Connect with us

Banking

FINTECHS AND BANKING POST-COVID

Published

on

COVID-19 has forced businesses and society to adapt to new realities. From big-name Wall Street banks to up-and-coming financial technology start-ups, the pandemic has forced individuals and corporations to look at how business is conducted through a different lens amid ever-changing consumer behaviours. Two years into the pandemic, financial institutions continue to trim their branch footprint and adopt a digital-first approach. The result is a boom in card payments, the expansion of digital channels, and a significant increase in online banking users.

 

The effect on retail banking consumers

Dima Kats, CEO at Clear Junction

US banks and thrifts permanently closed 233 branches in July. According to   US branches as of July 31.    However, even as the financial incentives to do so disappear, banks will need to maintain a physical presence to cater to older customers who may not be online, rural communities, and unbanked individuals; banks are more than a place where people keep money: they can be a vital community hub.

COVID-19 could prove to be a catalyst for the acceleration of the trends we’ve seen towards the increased uptake of digitised services, but it will be some time before changes wrought by the pandemic harden. Some current banking trends — including an affinity to use digital channels and online payment tools — will stick post-pandemic, while others will fizzle out and turn out to be a temporary fix. But people who are new to online and mobile banking channels are finding out that it is easy and quick. Banks will have to make investments to build awareness about options available to customers to make current banking habits stick.

The pandemic has put a spotlight on the importance of digitisation. A traditional bank will always maintain a physical presence, but branches are expensive to operate. Financial technology companies, unburdened by complex legacy systems, are primed to benefit from the shift to digital. A loan from a traditional banking institution can take over a week to complete, but neo banks — with their online-only operations that avoid the costs and complexities of traditional banking — can do that in just a few hours.

Rising infections are accelerating the use of online channels, particularly mobile, to view and manage finances. Fintechs, with their cloud-native approach, are purpose-built for the mobile channel, giving them an edge as a greater number of financial transactions are conducted through digital channels.

Digital payment and e-wallet services are expected to boom in a post-COVID world, as fintechs offer tech solutions in the cyber security space as the pandemic has increased cyber security incidents because of the increase in remote/hybrid working. With new digital finance technology comes new entry points for cyber actors to gain access to confidential data.

Ultimately, human intelligence can only spot and stop a finite number of cyber breaches. Therefore, the implementation and integration of Data Science (DS) applications into established financial systems are crucial for survival in the age of digital payments and e-wallets. Its use can help improve banking cybersecurity by:

  • Automating the threat hunting process to improve cyber threat detection rates.
  • Learning from previous threat patterns and leveraging the information to look for early signs of any potential attack in the future.
  • Predicting cyber breaches before they happen.
  • Securing and flagging potential threats and sending a notification to the IT team to resolve them.

DS already plays an integral role in business operations. Thus, extending it to improve cybersecurity should be a logical and simple transition to execute. However, with new digital finance applications and the increased use of remote devices to share financial data, mobile banking cyber threats are a growing concern. FIs who fail to integrate DS into their cyber security strategy risk financial and reputational devastation.

 

COVID’s impact on artificial intelligence in banking

The Bank of England published survey results in December 2020 which aimed to gauge banks’ appetite for machine learning and DS amid the pandemic. Overall, half of the surveyed banks expected an increase in the importance of machine learning and DS for future operations due to COVID-19.

While banks’ appetite for artificial intelligence doesn’t seem to be waning, the pandemic may prove to be a short-term hurdle as investment capacity is strained. Machine learning is only as good as the data it relies on, but with ultra-low interest rates and weakened revenue, the present is not necessarily indicative of the future. But banks may look to re-train machine-learning models to perform better under adverse economic conditions.

 

Importance of DS in fintech

Financial technology companies use DS-powered solutions to meet the demands of customers who want convenient and safe ways to help with their problems. Help with credit decisions, managing risk, quantitative trading, personalised banking, cybersecurity and fraud detection are just some areas DS is helping fintechs in. Because DS can quickly analyse large quantities of data to deliver important insights and information, it is used to create efficiencies and recognise patterns that help with decision making.

 

Cybersecurity in fintech vs banking

The pandemic has brought about an increase in cyber security incidents as bad cyber actors double down on their attacks through ransomware, malware and social engineering. Hastily implemented cloud data processes and security needs have failed to keep up with technological innovations which may have left financial data exposed. And as digital banking channels are adopted at an increasing pace, fintech users are more at risk than ever. Multi-cloud data storage, AI fraud detection, Secure Access Service Edge networks, blockchain systems and regulatory technologies are among trending innovations that can make fintechs secure and help keep financial data safe amid a rising tide of cybercrimes.

According to a cybersecurity report by Boston Consulting Group, banking and financial institutes are 300 times more likely to be at risk of a cyberattack than other companies. In the current world of remote workers and remotely connected workplaces, cybersecurity is arguably more important than ever before. Un-encrypted data, malware, third-party services that aren’t secure and spoofing are some of the biggest threats to a bank’s cyber security. Much of a bank or financial institution’s operations utilise technology. But without cyber security measures in place, sensitive data could be at risk. These attacks can be countered by using firewalls, multi-factor authentication, biometrics, training, automated solutions and outsourcing.

Companies that are able to predict how changing consumer behaviours will play out after the pandemic will be better positioned to seize opportunities. Understanding these changes can help companies determine what new behaviours are likely to be permanent and which might revert to their pre-COVID patterns. Businesses that can quickly identify and cater for these behaviour shifts will emerge from the crisis better positioned for growth.

 

 

 

Banking

WHY THE TIME IS NOW TO BANK BEYOND BORDERS

Published

on

By

by Lili Metodieva, MD of Monneo

 

As our world becomes more interconnected, so too does the need for banking systems to follow suit. In the past, businesses and individuals were often restricted to banking in a single country, but the rise of borderless banking is enabling both to benefit from greater financial freedoms. In this article, we will examine why this trend is so important and explain how Fintech companies are helping to make it possible.

 

What is borderless banking?

Simply put, borderless banking refers to any bank account, which allows users to spend, send and receive money across different countries and currencies, without incurring heavy fees. The concept has become increasingly popular in recent years, with more people now working in cross-border job roles and with many businesses requiring capital in a different currency than that of their country of origin.

For customers, borderless banking is making cross-border financial transactions more efficient and cost-effective. Through its rise, businesses and individuals can gain easier access to international streams of capital, which is crucial in this current moment of economic uncertainty. In fact, 74% of companies say cross-border payments have helped their business to survive [1].

 

Where do IBANs come in?

International Banking Account Numbers (IBAN) play a crucial role in facilitating borderless banking. The globally recognised system enables cross-border transactions to happen safely, by providing each international bank account with its own unique 36-digit alphanumerical code. On account of this code, financial institutions can quickly identify where funds are coming from, as well as where they’re going to.

More recently, providers such as us have been able to deliver Virtual IBANs (vIBAN). Working alongside a network of well-established European and International banks, we’re able to offer businesses a single platform interface that consolidates the management of all IBAN accounts. In turn, our multi-currency service makes conducting global financial transactions incredibly straightforward.

 

How has Brexit affected borderless banking?

The COVID-19 pandemic has accelerated the growth of borderless banking and services related to it, but other developments, such as Brexit are beginning to stand in its way. Most notably, the drawn-out withdrawal process has seeded a growing reluctance amongst risk averse, larger organisations to settle transactions using UK bank accounts or IBANs, due to unfounded concerns around regulatory complexity.

Despite leaving the EU, the UK remains a member of the Single Euro Payments Area (SEPA), so it’s unclear why these concerns around British IBAN accounts exist. Regardless, this unfortunate development must be addressed quickly as it has the potential to adversely affect the livelihood of businesses and individuals at a time of critical need.

 

What does the future hold for borderless banking?

There’s clear demand for borderless banking and borderless payments, but the discrimination of certain IBAN accounts represents a major obstacle, which could stand in the way of their widescale adoption. Moving forward, there needs to be a push towards borderless IBANs, which will make international financial transactions more reliable. At the end of the day, this is what IBANs were originally created for, so it’s important the current problems are rectified quickly.

To ensure this can happen, the industry needs protection and clarity from regulators. Likewise, it’s now time for membership organisations to stand up on behalf of the sector and lobby for the financial inclusion of businesses.

If the confusion regarding UK IBAN accounts can be sorted in a timely manner, businesses across the nation, as well as those further afield can look forward to a future of more streamlined and effective financial services. With this support, the diverse sector can deliver further access to innovative financial services and products, which improve outcomes for businesses and consumers alike.

As a sector, Fintech has the potential to provide vital assistance to the wider economy, particularly in an era of increased cross-border business. At Monneo, we’re committed to being part of that change and as a part of organisations like ‘Accept my IBAN’, are working towards reporting and ending IBAN discrimination.

[1] – https://www.mastercard.com/news/research-reports/2021/borderless-payments-report/

 

Continue Reading

Banking

IT’S TIME FOR BANKS TO SIT THEIR CUSTOMERS DOWN AND TALK OPEN BANKING

Published

on

By

Eugene Danilkis, CEO at Mambu

 

We are living in an experience economy, and banking is no different. Customers need innovative payment and finance management solutions. New entrants are edging into the landscape and challenging existing players. This should mean users have a better view of their finances and the tools they need to manage their money – but banks are failing to deliver.

Personal finances are a complex beast, emotional pulls are strong, and the worry of financial security is always on the mind. It’s the job of banks to be the shoulders customers can lean on and trust.

Open banking was supposed to take this to the next level, enabling banks to deliver personalised products and services based on improved data sharing and customer insights. But three years on, adoption remains sluggish. So, why is open banking failing to live up to its promise?

 

A missed opportunity

Open banking was introduced to the UK in 2018, but consumers are still mired in confusion as to what it means and how it helps them. According to Mambu’s global open banking survey, 61% of consumers say they’ve never used open banking, despite more than 8 in 10 using one or more mobile banking apps.

Eugene Danilkis

This is a problem for banks and consumers alike. Lack of understanding around the technology is hindering its adoption, despite this being in the best interests of both. By enabling the secure sharing of financial information, open banking creates an improved customer experience. Not only does this minimise friction and make online payments faster and easier, but allows for personalised services and greater automation, enabling customers to take advantage of tools like budgeting apps.

For banks, open banking is an opportunity to build innovative new products that will improve the customer journey, helping them retain accounts and acquire new ones. By collaborating with third parties, banks can hyper-target customers and build services that address specific user needs, increasing customer satisfaction and in turn brand loyalty.

It’s true there’s been a recent spike in open banking users. According to Juniper Research global, open banking users rose from 18 million in 2018 to 40 million in 2021. But this can be traced to the necessities of a pandemic rather than any sudden clarity in communications.

 

Putting customers at the heart of communication

Mambu’s research shows more than half of consumers (52%) have never heard of open banking. COVID-19 may have increased the uptake of the technology, but it hasn’t increased understanding among users.

So, what can banks do to encourage consumers to embrace open banking? Fundamentally, they must better educate their customers in terms they understand. This means talking to them like human beings, using clear and transparent language to simply explain the personal benefits open banking brings and why it’s really just smart banking.

The understanding gap between technology and terminology shows that consumer demand is there, but better communication is needed. Making sure consumers truly understand the tools they’re using, the control they now have over their finances and how open banking improves the customer experience is vital to dispersing the current fog of confusion. It’s the benefits of this technology that banks need to hone in on: customers ultimately care about what open banking can do for them and how it’s going to make their lives easier.

Centering the customer and their needs in this way will allow banks to fully realise open banking’s potential. The technology has already given them the opportunity to develop valuable services for customers that help build brand loyalty. But the industry has failed to put the customer at the heart of their communications and processes, and show them how much better banking can be.

 

Building trust

Key to reversing this trend is addressing consumer concerns around data privacy and financial safety. Yes, banks need to prioritise simplicity and clarity in messaging, but this isn’t an excuse to shy away from important conversations. Just because there’s an understanding gap around open banking doesn’t mean consumers aren’t switched on about tech and financial issues.

Mambu’s survey found nearly three in five customers have concerns about privacy and security in relation to open banking. So, it’s vital that banks provide reassurance and relevant information about data sharing from the outset if they’re to assuage these fears.

The industry can also encourage greater adoption by developing and improving open banking interfaces. Banks are the gatekeepers to how easily end-users can authorise certain actions, manage third-party access and navigate different open banking functions. If the interface is user-friendly, customers will have a better experience of the technology and be more likely to use and recommend these services.

 

Time to get talking

Customer communication is holding the industry back.. The ability of open banking to transform financial services is a concept that industry players are well-versed in. But the feeling isn’t mutual for customers.

Banks are failing to capitalise on the open banking opportunity by engaging with new and existing customers about what the technology can do for them. Debunking  common myths can open the door to increased growth and trust for banks, as they seek to open up new revenue streams post pandemic..

Make no mistake, open banking isn’t going away. But customers will if banks don’t get talking.

 

Continue Reading

Magazine

Trending

Business22 hours ago

IS SCARCITY OF TALENT THREATENING THE UK’S FINTECH CROWN?

Opinion From Rafa Plantier, Head of UK and Ireland at Tink   From the Square Mile to Canary Wharf, London...

SET YOUR BUSINESS UP FOR SALES SUCCESS IN A POST-PANDEMIC WORLD SET YOUR BUSINESS UP FOR SALES SUCCESS IN A POST-PANDEMIC WORLD
Business3 days ago

SET YOUR BUSINESS UP FOR SALES SUCCESS IN A POST-PANDEMIC WORLD

Dean Fiveash, Head of FinTech Sales, IFX Without doubt the Coronavirus pandemic impacted every aspect of our lives and fundamentally...

THE EVOLVING TECHNOLOGY NEEDS OF THE FINANCE DEPARTMENT THE EVOLVING TECHNOLOGY NEEDS OF THE FINANCE DEPARTMENT
Business3 days ago

THE EVOLVING TECHNOLOGY NEEDS OF THE FINANCE DEPARTMENT

Jennifer Sims, Senior Consultant at Xledger   The world of finance software is evolving quickly, but with many new software...

HOW RETURNS ABUSE AFFECTS RETAILERS HOW RETURNS ABUSE AFFECTS RETAILERS
Business3 days ago

HOW RETURNS ABUSE AFFECTS RETAILERS

By Aaron Begner, EMEA GM at Forter   Accompanying the significant growth in ecommerce over the past 12 months, is the...

TINTRA PLC FINALISES JOINT VENTURE WITH ARTIFICIAL INTELLIGENCE PARTNER TINTRA PLC FINALISES JOINT VENTURE WITH ARTIFICIAL INTELLIGENCE PARTNER
News3 days ago

TINTRA PLC FINALISES JOINT VENTURE WITH ARTIFICIAL INTELLIGENCE PARTNER TO BUILD INDUSTRY CHANGING REGULATORY TECHNOLOGY

Innovative fintech company, Tintra PLC(https://tintra.com/), has formed a joint venture with award-winning Artificial Intelligence and Machine Learning business, TMC2, via...

CELLPOINT DIGITAL PARTNERS WITH VYNE TO ENABLE INSTANT OPEN BANKING PAYMENTS FOR MERCHANTS CELLPOINT DIGITAL PARTNERS WITH VYNE TO ENABLE INSTANT OPEN BANKING PAYMENTS FOR MERCHANTS
News3 days ago

CELLPOINT DIGITAL PARTNERS WITH VYNE TO ENABLE INSTANT OPEN BANKING PAYMENTS FOR MERCHANTS

The partnership will allow CellPoint Digital customers to incorporate Vyne into its payment ecosystem and access instant payments without a...

WHY A MULTI-ACQUIRER STRATEGY IS KEY TO GLOBAL GROWTH WHY A MULTI-ACQUIRER STRATEGY IS KEY TO GLOBAL GROWTH
Business6 days ago

WHY A MULTI-ACQUIRER STRATEGY IS KEY TO GLOBAL GROWTH

As online business grows exponentially, finally fulfilling the internet’s promise of a ‘global village’ in which anyone can buy and...

Business6 days ago

TAKE THE NO-CODE LEAP TO DIGITAL INNOVATION WITH A FUSION TEAM

Chris Obdam, CEO, Betty Blocks   In the last couple of years, a new sector has emerged alongside enterprise financial...

Finance6 days ago

HOW FINANCIAL ORGANIZATIONS CAN PROTECT THEIR DATA

Yuval Wollman, President, CyberProof and Chief Cyber Officer, UST   Top executives from Wall Street’s largest banks pinpointed cybersecurity as the...

Top 106 days ago

IF IT’S A LOSS, YOU’RE TOO LATE – WHY THE INSURANCE INDUSTRY NEEDS TO FOCUS ON FIRST NOTIFICATION OF RISK

Simon Dicks, Insurance Channel Manager EMEA, Lytx   Insuring commercial fleets can be an expensive business. Average repair costs have...

Business6 days ago

IDENTITY SECURITY IN THE ERA OF SOX

By Steve Bradford, Senior Vice President, EMEA, SailPoint   The Sarbanes-Oxley Act (SOX) is a federal law that mandates practices...

News6 days ago

EXPERIAN LAUNCHES VERIFICATION SERVICE TO SUPPORT FASTER, MORE ACCURATE LENDING DECISIONS

Work Report™ is the UK’s first service that automates the digital sharing of payroll information on behalf of the consumer...

News1 week ago

TENUREX AND ELUCIDATE PARTNER TO INCREASE FINANCIAL INCLUSION WORLDWIDE

TenureX and Elucidate have announced a strategic partnership with a mission to increase financial inclusion worldwide and tackle the laborious...

Banking1 week ago

WHY THE TIME IS NOW TO BANK BEYOND BORDERS

by Lili Metodieva, MD of Monneo   As our world becomes more interconnected, so too does the need for banking...

News1 week ago

PAYCAST PARTNERS WITH MARQETA AND MASTERCARD FOR NEW MARKETPLACE PAYMENT SOLUTION

Paycast will leverage Marqeta’s modern card issuing platform and the Mastercard network to empower marketplaces with payment solutions that help...

Finance1 week ago

HOW FS ORGANISATIONS CAN USE API-DRIVEN DATA AUTOMATION TO JOIN THE OPEN BANKING REVOLUTION

By Steve Barrett, Senior Vice President, International Operations at Delphix    Technology is rapidly transforming all industries across the world. However, for the...

Banking1 week ago

IT’S TIME FOR BANKS TO SIT THEIR CUSTOMERS DOWN AND TALK OPEN BANKING

Eugene Danilkis, CEO at Mambu   We are living in an experience economy, and banking is no different. Customers need...

Banking1 week ago

WILL CHALLENGER OR TRADITIONAL BANKS WIN THE SECURE CARD PAYMENTS BATTLE?

By Vince Graziani, CEO, IDEX Biometrics ASA   Challenger banks have shaken up the payment ecosystem in the last decade....

Banking1 week ago

TOP ITALIAN BANK ROLLS OUT FIRST OF ITS FULLY DIGITAL BRANCHES WITH AURIGA

Banca Carige Smart, the new intelligent branch model enabled by Auriga #NextGenBranch solutions , combines digitalisation with a human touch...

Banking1 week ago

HOW BANKS CAN PROTECT THEMSELVES AGAINST RANSOMWARE

Jay Ralph, Managed Cloud Global Sales Lead at SoftwareONE   We’ve seen a slew of high-profile ransomware attacks in 2021. From hackers...

Trending