consumer bank. Email us if you would like to schedule a meeting with Microsoft financial services leadership team and come to see us all at Stand D108, just adjacent to the main SWIFT stand.

 The Customer Loyalty Conundrum

Banks face a customer loyalty challenge. Research from Capgemini and the European Financial Marketing Association (EFMA) indicates that consumer customer loyalty risk averages 40% globally. Four out of ten customers are unsure if they will remain with their bank for greater than one year. Furthermore, 53% of customers at risk cited ‘quality of service’ and 49% stated ‘ease of use’ as the primary reasons they would switch banks. This counters the traditional wisdom which places a lack of trust in banks (following the financial crisis) and fees as the dominant issues driving customer churn. The Capgemini/EFMA study correlates closely to unrelated research from Celent into the uses of Big Data in financial services. Fully 75% of bank respondents identified marketing and customer experience as areas where Big Data projects would be deployed. With the cost of new customer acquisition being higher than customer retention, banks clearly have the need to increase customer satisfaction and loyalty. Interesting. Does the payments business connect the two trends? 

Big Data and Payments to the Rescue?

In a previous post earlier this year I surfaced the idea that banks need to move their payments business to an information business in order to remain competitive. The premise was that banks are missing out on an opportunity to become more influential in influencing where people shop and what they buy, rather than just how they pay. Of course we have seen several major banks dive into the world of card-linked offers. Some solutions I've looked at appear to develop better offers than others, and the key to success with this is the depth and reliability of the purchase data and the data analysis to drive and targeting the offers. By analyzing spending habits of customers, comparing to a broader universe of payments data, demographic information, social media connections and location information, it is possible to drive valuable and desired offers to customers that might change shopping behaviors.

But card-linked offers are just one step. By extending such a program to digital wallets and mobile devices, bank customers can now search for bank-offers in the mall they are visiting by using the geo-location positioning integrated to a wallet app on the phone. Offer redemption can either be through cash back, or instant rebate/reward - whether customers pay by card or by phone. This is an example of what it will take to approach the value of that plastic rectangle in leather wallets and elevate the bank's payments brand. To achieve this, a multi-channel and device digital wallet strategy is essential for long term success.  But such a strategy requires more than an offers solution, or a mobile banking app. It requires a platform strategy for building and integrating enterprise grade payment solutions with data analytics, an offers platform, and a host of mobile devices. Such a platform must be built from the inside out rather than from the device back, thereby enabling the support of new payment devices and channels in the future. Oh - and by the way - this just might also increase the value customers see in their banking relationship.

At Sibos Dubai, I welcome the opportunity to debate this topic with you, and our team looks forward to showing you solutions that leverage the payments transaction to increase customer loyalty and lower customer churn across the consumer bank. Email us if you would like to schedule a meeting with Microsoft financial services leadership team and come to see us all at Stand D108, just adjacent to the main SWIFT stand.