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Banking Technologies To Thrive In The Modern World



By Frank Arellano, Founder and CEO of Revolv3.


According to research by Digital Banking Report 2022, 36% of financial institution executives believe that expanding digital products and payment capabilities is the next step in bringing about dynamic industry change in 2023. With connected commerce driving the digital economy and the ever-growing demand for agile, flexible, operating models, banking and financial institutions need to step up their innovation game to stay relevant to the modern customer.

Traditional banking structures and neo banks have much to learn from each other

Traditional banks have assets and resources that most payment innovators do not have, and technological innovations play a critical role in bringing the best of both worlds to merchants and customers. However, traditional banks are losing market share to their neo counterparts due to a lack of well-established digital capabilities to complement the retail side of things. Whereas, neo banks still have room for improvement when it comes to customer support and service- as a portion of the modern-day customer base still expects the kind of services they are used to getting from face-to-face or in-person interactions.

Particularly with digital banking, customers are looking for convenience and flexibility in handling their finances. According to a study by McKinsey, 71% prefer multi-channel interactions and 25% want a fully digitally enabled private banking journey with remote human assistance available when needed. They no longer want to choose between this or that when they can have it all.

What banking technologies are expected to bridge the gap between where institutions currently are and where they aspire to be?

Embedded finance: In a nutshell, embedded finance places a financial product in an otherwise non-financial customer experience, journey or platform, and as a natural extension, offers financial services through a multitude of possibilities like digital wallets, customer loyalty apps, accounting software and shopping-cart platforms. Supersized by the exceptional rise of e-commerce and marketplaces, embedded finance, and specifically embedded payments, is becoming increasingly common for all B2B2C and B2B2B businesses as a core value proposition. It has extensive potential to scale and achieve a sort of invisibility that will enable the integration of frictionless payments into customer journeys.

Today, banks have the opportunity to continue providing customer-centric services that they are uniquely positioned to, but at the same time make the best use of embedded fintech in delivering suites of integrated fintech products and services to match customer requirements as per relevance. As identified by a study from Cornerstone Advisors, embedded fintech opportunities for banks include bill negotiation services, subscription management, data breach and identity protection, wealth transfer management and cryptocurrency investing. This integration of fintech products and services into the financial institutions’ offerings and processes also means new revenue streams for banks as well as keeping up with the competition.

PayTech: With laser focus on enhancing the payments value chain, PayTechs make up 25% of FinTechs and are valued at over USD 2.17tn. Emerging PayTech ecosystems will be fully capable of securely storing, managing and leveraging customer and merchant data generated through transactions. Consider the popularity of Buy Now, Pay Later (BNPL), a credit option increasingly favoured by merchants and customers alike. What BNPL essentially offers banks is an opportunity to delve into an interesting new area to drive lending as well as collaborations with FinTech partners.

It’s also interesting to note that innovations in the payment space makes it easier for exciting yet complex business models to navigate their unique set of challenges. Subscription-based businesses, for instance, rely heavily on the quality of customer experiences that can make or break the relationship. Quality payment solutions play an inevitable role in ensuring that false declines and customer churn stay as low as possible. Technologies such as dynamic routing make this possible by reducing declines, optimising payment approvals and ultimately, achieve higher customer retention.

Open banking: It’s truly revolutionary how open banking is literally opening up a whole new ecosystem of global banking, driven by emerging technologies and the omnipresence of digital experiences. Application Programming Interfaces or APIs enable FinTechs and banks, each with their own set of advantages to come together and leverage each other’s assets to create the best possible outcomes for their customers. The open API market was estimated to be worth $2.48 million in 2022 and is expected to grow at a CAGR of 24.81% to over $14 million by 2030.

By eliminating the need for certain expensive labour and hardware, open APIs will enable pushing out microservices that are capable of reducing integration layers, especially when it comes to introducing or removing products and services with ease. Moreover,  BaaS enables banks to generate more revenue as they allow FinTech to use their payment infrastructure for a fee and at the same time FinTechs benefit from the traditional banking infrastructure to build innovative financial products.

The ongoing transition from traditional to new-age

Banks have historically been risk adverse in their approach and operations, having taken their own time to adopt technological advancements, but are now increasingly catching up with new age banks. Complicated regulatory environments as well as the need to ensure security and reliability have slowed down the process of technology adoption but we’re starting to see promising developments, especially in mobile banking along with an overall infrastructural change from on-site to cloud based technologies.

The growing number of smartphone users is making ‘mobile-first’ strategies an inevitable area of focus for banks. With this, cybersecurity is a major concern for the sector and reinstating this issue is the fact that at least 39% of customers cite fraud and security threats as their top fear and frustration while engaging with online banking products.

Needless to say, not just the future but also the present belongs to those who embrace change and make the best use of opportunities. The more the banks act as controllers of money supply, the more opportunities there are for disrupters to own up spaces they carve out of challenges. Irrespective of being digital natives or legacy banks, those who choose not to move with the change will be the ones who will be left behind.


About Frank Arellano

Frank Arellano is the CEO and founder of Revolv3, a fintech SaaS platform based in Laguna Beach, CA. Frustrated by the lack of subscription management payment systems that could minimise false declines and maximise first pass payment approvals, he built his own. Frank started his career with startups. Afterwards he led as an executive at Ingram Micro and Experian for over 20 years. Now, backed by Rosecliff Ventures, he intends to reshape the recurring payment market.


Top banking trends of 2023 and global outlook of banking and fintech for the year ahead



Author: Professor Marco Mongiello, Pro Vice-Chancellor, The University of Law Business School


You’d be forgiven for assuming that the global outlook for banking and fintech will be dominated by the usual suspects:

Artificial Intelligence – AI plays an increasingly prominent role in banking and fintech by enabling personalised services, fraud detection, predictive analytics, use of chatbots and robo-advisors.

Blockchain and Cryptocurrency – the secure, decentralised and swift system for financial transactions that blockchain has brought to the fore a few years ago, is now becoming ubiquitous. An increasing number of transactions are recorded through blockchains technology, primarily in the cryptocurrency market.

Digital Banking and fintech – accelerated by COVID-19 pandemic, the adoption of digital banking is a trend that will persist as customers have become accustomed to the convenience and efficiency of digital banking. Moreover, fintech enables access to financial services for previously underserved populations in developing countries or less affluent social groups in more affluent societies. This includes mobile banking services, peer-to-peer lending platforms, and microfinance solutions.

Open Banking – another global trend is the use of open APIs (Application Programming Interfaces) that allow third-party developers to build apps to facilitate customers’ access to financial data and services from banks.

Nonetheless, the challenges posed by these rapid changes are reminders that banking, an industry that by its very nature needs to be conservative, risk averse and solid, wobbles on the unchartered grounds of fast and turbulent innovation, where entrepreneurship instead thrives. The underlying rationales of banking and fast digital innovation are not incompatible but do need solid operations and thought-through decision-making to avoid causing catastrophic collapses.

The recent examples of Silicon Valley Bank, Silvergate, FTX and Wirecard are stark reminders that digital entrepreneurship applied to banking doesn’t just bring to customers the visible transformation of valuable new services, but also dents (perhaps as an unexpected consequence) the rationale itself of the role of banks in the global economy. Moreover, the central banks’ ability to contain the effects of single banks’ defaults is no longer a certainty, as experienced just over a decade ago and more recently. The markets’ sentiments are hardly reassured by the commitments of even the most coveted players, such as the European Central Bank, the Federal Reserve, and the President of the United States himself.

Regulators are lagging behind and their attempts to catch up may cause further seismic shocks to the global banking system. For example, another trend that is emerging is one of artificial intelligence decision-centres (i.e., decentralised offices of banks which take autonomous decisions on behalf of investors) outside the most stringent regulatory environments, enabling banks to operate globally more efficiently and more competitively. And we can expect that regulators will close the gap either abruptly, as it is currently happening in China, where private banks are subject to an escalation of regulatory and monitoring restrictions, or more gradually as it is happening in Europe and in the US.

The questions we face, as individual or trade customers of our high street banks, as direct investors or clients of managed funds, are whether banking will become more user-friendly yet, for our daily use but riskier, too, or is it simply becoming more efficient, transparent and also safer.

I’m afraid that the answer is by no means an obvious one. Therefore, caution, level-headed decision- making and critical thinking have never been as important as these days. Whether you are looking after your family savings or growing your pension reserve, the imperative is that you keep updated about the providers of the financial services you rely upon as well as about the general regulations that apply to your financial transactions. This is where, for example, you need to be familiar with your rights in case of cyber fraud, as well as learning how to minimise the risk of becoming a victim thereof. Also, taking additional steps to evaluate the credibility, solidity and reliability of the online provider of that app that was recommended by a trusted friend, may prove a very good move.

Similarly, whether you are the CFO of a medium or large company, or are a sole trader wrestling with your own business’s finances, you need to reflect on what you really want from your bank in the first place. That is before you started to be swayed by the whirlpool of offers of ‘opportunities’ to multiply your financial investments. Chances are that your initial approach to your bank was dictated by either a need for financing your working capital, as per your budget and strategic plans, or to find a safe place for your temporarily idle liquidity. Perhaps you were also after some basic treasury services such as swift payments and debt collection. Maybe some other financial services closely related to your business operations, e.g. factoring. The advice is to give very careful consideration to services that are more remote from your business, because the trend for the next years is that more and more of those will be offered to you. But many new services will disappoint those who, sadly, cannot afford financial mishaps as they look to run and grow their business.


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Will ‘Britcoin’ change the way we bank?




The Treasury and Bank of England recently announced a state-backed digital pound is likely to be launched in the UK later this decade, following the popularity of cryptocurrencies. However, the ‘Britcoin’ will be backed by the central bank, ensuring the digital pound will be much less volatile than its sister, cryptocurrency. Could a digital pound backed by the central bank be the answer to utilising technological developments in the finance system for the better?

Ross Thompson, Accountancy and Finance Lecturer at Arden University, considers what we can expect from ‘Britcoin’, how this will impact consumers, businesses, and the economy, and whether ‘Britcoin’ could be the revolution to restore our confidence in the banking system.

Trust in our financial system hit an all-time low post the 2008 financial crash. Even ten years on from the collapse of Lehman Brothers, a survey found 66% of adults in Britain still don’t trust banks to work in the best interests of society.

This means there remains to be apprehension for people to sign up to and use a bank to help manage their money. The UK doesn’t seem to struggle too much in this arena, however, as according to the Financial Conduct Authority (FCA), most UK consumers (96%) have a current account from a bank or building society. Regardless, there is still a significant number of adults who do not have a bank account or are what is known as ‘unbanked’.

The lack of trust plays a big part here. More people want better control over their money and to cut out the middleman, hence why cryptocurrencies and blockchain became a tempting option, as it can potentially remove the need for banks for any transactions. However, the volatility of these currencies has been a cause for concern for many investors and regulators.

Blockchain and cryptocurrency are gaining more traction and are becoming more of a viable option for businesses, especially due to talks of regulations coming into fruition. This is especially true with cryptocurrency, with the government announcing crypto assets will be subject to FCA rules in line with the same high standards that other financial promotions such as stocks, shares, and insurance products are held to.

The “Britcoin” aims to solve the issues traditional Bitcoin presents. It would be backed by the central bank, which would ensure its stability and reduce its volatility, making it a more attractive option for investors and providing greater confidence in the stability of the financial system. Britcoin will be as stable as the inherent stability of the British economy and political system. It would also provide an opportunity for the UK to stay at the forefront of technological developments in the finance system – a system in which it can sometimes be slow to react.

One of the key benefits of a digital pound is that it would be much faster and more efficient than traditional banking systems. Transactions could be completed almost instantly, regardless of where the parties involved are located. This would make cross-border transactions much easier and could even help to boost international trade.

The Bank of England’s Governor, Andrew Bailey, stated: “a digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability”, pointing toward the other advantage of a digital pound. It would offer more security as transactions would be recorded on a distributed ledger, which would make it much more difficult for hackers to tamper with the system. It would also provide greater transparency, as all transactions would be recorded on the ledger and could be easily traced if needed.

However, there are also some potential drawbacks. One concern is that it could lead to a reduction in the use of cash, which could have implications for those who do not have access to digital technologies or who prefer to use cash for privacy reasons. There are also concerns that a digital pound could be used for illicit activities, such as money laundering or terrorism financing. On top of this, more details are required in relation to the levels of personal account privacy; the potential to usher in ‘big brother’ banking systems is a growing a concern regarding state digital currencies.

Around 85 central banks are currently engaged in projects to create digital currencies, according to figures from the Bank for International Settlements. But as it stands, many feel there is probably little need for a digital pound; with a growing amount of people using their debit cards, phones and watches to fulfil the same function, a digital pound is deemed unnecessary. On top of this, many of the public fear that a government digital currency could potentially infringe on their privacy – despite the BoE stating the currency would be subject to rigorous standards of privacy and data protection.

And in countries where a digital currency has already been established, there has been little uptake – widely due to the lack of trust between central banks and citizens. It seems gaining users’ confidence should be the Bank’s first priority. The House of Lords economic affairs committee stated last year that a digital pound would pose “significant risks” such as state surveillance, financial instability as people convert bank deposits to CBDC during periods of economic stress, an increase in central bank power without sufficient scrutiny and could be exploited by hostile states and criminals; it is safe to say that the nation’s ‘Britcoin’ will need to be very well thought out.

It has the potential to revolutionize the finance system, however, and could provide significant benefits to investors and consumers alike. However, the potential risks and drawbacks must be carefully considered before any decision is made to launch such a currency. Having said that, if it is implemented correctly, a digital pound could be a powerful tool for utilising technological developments in the finance system for the better.

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