Connect with us

Top 10

A CASHLESS SOCIETY? WHY THE FUTURE OF MONEY WILL MAKE OR BREAK BANKS

Rahul Singh, President of Financial Services, HCL Technologies

 

When you educate people, you trigger change. Perhaps that is why many universities are now accepting tuition fees in Bitcoins. Among them are the Lucerne University of Applied Sciences and Arts in Switzerland, FPT University in Vietnam, the King’s College in New York and the European School of Management and Technology in Berlin. It’s possible that these universities are injecting the young with new ideas so that when they graduate, they can lead the way by shifting from fiat-banking to decentralised cryptocurrency. In Hangzhou, China, Alibaba’s Ant Financial is changing how we handle money with its launch of a ‘smile to pay’ service at a local KFC. A 3D camera recognises your face, maps it to a bank account, credit card or mobile wallet and completes the transaction, all before the wings and fries are yours. Fundamentally, the future of money appears to be invisible, and underlying this is the intriguing reality that the distinction between money and data will vanish.

 

Money talks

The consequences are enormous. For one, we’ll simply move data around and not hard cash, saving billions worldwide each year as physical money will no longer need to be produced. Counterfeits will be non-existent and, combined with blockchain, entire economies will be spared from immoral underworld transactions. Tax evasion will become (almost) a thing of the pas and, in a cashless society, the importance of global financial hubs like New York, Zurich, London and Hong Kong will come under question. In other words, there’s a Richter eight earthquake coming to the financial services industry.

You can imagine what these changes imply – new processes, policies, regulations, platforms and systems will emerge, creating fresh challenges in integrating these diverse systems and technologies. In the immediate future, it is the uncertain technological landscape around virtual or digital money that is the single biggest barrier to an almost frictionless financial world. However, as digital technologies seep deeper into every industry, it can only be a race to the bottom for those who don’t adopt digital. Banking is no exception.

Banks were primarily known for three things: the ability to store money, keep it safe and make it available conveniently anywhere else. Over a period of time, banks began offering ways to make money grow – even when it was doing nothing in the bank vault – through loans and investments. That was a natural evolution in the history of banking.

Quite suddenly, however, this has changed, since banks are no longer the only ones offering financial services. Chinese e-commerce giant Alibaba, for example, is already providing small-scale loans to consumers. Alibaba knows its customers well and can quickly tailor products to fit the needs of individuals. In fact, organisations such as Amazon, Apple, Google and Facebook which own enormous quantities of customer data and whose platforms are used regularly by their customers, are well positioned to offer banking services. The fact that they are digital by birth makes them daunting competitors to the traditional banking industry.

 

You can bank on technology

The question is, should banks be daunted? Not really. Consider this: banks own their customers and are already custodians of their wealth. That not only gives them an unmatched start, but opens some surprisingly obvious doors for staying ahead of the competition. These include injecting digital into their processes and re-engineering core systems, building sophisticated customer profiles using data with a manic obsession, partnering with dynamic fintechs and moving from being product-centric to customer-centric. All things being equal, it will be customer experience that defines a bank and creates differentiation.

If there’s one thing banks can count on, it’s that the demands from customers will remain the same. They will always want their banks to keep their money secure and enable payments and cross border transfers. Similarly, there will continue to be demand for banks to offer wealth management, provide loans, credit, overdrafts and a host of ancillary products such as tax management, property evaluation, market forecasts, expense tracking, debt management, pension, alerts and reminders. The ones who offer personalised services with minimal processes, authorisations, delays and costs will ultimately win.

When every aspect of banking goes digital, four elements will dictate success: banking licenses, technological heft, marketing muscle and customer experience. It is essential, therefore, that banks use the firepower of next-generation technologies like blockchain, biometrics, natural language processing, chatbots, data sciences, analytics and augmented reality to re-engineer themselves.

Banks must begin to use technology to drive severe innovation. For example, can a bank crowdsource funding for a customer’s business at lower-than-market interest rates? Can it offer on-demand, real-time price comparison for its customers and drive savings? Can it deliver deals and bundles to customers based on real-time location tracking? All this would be impossible without drawing on the power of advanced technology. And it would be equally unthinkable without an innovation mindset.

 

Adapt or fail

The terrible truth is that there is no time to test-and-try technological options or experiment with innovation. Banks and other financial institutions must find competent partners who are already developing these technologies, who have a deep understanding of the financial services domain and the talent to confidently innovate. Money will, inevitably, become invisible, and during this process it will unleash ground-breaking change. Some banks will be swallowed by this change; others, with an appetite for technology, will thrive.

 

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Technology

USING ARTIFICIAL INTELLIGENCE TO ACHIEVE CIRCULAR ECONOMY

By Professor Terence Tse, ESCP Business School

 

It is really only a matter of time before the two main trends, artificial intelligence (AI) and circular economy, would come together. A milestone of this convergence was the white paper “Artificial intelligence and the circular economy”: AI as a tool to accelerate the transition, jointly published by The Ellen MacArthur Foundation and Google earlier this year. It has kick-started the discussion on how AI can be used as a tool to help accelerate and scale our transition to a circular economy. This can be achieved by unlocking new opportunities through improving product and material design, enhancing circularity-based business models, and optimising circular infrastructure. The paper draws on the food and consumer electronics industries to illustrate the circular benefits driven by AI. The forecasted value that can emerge from these is encouraging: up to $127 billion and $90 billion a year in 2030, respectively.

 

The pace will be slow

No doubt these are very good news. It also shows how innovative technologies can take circular economy to the next level. Yet, I believe the path leading there will be full of challenges, not least because, contrary to what general media would like to get us to believe, the development of AI is, in reality, really slow.

 

There are several reasons attributable to this sluggish pace

First, there is a general shortage of AI-proficient graduates. Training up AI researchers takes time. Universities are not churning out data scientists fast enough to meet the job market demand. For those who are graduating, they will most likely be snapped up by the technology giants. Indeed, it has been estimated that some 60% of AI talent are in the employment of technology and financial services companies, leading to a ‘brain drain’ in academia, which in turn, slows down the production of qualified graduates. Small circular economy-based companies (as well as AI start-ups) will struggle to have the same hiring power, as they often lack the ability to match the levels of salaries and prestige offered by large organisations.

Another reason why circular economy-aimed companies, large or small, will struggle to deploy AI is that the technology remains a very expensive investment. AI is, at the moment, far from a plug-and-play technology. Arguably, there are off-the-shelf AI applications available in the market. But what this one size fits-all technology solutions can really do is often very limited and their effectiveness low. Inevitably, for AI to work at an acceptable, value-creating level, it is necessary to integrate it into the existing wider IT system. Customising AI applications to be embedded in the system architecture is very complex and hence very costly.

To make matters worse, the market is seemingly inundated with self-proclaimed AI companies. A recent report has suggested that 40 percent of start-ups in Europe that are classified as AI companies do not actually use artificial intelligence technologies in a way that is “material” to their businesses. As someone who researches and works in the business of AI, I can readily observe this phenomenon has already eroded the trust of many companies, making them increasingly cautious when proceeding with investment and deployment of AI.

 

Gradual developments, not quantum jump

For these reasons above, the adoption of AI, and by extension, in the area of circular economy, will be slow. This, however, does not mean there will be no advancement. Instead of “big bang” new business model creations, AI will most likely produce circular advantages through baby steps in operational enhancement gradually. For instance, one of the important elements in achieving circular economy is better asset management. In a recent research project for the European Defence Agency, my colleagues and I have discovered that there is a wide spectrum of operations for ministries of defence to save money and practise circular economy, from refurbishing and repurposing small military equipment items to reduce waste and minimise the use of virgin materials to extending the service years of capital assets. Unquestionably, the same may be applied to civilian activities. For example, combining the power of AI and drones can extend the longevity of major infrastructure such as reactors and bridges.

Advancements in drone technologies have allowed them to be deployed to take pictures at heights that are dangerous for inspectors to reach. The contributions of AI come from its ability to analyse and identify cracks as well as defects on assets that are not always visible to human eyes from captured images. Consequently, problems are detected before the assets become irreparable, thereby lengthening their lifetime.

A seemingly insignificant but potentially huge possibility of waste reduction would be saving on paper use. In the insurance industry, for instance, there is still a huge reliance on actual paper, with the communications between various stakeholders, including the underwriters, brokers and insured, passing on a large number of physical documents. AI techniques, in particular natural language processing, can help speed up the digitalisation of documents as they can go beyond the point of just reading and processing text to recognising and recording signatures and rubber stamp marks. Little by little, it will be possible to lower paper consumption.

 

The future is now

Both AI and circular economy are by themselves breakthrough ideas that are set to change the world dramatically. Combined, it can be a very powerful force of good. But this can only be achieved if we can synthesise them. For AI and circular economy to work together, it is necessary to educate AI developers to be more familiar with the idea of circular economy as well as making circularity practitioners and researchers more AI-savvy. Holding just half of the equation, we risk missing out on most of the intelligence. After all, no matter how smart machines can be, ultimately, it is the human intelligence – or stupidity – that determines the kind of future that we will be having.

 

Extract of “The AI Republic: Building the Nexus Between Humans and Intelligent Automation”

 

Continue Reading

Top 10

IS BITCOIN SET TO HAVE A 2017-STYLE MINI BOOM THIS YEAR?

Bitcoin’s price is set to “surge before the end of 2020” with investors keen not to “sleepwalk” through a 2017-style mini-boom, says the CEO of one of the world’s largest independent financial advisory and fintech organizations.

The prediction from Nigel Green, the deVere Group CEO and founder, which has $12bn under advisement, comes as Bitcoin – already one of the best-performing assets this year – appears to be on the brink of a bullish breakout.

In recent days, Square, which is owned by the billionaire founders of Twitter, has allocated 1% of its cash reserves to the cryptocurrency, whilst a former Goldman Sachs hedge fund chief says the price of Bitcoin will jump to $1m in five years.

Mr Green comments: “There’s been something of an avalanche of interest in Bitcoin in recent weeks from household-name investors.

“Investor activity is picking up considerably with various on-chain metrics and ongoing – and heightening – global political, economic and social turbulence suggesting that there will be a price surge before the end of the year.

“Like gold, Bitcoin can be expected to retain its value or even grow in value when other assets fall, therefore enabling investors to reduce their exposure to losses.
“Investors will increase exposure to decentralised, non-sovereign, secure digital currencies, such as Bitcoin, to help shield them from the potential issues in traditional markets”.

He continues: “There’s a growing sense that we’re set to experience a mini-boom similar to that at the end of 2017.

“Prices are yet to catch-up with investor interest – but this is only a matter of time as investors will not want to sleepwalk towards perhaps year-high prices in the run-up to the end of 2020.”

The late 2017 bull run saw the Bitcoin price reach its all-time high of $20,089.

The deVere CEO concludes: “There’s been a notable ramping-up of interest in Bitcoin amongst investors since the end of summer. Indeed, it has been the best performing week for one of the year’s best-performing assets since July.

“I can see no reason why this upward trajectory will not continue between now and the end of the year.”

 

Continue Reading

Magazine

Trending

Wealth Management23 hours ago

UNDERSTANDING THE RISKS INVOLVED IN TRADING FOREX

The foreign exchange market attracts numerous traders every day because penetrating the market is easy. To venture into trading forex,...

Business1 day ago

CONSUMERS IN THE COVID ERA CAN LEARN TO EMBRACE STRONG CUSTOMER AUTHENTICATION

By Ed Whitehead, Signifyd managing director, EMEA   The changes that COVID-19 has caused in rapid succession make it hard...

News3 days ago

ATOM BANK CHOOSES SUREPAY TO PREVENT FRAUD AND MISDIRECTED ONLINE PAYMENTS

Since launching in the UK, SurePay’s Confirmation of Payee solution is checking over 25 per cent of all UK payments...

News3 days ago

THE CENTRAL BANK OF IRELAND GRANTS MODULR AN EMI LICENCE

The European arm of Modulr has been established to provide services to customers across the European Union Modulr will drive...

Business4 days ago

PROTECTING THE CONNECTED CONSUMER FROM REAL AND PERCEIVED FRAUD RISK

Sam Holding, Head of International, SparkPost   Experts have researched and observed that when there is an economic downturn, there...

Business4 days ago

CHIEF DATA ANALYTICS OFFICERS – THE KEY TO DATA-DRIVEN SUCCESS?

by: Simon Axon, EMEA Financial Services Industry Consulting Director at Teradata   Banks were among the pioneers of the new...

Finance4 days ago

UNDERSTANDING FINANCIAL LITERACY

By Rita Cool, Certified Financial Planner at Alexander Forbes   Financial literacy is more than understanding how to work out...

News4 days ago

FINTECH TRADECORE SUPPORTS PLATO TO BRING MORE EFFICIENT MONEY TRANSFERS TO MARKET

Plato ’s digital and card solutions enable customers to share funds with family quickly and easily   Fast growth fintech...

Business5 days ago

THE EFFECTS AUTONOMOUS DRIVING WILL HAVE ON THE TRANSPORTATION AND LOGISTICS INDUSTRY

Stefan Spendrup, Vice President of Sales Northern and Western Europe at SOTI    ‘Big thinking’ articles on how to disrupt industries...

Technology5 days ago

USING ARTIFICIAL INTELLIGENCE TO ACHIEVE CIRCULAR ECONOMY

By Professor Terence Tse, ESCP Business School   It is really only a matter of time before the two main...

FINANCIAL SERVICES FINANCIAL SERVICES
Banking5 days ago

WIRELESS CONNECTIVITY POWERING BANKS OUT OF THE STORM

Graham Brooks, Strategic Account Director, Cradlepoint EMEA   It’s now clear the pandemic is going to have a long-term effect...

Finance5 days ago

FROM COVID TO CURRENCY CRISIS?

One hallmark of the United States’ superpower status is the primacy of the dollar. All regimes rise and fall. There...

Top 101 week ago

IS BITCOIN SET TO HAVE A 2017-STYLE MINI BOOM THIS YEAR?

Bitcoin’s price is set to “surge before the end of 2020” with investors keen not to “sleepwalk” through a 2017-style mini-boom,...

Business1 week ago

ACCOUNTANTS HAVE BECOME CRITICAL TO THE SURVIVAL OF BUSINESSES AND THEIR REPUTATIONS DURING COVID-19

Stuart Cobbe, Director of Growth, Europe, MindBridge   The opportunity for fraudulent activity to flourish as finance departments operate remotely...

Business1 week ago

STAY SECURE FROM ANY LOCATION WITH COVALENCE FOR REMOTE WORK

By Andrew Milne, Chief Revenue Officer at Field Effect    As cities across the globe begin to ease their COVID-19 restrictions, this...

Finance1 week ago

ARE FINANCIAL SERVICES COMPANIES RISKING THE CONSEQUENCES OF A DATA BREACH?

By Andrew Fitzgerald sales director for Western Europe and Sub-Saharan Africa – Cohesity   Financial services companies need to be doing data...

Business1 week ago

COVID-19 HAS MADE PERSONALISATION IN CUSTOMER COMMUNICATION MORE IMPORTANT THAN EVER

By James Hall, Commercial Director, Striata UK   When COVID-19 struck and countries around the world went into lockdown, the...

News1 week ago

CORE BANKING PROVIDER OHPEN APPOINTS DOUWE-KLAAS BIJL AS CFO AND BOARD MEMBER

Ohpen, the first fintech platform to bring a bank to the cloud, today announces the appointment of Douwe-Klaas Bijl as its new CFO. Joining...

Business1 week ago

HOW BUSINESSES CAN USE THE CHANGING LANDSCAPE TO AUTOMATE.

By Paul McFadyen, Managing Director of metals4U    The Coronavirus pandemic has dominated our global markets for the first half of...

News1 week ago

ABBYY DIGITAL INTELLIGENCE SELECTED BY PARAGON CUSTOMER COMMUNICATIONS TO DRIVE DIGITAL TRANSFORMATION

ABBYY, a digital intelligence company, has announced a collaboration with Paragon Customer Communications – the leading provider of insightful customer...

Trending