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COVID-19 HAS FORCED MORE THAN THREE-QUARTERS OF BANKS TO CHANGE THEIR FUTURE BANKING STRATEGY

The banking industry faces a watershed moment, with banks re-evaluating strategies and accelerating plans to digitally transform

Marqeta, the global modern card issuing platform, today released a report that examines how banks intend to change their strategies in response to the COVID-19 pandemic. According to the findings, COVID-19 has had a significant impact on almost all (96%) European banks, with over three-quarters (78%) planning to change their future banking strategy to adapt to changes in consumer behaviour, such as the accelerated adoption of digital banking services and cashless payments.

The study of 200 banking executives found that, as a result of growing demand for digital services, 80% of banks have accelerated their plans to digitally transform. Banks also predicted that digital transformation projects will need to be delivered in two-thirds (69%) of the time, with 89% saying that the COVID-19 pandemic has drastically increased the speed of change in banking from years to months. The study also found that:

  • Three quarters (75%) of banks “weren’t prepared” for the scale of change that COVID-19 has triggered in consumer behaviour.
  • 88% of banks were overwhelmed by the demand for online and mobile banking during the COVID-19 pandemic.
  • Since the start of the global COVID-19 pandemic, banks say that digitally transforming to improve the online and mobile banking experience (76%), offering new, differentiated payments services (70%), investing in security and anti-fraud solutions (70%) and modernising core banking and payment platforms (66%) have all increased in priority.

“The future of banking has come around quicker than most expected. The onset of COVID-19 accelerated many trends in consumer behaviour, with more people moving away from cash and adopting digital services such as online and mobile banking,” comments Ian Johnson, Managing Director Europe at Marqeta. “These are all trends that were set to slowly change over time and banks would gradually transform to adapt. But COVID-19 has drastically moved up the timescales, with 36% of banks saying COVID-19 has “opened up the floodgates” to modernising core banking and payment systems. Attitudes to modernisation have clearly changed. Banks are now speeding up efforts to transform because they know that the winners of the next age of banking will be determined by who can best adjust their strategy to adapt to the new normal.”

 

Future banking strategies are changing

Over three quarters (76%) of banks say that the impact of COVID-19 has meant that the business models they used to follow have changed forever. As part of their future banking strategy, more than half (54%) of banks plan to reduce their physical branch network. Banks are also set to increase the number of digital services offered in branch (72%), the provision of specialist payment services (68%), their investment in digital banking and services (66%) and their digital innovation capabilities (61%).

As a result of the COVID-19 pandemic, 92% of banks say that innovation has become more important than ever. When it comes to innovation, banks say they need to:

  • Improve their use of data analytics to gain insights into customers that will allow them to make lending decisions in real-time (91%)
  • Improve their technology capabilities to better use contextual data to make judgements on fraud as transactions are being processed (91%)
  • Implement technology and processes that enable them to control what loans are spent on (90%)

 

Banks have to change quickly, or risk falling behind.

With COVID-19 driving a broad shift in consumer behaviors and adoption of new technology, all banks surveyed acknowledged plans to increase investment in tokenized card technology and modern card programs and said that the dangers of not being able to keep up were real. A significant portion (38%) said that without innovation in payments they would be unable to scale their existing services to offer new features and capabilities, while more than a third (34%) said they feared losing market share to competitors.

“COVID-19 has ushered in a new age of digital banking. Banks need to ensure they are prepared to adapt for this world, and many are set to double down on digital services and capabilities. But to do this, they need to overhaul legacy technologies that don’t provide the agility required to respond to the needs of the market. To adapt and thrive, traditional banks need to be supported with modern core banking and payment platforms that can support the requirement to digitally transform and provide the flexibility needed for their future banking strategies,” concludes Johnson.

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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
  • Recent research from UK Finance found there was a significant spike in fraud in the first half of 2020, with internet banking fraud reaching almost £65m and impersonation scams reaching 15,000 cases

 

SurePay has today announced another successful implementation of it’s UK Confirmation of Payee solution for the UK’s first app-based bank, Atom bank. The Financial Technology company from the Netherlands is already responsible for checking over 95 per cent of all Dutch payments with the IBAN-Name Check and its Confirmation of Payee solution checks 25 per cent of all online payments in the UK.

According to research from UK Finance in the first-half of 2020 losses to customers of internet banking fraud jumped by 32 per cent to £64.3m, with cases doubling from the same period in 2019 to just over 21,000. Impersonation scams have also been on the rise, with more fraudsters pretending to be trusted organisations, with 15,000 cases reported.

 

Confirmation of Payee in the UK

SurePay developed a Confirmation of Payee solution to comply with all relevant UK rules and regulations. The service enables payers to verify that the payee’s name and sort code match so they can prevent transferring money to the wrong person or business, whether by intent (payment fraud) or unintentionally (misdirected payments). Second is that in an onboarding process you’re able to verify the contra account of the potential customer.

The algorithm detects and interprets subtle differences between payee details entered by the payer and the payee details officially registered at the bank. The service aims to significantly reduce the number of payments made in error, prevent fraudulent transfers and provide users with peace of mind when making a credit transfer online. Most importantly, the algorithm will not interfere with correct payments because the entered details are verified instantly and the user experience is unaffected.

In June of this year, SurePay announced its solution was being provided to NatWest Group.

 

Richard Koldewijn, Business Development Manager UK, commented: “Our mission is to make online payments personal, easy to use and even more secure. With all the things 2020 has thrown at the world, fraud has been on the rise as more people are willing to take advantage of the vulnerable. With Confirmation of Payee, we’re able to offer banks a way to help protect more people. We are excited to partner with Atom bank to help protect their customers against fraud and will continue working on further solutions for the UK and Europe.”

 

Roger Mackintosh, Head of Payments and Partnerships for Atom bank, added: “Keeping customers money safe is our top priority and we’re working tirelessly to make sure our customers have the best technology to protect them. We’re impressed with the work SurePay has done to date and the ability to implement Confirmation of Payee so quickly.”

SurePay has already performed almost 3 billion checks since 2016. In the UK SurePay has performed over 30 million checks, with more than 300,000 checks every day with sub-second response time. In the Netherlands, SurePay realised a drop in fraud and scams of 81 per cent and 67 per cent drop in misdirected payments.

 

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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 instant payments expertise into the Eurozone, to radically transform wholesale and commercial payments
  • Powering the payments infrastructure of Sage, Revolut, Mode and Iwoca, Modulr’s European ambitions are hotly anticipated by the European software businesses to enable payment capabilities for their customers

 

UK and Ireland-based FinTech Modulr has today announced it has secured an electronic money institution (EMI) licence from the Central Bank of Ireland for its Dublin-based entity, Modulr FS Europe Limited (638002), (hereafter referred to as Modulr Europe).

Modulr Europe was granted an EMI licence by the Central Bank of Ireland and plans to provide services to customers across the European Union.

Following strong business growth in the UK over the past four years, the newly granted EMI licence will enable the FinTech to offer an extensive suite of payments products, including its award-winning payments platform, through its powerful API to EU markets.

The team at Modulr also brings its significant expertise of real-time payments to SEPA Instant, the euro’s instant payments scheme. Modulr will draw on its experience of Faster Payments to unlock the potential of the new scheme by providing efficient access for European software companies, merchants, specialist banks and more.

The true potential of a digital API-led alternative to commercial payments will rely upon an agile and efficient ‘behind the scenes’ payments process, which has historically been inaccessible and unaffordable to SMEs and enterprise alike. This information comes from soon to be published research commissioned by

Modulr, which reveals contemporary insight not only into the hard cost of payment processes but the hidden impact on customer experience as well.

 

Myles Stephenson, Chief Executive, Modulr comments: “We are delighted to have been granted an EMI licence by the Central Bank of Ireland. The opportunity for a digital alternative to commercial and wholesale transaction banking is significant as software businesses across multiple industry sectors are identifying the need to deliver new functionality and efficiencies to their customers by embedding payments in customer journeys. We plan to build a truly digital, frictionless payments infrastructure for software platform partners to provide new payment experiences to more than 500m people.

“We believe that our depth of experience in digital payments and API integration makes us the perfect partner for European businesses seeking to transform the way they make, receive and manage payments. Traditional banks face clear challenges in making embedded payments a reality via developer-friendly and seamless APIs.”

 

John Irwin, General Manager, Modulr Europe comments: “The granting of the licence is a significant milestone for Modulr’s European operations in Dublin and ambitions for the European market. Our digital platform and experience can transform the payments business. For too long, European payments have relied on the same technologies.

“We look forward to automating payment flows, embedding payments within customers platforms and enabling them to focus on their core business. This will shore up the hidden inefficiencies prevalent in many payment processes today making payments a competitive advantage.”

Modulr has moved over £40bn for customers including Sage, Revolut and Paxport through its platform which has an uptime of 99.999%.

Modulr provides this scale, reliability, and premium service by investing in its own financial access and achieving principal and direct access to critical payments infrastructure where possible.

 

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