Finance

How fintech is transforming customer experience

Published

4 months ago

August 10, 2023

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Chirag Shah, founder and CEO of Nucleus Commerical Finance and Pulse.io

Fintech is transforming the customer experience for the better. Thanks to the latest advances in technology, the customer can now do everything from checking their balance to making payments in a matter of seconds, all at the click of a button.

Among the key drivers behind this digital revolution have been generative artificial intelligence (AI), mobile banking and the digital wallet. But even those technologies are starting to be superseded by new innovations that look set to shape the future of banking and finance.

One of the most significant developments in recent times has been the advent of AI and advanced predictive analytics, with companies planning to spend an additional $31 billion by 2025 on technology, according to Jones Lang LaSalle’s 2023 Banking and Finance Outlook. The technology is enabling customers to get better access to finance and manage their money more effectively using tools such as predictive insights to help them plan ahead.

AI also helps banks to improve their lending inclusivity and equip their customers with greater insights and personalised money management tools. By using real-time analytics and insights from transaction AI across their portfolio, they can better understand their customers’ needs and therefore serve them better.

Taking it a step further, generative AI virtual assistants and chatbots are now being used across the board to answer customer queries 24/7. Another application is for developing and rolling out personalised offers that meet the customer’s needs, such as cashback.

Benefits for SMEs

Fintech is making a huge difference in small and medium-sized enterprises’ (SMEs) day-to-day operations too. It makes it easier for them to set up recurring payments, as well as to gain access to finance, enabling the customer to make a loan application in minutes and receive a decision within a matter of seconds.

By using personalised dashboards that provide data-driven insights, SMEs can also make better informed critical business decisions. With wider access to data, they can run more targeted marketing campaigns and acquire more customers too. They can also benchmark against industry standards and their competitors more easily.

Inflation assessment

AI is also being used to pre-empt the impact of inflation and rising prices on customers and, thus, enable them to manage their money more smartly. That makes the lending process easier for lenders, from carrying out income verification and affordability assessments of applicants to supporting existing customers who are struggling with repayment or have defaulted.

When combined with open banking, AI models can examine a consumer’s financial history by looking at much wider data sets than most traditional credit-scoring algorithms currently used, thus broadening the basis on which scoring and lending decisions are made. That provides access to finance for those who couldn’t obtain it before based on credit reference agency data alone, such as gig economy workers or people without an established credit history.

Finance management tools

Banks are also enabling customers to better manage their money using self-service tools such as saving pots and in-app budgeting capabilities to help them control their spending.

Customers also want to feel that their banks are looking after them and providing them with the support they need, particularly during these economically uncertain times. By providing services like budgeting and personal finance management tools, and giving them a broader view of their finances so they can make better financial decisions, banks and fintechs are able to build greater trust and loyalty among their customers.

In addition, digital wallets and ecards have simplified and made the payment process frictionless. Apps enable the user to do everything on their smartphone, including activating physical and virtual cards and ordering new ones, viewing transactions in real-time and transferring money seamlessly.

Rise of embedded finance

Another game changer is embedded finance and open APIs. Many non-financial businesses now offer financial products via their apps, for example, allowing end users to book and pay for a taxi in one place, which has allowed companies to add new revenue streams and foster greater customer loyalty.

But in order for all these technologies to function effectively, the quality and availability of relevant data is key. By scrutinising data from all parts of the payment process, including cards, bank accounts and payment systems, AI can recommend what customers want, enabling banks and other finance providers to build their products around these requirements.

Customers are also becoming more willing to share their data as they realise the benefits of their overall payment experience. That has meant more data is available for businesses to provide a more personalised customer payment journey.

Better financial control

The bottom line is that all of these fintech tools are enabling customers to manage their finances better than ever before. But the technology is only as good as the data that it uses and if it provides a solution that’s relevant to the consumer’s needs.

By providing a service that’s specific to the user, these applications have the potential to take banking to a new level. And as the gap between the physical and digital journey continues to close, so the customer outcome is improved too.

In order for banks to remain relevant in the long term, they must unify the customer journey across both physical and digital channels. Technology is the key to addressing their needs and preferences, as well as ensuring customer loyalty.

Chirag Shah, founder and CEO of Nucleus Commerical Finance and Pulse.io has over 20 years of experience in the financial services industry and a deep understanding of the needs of UK SMEs.

In 2011, he founded Nucleus, a leading alternative finance provider, to offer flexible and tailored solutions for SMEs across various sectors and stages of growth. With an understanding of the challenges that UK SMEs face in the current economic climate, Chirag launched Pulse in October 2022, a free-to-use service that helps businesses and accountants gain insights into financial performance with AI-powered data visualisation and personalised dashboards. Chirag is not only committed to driving growth and innovation in the UK business ecosystem, but he’s also helping SMEs better understand their data to boost their profitability and guide them towards success.

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Finance

How technology can help win the war on financial crime

Published

1 day ago

December 2, 2023

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By Andrew Doyle, CEO of AML compliance software, NorthRow

Financial crime is on the rise and the stats are alarming. In the UK alone, 64 percent of businesses (according to data from the Global Economic Crime Survey) have experienced fraud, corruption or other incidents of financial crime within the last 24 months, while ONS stats show there were 3.7 million incidents of fraud in England and Wales in the year ending December 2022.

So it’s no surprise that financial institutions and other regulated firms are under increasing pressure from regulators (and the ever-evolving legislation they must adhere to) in the battle against dirty money. Regulators are imposing crippling fines for any compliance breaches, not to mention the significant reputational damage that comes with non-compliance.

Historically, financial firms have employed large numbers of staff to combat money laundering, but regulators are now expecting to see digital solutions in place to counter the risk of financial fraud, and with good reason. Technology can be the deciding factor in the war on financial crime and here’s why:

Better risk detection

Technology platforms can analyse historical data to predict potential incidents of money laundering, enabling organisations to take preventive measures, while also identifying unusual patterns or changes in customer risk profiles, which may also indicate suspicious activity.

Advanced analytics can help companies identify complex patterns across large datasets, making it easier to detect networks of fraud. It is also possible to assign risk scores to transactions or entities based on their likelihood of being associated with money laundering. This helps in prioritising high-risk cases for investigation.

Andrew Doyle

Enhanced customer due diligence

Automated software platforms can analyse customer information, public records, and other data sources to perform thorough due diligence on clients, identifying potential risks or suspicious behaviour before they are signed up.

RegTech automates the process of verifying customer identities and conducting enhanced due diligence on individuals and on companies, ensuring compliance with Know Your Customer (KYC) and Know Your Business (KYB) regulations, both vital components of anti-money laundering efforts.

More accurate identity verification

Biometric verification is a powerful tool in enhancing anti-money laundering and fraud detection. It involves using unique physical or behavioural characteristics of an individual to verify their identity. Traits like fingerprints, facial features, iris patterns, and voiceprints are unique to each individual and are nearly impossible to replicate or forge. This makes them highly reliable for verifying that clients are who they say they are.

Biometric verification can also reduce the number of false positives in fraud detection by providing a highly accurate means of confirming the identity of a customer. This leads to more reliable results and lessens the need for manual intervention.

Continuous and real-time monitoring

Real-time alerts allow for immediate action when suspicious activity is detected. This can prevent or minimise potential financial losses and damage to a company’s reputation. By identifying and acting upon suspicious activities in real-time, financial institutions can reduce the risk of financial losses associated with incidents of economic crime.

Continuous monitoring with real-time alerts can also help refine the accuracy of anti-money laundering systems over time. This reduces the number of false alerts and decreases the need for manual intervention.

To the future

According to data from Capgemini, 68 percent of UK institutions are already looking into real-time anti money laundering monitoring systems to stay ahead of potential threats while 86 percent, says Refinitiv, agree that innovative digital technologies have helped them identify financial crime.

So the data tells us that companies are already heading in the right direction when it comes to fighting fraud, but as the landscape of financial crime continues to evolve, financial firms must ensure they do the same.

By leveraging the right technology, businesses can ensure they not only meet regulatory requirements and safeguard their operations, but also protect their reputations and crucially, maintain that all important customer trust.

Finance

In 2024, payments will evolve to broaden accessibility

Published

2 days ago

December 1, 2023

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Attributed to Roy Aston, COO at Paysafe.

As we look to 2024 and beyond, businesses will need to adapt experiences to changing consumer needs and demands, working with payments providers to increase accessibility, offer broader choice, and more.

We break down some the forces driving evolution in payments over the coming years.

Payments need to be available to everyone, everywhere

Regardless of their location or situation, consumers do not want to wait when it comes to payments. The proliferation of smart devices has given users access to everything, all at once, and this is also expected when making transactions.

In 2024, banks and financial institutions will continue to push ahead with this journey to offer smooth, secure payments to everyone, everywhere, delivering services at the lowest possible barrier to entry. This also means ensuring consumers, even those that are unbanked or underbanked, have access to remittances and cross-border payments.

The first step in achieving this goal will be to improve reliability, security and availability, which may see traditional payment methods like debit and credit cards – still the most popular payment methods – become less dominant, while alternative payment methods (APM) like eCash and digital wallets will grow.

This is because, with the right payment provider, merchants can ensure these APMs are available anywhere in the world – eCash, for example, does not require a bank account to use. In addition, digital wallets and online cash can offer swift, secure transactions, helping users overcome security issues by not requiring them to enter their financial details.

Financial companies will embrace collaboration in 2024

While businesses can address consumer payment concerns using APMs, they must also look to bolster their own defences as the threat landscape changes. Increasingly advanced technology, like AI models, are now accessible to far more people, including threat actors.

To combat this escalating threat, it’ll be no surprise to see more financial companies collaborate in 2024 as they seek to improve cyber risk mitigation. This makes perfect sense – and would be a positive step for the industry – though it is easier said than done.

Businesses must share data legally, while aimed toward a positive purpose, rather than for pure profit. For example, if a financial organisation gains intelligence on a cyber group, they could share this with other companies to protect against bad money movement.

Ideally, collaboration could help improve anti-fraud, anti-money laundering, and cyber security measures, and more broadly reduce risk for businesses and consumers alike. But first, thinking around data governance may need to change.

Existing trends will evolve

While exciting new trends will emerge in 2024, we’ll also see the evolution of some that have yet to reach their full potential.

Embedded payments, for example, will continue to develop, with more businesses bringing together financial products with features like loyalty schemes to offer more added value to consumers.

Decentralised finance, too, should continue to build momentum in 2024. While decentralised finance, and specifically NFTs, have faced challenges this past year, it will be no surprise to see companies get to grips with changing regulatory requirements and continue to build in this area.

Open banking could also see a big 2024, with more APIs becoming available, and companies starting to develop new solutions to enhance customer experience and reduce friction in the payment ecosystem.

And while evolution rather than revolution is a necessity in technology, it’s always exciting to look ahead to the big trends that could shape the future – perhaps not in the year ahead, but beyond.

The future is quantum

Quantum computing is a trend that is as exciting as it is potentially frightening. Able to perform computations that are exponentially faster than ever before, quantum computing represents a new frontier and it will be thrilling to see how it is used in the years ahead.

Combined with AI, for example, quantum computing could optimise processes at a speed and scale never seen before – with serious benefits passed onto consumers.

In the nearer term, however, ensuring payments are available and accessible for everyone must remain the focus in 2024.