By Dr Vic Arulchandran, CPO at Nivaura
The year 2020 saw many technology trends accelerated due to the global pandemic. Now that we’ve seen many organisations adopt digitised processes, this momentum shows no sign of slowing. Two predictions that I think gained momentum in 2020, but will come to fruition in 2021, are the adoption of low-code tools and the digitalisation of capital markets.
The low-code / no-code movement has been gradually gaining momentum behind the scenes for the past couple of years. 2020 was the year we saw it really step into the spotlight, when demand for digital products dramatically accelerated due to COVID-19. Organisations that already utilised low-code platforms found themselves in a far better position to efficiently digitalise and automate service offerings and operations than competitors who had not yet embraced low-code. Indeed, Forrester has predicted that by the end of 2021, 75% of application development will use low-code platforms, up from 44% in 2020.
What we’ll see in 2021 is a wave of new entrepreneurs. By this, I mean we’ll see founders who are not developers creating their own applications. Low-code platforms make services and applications available, so that any eager entrepreneur can put together services to create an entirely new offering.
There are three main reasons why tech-savvy entrepreneurs will leverage this trend. Firstly, low-code tools are like building blocks, they are easy to put together to create applications. This also means that parts can be added or taken away with the click of a button if necessary. Compared to code, where parts would need to be modified or completely rewritten in the event of proposed changes to the end product, this is far more efficient. Secondly, because of their building block nature it means that entrepreneurs do not have to become specialist programmers to create their own products and apps. This also removes restrictions on developers who are skilled in some coding languages but less so in others. Finally, they also present the opportunity to automate certain tasks that are time consuming and repetitive. Some organisations have already begun to tackle this using machine learning and RPA.
Separately, while many sectors have embraced digitisation, financial services in particular, primary capital markets workflows have remained largely unchanged. They are the final frontier for digital evolution in the financial industry. In 2021, this will change. Many projects are already underway, developing artificial intelligence implementations and use cases for dramatically reducing the time and human capital required for activities such as bond issuance, as well as the risk level associated with human intervention in transactions.
Today, capital markets workflows generally remain overly complicated, with high manual touchpoints in the issuance process causing issues further downstream in unstructured data flows and post-trade errors. Developing dynamic workflow tools that employ low code / no code principles and utilise AI will have huge benefits for primary markets, not only enabling the generation of deeper insights and delivering increased efficiency to a multitude of tasks, but ultimately democratising access to liquidity.
This extends to many other sectors too, including healthcare – where AI will be used to assist with diagnostics and procedures, sales – through AI recommendations and chatbots, and entertainment – gaming uses AI to create human-like challenging opponents that dynamically adjust to the environment and the user skill level.
FINANCIAL INCLUSION WITHIN DIGITAL PAYMENTS
NICK FISHER, GENERAL MANAGER, SALES AND MARKETING UK, JCB INTERNATIONAL (EUROPE) LTD.
The shift towards an economy that removes physical cash has long been on the horizon in many regions. Sweden is an example of a country rapidly heading this way. Two years ago, just 1% of Sweden’s GDP was circulating in cash compared to 11% in the Eurozone, and research by the Swedish Retail and Wholesale Council showed half of the nation’s retailers saying that they probably would not accept cash after 2025.
In 2019 in the UK, cash payments decreased by 15%, although physical money was still the second most frequently used method comprising of 23% of all payments. The Financial Inclusion Commission in the UK states that there are over 1 million people that do not have a bank account, and the World Bank estimates that there are some 1.7 billion adults globally that still lack access to a bank account.
The finance industry has collaborated over the years to develop various credit products for affluent communities. These customers are considered a lower risk. However, institutions should continue to prioritise the advancement of services to serve an audience which remains – ‘unbanked’. Research by EY showed that financial inclusion could improve GDP by up to 14% in more rural, developing economies like India, and by 30% in frontier markets like Kenya. While the positive reasons for fully embracing digital payments and eliminating physical cash are plentiful, including lower payment processing costs for the retailer and customer convenience, physical cash provides the ‘unbanked’ with the ability to function day-to-day with a legal tender.
To establish digital solutions for the unbanked, payment players should adopt an inclusive mindset. The race towards a digital cash society will naturally get closer to the finish line with the passing of each generation, but governments could lend a hand to the unbanked by encouraging financial institutions to sponsor organisations that provide legal quasi digital cash products. In my opinion, the financial industry has an important part to play in developing low cost solutions to support the unbanked with authentication tools – such as biometrics and risk tools to manage real-time credit risk reporting with anywhere accessibility.
In both developing and developed countries, QR codes can play a superhero role as they offer simple, low-cost ways of processing payments on basic mobile phones. In June last year, we collaborated with FIS to enable cross-border QR codes in the APAC region. The ‘Worldpay from FIS 2020 Global Payments Report’ found that digital wallets, at the time, accounted for 58 % of regional ecommerce purchases and were expected to reach almost 70 % percent by 2023.
In developed regions, we are issued with a formal identification when we are born, no matter our circumstances, and this comes in the form of a birth certificate or, later in life, a passport. This does not always happen in developing countries as resources are often limited. Yet, advances in biometric technologies, such as fingerprint or palm vein may offer a solution to the requirement for proof of identity to open a bank account or to create a mobile wallet. Biometric organisations, payment leaders and innovators, such as Google Pay and Apple Pay, have partnered to make this a reality, despite the initial cost implications for development.
In summary, understanding the reasons for why some prefer physical cash, and others prefer digital cash, provides holistic learnings to achieve a society that ultimately uses digital cash only. Empathy is paramount for building customer-centric commerce. For me, at least, a world without physical cash cannot be considered responsible, or fair, until everyone can be accommodated.
THE EFFECTS OF JOB HOPPING ON YOUR RETIREMENT OUTCOME
By Neli Mbara, Certified Financial Planner at Alexander Forbes
Job hopping – defined as spending less than two years in one position – is a very controversial subject. It can be an easy path to a higher salary but can also be a red flag to prospective employers, not to mention your future financial goals if you are cashing in your retirement fund every time you make a move.
When changing jobs, whether it be once a year or once every decade, one has to make decisions regarding career growth and retirement plans which affect one’s long term financial plans. One of these decisions is ‘what to do with my retirement fund?’
For many people, the first thing that comes to mind is using their pension money to pay off their debt. Alexander Forbes Member Watch statistics show that 91% of members do not preserve their retirement savings when changing jobs. As we are living in times where most household income is used to finance debt, most people use job hopping to gain access to their retirement funds, and use this money to pay off debt. However, a quick fix and instant gratification comes at a price, which in this case could be a delay in your retirement plan.
Your retirement savings are simply for that, your retirement, to pay you an income once you stop working.
Early access of your retirement fund can result in:
- Not having enough money at retirement – this is simply because most of us are already not saving enough for retirement
- Robbing yourself off the compound interest you could have potentially earned from the investment.
- Never making make up for the lost benefit
- Creating a bad habit that will delay you from achieving your retirement plan and desired income at retirement
It is easy to cash in your money from a retirement fund at resignation but it is much harder to make up for the lost benefit (capital cashed in plus interest). Calculations show that for you to make up the lost benefit depending on your retirement age and investment time horizon, you will likely need to invest more than double your contributions towards a retirement fund.
Since only 6% of the South African population are reported to have accumulated enough to retire comfortably, without having to sacrifice their standard of living, you will most likely have to invest much more towards your retirement fund to make up for the lost savings.
Therefore, leaving your retirement fund invested and preserved in a preservation fund is the recommended option when changing jobs, as this keeps you committed to your retirement plan.
Changing jobs is a life-changing event, and it is therefore important that you seek advice from a professional financial adviser who will guide you in your retirement planning ensuring that your retirement needs are taken care of, by providing solutions that help you to ensure your financial wellbeing.
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