Jul 15, 2021

NatWest is helping customer track their carbon footprint

Fintech
NatWest
Carbonfootprint
App
3 min
NatWest is embedding a free carbon footprint tracker within its mobile banking app to help customers reduce the climate impact of their spending

NatWest has introduced a new carbon footprint tracking feature for its mobile app to help customers reduce the climate impact of their spending.

The national launch follows an eight-week pilot of the CoGo-developed feature by 250 bank staff. The app shows customers the CO2 emissions associated with their daily spending, as well as providing hints and tips on how to go greener and resources for doing so.

According to NatWest, the insights from the pilot showed the average user saved approximately 11 kg of CO2 emissions per month by committing to behavioural changes that used less carbon – such as composting, reducing meat consumption, or switching utility providers. If this behaviour was replicated across NatWest’s 8 million customers who use the mobile app, it would save more than 1 billion kg of CO2 emissions per year, equivalent to planting 17 million trees.

David Lindberg, CEO, Retail Banking at NatWest, said: “We know that many people in the UK want to reduce their impact on the climate, and that to be able to change something in a meaningful way, you need to be able to measure it. Our use of CoGo’s expertise in carbon tracking in the NatWest app is a really important first step in making it easy for everyone to live and spend in a greener way – using the power of their money to influence change.

“It’s aligned to our core purpose as a bank and it’s going to give people the information they need to make informed choices about how they spend, as well as realistic and achievable ways of cutting down on carbon.”

 

A critical time to address the climate crisis

 

In addition, the pilot showed that women under 30 years old were particularly likely to make a commitment to changing behaviour after seeing the impact of their spending, with more than 55% choosing to take action.

Emma Kisby, CoGo, UK CEO, said: “We live in a critical decade to address the climate crisis, and we all have a role to play. CoGo is delighted to partner with NatWest to deliver our carbon footprint tracking feature to 8 million customers to inform them of their climate impact and reduce their carbon emissions. NatWest is providing us with a platform to deliver the scale and pace of change that is needed. Our vision is a world where knowing your carbon footprint is as typical as knowing the calories in your food or steps you’ve walked daily.”

NatWest users will see the feature enabled in their app in the coming months and the service is free for mobile banking app users – the information will appear in their ‘spending’ tab which is designed to help their customers understand where their money goes. The move follows a suite of improvements to help people build their financial capability in the mobile app, such as showing a user’s credit score or enabling them to set budgets and savings goals.

 

Share article

Jul 18, 2021

Reimagining operational risk management for business value

BroadwayTechnology
riskmanagement
Finance
AI
Tom Ballard, Program Manager, ...
6 min
Tom Ballard sets out a thorough new vision for operation risk management in finance, using advanced AI and analytics technology to drive business value

The events of 2020 and 2021 have fundamentally changed how we do business, upending every industry, including investment banking. Once bustling trading floors went silent as the switch to work from home led traders to disperse locations – and gave rise to new operational risk challenges. 

Today’s dynamic regulatory landscape coupled with ongoing technological innovations have made legacy approaches to operational risk management ill-suited to tackle current challenges and complexity. And while many financial institutions have turned to digital automation and transformation projects to adapt traditional ‘revenue generating’ functions to meet their challenges and help drive growth, they must now do the same with their Operational Risk Management (ORM) functions - or risk being left out in the cold. 

The Basel Committee defines operational risk as the “risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.” Unfortunately, many financial institutions still view ORM as a regulatory and compliance necessity rather than a business function that delivers real value. That means executives and risk management departments must now change their risk approach to ensure they are dynamic and flexible, can guide their organizations through complex situations, and can readily meet the evolving expectations of regulators and their clients. 

Operational Risk Management is still a young field compared to other risk sectors in the financial markets, but it has always been viewed under a broad umbrella that encompasses risks and uncertainties difficult to quantify and manage in traditional manners. ORM has also been the convergence point where corporate governance issues overlap with revenue-generating business activities, causing potential confusion between departments. 

Investment banks have too often placed undue emphasis on creating governance frameworks designed to ensure they meet Basel Committee on Banking Supervision (BCBS) standards instead of recognizing that a sophisticated ORM function can bring quantifiable value. Their desire to merely meet BCBS standards and avoid historic risks has in effect led to an outdated, analogue approach in an increasingly digital world. Savvy investment banks have grasped the value potential of ORM and begun to drive a shift in awareness about the importance of a comprehensive risk identification, measurement, and mitigation program. 

Embracing a data-driven approach

Market players now recognize that adopting a digital strategy will allow them to deploy diverse and agile risk management mechanisms. It will also empower them to develop a strong and dynamic understanding of risks while adding real value to the business. This value goes beyond meeting regulatory and compliance mandates introduced as part of the Standardized Measurement Approach developed under Basel 3. A robust approach to risk allows the ORM functions to provide actionable intelligence to support business decision-making and assume a more commercial role that supports the various business units’ day-to-day activities. And that requires an intelligent, data-driven approach with a mandate to match, one that is championed at all levels of the organization.

This type of aggressive approach and embrace of digital transformation can also strengthen how ORM functions handle ambiguous and/or improbable events, especially as traditional methods of risk analysis prove unable to manage the ever-increasing volume of data. In 2010, the total amount of data created, captured, copied and consumed equaled about two zettabytes, compared to 2018 when volumes reached about 33 zettabytes. This 26% compounded annual growth rate means that if the rate of growth steadily continues by 2024, we can expect 149 zettabytes of data created per annum. 

Available data levels will make it difficult for analogue ORM functions to successfully meet the executive expectations, however organizations that adopt a data-driven approach will find increased data volumes provide them the insights to gain a competitive advantage and ability to proactively manage their risk. 

Leveraging AI and advanced analytics for high impact

Cognitive computing technologies like artificial intelligence (AI), data mining and natural language processing (NLP) can supplement a data-driven approach and help financial institutions confidently automate decisions, optimize processes and provide a deeper insight into available data. These cognitive computing technologies can help reduce or eliminate time-intensive and repetitive tasks, often related to data collection, handling and analysis which are better suited to automation. That in turn can free up critical employees to deploy their experience, knowledge of policies, and powers of assessment to support ORM functions and achieve their goals and focus on high-impact, high-value deliverables. 

Cognitive computing can teach computers to recognise and identify risk, which is especially useful to handle and evaluate unstructured data – the kind of data that doesn’t fit neatly into structured rows and columns on a spreadsheet. Natural language processing (NLP) can analyze text to derive insights and sentiments from unstructured data, which a 2015 study by the International Data Group estimates accounts for 90% of all data generated daily. When combined with the estimated future data volumes, cognitive computing functionality presents an immense opportunity for ORM functions to add additional business value in ways previously impossible. A detection model built on cognitive analytics can manage risk on a near real-time basis and can also unlock organizations’ historic datasets that have been compiled for internal, regulatory, or compliance purposes. These datasets often contain free text descriptions that contain a potential wealth of untapped, institution-specific information and could provide valuable insight into historic operational risk losses, providing data to augment employee’s qualitative experiences.    

Teaching an old dog new tricks

There are certainly challenges to launching digital transformation projects, implementing new data-driven approaches, and introducing cognitive computing technologies, including employee uncertainty and ethical considerations. That means financial institutions must preemptively address and prepare for potential challenges before they adopt a technology-enabled approach to Operational Risk Management. They must also secure employee buy-in to ensure stakeholders use these new technologies to their full potential and to assuage any concerns that technology diminishes employees’ important role in the organization.  

It’s critical that investment banks now shift their Operational Risk Management functions and focus on becoming more adaptive and agile in an increasingly volatile, complex, and uncertain world. Over 66% of banking executives report that adopting new technologies like AI and NLP will be a key driver in IBs development through to 2025. Yet for many investment banks, their ORM functions do not leverage the powerful new tools available to them – including increased computing power, digitization, advanced analytics, and data visualization techniques – much less harness the power of cognitive computing technologies. Until ORM functions leverage these tools, executive leadership cannot allocate resources and solidify ORM’s role in business strategy, performance, and decision-making processes. 

Old habits die hard, but it’s time for ORM functions to keep pace with these new technologies, methodologies, and approaches to position themselves and their organizations for success in today’s ever-changing world. If they do not adapt, there is a real risk they may stifle the wider organization, impede new opportunities and inhibit paths to valuable business growth.

This article was contributed by Tom Ballard, Program Manager, Broadway Technology

Share article