By Brian Hanrahan, CCO, Sentenial, parent company of Nuapay
The past year has accelerated payments trends that already existed, as consumers looked for alternative ways to manage their money and purchase goods and services during the pandemic. In 2021, it’s easy to see how these trends have been cemented into the mainstream.
Digital payments grew significantly in 2020, as a direct result of the pandemic. Open Banking payments in particular increased significantly, with research from the UK Open Banking Implementation Entity (OBIE) showing that the ecosystem set to hit three million users shortly , despite disruption caused by COVID-19. This can be partially attributed to the growth in Alternative Payment Methods (APMs) enabled by Open Banking, particularly in mobile commerce but also in some physical scenarios using technology such as QR codes.
Quick Response (QR) codes enable consumers to make payments securely and efficiently from their mobile devices. Recent research concluded that customers across the UK and Europe are increasingly relying on QR codes, with 80% of smartphone users saying they had scanned a QR code at least once in their lifetime, and 40% added that they scanned one in the last seven days. Respondents named, among others, cafes and restaurants as places where they used a QR code as a payment method, demonstrating that this increased adoption goes beyond Covid related Track and Trace schemes.
Importantly, more than 50% of all respondents said they expected to use QR codes for payments in the near future, indicating that consumers will begin to expect QR codes to be available in face-to-face payment environments like brick and mortar stores.
Another range of APM use cases that will become more commonplace after a relatively slow start in the UK are wearable payment devices. The wearable tech market was valued at approximately $27 billion in 2019, and is expected to rise to $64 billion by 2024, partially due to a greater increase in consumer adoption in 2020 than had been predicted.
Innovative wearable technology, like K Wearables’ K-Ring, enables consumers to seamlessly make payments while eliminating the need to handle cash or touch a card terminal PIN pad. When enabled by Open Banking technology, rather than traditional card rails, merchants also benefit by receiving their funds significantly faster and much lower processing costs. As merchants become more familiar with the benefits of accepting payments via Open-Banking enabled wearables, I anticipate we’ll begin to see merchants incentivising their customers to use them.
Indeed, recent research found that 30% of consumers said that a trusted brand could encourage them to use Open Banking as an alternative to credit or debit cards, while more than one in six said a retailer could incentivise them to use Open Banking through loyalty schemes. Additionally, more than half of all UK consumers, and over 60% of mobile banking users would be willing to pay via Open Banking if provided with the opportunity.
Consumer subscriptions powered by recurring payments will also continue to grow throughout 2021. Subscription-based models have traditionally been difficult to implement for SMEs, due to the difficulties surrounding collecting recurring payments. As the Account-2-Account payments market has become more competitive, providers have raced to provide technologies that enable recurring payments seamlessly, primarily based on direct debits. In turn, this has meant that SMEs can provide an efficient and secure payment experience, and meet the ever-growing demand for subscriptions from their customers.
Even pre-pandemic, more than 60% of adults worldwide used at least one subscription service, and in Europe alone spent an average of €130 per month on subscriptions. With millions more consumers discovering the convenience and even excitement of a monthly coffee, pasta, and even toilet roll subscription in 2020, I foresee recurring payments staying the course through 2021 and beyond.
Overall, Covid-19 has advanced the migration of business to online and mobile, in order to maintain their service to customers who they can no longer attend to in person.
Competition has dramatically increased in the digital space, and delivering seamless customer journeys has become a necessity for businesses to survive. This is particularly true for retailers, who are already turning to alternative ways for their customers to pay.
TAPPING INTO THE RIGHT MINDS
David Holden-White, co-founder and managing director, techspert.io
The world is awash with information. Analyst house IDC estimated that more than 59 zettabytes of data would be created, captured, copied and consumed in 2020, and that the amount of data created over the next three years will be more than what was created in the past 30. The boom in consumer technology and the rapid improvement in mobile connectivity has meant that the 48% of the globe that owns a smartphone has near instant access to all the digitised, publicly available information in the world in their pocket.
A world overloaded by information
It’s no surprise that people talk of information overload, or how much it impacts productivity. It’s not new either. A 2012 study from McKinsey & Co highlighted that nearly a fifth of professionals’ time was spent searching for and gathering information, half of the time they spent undertaking role-specific tasks. This is only likely to have increased as we’ve become more dependent on digital tools and services.
On top of that is the realisation that, thanks to social media, we’re living in a time when anyone can be an influencer or thought leader if they shout loud enough. It doesn’t matter whether you’re pushing trainers or cloud computing, whether your audience is a broad spectrum of consumers or a niche group of B2B buyers; the tools and resources are pretty much freely available to build a profile and push your message out there.
The result is that it’s becoming increasingly hard to find the value amongst vast and accelerating volumes of online data and noise, and to use that data to make accurate, effective decisions.
This is something we need to be able to do. We’re all expected to work faster, to make better decisions more quickly. The pandemic showed that certain changes don’t need five committees, two working groups and a proof of concept to take place before decisions can be rubber stamped. At the same time, no matter what industry you work in, there will be competitors who are more agile, more flexible, and seem to be much better at making decisions and capitalising on opportunities.
Yet those decisions still need to be backed by evidence, by irrefutable knowledge. What’s more, there’s only so much data can give us. We need the insights stored in the minds of true experts, with lived experiences of the particular problems, markets and technologies in question. In accessing this, we can develop a decision-making edge in businesses that competitors don’t have, that can be used to drive entrance into new markets, or for winning investment decisions.
Limiting risk in investment decisions
As we all know, investments are inherently risk-related, so, anyone making such a decision will do all they can to minimise their risk exposure, especially in volatile post-covid markets.
To do that requires being able to identify, consume and process information quickly. Investment opportunities, particularly in industries with significant growth capacity, come around quickly and get snapped up fast.
Those decisions will incorporate analysing and drawing insights from raw data, using publicly available and analyst-produced information. But there is also an opportunity to draw on human insights, from leading experts in relevant fields, to get a sense of the story that 0s and 1s can’t properly tell yet. Tapping into the right minds is essential to informing investment decision-making in 2021.
In an ever-growing haystack of information, the challenge is finding them quickly. Plus, once they are found, there’s a tendency to keep using them, or to use them as a gateway to others in their network. While there’s nothing inherently wrong with this approach, it leaves investors exposed to a lack of diversity in thought that makes getting to an unbiased view of the world impossible. At the same time, casting their net wide and finding lots of experts is resource and time-intensive, at a point when time is one commodity in short supply.
So, what’s the solution? Ironically, given that the challenge is bringing the right human insight into the process, the answer could lie in technology, specifically artificial intelligence (AI). AI-powered platforms can take a request for expertise and run searches through all available published and credible material to recommend the most appropriate experts for the project in question.
It’s true that there are already services that recommend experts, but they are heavily manual and therefore slow and imprecise. It’s also true, there are also both negative and positive connotations being attached to AI. No technology is without its flaws, and if investors were relying on the AI platform itself to provide expertise then there would be cause for concern. Services that provide access to the experts themselves, however, are providing a fast way through the noise and data – it’s a car to the destination, not the destination itself. Once investors and experts are connected, the former has access to the relevant insight the latter holds in their heads. What AI has done is rapidly scan through millions of people of talent to highlight the relevant knowledge holders with pin-point accuracy.
Using technology to highlight the best human knowledge
Using an AI technology platform to find the most relevant human is a way of taking a resource-consuming process and finding what’s needed in a thousandth of the time. In that way, investors can get fast access to the human insight they need to make the best decisions, allowing them to capitalise on opportunities and not miss the next big growth opportunity.
UNDERSTANDING THE CYBERSECURITY CHALLENGES FACED BY NEOBANKS
Narendra Sahoo, Founder and Director of VISTA InfoSec
In recent years we have witnessed a major drift in the banking and financial industry with digitization and growing use of mobile technology. Customers are also embracing the digital means of financial services by moving away from physical cash to digital currency. Customers today seem more comfortable transacting digitally than ever before. But the digitization in the Banking and Financial Industry has also triggered huge cybersecurity challenges for Financial Institutes and Service Providers. It has opened up entry points for cybercriminals to stage attacks and get illegal access to critical data. Today, with digitization and technological advancements, the banking industry has grown out to be more vulnerable than ever before.
Facing numerous incidents of breach and theft every year, cybersecurity now becomes a major point of focus for the Banking and Financial industries globally. Especially, for the emerging new financial players like the Neobanks which runs entirely on a digital banking model, cybersecurity should be their topmost priority. Focusing on this area, we have today written an article listing out some of the potential cybersecurity challenges faced by Neobanks and the future that holds for these emerging financial players. But before that let us first understand what Neobanking is and how exactly does it operate in the industry? This will give us a better perspective of its operational challenges and risk exposure that they face in their business.
What is Neobanking?
Neobanks are virtual banking service providers operating digitally without having any physical infrastructure like their traditional counterparts. Their offerings are limited to internet-only financial services that focuses on providing its tech-savvy customers the convenience of their cutting edge and technology-driven digital banking services. Neobank offerings are slightly similar to those of traditional banks but limited to just opening saving accounts, payment, and money transfer services, loans, and budgeting, to name a few. The banking structure and business model of Neobanks are different from the traditional ones, eliminating physical infrastructure and automating banking processes. Given below are some of the key difference that will help you understand the concept of Neobanking a little better-
|Neobanks run on a digital platform and have no physical branch.||Traditional banks have physical banking service branches for operating their business.|
|Banking processes in Neobanks are easy, quick, and automated.||Banking processes in a traditional bank are usually lengthy, tedious, and involves partial manual and automated task.|
|Neo banks’ customer support relies on a combination of chatbots and AI providing flexible, virtual, online support.||Traditional banking relies on telephonic or in-person support.|
|Service offerings include- |
· Opening accounts
· Payment and money transfer services
|Service offerings include-|
· Opening accounts
· Payment and money transfer services
· Insurance services
· Wealth Management
· Merchant services
· Mobile banking services
So, while Neobanking helps in overcoming the traditional banking challenges with the ease and convenience of availing services, they also pose huge security challenges. Given below are some major cybersecurity challenges faced by Neobanks.
Cybersecurity Challenges faced by Neobanks
Without having a robust Cybersecurity measure in place, sensitive data may be at high-risk. For the size and business, they are into, Neobanks cannot afford to invest hugely in full-time security teams. They are dependent on third parties to level their security to the standards of the industry requirements. Given below are some major cybersecurity challenges that Neobanks may have to face
Cybersecurity requires huge amounts of investment. Neobanks are comparatively smaller than the traditional banks and often lack the budget for having a full-time cybersecurity team for monitoring all the activities. Their low investments and budget on cybersecurity may result in weak security measures leading to higher levels of risk exposure.
Neobanks work digitally and are heavily dependent on third-party services to serve their customers. So, with the dependency on the third-party, the risk exposure is significant. If the third-party vendors do not have a tight Cybersecurity measure it may possibly result in compromised security measures and lead to data breach incidents.
Malware- Since the entire banking process is online, a lot of sensitive data passes through the network and digital devices. Networks and devices should be appropriately secured to prevent any incidents of a breach. In case a device connected with a network is compromised with malware, it may pose a huge threat to your sensitive banking data and may result in compromised cybersecurity.
Spoofing is the latest form of cyber threat wherein the cybercriminals will impersonate the banking website’s URL with a website that is similar to the original one and functions the same way. So when the user enters his or her login credentials the sensitive data is stolen resulting in data theft and unauthorized access to critical information. It is a common practice adopted by most attackers to steal sensitive data. With Neobanks completely operating online the risk exposure to such scams are high.
Phishing is an attempt made by a hacker to get access to sensitive information such as credit card details by disguising as a trustworthy entity in an electronic communication. Today, online banking phishing scams have evolved significantly, resulting in high profile incidents of scams. With Neobanks completely operating online the risk exposure to such scams are high.
Almost all of the Neo banks would be required to comply with standards such as PCI DSS. This would be in addition to the local regulatory compliance such as those concerned with Privacy. In this virtualised environment with low budgets and manpower, adhering with these compliance requirements would possibly be the largest challenge faced by Neobanks.
What the future holds for Neobanks– Our Final thought
As the world goes completely digital, security measures need to be more complex and sophisticated. More so, they need to be updated from time-to-time. Implementing appropriate measures and adhering to industry best practices is one-way, Neobanks can get a grip over the cybersecurity challenges. Constantly educating customers about the evolving risk exposure and ensuring compliance to industry standards (PCI DSS) will go a long way in securing the environment and digital business operations. This brings us to recommending Neobanks to consult industry experts for implementing Cybersecurity measures that do not compromise the safety of customer’s and the institution’s data and money in any way.
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