In some senses, every organisation is a technology company. IT underpins almost every process – and often defines how well a business can deliver on its strategy. The biggest challenge that comes with all that kit, however, stems from the fact that technological capability is advancing all the time, while the digital revolution has accelerated the pace of change dramatically.
Whether it is customers, end users, partners, regulators or any other stakeholder in the value chain, expectations of how products and services are delivered are constantly evolving, a fact largely driven by the convenience, performance and availability that digital technologies can support.
For every organisation, therefore, digital transformation is becoming essential if a firm hopes to perform effectively. The finance function, for its part, plays a pivotal role in delivering digital transformation. That’s not just by holding the purse strings and enabling investment in new IT infrastructure, but also by partnering with other parts of an organisation to understand exactly what is required to deliver a successful transformation programme. At the same time, the finance function itself is transformed through the adoption of new digital technologies.
This is evident at the UK’s Financial Ombudsman Service (FOS), which is currently engaged in its own programme of digital transformation. Formed 20 years ago, it operates a dispute resolution service that settles complaints between consumers and providers of financial services.
In recent years, its workload has increased dramatically – it now deals with around a million enquiries each year – and needs to remain as responsive and effective as possible.
“Financial products are constantly being developed, and the environment in which they are sold also changes, for example in periods of austerity,” says Nicola Wadham, CIO at the FOS. “As an organisation we need to react to the demand, no matter what the drivers are.”
“The challenges this creates for the technology function are to be able to provide early insight into the changing nature of demand to our caseworkers, and to provide relevant case progress information for our customers, so their experience of our service is positive,” she adds.
“[Customer portals] will provide more choice and flexibility for consumers, although we will continue to support our existing channels to ensure that we remain an accessible organisation for all.”
454,259
The number of new enquiries the Financial Ombudsman Service dealt with for the financial year 2020/21.
FOS
Demand drivers
Documenting and investigating cases against financial services organisations is a highly detailed process and, for many years, was largely paper-based. Each case is investigated by experienced personnel, but a document-heavy workload means that progress can be slow. There is a clear opportunity, therefore, to digitalise and automate as much of the workload as possible in order to leave the human element to its key function of decision-making.
“The Financial Ombudsman Service is a demand-led organisation and complaint volumes do fluctuate,” says Wadham. “Over the past decade, we saw a huge increase in complaints about Payment Protection Insurance or PPI, and this prompted the move away from paper-based processes.”
Now, the FOS is helping customers deal with losses arising from authorised push payment (APP) systems, also known as bank transfer scams, in which customers knowingly or unknowingly transfer money from their own bank account to one belonging to a criminal. For example, such a scam may come in the form of a fraudulent email purporting to be from a bank’s fraud team.
Digitalisation will help the FOS to address such cases more swiftly, but will also be particularly important at a time when the financial services industry is in the midst of its own revolution, with a plethora of products available and a host of new market entrants, predominantly fintech companies, bringing them to market.
“The FOS is a free and easy-to-use service that settles complaints between consumers and businesses that provide financial services,” Wadham explains. “We resolve disputes fairly and impartially, and have the power to put things right. So, based on that, I wouldn’t say fintech, per se, has made the Ombudsman more or less important. What it has done is increase the range of financial products that we deal with.”
It was PPI that led to the FOS expanding rapidly – from around 300 staff at its launch in 2001 to its current roster of 4,000 – and the demand led to the initial move away from paper-based processes. Its first technology revamp saw it develop an in-house case management solution based on SQL Server, Microsoft’s relational database management system. Now that the tide of PPI claims is receding, it is the emergence of fintechs that is driving demand and serving as a catalyst for further IT transformation. It is this programme that Wadham, who joined the FOS at the end of 2019, is charged with delivering, along with a team of 180 in the organisation’s IT department.
“At present, our biggest shift will come from digitalising our communication channels by introducing customer portals – for both businesses and consumers,” she remarks. “This will provide more choice and flexibility for consumers, although we will continue to support our existing channels to ensure that we remain an accessible organisation for all.”
Integrated platforms
Overall, several projects are underway to replace on-premise IT infrastructure with cloud-based solutions. Among other things, the FOS’s enterprise data warehouse and document management system will be removed from physical servers. At the same time, Wadham has overseen the implementation of Workday’s cloud-based HR, finance and payroll solutions, which perform the functions once entrusted to 14 different legacy systems.
“Our main applications are SaaS services – Microsoft Dynamics 365 and Workday – and we have adopted cloud-based solutions where possible,” Wadham explains. “We are in the process of migrating several services to cloud solutions and, where these are not available, we will use an IaaS platform to host those services in the cloud.”
“The benefits of adopting SaaS solutions come from the continual investment from vendors, which keep applications up-to-date,” she adds. “It is also helpful that the infrastructure they run on is maintained and scalable. It allows us to shift our focus from building and operating technology to adopting and using technologies.”
“We are in the process of migrating several services to cloud solutions and, where these are not available, we will use an IaaS platform to host those services in the cloud.”
454,259
The number of new enquiries the Financial Ombudsman service dealt with for the financial year 2020/21.
FOS
The goal is to bed down a single, integrated platform with many facets that can exploit the latest technological advances to improve not only case management, but also many other internal processes. For example, the platform is already leveraging artificial intelligence (AI) to spot patterns in the customer complaints sent to the FOS. These patterns would otherwise be too difficult to find if the organisation were forced to rely on lengthy manual processes. AI, for its part, can help the FOS to catch potential problems early and resolve them more swiftly.
Currently, the FOS is on the second generation of casework and document management systems, which is based on the cloud-hosted Microsoft Dynamics 365 solution. This was implemented in 2019, and the organisation is now engaging with Tata Consultancy Services (TCS) to build more key systems for its digital transformation journey.
Among other things, TCS will design and implement a new digital customer portal, as well as a complaint management and reporting system to leverage its PACE innovation ecosystem – leveraging work from the company’s innovation hubs around the world to deliver creative solutions to accelerate digital transformation. “The most important outcome that we are looking to achieve is to improve the service for our customers, both for regulated businesses and consumers equally,” Wadham stresses. “This means easier access and communication with customers, more shareable insights with businesses and shorter average time for complaints to be resolved.”
Behind the customer-facing solutions, meanwhile, internal processes are also being revamped, not least the finance function. As part of its deal with Workday, the FOS is implementing a finance solution, which can intelligently automate key functions, from record to report, procure to pay, and contract to cash. The solution is designed to not only introduce more control over financial processes, but also to provide more flexibility in how financial data is stored and used.
The solution will enable the FOS to continuously plan, forecast, and analyse financial data, enabling more standardisation of processes, which in turn will support more accurate forecasting and risk management. Even better, these shifts will offer Wadham and her colleagues better visibility across different aspects of the organisation. Part of this solution involves using machine learning (ML) to reduce friction in the finance function by continuously detecting anomalies and making recommendations, which leads to quicker and better analysis of financial data.
The next mile on the digital highway
The FOS has already made significant progress, but many more steps remain in its digital journey. “The next major milestone in the journey to the cloud is our planned exit from our data centres this financial year,” says Wadham. “As with all plans, we aim to complete this safely and will judge our timing with that in mind. With respect to our digitalisation, we have just signed a partnership with TCS to support our delivery of the portals. We will implement our portals over the next 12 months, iteratively and with security and a positive customer experience as our focus.”
All of this is part of Wadham’s efforts to deliver on a much broader brief as CIO, which will no doubt continue to leverage the latest technological advances. “My goal remains the same, to provide a resilient, secure, and flexible service to the Financial Ombudsman Service and to use technology to improve our customers’ experience, our employees’ experience, and our operational effectiveness,” she says.
In delivering that goal, Wadham’s team will continue to work with the finance function, while also streamlining and improving it. Finance is both the enabler and the beneficiary of digital transformation across businesses, and – as at the FOS – will reap the rewards only as part of an IT refresh programme that encompasses every aspect of the organisation.
