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EMBRACING DIGITAL TRANSFORMATION: THE FUTURE OF BANKING

By Steve Tipping, Vice President Sales UKI & Benelux, Selligent Marketing Cloud

Financial services are undergoing a huge period of digital transformation, as advanced technologies radically transform the way the industry operates. AI, machine learning and robotics are fundamentally changing the sector and it’s time we fully embraced the amazing opportunities they have surfaced. However, added to the impact of digital transformation, financial services are also undergoing a crisis of trust with PWC reporting that British consumers have lost trust in the industry. With rising competition from fin-tech disrupters, the question is how can financial services succeed in this increasingly digital world? How can they embrace and deliver the digital innovation that customers demand without compromising security and ultimately consumer trust?

The Customer is still king

The financial sector has historically been a digital slowcoach due to strict regulations, legacy systems and senior decision makers being slow to recognise potential ROI. Whilst banks are now increasing I.T. spend and are automating business processes through artificial intelligence (AI), there is still a lag in meeting consumer expectations for seamless mobile apps, alternative technologies like person-to-person payments, mobile wallets and more. The problem is that many banks still believe that digital transformation is about systems and workflows rather than customers. Many banks are also hindered by fears that new technologies will lead to new security threats.

It’s misguided to let security concerns eclipse the fact that consumer behaviour in banking is changing. Studies show that instead of speaking in-person to an advisor at a local bank branch, most customers will prefer to interact remotely via digital channels. In fact, the average consumer will initiate up to 10 digital interactions with their bank per month. These changes in consumer behaviour are opening doors for a new breed of fintech disrupters who are ready and waiting to take market share and customers. Digital-first providers like Monzo and Revolut are giving dissatisfied consumers the opportunity to literally take their money elsewhere, and with multiple challenger banks shaking up the industry, consumers are spoilt for choice. Consumers are enjoying digital transformation in other sectors and now expect the same from financial services; disrupter banks are simply giving them the innovation they crave.

Learning from the competition

So what can be learnt from the boom of disrupters entering the financial market? Without a high street presence, disrupter banks have prioritised the user experience, as every point of contact for their customers is now digital. It’s clear from their successes that other financial services companies must follow suit in order to regain consumer confidence; put simply, banks must evolve or die.

Despite the threat from disrupters, traditional financial services organisations, such as banks and credit unions can win back favour with today’s entitled consumers. Financial services must generate trust and long-term dividends by establishing themselves as stewards of consumer financial assets, namely money and data, and by ensuring their service is relevant and bespoke.

Meeting consumers’ demands with new technology

Consumers are aware of the value their data has for banks, especially in this post-GDPR world. The good news is they are willing to share; but with this comes higher expectations of the service they will be getting as a result. Research by Accenture found that almost half of UK bank customers expect relevant advice and product information available at their fingertips that they can access easily. They expect banks to inform them of the best rates to suit their individual financial situation. What’s more, Big Data provides significant opportunities for banks to outshine their competition. Migrating data onto a cloud platform provides a 360-degree view of every customer and this deep insight shows banks where they can provide a higher level of service and create more value.

For example, if a customer is in the process of buying their first house, their bank can contact them with relevant and useful information to ease the process. With all the data available to financial services, customers expect their bank to know what they want and need, before they do, offering them next level personalisation that caters to their every possible financial need. AI and machine learning has finally made it possible for financial services to personalise marketing messages which truly resonate and drive revenue.

Creating seamless experiences

Another aspect of the customer experience that needs to be improved is flexibility: giving customers the freedom to access and manage their finances on the go is vital. Consumers expect to perform transactions anywhere, at any time, and only a seamless omni-channel experience will meet this demand.

British consumers want the flexibility to access and manage their finances from wherever they are, whenever they want to. If offered by their primary bank, for example, over 75 percent of Gen Z US internet users would use the financial tech services offered such as apps that can be accessed on the go.  It is the responsibility of the banks and financial services to ensure accounts are quick and easy for customers to access, whilst also being highly secure in order to avoid catastrophic data breaches.

Despite the ongoing fundamental changes to the industry, three things remain certain: customers want to bank with companies they can trust, customers demand individual financial advice, and customers insist on full control over their finances. Prioritising customer experience in these ways is nothing new, but financial services must wake up to the new technologies at their disposal in order to match changing consumer behaviour. Through a data-driven blend of personalisation, prediction, and true omnichannel reach, financial services can create a much brighter future for their customers and, ultimately, themselves.

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Top 10

WHY INDONESIA IS THE WORLD’S NEXT DIGITAL PAYMENTS BATTLEGROUND

Kelvin Phua, Global Head of Payment Networks at PPRO

 

The COVID-19 outbreak has seen the e-commerce sector surge. Despite economic uncertainty, consumers around the world are turning to the internet for the goods and services that they previously would have looked for in-store. In APAC, this has meant that some emerging markets have accelerated their adoption of digital services; the growth that was projected to take years has only taken months.

One notable example of this is Indonesia. According to a recent survey, Indonesia’s e-commerce sector is expecting 50% year-on-year growth with its value set to reach US$35 billion in 2020, up from $23 billion in 2019. What’s more, 30% of the country’s growing e-commerce market is new to online marketplaces and 40% intend to keep using e-commerce after the effects of the pandemic lessen.

With this upward trend has come a reliance on digital payments, and both public and private sectors have responded accordingly. Recently, the Indonesian central bank announced that all mobile payment providers were to replace QR codes with the standardised QRIS (Indonesian Standard QR code), providing a single integrated platform for all transactions made using QR codes across multiple e-wallet providers. On the private sector front, LinkAja has launched an online shopping solution to overhaul traditional marketplaces throughout Jakarta by enabling users to pay for goods using an app with the products delivered straight to their door.

For e-commerce and digital payment providers, these examples are good indicators that the time is right to go after a share of this market.

 

Understanding the playing field

Indonesia possesses many of the key characteristics that are critical to a market’s adoption of digital payments. With a smartphone penetration rate of 60%, well above the region’s average of 51%[1], and having witnessed its middle class grow from 7% to 20% of the population over the last 15 years, it comes as no surprise that Indonesia’s internet economy has more than quadrupled in size since 2015.

Currently, there are 37 local payment methods (LPMs)[2] in Indonesia, with GoPay, Doku, OVO, Dana, and LinkAja some of the frontrunners in the battle to claim a slice of the payments pie. This number is expected to grow as Alipay formalises its entry into Indonesia in partnership with Bank Mandiri and Bank Rakyat Indonesia, joining WeChat Pay which was officially granted a licence to operate in the country this January in collaboration with CIMB Niaga.

The growing number of players jumping on board with digital transactions bodes well for the Government’s National Non-Cash Movement launched in 2014. Go-Jek’s recent funding round and Facebook’s plans to build an e-commerce ecosystem around WhatsApp will help accelerate the adoption of digital payments for millions of SMEs in Indonesia, with businesses already using the popular messaging service to interact with their customers. Similarly, PayPal’s arrangement with Go-Jek will see the latter’s users use GoPay at PayPal merchants globally.

With the influx of foreign payment services and investment catering to higher consumer demand while creating the digital infrastructure needed to facilitate higher payment volumes, Indonesia is shaping up to be Southeast Asia’s next digital payments battleground. But what does this actually mean for businesses and consumers there?

 

Navigating a fragmented payments landscape

With all this consolidation and market movement, payment providers are innovating quickly to strengthen and enrich their offerings by partnering with others to develop their own unique payment ecosystems. Initially, these new partnerships will result in greater efficiencies when it comes to connecting consumers and businesses through one platform. But the fundamental pain point remains; the development of multiple payment ecosystems will continue to create the dilemma of choice. Consolidation in the truest sense of the word is yet to be achieved, and the payments landscape in Indonesia remains highly fragmented.

Since Indonesia loosened investment rules in 2016, foreign e-commerce players such as Amazon and Alibaba have entered the domestic market, competing against homegrown firms such as Tokopedia and Bukalapak. This has provided consumers with access to a wider variety of goods at more competitive prices.

To keep up with consumer preferences in Southeast Asia’s largest economy, merchants and payment service providers would need to evolve – by delivering a customer-centric experience where consumers are able to pay with the local payment method they prefer and trust.

In the long term, businesses should refrain from the drawing of battle lines in Indonesia’s fragmented payments landscape and create a payment ecosystem that takes into account payment preferences of the local consumers. Those who seek to enter multiple markets through one payments platform-as-a-service will be the ones most likely to succeed in capturing the lion’s share of the e-commerce market.

 

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Technology

ARTIFICIAL INTELLIGENCE AND FUTURE OF TECHNOLOGY

Ashish Jain, CEO, Future FX

 

Artificial Intelligence refers to machine intelligence that is programmed to think like humans and mimic their actions. For example while writing this article, I am not actually typing it but dictating it out using the microphone and the text is being typed by Microsoft Word itself.

The ideal characteristic of artificial intelligence is to rationalize and take actions to achieve a specified goal.

As technology advances the previous methods of artificial intelligence are taken for granted as new necessities are conjured. For example the computer was one of the most iconic invention of artificial intelligence but now it is considered as mandatory.

Artificial intelligence is continuously evolving and has to evolve. Machines are made in a way that they understand mathematics, linguistic, psychology and many more other terms that are related to human mind.

Artificial intelligence is used in many sectors for example the medical sector. It is used to test drugs and medicines.

We have applications and games which includes chess where the computer plays against us this is also a feature of artificial intelligence. Similarly self driving cars are also an invention of artificial intelligence. These have to be designed very intelligently.

This can also be used in the financial industry to trace and flag activities in banking and finance such as unusual debit card activity or usage and large deposits.

This also helps to estimate the demand supply and prices of the estimates and that makes trading easier.

Earlier, we had to pay a visit to bank on order to deposit a cheque. Then we updated to ATM/Debit Cards and now you can be identified by your retina. Many different sectors have also adapted this method to make actions it more convenient and safe.

Some more examples of artificial intelligence are iPhone’s Siri, Google’s Smart Assistant, Amazon’s Alexa, Google Maps, Ride- sharing apps like Uber and Ola, diseases mapping, Automated investing, virtual travel booking, social media monitoring, inter team chat tool, NLP tools, etc.

Artificial intelligence is all around us and playing an active role in our daily lives. Every time we open our Facebook newsfeed, do a Google search, get a product recommendation from Amazon or book a trip online, we are using it immensely.

In the coming years, computers might match or even exceed human intelligence and capabilities on tasks such as decision- making, reasoning and learning, analytics and pattern recognition, visual acuity, speech recognition and language translation.

Smart systems in commodities, vehicles, day to day use objects will save time and effort offering us a more customized and comfortable future.

It will help the medical sector hugely in upgrading the medicines and treatments, inventing new ones which haven’t been found yet and making everyone’s lives more safer and healthier. A large number of data can be collected from person to person about their health and nutrition and thus changes can be made in the lifestyle.

Artificial intelligence will bring changes in the educational system making it more revolutionary and advanced.

Overall, every factor has advantages and disadvantages and artificial intelligence has it’s lot too. Considering all the advantages artificial intelligence will also affect the human decision making power, analyzing and rational thinking, lifestyle etc. It will make people lazier and will affect their creativity. It can also lead to unemployment due to increase in usage of machines.

Like everything has a balance, artificial intelligence needs to be balanced too so that we can enjoy it’s benefits without suffering the negatives.

 

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