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Finance

FINANCIAL SERVICES NEED TO INNOVATE, NOT PROCRASTINATE

By Asheesh Mehra, Co-Founder and CEO, AntWorks

 

Financial services are on the cusp of evolving thanks to new automation technologies. Most financial services companies will need to use the most advanced automation that exists in order to efficiently ingest, process and organise the documents they work with most frequently. The reports, email and text files that are primarily used by Banking, Financial Services and Insurance (BFSI) businesses are considered ‘unstructured data.’ This refers to data where information is scrambled and not presented in a clear way, from videos, to images, audio files, text data and much more. Unstructured data is expected to make up 80 per cent of all the world’s business data by 2025, which means that BFSI companies will need automation solutions that can process unstructured data which will be clogging up the electronic pipelines in the next decade.

Robotic Processing Automation (RPA) isn’t going to cut it, as this type of automation can only process structured data, like inventory control, sales transactions, and ATM activity. RPA is also very task-based and can’t automate a business process from start to finish and requires human intervention. RPA isn’t AI.

So how can a BFSI enterprise prepare for the era of intelligent automation? To prepare accordingly, companies need to address which aspects of an entire business processes is most in need and can gain the most value from end-to-end automation, and then decide which technology solution will help them achieve their automation goals. It’s time for enterprises to move past RPA and implement intelligent Integrated Automation Platforms (IAPs) which provide a one-stop solution for data curation, and building, deploying, and managing AI-enabled digital workforces.

 

Innovate, don’t procrastinate

Despite 83 per cent of Chartered Institute of Management Accountants (CIMA) supporting automation in finance, only 43 per cent of finance executives admit that they need to innovate more. Companies are often reticent to innovate simply because they are skeptical about the real financial benefits and ROI of being the first mover to adopt technological solutions.

Financial services is an industry that is constantly under pressure to innovate. Take online banking for instance where UK citizens using online banking as their primary way of tracking spending increased dramatically from 47 per cent in 2012 to 73 per cent in 2019. With this sharp increase in the uptake a more digital service in such little time, banking firms have had to innovate quickly for fear of being left behind. By the end of 2014 there were 51 million contactless cards in circulation in the UK, but by 2017, there were close to 120 million – almost the equivalent of 2 cards per person. This signifies that BFSI can and will innovate when there’s a clear need for it. All this innovation has meant greater revenue opportunities for banks and has given rise to a new wave of challenger online banks becoming popular, like Monzo and Revolut.

Intelligent automation is expected to add US$512 billion in global revenue to the financial sector, but this can only be achieved when finance executives take the initiative to automate their processes with IAP.

As enterprises begin to embark on their AI journey, it’s imperative that employees are fully integrated into the process with employers simultaneously ascertaining which business processes need automating, and which employees will need reskilling and retraining to meet changing demands. With concerns mounting around automation replacing people’s jobs, it is the business’ responsibility to quell these fears. In fact, if done right, people shouldn’t be afraid of robotics and AI in the workplace, they should embrace it. AI has the power to enrich the employee experience—by removing the mundane and allowing people to focus on tasks that are more complex, creative, and require higher levels of decision making. It is up to leadership to invest in not just the technology but also in their talent.

 

Where do you need to automate?

Financial services and banking are industries where a huge variety of datasets exist. Customers still fill out paper forms to set up bank accounts, but they also use online services too. Banks are also managing customer service requests over the phone and via email. This means that employees in the BFSI sectors work with a huge variety of different types of data throughout their working days, meaning that several different departments can benefit from being automated with IAP.

The first key thing for companies to consider would be to identify which areas of the business are most reliant on unstructured data, and where the productivity lapses are with regards to processing this data.

With this in mind, enterprises need to be prepared and identify which processes requires automation.  There are numerous departments in BFSI firms that deal primarily with unstructured data, including support teams, administration, fraud detection and among others. All of these departments can experience increase productivity in the digital workforce when adapting to IAP solutions.

Fraudsters are getting more sophisticated in gaining access to bank accounts and the banks need to always stay ahead of the latest technology in order manage customers’ expectations and safeguard assets. Automation which is built on fractal science can process both unstructured and structured data of all forms and help fraud detection teams ascertain whether a transaction is genuine or not by analysing all forms of a customer’s previous transactions that are recorded through unstructured and structured data. Giving customer assurances that their bank provide superior and automated fraud detection services, and providing further convenience for their employees will improve customer services by offering quicker and more efficient responses to enquiries or requests.

 

Remaining agile and competitive for the future

All industries have challenges ahead in terms of remaining competitive in their respective markets, especially in the UK where issues such as Brexit pose a threat to economic stability. More than a third of financial services firms have seen a 2 – 5 per cent increase in revenue from automation, and as more and more businesses realise the potential of intelligent automation, this figure will continue to rise.

Don’t procrastinate when it comes to innovation, but also be mindful about which type of solutions to adopt and how. As we move into the 2020s, companies need to seriously consider how automation will impact their businesses and make smart decisions about where to automate with IAP.

 

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Finance

WILL BLOCKCHAIN REVOLUTIONIZE FINANCE?

By Ken Timsit, ConsenSys

 

Over the last 10 years, researchers, software developers, start-ups, and large companies have been conducting experiments aimed at determining whether networks based on blockchain technology can ultimately – in whole or in part – replace the infrastructure on which financial institutions and capital markets are built.

 

In today’s electronic databases, any information can theoretically be replicated at will. This is why most governments allow only regulated actors to keep records of digitized assets (banks, depositories), to avoid pitfalls such as the execution of misleading transactions or the creation of artificial assets. With blockchain, these pitfalls can be avoided at the source code of the technology, which is available to all members of the network. The creation of Ethereum enabled a more robust blockchain network capable of “smart contracts”, which once programmed, can run automatically without the results being modified or manipulated.

 

Contrary to what some critics argue, the potential of the blockchain is not the creation of a free and unregulated space in which everyone can invent new financial instruments. Rather, the potential lies in creating a much more efficient and globalized commercial and financial infrastructure, in which many layers of control and intermediation are no longer needed as they are replaced by transparent and immutable IT rules that ensure the same risk management functions.

 

For example, bonds are essential financial instruments on which a large part of our economy and savings are based. The issue and exchange of a bond requires the intervention of several dozen financial institutions (issuers, intermediaries and investors). Some regulated players in this intermediary chain exist mainly to ensure that it is possible to know, at any time, who holds each bond, in order to guarantee their rights to its bearers.

 

It is theoretically possible to simplify these stacks of operators by linking them to a global blockchain network, open to all stakeholders in the industry. The blockchain network can thus ensure at any time that the number of outstanding bonds corresponds exactly to the number of bonds issued, and that each exchange transaction is carried out without the risk of default.

 

The blockchain revolution is first and foremost the reduction of costs and delays caused by the current financial infrastructure. The blockchain revolution also creates innovation opportunities for consumers, savers, and investors.

 

 

The Web3 revolution, often used to refer to the blockchain revolution, will be driven by the reduction in transaction costs, allowing the emergence of new peer-to-peer business models that we are not yet able to accurately predict, but which will probably participate in a rebalancing of the relationships between financial institutions and their clients. Some international peer-to-peer payment and loan-to-peer savings investment models are already attracting increasing interest from the most sophisticated consumers.

 

Where are we in 2020?

Today, the blockchain revolution is still in its infancy. Transaction volumes through blockchain networks, public and private, are low compared to those of existing systems. The fixed costs of the technology are still relatively high, and the user experience leaves something to be desired.

 

However, innovations abound. It is already possible for me, from my smartphone, to buy digital assets whose value is equal to about one US dollar, and to lend them in three clicks to other users who will pay me between 1% and 10% per year for this service, depending on the type of platform.

 

The number of large operational business projects is still small, but very promising. Numerous international commodity trading players have joined forces to create Vakt and komgo, two platforms that contribute to a significant simplification of trade and oil financing. Similar and competing projects, Voltron and Marco Polo, are being launched. On the corporate side, the Capbridge 1x platform (Singapore) already allows shares to be traded on an Ethereum blockchain network. Other important projects such as LiquidShare (France), SIX Digital Exchange (Switzerland), Daura (with Deutsche Borse and Swisscom in Switzerland), Synapse (Hong Kong Stock Exchange) are in preparation. The World Bank, Société Générale and Santander have issued bonds on an Ethereum blockchain network. These initiatives are still experimental but have attracted significant interest from financial institutions around the world.

 

And of course, many projects aim to revolutionize global payments by creating digital assets on blockchain networks that are fixed in Euros, U.S. Dollars or other currencies, such as those of the Monetary Authority of Singapore, the South African Reserve Bank, and Union Bank of the Philippines. Since the announcement of the Facebook-initiated Libra project, many governments have expressed concern about the possibility of private companies controlling global payment flows, and have asked their domestic financial institutions to redouble their efforts to explore competing initiatives.

 

All of this is to say that adoption is happening, albeit gradually. The middlemen and intermediaries of the financial world will not be replaced overnight. Moreover, the exact formation or architecture of the new financial system is impossible to predict with accuracy. However, it’s safe to say that blockchain will enable a financial system that is more efficient and yields more value-add to consumers, users, and investors.

 

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Finance

RECOLLECTING 2019 CRYPTOCURRENCY TRENDS & LOOKING FORWARD TO 2020

Marie Tatibouet is the CMO at Gate.io

 

It has been a bold and progressive year for the digital asset market with exciting announcements flowing in from technology behemoths and government bodies around the world. However, Facebook’s launch announcement of Libra (though they are now facing regulatory issues) and China’s new cryptocurrency law caught all the attention, affecting the Bitcoin price, and the overall market sentiment.

In 2019, the global market saw several catalysts emerging for mainstream adoption despite increased scrutiny around several burning issues such as wash trading and security breaches. For over 400 cryptocurrency exchanges in the world, being able to constantly improve on aspects around user experience and fund security is the only way to be sustainable. However, only a handful have real trading volume and technical expertise to build strong trust in the community. For instance, global wash trading has been the hottest topic of discussion in 2019 but new rankings on CoinMarketCap clearly indicate that the industry is working towards eliminating market manipulation.

 

Looking back at 2019

In 2019, digital asset organisations have constantly innovated to attract users but at the same time, the trading process has become increasingly fragmented, spiking the time gap between new users becoming long-term users.

 

Marie Tatibouet

Holding & Lending Funds

Since 2014, the Bitcoin margin trading market has expanded from $10 million to $100 billion. Margin trading has been a great use case in the cryptocurrency space. Many exchanges launched the feature to provide diversity to the trading experience and attracting a huge amount of users to the platforms. It allows traders to multiply their profits on successful trades, providing a range of possibilities for both profits and losses.

Staking is a process where users can buy digital assets and earn interest by keeping (holding) them in a cryptocurrency wallet for a particular period of time. It has proved to be a strong use case for digital asset companies as it encourages user participation. In 2019, staking programs brought stable earnings for cryptocurrency investments made by the users. For instance, HODL & Earn launched by Gate.io in August 2019 has been bringing stable earnings for cryptocurrency investments made by its users. The competitive advantage for HODL & Earn is its annual interest rate, which is as high as 32%.

 

IEO

Crowdfunding as an approach to build and grow products has seen a lot of traction over the last decade or so. One of the highlights this year was the emergence of “Initial Exchanges Offerings”, more commonly termed as IEOs, an alternative to traditional IPOs where companies can raise funds by selling a quantity of digital assets to investors, supervised by cryptocurrency exchanges. With over 1.5 Billion funds raised, IEOs shook the entire cryptocurrency space in 2019.

Owing to the richness and variability that we have seen so far, there has been no one clear winner to pick, but there’s also no ignoring the leaders; Gate.io has the second best average IEO returns, raising over 80 million dollars in its first 5 projects and has similar offerings panned out for 2020.

 

Source: https://medium.com/@neironix.io/top-8-largest-ieo-whats-happening-to-them-now-f7e60a638dda

 

Deals and Discounts 

Discount deals are being increasingly leveraged by digital asset companies, encouraging users to maximize their capital. Holiday seasons such as Black Friday are packed with jaw-dropping discounts. However, as an industry, we should aim to integrate discounts in digital currencies into the mainstream world, which would bring price stability.

 

Dynamic User Relationship

Cryptocurrencies are being taken seriously and companies are designing consumer-specific strategies. It is a great indication of the fact that more and more people are interested in trading digital assets. However, we have a long way to go when it comes to tackling the industry challenges and unlocking value for the entire ecosystem.

 

Regulation, Security, and Mass Adoption 

Central banks of the US, Europe, China, and Ghana are looking at creating their own central bank digital currencies, putting a structure to the adoption of the blockchain technology across finance and other industry verticals. Japan’s recent regulation amendments, China’s new crypto law have laid the right frameworks for mainstream crypto adoption.

While we have major countries pushing for the mainstream adoption, security remains a major concern. Cryptocurrency thefts and frauds in Q3, 2019 annual stand at USD 4.4 billion and this will only increase if fund safety mechanisms aren’t strengthened. Therefore, the strongest will survive as far as digital asset security is concerned.

Nonetheless, blockchain technology is helping to create an innovative and accessible financial system around the world and its mainstream adoption is closer than we can fathom.

 

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