Connect with us

Banking

Mission: Possible – Banking the unbanked

Published

on

By Jovi Overo, managing director of BaaS at Unlimint

 

The Oxford English Dictionary defines psychology as ‘The scientific study of the mind and how it influences behaviour’. On the surface, a background in the discipline may not seem an obvious starting point considering where I find myself today – in fintech. Moving from psychology to finance and technology may seem like a leap, but in truth, it’s been incredibly helpful in dealing with the trials and tribulations of starting and subsequently doing business. The successful ability to influence a client when starting a business is key. Communication skills are central to this and by effectively communicating the benefits of doing business, the more powerful one will be at influencing client decisions. However, this is a two-way street. It is essential that clients listen, and, to do so you must build a rapport so they both like and, perhaps more importantly, trust you. Psychology has played a starring role in helping me to sharpen these skills which have so far served me well, particularly in a client-facing role.

While psychology has given me the foundation to grow professionally, I soon realised I was in the wrong field. This is why I moved to finance and banking. I spent the early part of my financial services career as co-founder of an investment advisory firm in the City of London. I then switched to fintech via an MBA (Master of Business Administration) at Imperial College Business School. For the last decade I have been particularly involved in the startup, payments, fintech, and BaaS (Banking as a Service) sectors.

My particular interest in BaaS means I can influence real change by developing and using fintech products. My current responsibility includes building solutions and the new BaaS division from the ground up. This allows me to develop my own creativity to bring change to the sector, help clients with all their financial needs, and meet my personal goal to make the world a more interesting and innovative place through fintech. I believe fintech makes banking, payments, and financial products better and that leads to making people’s lives a little easier, a little less stressful, and a little more inclusive.

I feel that now is a particularly exciting time for the growth of fintech as well as opportunities for entrepreneurs in the sector. In fact, the global fintech market will reach $225.1 billion by the year 2027, growing at a CAGR (Compound Annual Growth Rate) of 12.9 per cent. Growth of the market is predicted to be driven by the use of smartphones for services related to fintech and online transactions. Last year, approximately 44 per cent of payments were through a mobile app while 64 per cent of worldwide consumers utilised one or more fintech platforms.

For aspiring fintech entrepreneurs who are willing to take calculated risks and learn from mistakes and failures, the opportunities are immense. Belief in both what you are doing and trying to achieve is half the battle. Fintech, Web 3.0, Blockchain, and DLT (Distributed Ledger Technology) are all in their relative infancy. If history has taught us anything it’s that successful innovation drives progress. My tip for entrepreneurs who may be considering the fintech sector is to jump in with both feet!

I would certainly say that my passion for fintech is absolute, as it makes financial products, payments, and banking better. The inevitable result is that people’s lives are easier and less stressful.

In terms of industry trends, fintech is perfectly poised for the future. Further, I think that cryptocurrency, despite its volatility, is here for the long term. Innovative credit products and solutions are also a trend that is here to stay. There will never be a shortage of customers who wish to borrow conveniently and cheaply. This represents an enormous opportunity if employed correctly in tandem with adequate credit risk management.

For over a decade, the Global Findex Database has been a conclusive source of information in relation to accessing financial services including borrowing, payments, and savings. Its 2021 report revealed an increase in financial inclusion, but also found that 1.4 billion adults around the world still remain unbanked. In developing countries, figures for those with a bank account have increased from 42 to 71 per cent in the last ten years. In 2021, Morocco (71 per cent), Vietnam (69 per cent) and Egypt (67 per cent) were the countries with the highest number of unbanked populations.

I find some of these statistics both unacceptable and inexcusable. The countries where a lot of the unbanked reside have unreliable infrastructure, such as electricity for payments processing. In addition to this, bank branches are often absent in areas where unbanked people live, and too many financial services are poorly designed and difficult to use. Therefore, financial services provided by fintech will absolutely help bridge this gap by offering mobile solutions. The conundrum of the distance between bank branches and customers can therefore be solved.

Growing up, I was rich in love but I vowed to make it a mission of mine to ensure that children should not have to go through poverty. The largest group of people living in back breaking poverty are children and children of single parent households where that single parent is a woman. Women are the largest group to be unbanked and most likely to suffer from financial inclusion. This is where my passion drives me to address this problem. We don’t do nearly enough. We can do better, and we must do better, and we WILL do better. This is my mission.

 

Jovi Overo is managing director of BaaS at Unlimint, an advanced all-in-one fintech solution. It provides fast-growing innovative businesses with the ability to accept and make payments globally. The company’s main offices are located in London, Frankfurt, Singapore, São Paulo, Hong Kong and Mexico.

Banking

Are SaaS platforms challenging banks for a piece of the payments pie?

Published

on

By

4 common myths about the role of open source in financial services

Attributed to: Ralph Dangelmaier, Global CEO of BlueSnap

 

The finance industry is at a tipping point with software firms on the brink of becoming banks. This may seem like a farfetched idea, but now that software platforms come equipped with payment capabilities, their SME customers may want to receive more financial products from these platforms.

This is part of the wider trend of ‘embedded finance’ – when companies which aren’t banks incorporate financial services such as lending, insurance, and payments into their product.

Software firms are particularly leveraging ‘embedded payments’ – where the ability to accept and process payments comes with the software itself. Think of a school consolidating all the payments a parent would make for their children – tuition, books, extracurricular activities – in one software platform. This trend has exploded in popularity because there’s a desire among companies, and their customers, for everything from products to payments to happen under one roof.

With the market value of embedded payments expected to reach £2.08 trillion by 2026 and customers becoming increasingly married to their software, let’s look at how we ended up at this turning point in payments.

How chasing convenience puts money in platforms’ hands

Ralph Dangelmaier

The growth of embedded payments is propelled by the need for ease, trust, and convenience. As platforms are selling payments hand-in-hand with their software, customers don’t need to integrate with additional service providers just to accept payments. And they’re already bought into using the platform for its other functions.

Not only is this kind of back-end reconciliation easy and convenient but it helps software platforms generate revenue too. That’s because software companies that embed payments become Payment Facilitators (a.k.a PayFacs) – allowing them to monetize transactions that happen within their platform.

By selling payments, software firms can see up to a fivefold increase in value per client. Rather than depending on software subscriptions alone, these platforms now receive a cut of every transaction that’s facilitated using their software too. This provides them and the businesses they serve with a mutual incentive – shared profits.

Software platforms are passionate about helping their customers create the most easy-to-use experience to drive a higher volume of transactions. Of course, there are many ways to launch new revenue streams, but why leave money sitting on the table when all you have to do is become convenience-obsessed?

Why finance teams want software and payments in one  

As a payment expert who’s worked in a bank’s back office, I know how important a financial software stack can be. In its highest form, it can steer a business’ entire financial strategy.

Often these stacks are well curated, but the biggest drawback is the manual collection of data across platforms. Trying to build a financial picture of a business using your ERP, CRM, human resource and billing system can involve hours of laborious data entry.

For everyday finance teams, this isn’t an efficient use of time. They need to be able to pull data swiftly to advise their executives on financial strategies. CFOs are also under pressure to choose the right software stack to streamline processes and ensure payments ROI.

That’s why payment technology that removes the manual work for finance teams – to get from A to B more quickly – is growing in popularity.

Software firms using embedded payments are saving them hassle and time. Not only that, it helps the key financial decision makers of SMEs stay in a constant state of financial planning, where they can change their strategy whatever the market conditions may be.

The end of traditional banking for SMEs?

Increasingly, SMEs are struggling to get the payments support they need from traditional banks. The ‘higher risk, lower return’ view of the small business market among banks leaves software platforms in a ripe position for a takeover.

There are over 90,000 software companies in the UK alone. With nearly half of software platforms (48%) turning to embedded payments to gain a source of competitive advantage, this figure could represent a threat to corporate banking as we know it.

SMEs don’t have the deep pockets that multinational businesses have. The Amazons and BMWs of the world have long reaped the benefits of a corporate account with a large bank – and the round the clock support this offers.

But SMEs face high conversion fees and often receive minimal support chasing late payments, leaving them between a rock and a hard place. If these businesses can save money by moving from banks to software platforms, then banks are at risk of losing their position over the middle market.

Looming regulation

Until now banks have been able to defend their position because safety and security is key. Once platforms become regulated, then what? It won’t be long before regulators eye up the software industry as their next big focus.

But regulatory bodies like the FCA, PRA and more favour ‘controlled innovation’, so this will take time.

Currently, to process transactions in Europe, businesses must go down the lengthy and costly process of becoming Payment Service Providers (PSPs). That’s why many software platforms are choosing to partner with a licensed payment provider which sells the payment package to them, instead.

In fact, 89% of software platforms choose to work with PSPs rather than become a PayFac themselves. It makes sense when it’s taken more than a year for some platforms to begin processing payments on their own.

Given the sizable financial risk of processing your own payments and the administrative burden this brings, it’s no wonder software firms are looking to fintech for a better way.

After all, it’s not just about processing the payments. A partnership with a payment technology partner comes complete with support in onboarding, underwriting, compliance, risk, payouts and customer support.

In short, software platforms see the benefits of selling payments and are primed to become the next big financial players.

Not only is there revenue for the taking but their customers benefit as well. With software platforms ready to offer SMEs a banking alternative and a superior customer experience, they’re offering a truly win-win solution for all involved. And it’s payment technology partners that can help them make this vision a reality.

Continue Reading

Banking

Emerging technology will power long-term sustainability within the UK banking industry 

Published

on

By

By Peter-Jan Van De Venn, VP Global Digital Banking at Hexaware Mobiquity.

 

Sustainability has been a big focus for the banking industry in recent years, with the issue becoming increasingly important for consumers. It’s no wonder that sustainability has become baked into the purposes of almost every bank, from Natwest to HSBC.

However, the economic uncertainty of the last year has led to many banks putting it on the back burner. Challenging market conditions have forced financial institutions to change their priorities to concentrate on protecting the bottom line. Our research found there’s been a significant drop in the number of UK banks saying that sustainability remains a key business strategy. 12 months ago it was a major priority for 100 per cent of banks, but now that number has shrunk to 60 percent.

Whilst it’s understandable that banks are feeling the pressure at the moment, there’s a risk that they will miss out if they hit the pause button. From cost savings brought by innovative digital products and services, to improved brand reputation and increased profitability, there are a lot of longer-term benefits they could be failing to unlock. So how can they keep moving forward?

Losing momentum

Emerging technology holds the key to their success, with the power to disrupt current behaviours and promote a more sustainable culture. Banks are already aware of this, with 76 percent using digital transformation to drive sustainability, but a lack of leadership has made it difficult to build momentum in the last 12 months. Currently just over half (54 percent) of banks have tasked an executive at board level with overseeing sustainability – way down from 83% just 12 months ago.

This lack of board authority means banks are struggling to engage the entire organisation to move ahead with sustainable initiatives. As a result, almost two-thirds of banks are seeing progress slow, admitting they are not actively taking steps to foster more sustainable behaviours throughout the organisation. Those that have taken their foot off the gas need to find a way to move forward again.

No time for standing still

Banks know that technology can drive sustainable behaviour. For instance, many of them are already encouraging their workforce to work remotely, as a way of reducing travel. This has two benefits – not only does it cut the costs of running physical offices at full capacity, but also reduces the bank’s carbon footprint. There has never been a better time to invest in technology to drive more sustainable behaviours.

New digital products and services can also extend the benefits beyond employees to encompass the wider customer base. A fair number of banks are already investing to make this happen. More than a third (35 percent) of banking organisations are using Machine Learning (ML), Artificial Intelligence (AI), cloud and analytics to make digital services more easily accessible. Investment in these technologies will be critical as the number of physical bank branches continues to decrease, with figures from Which? showing this is taking place at a rate of 54 branch closures each month.

Hitting environmental and social responsibility goals

Emerging technologies can also help banks keep pace with tightening ESG rules and regulations. Banks are faced with demands for increasingly granular reporting and transparency on ESG – demanding a new approach. In line, 41% of them are developing data visualisation tools to improve stakeholder engagement and understanding of ESG risks and opportunities, while 37% are using machine learning and artificial intelligence to identify and track ESG risks and opportunities across a wide range of data sources.

More than one in three are also using the blockchain to improve transparency and traceability in supply chains, and implementing digital tools and platforms to collect, analyse, and report ESG data and metrics in a standardised and consistent manner. All these applications of emerging technology will put banks on track to address global environmental challenges and unlock a greener future.

Long-term sustainability

As the economic pressures hopefully start to subside, increasing numbers of banks will start investigating how they can use emerging technologies to provide engaging experiences and value-added services for customers, to drive greater revenue and efficiencies.

Whilst banks are right to focus on their revenue under difficult trading conditions, it’s important they don’t miss out on the long-term benefits that sustainability can bring. To capitalise on this, banks must keep pushing the boundaries and invest in emerging innovations to drive more sustainable banking behaviours, benefiting the planet and driving great digital experiences for customers.

Continue Reading

Magazine

Trending

Business22 hours ago

How can law firms embrace automation and revolutionise their payments?

Attributed to: Ed Boal, Head of Legal at Shieldpay   Once again, AI is dominating international headlines. This time, it’s...

Business2 days ago

In-platform solutions are only a short-term enhancement, but bespoke AI is the future

By Damien Bennett, Global Director, Principal Consultant, Incubeta   If you haven’t heard anyone talking about artificial intelligence (AI) yet,...

Business3 days ago

Exploring the Transformative Potential and Ethical Challenges of AI in Wealth Management

Nuno Godinho, Group CEO of Industrial Thought Group   In recent years, the advent of AI has sparked both excitement...

4 common myths about the role of open source in financial services 4 common myths about the role of open source in financial services
Banking3 days ago

Are SaaS platforms challenging banks for a piece of the payments pie?

Attributed to: Ralph Dangelmaier, Global CEO of BlueSnap   The finance industry is at a tipping point with software firms...

Banking3 days ago

Emerging technology will power long-term sustainability within the UK banking industry 

By Peter-Jan Van De Venn, VP Global Digital Banking at Hexaware Mobiquity.   Sustainability has been a big focus for...

FinTech Trends In 2022 FinTech Trends In 2022
Business3 days ago

Is your business suffering with Fintech FOMO?

Tom Kiddle, Chief Commercial Officer at Equals Money   It’s a challenging time for businesses of all sizes, but the past three...

Banking3 days ago

The Future of Banking: Streamlined Cash Management for ATMs

Gaetano Ziri, Innovation Manager, Auriga   “Maintaining free access to cash for the community demands robust strategies to mitigate the...

Top 103 days ago

Can AI revolutionise wealth management?

~ The benefits of AI when collecting and analysing financial data ~   Global fintech company Finder reported that around...

AI and machine learning AI and machine learning
Finance3 days ago

Where is the value in generative AI for financial services?

Michael Conway, Executive Partner, Data, AI and Technology Transformation Service Line Leader at IBM Consulting   The New York Times...

Technology3 days ago

Connecting the security dots with cyber fusion 

Anuj Goel, Co-founder and CEO at Cyware  Against the backdrop of Russian-based hacktivists declaring war on Europe’s financial systems, the...

Business3 days ago

Exploring the symbiotic advantages of SoftPoS for merchants and consumers

By: Brad Hyett, CEO at phos by Ingenico   Amid the dynamic shifts that have come to define today’s fintech...

Finance4 days ago

Investing In Bitcoin: What You Need To Understand Before You Buy

Bitcoin—the digital currency that launched a financial revolution—is more than a trending investment. This decentralized currency, free from traditional banking...

News6 days ago

How the LEI Can Help Financial Institutions ‘Address’ a Growing Challenge in ISO 20022

The vast complexity and inconsistency of address formats globally presents significant challenges for financial institutions. In this blog, GLEIF’s Head...

Banking1 week ago

Building towards an inclusive financial future

By Catharina Eklof, CCO of IDEX Biometrics    From the visually impaired to displaced migrants, the unbanked, and people living...

Business1 week ago

Euro deep tech M&A deal value expected to reach $20bn+ in the next 15 months

Written by Oliver Warren, Associate at DAI Magister   Investment in European deep tech has mirrored the broader decline in...

Business1 week ago

Why ESG Investing Is Becoming More Important

Author: Urtė Karklienė, Sustainability Manager at Oxylabs   Environmental, social, and governance (ESG) term was first mentioned in a 2004...

Banking1 week ago

Preparing banks for digital transformation

By Joman Kwong, Strategic Solutions Manager, Financial Services at Laserfiche   Today, digital transformation is imperative for every industry. After...

Finance1 week ago

The critical tech to deliver personalised digital financial experiences 

Jay Sanderson, Senior Product Marketing Manager, Digital Experience at Progress   Providing customers with outstanding digital experiences is now a must...

Banking1 week ago

Bank-fintech partnerships can shape the future of cross-border payments

Steve Naudé, Head of Wise Platform   People and businesses are more interconnected than ever. In today’s global economy, international...

Business2 weeks ago

DORA Compliance in Financial Organisations: What You Need to Know

Nick Hogg, Director of Security Training, Fortra   The regulatory landscape is tightening for European banking, financial, and insurance institutions....

Trending