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Industry roundup: 22 November

Artificial intelligence market predicted to reach $360 billion by 2028

According to The Payments Association, the AI market will hit US $360 billion by the year 2028. Their recent survey outlines how AI and machine learning are currently used in payments, finance and banking sectors and how they can be used in the future.

The research conveyed that the interest in AI and its acceptance were slow but sustained prior to COVID-19, but have seen a surge in interest since the pandemic as financial institutions look for ways to increase their efficiencies. This has led to a surge in regulatory interest in AI to mitigate privacy, illegal discrimination and security-related risks.

Backed by the international payments firm, Fable Fintech, this report shows that the majority of financial services companies with more than 5,000 employees are using some form of AI. In the report, 70% of financial services companies use machine learning to forecast cash flow, optimize creditworthiness and detect fraud, and 54% of financial services companies with more than 5,000 employees implemented AI.

Given the need for additional security when paying, 92% of consumers expect a fast, smooth, yet reliable and secure experience according to the survey’s findings.

The impact of AI's transformation on the financial sector is still in its infancy. The potential value of AI in finance is estimated at $ 1 trillion annually, but The Payments Association says this could be the "tip of the iceberg" given how much AI will advance in the future.

Artificial intelligence has transformed the payments industry, moving from individualized department processes to becoming the core technology that drives the firm’s business, commented Tony Craddock, General Manager, The Payments Association.


First Plus Asset Management selects fund administration through BNP Paribas

First Plus Asset Management has selected BNP Paribas Securities Services to provide fund management services for funds using the Singapore Variable Capital Company (VCC) structure.

BNP Paribas Securities Services, a long-time advisor and partner of First Plus, helped the investment group establish the first VCC fund. 
As part of the requirement, BNP Paribas will offer hedge fund administration, global custody, and investor services to First Plus for its Asia Opportunity Fund and Asia Special Situation Fund under First Plus Global Opportunity Fund VCC. It will add its planned private equity fund in the future.

VCC was launched in January 2020 by the Monetary Authority of Singapore as a state-of-the-art corporate structure for investment trusts to strengthen Singapore's position as a regional fund distribution centre. Umbrella funds and sub-funds can be open or closed-ended structures.

The BNP Paribas global network and expertise in the local market will further enhance their business. According to Diane Senanayake, BNP Paribas Securities Services Singapore, BNP has a long history of helping China-based asset managers access a variety of cross-border investment initiatives as they grow in the region. Senanayake further added BNP Paribas’ support to assist Singapore authorities in strengthening Singapore's money management infrastructure is an important part of VCC.


A multi-speed approach to business data and analytics

Information is always key to successful organizations. However, the more types of data provided in real-time, the more efficient business operations can be. Innovations of technology, such as the cloud, contribute to providing key data to everyone in the business at lightning pace.

The economic scalability of the cloud suggests that it can process large amounts of data and provide companies quick insights required to move from volatile to rigid operations. In addition, as the functionalities of artificial intelligence continue to evolve, the investment pace increases along with it.

Businesses manage data and analytics using one of the latest methods, a “top-down” or “bottom-up” method. The top-down method focuses on coordination across the organization and utilizes cloud platforms to rebuild data and provide access to the best analytics services. According to Accenture, this method enables company-wide strategic decision making, helps attract and retain talented people, and provides a truly lucrative start. However, this method takes longer to see the benefits.

The bottom-up method is considered a faster innovative option for business units to create their own solutions that meet their current business needs. However, this method can lead to fragmented units limiting opportunities for data-driven opportunities.

Accenture recommends a balanced and multi-speed approach to data transformation. Companies can choose between top-down strategy and bottom-up agility by creating a middle tier in your organization, such as the Rapid Insights Lab (or "RIL"). Furthermore, RIL is able to provide strategic data and analytics faster than the traditional top-down transformations. Benefits include the following:

  • Comprehensive data analytics that everyone in the business can access faster.
  • Analysis results are provided in a form that can be quickly used by the enterprise.
  • Information literacy and data-driven decision-making are facilitated throughout the organization.
  • Ability to assess and mitigate the risks of analytical concepts before significant investments are made.

Below are ways businesses can set up an RIL according to the Accenture report:

  1. SCOPE: Review the company's current data maturity and the type of data science problem to be solved.
  2. EXPERTISE: A well-balanced and appropriate combination of technical and business skills is important.
  3. SCALABILITY: The RIL should be able to measure operations up and down as desired.
  4. TECHNOLOGY: A delivery platform to create a prototype rapidly and roll out new features on demand will be necessary.
  5. FOCUS: RIL remains true to its original mission providing proven prototypes for scalability.

According to Accenture, the RIL multi-speed approach can give differentiated results, help align a shared data vision, increase organizational speed and agility, and deliver effective, innovative insights at all times.


Northern Trust and EDS partner with Snowflake for data services

Northern Trust and Equity Data Science (EDS) have partnered with data cloud company, Snowflake, to use investment data science capabilities to improve secure data sharing and onboarding for asset service clients. With cloud technology provided through Snowflake’s financial service data cloud, clients will move from the manual intensive process of retrieving and distributing data records to the ability to share data on a single, integrated platform. This capability enables Northern Trust and EDS to quickly update or modify data elements and layouts to tailor the solution to the needs of their customers.

This new technology swaps out the traditional method of data exchange, according to Payl Fahey, Head of Investment Data Science, Northern Trust. Furthermore, Fahey commented that customers will gain access to key information quickly, enabling them to market and onboarding new customers within 24 hours. According to Matt Glickman, Vice President and Global Head of Financial Services, Snowflake, Northern Trust is connecting with a growing list of industry brand names using Snowflake. In addition, this will assist them in prospering and maintaining security and governance standards in this highly competitive space.

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