In this episode, Dr. Louise Beaumont talks about the idea of exploiting disruption: the most meaningful and promising disrupting trends or technologies she is watching, as well as how open and accessible data changes the landscape of financial services, and the technologies driving change around data usage.
In this episode, Dr. Louise Beaumont talks about the idea of exploiting disruption: the most meaningful and promising disrupting trends or technologies she is watching, as well as how open and accessible data changes the landscape of financial services, and the technologies driving change around data usage.
She also discusses the concept of open banking and its goal to provide services we didn’t know we needed, but now can’t live without, and the value of industry vertical marketplaces.
Episode Links
Banking Industry Home - For various articles and papers.
Capital Markets Home - Among other things, you’ll find a great e-book on Enabling the capital markets firm of the future.
Dr. Louise Beaumont has a soft spot in her heart for true innovation and disruption in financial services. She works with legislators and regulators to drive positive disruption with established organizations to cope with disruption, and with start-ups to exploit disruption. As such, she has a rounded perspective on FinTech’s future and the smart, open and accessible data required to fuel it.
Follow her on LinkedIn or Twitter.
Hosts
Paul Maher is General Manager of the Marketplace Onboarding, Enablement, and Growth team at Microsoft. Follow him on LinkedIn and Twitter.
David Starr is a Principal Azure Solutions Architect in the Marketplace Onboarding, Enablement, and Growth team at Microsoft. Follow him on LinkedIn and Twitter.
Welcome to the Azure for Industry Podcast. We're your hosts, David Starr and Paul Maher. In this podcast, you hear from thought leaders across various industries, discussing technology trends and innovation sharing how Azure is helping transform business. You'll also hear directly from Microsoft thought leaders on how our products and services are meeting the industry's continually evolving needs.
Hello, listeners. Today's very special guest is Dr. Louise Beaumont, and she has a sort of self-proclaimed soft spot in her heart for true innovation and disruption in financial services and the financial service industry as a whole. Louise works with legislators and regulators to drive positive disruption with established organizations to cope with that disruption, and also with start-ups to exploit it. As such, she's got a very well-rounded perspective on fintech's future and the smart and open, accessible data required to fuel it, which will be a primary point of our discussion today. Welcome, Louise, to the show. It's great to have you here.
LOUISE: Hello. Thank you very much for having me.
DAVID: Absolutely. And before we get started with our discussion, I'll mention just a few things that Microsoft is focusing on in banking and other fintech areas. And the overarching goal of Microsoft in this area of course is to re-imagine banking and capital markets. And that sounds a bit lofty so let's dig into it with just a few items about what that really means.
First of all, we can talk about the modernization of payment in core systems. This is a big shift in financial service organizations, and they're looking to move to modernize many of their back end and core systems some of which have been in place for decades. And people are realizing that it's time for a change in those systems. And also, Microsoft is focusing on delivering personalized customer experiences, and what this means is digital experiences that customers use to manage their money and other financial services on a regular basis but speaks to their needs specifically and tailors itself as an experience to meet their needs. Finally, Microsoft focuses on the financial industries employees themselves by empowering them with the right data for the autonomy of decision-making at the right point of service, and we do this by helping organizations expose data at the right point of service to help employees make decisions to enable service at the moment it's needed with their customers.
And with that, I would love to move over to our conversation with Louise. And Louise, you talk about the idea of exploiting disruption. This is a very big theme in much of your work. So, what are some of the most meaningful or promising disrupting trends or technologies that you're watching today?
LOUISE: Well, for me, it's about unleashing data, and I mean the kind of data that we create through our behaviors, our behaviors as consumers, our behaviors as businesses, corporates, or governments. We need to start looking at the data that we generate through our behavior and start using it for our benefit. So the whole trend that I'm particularly interested in and have been agitating for is around the openness of data in banking, so you'll hear that described as open banking. I'm now very interested and have been interested in a long while in open finance, which drives us beyond that enclave of banking. And of course, why stop there? Why allow some arbitrary barrier between sectors to hold us up? Actually, we need to be looking at open data, and I'm talking about the data that we create through our behaviors being used to create services that actually work for us. I think we might explore that a little more in this show.
PAUL: Thank you, Louise, and welcome to the show. Thank you for the opening, David. I'm really excited about the show today. And so as we just touched upon data, Louise, how about we kind of drill in a little bit more on that? So from your perspective, how well has open and accessible data really changed the landscape of financial services? And the second part of that question would be to talk about what are some of the technologies driving change around data usage as well? Feel free, Louise, to jump in or David as well.
LOUISE: So that's really cheeky. You're asking me two questions in one.
PAUL: [Laughs] That's right.
LOUISE: So open and accessible data I think is phenomenally powerful in completely disrupting financial services if we get it right because what it will do is it will expose the lie inherent within the name of the sector. We refer to financial services as if it were a services industry; actually, it is founded on product. It is an inherently product-centric industry, and by products, I'm talking about the mass manufacturer of products like current accounts and savings accounts, and then mass marketing them without consideration for the end consumer. So it's very much a product-push mindset. If we get this right, if we unleash data safely and securely, what it actually allows is services to be generated, that flex and flow around the individual human or the individual business or corporate, which are hyper-personalized, predictive, and preemptive. So what I think we'll do in financial services if we get this right is we will finally turn the financial sector into a service sector, one which has the consumer and the business at the very heart of what it does, recognizing that hyper-personalized, predictive, and preemptive services flex and flow based on the data that that individual is willing to share with you. So the service I might receive today is different from the service I might receive tomorrow. That's what's going to happen if we get that right.
And if I remember, because you were very unfair with me, if I remember the second part of that question, the data usage, the technologies which are going to allow that kind of data usage in my view are fundamentally cloud-enabled. I can't see how you can do it any other way.
PAUL: Oh, that's great, Louise. Thank you so much and sorry for being unfair on the two questions. [Laughs] You see how we roll on this show. David, anything else to add from your perspective around the technology?
DAVID: In terms of technology and the idea of shedding data as Louise talked about it -- In a previous conversation she and I had, she mentioned the term digital dandruff which we'll get to in a moment, but this is the idea of individuals shedding data and the notion that we're able to share our data in real-time. Azure, of course, has many data technologies that allow this sort of real-time processing and real-time visualization and analytics of data that will allow things like insurance policies to flex according to what we see in biometrics. But I'll let her speak a little bit more to the business of that. The point is that I completely agree that the way to accomplish what we're talking about here is leveraging the cloud to be a bit more agile in the services that are provided by the financial services industry.
LOUISE: I should apologize for that terrible term digital dandruff. I was obviously somewhat traumatized on the day I came up with that idea. It's now enshrined in podcast history. What I was trying to get across was just the sense that through every aspect of our behavior, what it is that we do, we are generating and shedding that data. It's the same way as one -- hopefully, none of our listeners shed dandruff. It's a vile, vile, mental image for you but one I think that has staying power.
DAVID: Absolutely.
PAUL: [Laughs] That's too funny. Thank you both. As we move through the conversation, data, of course, is at the core as I think of the proliferation and the explosion of data. This notion of digital dandruff and shedding data I think is super interesting. And most importantly, as you mentioned, the cloud is now providing capabilities to consume these large amounts of data. It's providing the ability to give accessibility across departments to have access to data that perhaps they didn't have before. And then we'll talk a little bit later about driving meaningful insights from that data and what that looks like further up the stack. So with that, let's change topics, Louise, and talk a little bit about open banking. From my purview, taking a little bit of a look on what open banking is when you do a search, you find a rather dry definition. In fact, I found the following definition: "Open banking is the secure way to give providers access to your financial information." I'm sure you see it as much more than that and much more interesting, and powerful, and impactful. Can you talk to us a little bit about open banking and give us your perspective and your spin for our listeners on what it is and why it's really important for us?
LOUISE: That definition is just the dead hand of technocrats, isn't it? It crushes the life out of the subject.
PAUL: [Laughs]
LOUISE: So let me see if I can bring it to life a little bit more. Basically, the definition is absolutely right. Yes, it is the secure way to give providers access to your financial information. And what you will find people doing with open banking, the early kind of adopters, the creators of services, what they will do in the first instance is always incremental. It will be things you can always already do now but just slightly faster, maybe a bit smarter, maybe a bit cheaper but fundamentally they are incremental innovations. And actually what I think we're suffering from both in open banking and further into open finance and then when we get to the sunlit uplands of open data, what we're actually missing on right now is there's a chronic imagination gap. People can't see beyond the incrementalist tendencies. And I find sometimes it helps to have examples from other sectors because really what we're looking to do here is not just incrementally improve things slightly; that's really not worth getting out of bed for. What we're actually looking to do is to explain the pie i.e., create new services, things that we didn't imagine, things that we didn't ask for, and things that we can now no longer live without because it's just the way we do things now. And we've certainly seen that when we've unleashed other types of data. And a very old school example now, location data powers Uber, for example, many other things power Uber.
Let me give you an example from the insurance industry, which is a really nice one. It's a company called Vitality. Vitality allows you to share your health, your fitness, your nutrition, your wellness, and your medical data with them so that they can track you getting and staying physically, and mentally, and emotionally well, therefore, reducing the likelihood that you're going to make a claim. You get Vitality points for buying healthy food from Ocado, which is a British supermarket delivery service, for running or cycling via fitness trackers like Fitbit, for going to the gym like Virgin Active, you know, when it's open and when we're allowed to go, for meditating using apps like Calm and Headspace, and for getting medical checkups and for acing those tests. So if you eat well, stay active, and look after your mental health, go for medicals, and share the data, not only are you going to be in better health, you'll be earning discounts on healthy food, on your favorite meditation app, on an Apple watch, and much, much more. And what Vitality insurance does is, I'm sure you've worked this all up, cream off the best customer leaving the risk of the unhealthier customers with their competition. And what you're getting as a customer is a service which is enjoyable. It's fueled by your data and reinforced with trust builders every step of the way. And what that's exploiting is of course the fact that people like pleasant experiences that reinforce behaviors they enjoy. And so what that has effectively done is it's creamed off the better customers, the ones less likely to make a claim, and it's also expanded the pie of what's the possible service. So the thought I'll leave you with is that this is a really positive interaction. Vitality connects with their customers every time they take a step, every time they go to the gym, every time they log onto the Calm app, every time they buy an apple, it's a positive interaction, not a negative interaction. So I think that's just an example from an adjacent sector about how you can leverage data if you are prepared to put in the hard yards to get that individual person or company to share that data with you. You've got to do something interesting with it that they will enjoy and see the value in and maybe share more data with you.
PAUL: That's great, Louise. And thank you for using a reference around insurance. For someone who's in financial services both on the banking and the insurance side, it's good to hear stories from both sides. I think also I would add to that that it's good to see what the innovation learnings we can learn from either insurance and taking that across into banking and capital markets and vice versa. It's great to see broader capabilities being driven through financial services. Each of the disciplines can hopefully learn from each other.
DAVID: I'm going to ask a bit of a follow on question to that and that is how the evolution is going and how people feel about sharing that kind of data. Of course, it's very personal, and it's something that there's still some reticence I think out there for people to share this type of thing. And I'm wondering what you're seeing in the uptake of willingness to share this type of data to improve personal experiences.
LOUISE: So we're seeing an increase in people using services powered by open banking. In the UK, for example, last year it was 1 million; this year it's 2 million, which are small numbers, but it is increasing. And we're seeing an increasing number of services come to the marketplace. So there's more opportunities to use services, which are powered by open banking which will, in turn, reinforce that uptake. What it comes down to is can you, as a service provider, inspire and then deliver on trust? So can you inspire trust from your customers such that they will give you data that they've never given you before? Can you inspire trust with the services you seek to provide with that data? And can you prove to them that you are working towards services they will find even more valuable? And that's why I come back to the definition of hyper-personalized, predictive, and preemptive. I should add to that a fourth P which is of course pleasurable. People talk about how good is the customer experience. I think we do have to move beyond goods to pleasure. It needs to be pleasurable. If we enjoy the service, we'll use the service.
PAUL: Thanks, Louise. We've talked a lot about data. How does open data change our view or even the need for investment in data and of course how we think about how we manage data security and the ongoing concerns about data breaches? So what are your thoughts, Louise?
LOUISE: Well, first of all, you have to be curious about data. I talk continually about imagination and curiosity. So rather than seeing data as something which is to be held in some unbreakable vault, you've got to find a way to make it accessible to the people who created it with their behavior and who then want to use that data they created through their behavior and to do so in a way which is secure, which is the big drive behind how we built open banking in the UK. It has to be secure in the way that you share that data. So that's a given; it's a fundamental tenet of everything that we've built with open banking. And as we expand that into open finance and beyond into open data, we hope those lessons are not lost. It's a critical tenet for how you deliver this. It's no longer the case that you can just hide it, hoard it, and hope that you never ever lose it. Now, if we want to move from product to service, we absolutely have to use that data and to do so safely and securely.
PAUL: That's great. And David, maybe I'll look to you. So we've talked a lot about the cloud so far. We've talked about data. I'll mention, of course, with the Microsoft Azure cloud at the core is security and compliance. So, David, what are some of the things that when you think about the Microsoft Azure cloud kind of the capabilities that it brings to support some of what we've just been talking about?
DAVID: You're absolutely right, Paul. Security is one of the things that really differentiates Microsoft in the cloud ecosystems, and it's something that is and has been from the very beginning of Azure top of mind for Microsoft. All of the services that we offer on Azure by default data at rest, data in transit, of course, is secure and is encrypted. Now we have a wide variety of services to help build on top of that infrastructure and build secure solutions on Azure, too many services really to enumerate and list here but just understand that they all work together to provide an ecosystem of tooling and underlying capabilities that allow building a security-first solution. And delivering solutions with elastic workloads is particularly important in financial services, doing computational services, for example, both large and small. And security is a huge concern here when we do these large high-performance computing workloads, and we've got some great solutions around that. And of course, AI and machine learning are playing a big role in our platform portfolio as well, integrating into new data offerings in our marketplace that are meant specifically to work with AI and ML with very secure capabilities. And the last thing I'll mention here is the notion of people's right to be forgotten, which is actually in many countries a requirement, that is to say, that I can call up an organization that has access to my data and ask specifically for the right to be forgotten from their system, pull all of my data out of that system and no longer hold onto it. And that's something that is the responsibility of the organization that builds solutions on top of Azure despite the capabilities that Azure brings to security.
PAUL: That's fantastic and just a couple of reference points for our listeners. We'll talk more later on, but feel free to go to azure.com, and you'll see a plethora of content. You can learn more about Microsoft Azure cloud, our services, how we think about security. I just want to double down on what you were saying. When you think about the Microsoft Azure cloud, to your point, you're thinking about security, you're thinking about privacy, you're thinking about compliance. Also, it's things like reliability and resilience. So go to azure.com; there's a ton of information there. I'll also put in a plug, if you want to go learn more, check out Microsoft Learn. And also if you want to dig in a little bit more on the details that David's talking about, go check out docs.microsoft.com. But great insights, David, back to you.
DAVID: Well, Louise, I'm wondering with all of this availability of personalized data -- and you've spoken to the need for personalized experiences. There was an initial move of personalized experiences where I could manage my banking online. But what's new and upcoming that is important for organizations to deliver in the near future for their customers as they interact with financial institutions?
LOUISE: You're asking me there about the imagination gap and how we can create services that break out of this horribly restricted and self-imposed mindset which says, "We've got to be pure banking." And that's why I shared the Vitality insurance example with you because they're looking at data from lots and lots of sources and lots and lots of different parts and aspects of your life so that they can better fit their service to you. There is nothing stopping banks from showing curiosity about their customers, banks demonstrating imagination about the kind and quality of services that they could provide. It does require this enormous shift from being product-pushed to genuinely being customer-centric and delivering a service. So I think we're going to see lots of innovations from much smaller organizations that don't have that restrictive self-imposed sector-specific mindset that can look beyond that to other verticals to find out what are the various sources of data with which they can bring together and create a new recipe? And it's those services that we didn't ask for that we never knew we needed and now can't live without.
I remember years ago if I worked late on a Wednesday evening, and it was cold, and it was dark, I would leave my office, and I would stand in the street and hold my hand up and wait for a particular type of car to happen to drive past me with its light on, not off, to stop and to then ask them if they would be kind enough to allow me to pay them to go to where I wanted to go. And sometimes they might say things like "No, love. I'm not going south of the river this time of night." They might refuse to take me to my destination in which case I was back on the pavement standing there in the rain downcast and dejected. Now I can, from my very own desk, go to my app of choice. I name-checked Uber those services are available, and I can get all of that squared away before I've even put my overcoat on. So that was a service I didn't know existed. I never asked for it. I didn't think I needed that service. I thought I had the London black cab best service in the world. Of course, it wasn't. Now I have a service that is much more tailored to me, to my wants, to my needs, to my desires, and is much more pleasurable for me. So those are the gaps in the kind of services that I'm looking for and the innovations I champion when I see those delivered by businesses that actually care about their customers as individuals.
DAVID: Louise, you've talked several times about bringing data from different industry verticals together to really enhance new experiences or bring to market new experiences, particularly by start-up type organizations. And one of the things that are enabling that, that we're seeing across industries, are new API marketplaces or data marketplaces, the ability to go out and consume data from different industry verticals, from different marketplaces. And I'm wondering if you've seen the value in these marketplaces and how they're being used.
LOUISE: So I think there is value in those marketplaces because what they've dealt with is all of the hygiene layers to make data available and accessible. So you are literally coming in with different plugs to put in their different sockets, so that is an absolutely essential layer in the industry to make the accessing of data simple. You simply go to the mart and you plug into the various data sources that you need to in order to power your service. What it means, however, is the service providers must absolutely differentiate themselves by the quality, the range, and the audacity of their imagination because all of these ingredients, these component parts, these datasets are now available to them. The question is how audacious is their imagination? What are the services they're going to create and how beautiful, how pleasurable are those services going to be? Because the accessing of data is no longer a challenge; that's now the easy bit.
PAUL: So Louise, I'm going to give you a soapbox for a moment to jump on. So from your perspective, what are financial institutions not paying attention to? So if you were to shake them up, and pass on your perspective of what they should be doing, the focus, most importantly, how can we help influence them and fuel and accelerate change that perhaps hasn't happened already?
LOUISE: So I think the things that they're not paying attention to that they must, is actually earning the stripe that says, "We are genuinely a service organization. We provide hyper-personalized, predictive, preemptive, and fourth P, pleasurable services to individual customers shaped by the data, the digital dandruff that they shed." The field is wide open for somebody to absolutely step up and take on that challenge of genuinely being a service organization and having that audacious imagination to come up with services that we didn't know we needed, didn't ask for and now we can't live without; that's the opportunity. And there's a lot of ground to cover in order to become that. The one that's a mixed ability class is financial services, so not every financial institution will make it to those sunlit uplands, some will just be relegated to big, dumb products forever. I worry about their margins. I worry about whether that business model is genuinely tenable as we move to our open future.
PAUL: I like that, that open, digital future. That makes a lot of sense. Now let me switch to an interesting wall that I think a lot of financial institutions are probably grappling with as they think about disruption and innovation. A lot of the innovation that's happened so far in financial services perhaps hasn't been kind of core systems; it's maybe around the peripherals. As we mentioned at the beginning of the show, modernizing core systems and payment systems, and financial services is the big bet for Microsoft, but of course, these systems have been around for years. They're built across many different platforms and perhaps the domain and institutional knowledge has left the company many years ago since they were built. So, what is your perspective, Louise, on the strategy, the opportunity where you've seen innovation happen? And most importantly for our listeners, what is some guidance that you can provide may be light at the end of the tunnel for these super important kinds of systems for financial institutions? What's the light at the end of the tunnel? What have you seen work? What's the approach? What are some success stories that people can take away?
LOUISE: Well, that's nine questions in one. So I'm going to be highly selective about what I answer.
PAUL: [Laughs]
LOUISE: So let me start off with just a thought about payments. Today I'm pretty sure that most people would agree payments has absolutely been the Cinderella of fintech, ignored unglamorous, overlooked. And I think that is changing, not just through the good auspices of open banking but also in the UK I would call out the work being done by Pay.UK. One of my roles is at Pay.UK which runs the critical national infrastructure, which is payment in the UK. Now, they've got a very interesting mission. Their mission is to enable a vibrant economy by delivery of best in cost payments and infrastructure, and standards for consumers and businesses everywhere, the length and breadth of Britain. And what they're building is the new payments architecture upon which huge payments innovations will come. And I think the challenge is to take what has been rather dry, rather dusty incredibly reliable payments systems and create the arena where innovation can be sparked. So I'm very curious about, optimistic about, the next generation of payments innovation because I think that now we're getting to the point where there's enough in the mix that genuine innovation can take hold. And I think confirmation of pay, request to pay are merely excellent starting points, but there is so much more to come.
DAVID: That's great, Louise, and thanks for that. I, unfortunately, have to say we're kind of winding down the conversation here, which has been great. But before we do, I'm wondering how listeners can learn a bit more about you and about the work that you do.
LOUISE: Well, I'm going to give you the absolutely classic answer, which is if you want professional me, the good upstanding citizen, you can find me on LinkedIn. If you want the honest me, the irreverent me that loves the worst excesses of Twitter, then that's where you can find me. So I'll give you both sides of my very split personality. You can find me on Twitter for the irreverent me, and you can find me on LinkedIn for the good, corporate upstanding citizen me.
DAVID: That's a perfect place for everyone to start. I would like to talk just a little bit about some resources that people can follow up on with Microsoft's offerings around financial services, and those are simply some resources you might find helpful to include our Banking Industry Homepage, where you find various articles and papers about banking and separately, a Capital Markets Home where among other great articles and such you'll find an e-book on enabling the capital markets firm of the future, which is a recent publication out there on our Capital Markets Home. And of course, we'll link up to these and even our financial services blog and of course, to Louise's social contacts in our show notes so that listeners can follow on and learn more. So with that, Louise, I want to thank you so much for being on the show. It's been an absolute pleasure to have you on. You've really illuminated what it means to be innovative and disruptive in financial services. And I think our listeners are going to appreciate that as much as Paul and I did.
LOUISE: Well, thank you very much for having me, and thank you for taking the guardrails off so I could really say what I thought.
DAVID: Thank you for joining us for this episode of the Azure for Industry Podcast. The show that explores how industry experts are transforming our world with Azure. For show notes, topic recommendations, or other feedback, reach out to us at industrypodcastatmicrosoft.com.