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Six cloud trends you didn’t know about in 2023

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By Darren Bowling, Senior Advisor at Cloudreach

 

Several industries, including healthcare, sports, travel and retail, have embraced cloud technology in recent years. As a result, investment in cloud-based applications is increasing as more businesses realise the benefits of storing and accessing data in the cloud.

As Gartner predicts, end-user spending on public cloud services will exceed $480 billion by 2022. But this is only the beginning; the global cloud computing market is estimated to grow to be worth $1 trillion by 2028. The development of new, emerging cloud technologies and services is increasing, and 2023 will see more businesses from varied industries utilise the cloud. Here are six trends to watch out for.

 

  1. Enterprises are moving towards Cloud Native Technologies

As we see an increase in investment in cloud computing, we are also seeing a decrease in investment in other areas of IT, which are becoming less of a priority, including end-user devices such as computers and laptops.

Cloud native technology is becoming increasingly popular among businesses due to the many advantages it offers. These advantages include improved efficiency, scalability, and cost-effectiveness. In order to get the most out of cloud native technology, businesses need to invest in people by training them on how to use new cloud technologies and processes. Additionally, businesses should focus on maintaining employee satisfaction and motivation. By doing so, businesses will be able to run more efficiently when adopting and implementing cloud native technologies.

  1. Cloud reducing carbon emissions

As we move closer to a low-carbon future, we expect to see more businesses decarbonising their digital assets using the cloud over the next few years. By storing data and applications in the cloud, organisations can reduce their overall carbon emissions and cloud providers can help IT estates and supply chains lower emissions by switching to renewable energy sources and energy-efficient data centres.

In the future, we anticipate that an increasing number of enterprises will adopt this approach. A large percentage of Enterprises increasingly recognise the cloud as a key resource in their sustainability strategies and IDC predicts this number to reach 85% by 2023. This shift is driven by the many benefits of using the cloud, including helping to reduce carbon emissions.

  1. Talent Crisis: Enterprises Find New Solutions to Answer a Complex Problem   

As the world increasingly relies on digital technologies, the skills employees need to excel in their roles are changing. To close the widening skills gap, many organisations are offering apprenticeships and training programs that give employees the chance to learn new, in-demand skills and further their careers. In some cases, employers are forgoing the university degree requirement for candidates with relevant digital apprenticeships under their belt – making it easier for people from a variety of backgrounds to enter the workforce.

  1. Connecting regions: Large-Scale 5G and IoT applications

5G and IoT technologies can benefit businesses in many ways, such as reducing costs, increasing operational efficiency, and assisting with decarbonization and sustainability efforts. However, these technologies can only be fully leveraged if businesses have cloud architectures that are flexible enough to support them in any situation. By ensuring that their cloud architectures are flexible, businesses can take full advantage of 5G and IoT technologies and reap all of the benefits that they have to offer to support them in any situation. By doing so, organisations can increase operational efficiencies, reduce costs and redundancies across their value chains, and assist with decarbonization and sustainability efforts.

  1. The evolving role of the CIO

As business priorities shift and evolve, so too must the role of the CIO. In the past, CIOs were primarily responsible for managing technology investments made by businesses. However, people and culture have become increasingly important considerations in business change implementations and CIOs must expand their scope of responsibility to include management of their team, technology, and organisational culture. This will be an essential factor for organisations in leading successful business change in 2023 and beyond.

  1. How Cloud-Native Enterprises Can Drive Economic Efficiency

Businesses are increasingly looking to their finance and accounting departments to take the lead in improving financial performance. One key metric in this regard is the financial quotient (FQ) of a company, which captures its financial health and resilience. To improve their FQ, businesses are looking to adopt best practices in cloud economics, such as resource and capacity planning, cost optimisation and billing and invoicing.

With this knowledge, businesses can make informed decisions that fit their needs and budget and create accountability throughout their organisation.

A glance at 2023 and beyond

Cloud adoption has been a major focus for businesses in recent years, and this trend is expected to continue in 2023. A cloud-first strategy can help organisations achieve their goals and future-proof their infrastructures. However, on-premise data storage still has a place for many enterprises.

As such, these trends suggest a growing and evolving cloud industry, with hybrid and native cloud models being increasingly adopted by organisations. We can expect to see these trends catch on in the business world and lead to new technological innovations, greater sustainability, and a growing workforce.

Business

Shutting off mule accounts to effectively tackle APP fraud

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Cleber Martins, Head of Fraud Management for Banking at ACI Worldwide

 

Authorised Push Payment (APP) fraud is on the rise. Losses from this type of fraud are expected to record an average CAGR of 21% from 2021-26 in the UK, US and India. To combat this rising threat, late last year the Payment Systems Regulator (PSR) published new rules for banks and building societies regarding the reporting of APP fraud.

While losses won’t keep pace with the overall growth of real-time payments, banks shouldn’t be complacent regarding the risks. And though it’s true real-time payment channels have created a reality where fraudsters can succeed faster, it is mule accounts that allow them to keep getting away with it.

Fraudsters recruit mule accounts often through identity theft, turning a user’s account into a mule account without their knowledge, or by recruiting and targeting more vulnerable people on social media and other online communication channels. Thereby enabling criminals to hide their identity and quickly move stolen funds beyond the reach of banks and authorities, either through other mule accounts at different banks, or by buying crypto or NFTs. This is why, in order to effectively tackle APP fraud, banks need to shut off these mule accounts once and for all.

Banks battling back

Currently, most banks only tend to check outgoing transactions. This means that when a mule account suddenly receives money from numerous different accounts, following little to no activity, it’s usually not picked up. And this needs to change.

Cleber Martins

When battling back on scams, banks need to have the appropriate Know Your Customer (KYC) standards. Thus allowing them to monitor the money coming in as well as out of customers’ accounts and analyse the user behaviour of those accounts. This all helps banks to monitor for synthetic and stolen identities in relation to the money coming into accounts.

Being able to monitor and analyse all the data in real-time requires machine learning algorithms with rich contextual information. Put simply, these models are only as good as the signals and inputs they have been given. This means the more financial institutions – on both the sending and receiving end of the transaction – collaborate on signal sharing, the better they can target mule accounts. Additionally, more data and more accuracy should also lead to a decrease in the number of false positives and an improved user experience for legitimate customers.

To effectively shut off the supply of mule accounts, better collaboration and data sharing between banks and financial institutions are needed and with the introduction of the new PSR rules, we could see this quickly come to life.

Why receiving banks must be held accountable

There’s currently almost no risk at all for receiving fraudulent transactions into mule accounts, despite hosting the mule accounts used by fraudsters to receive stolen funds. This results in most banks doing little to no monitoring or analysis of the money coming into accounts. And little to no meaningful intelligence being exchanged between the two ends of a transaction. To turn the tide on scammers, this needs to change.

The Payment Systems Regulator (PSR) has said that in addition to putting mandatory reimbursement for most victims of APP scams, liability should be split equally between initiating and receiving banks. Unless the receiving bank can prove it has gone to greater lengths to do it’s checks, in comparison to the initiating bank, resulting in the initiating bank being held more financially liable.

This should incentivise a major shift in how banks monitor fraud activity, by increasing how they monitor the money coming in, in combination with behavioural profiling of the receiving accounts. Ideally, once the two sides of a transaction are working together, a “fraud DNA” can be constructed to enable more precise decision making. One strand of that DNA, in practice, would be the initiating end’s sending an intent for a real-time payment, including intelligence about the initiating account in metadata format. The receiving end would then correlate that with their own, thereby adding the second strand of intelligence to the DNA chain. Finally, a decision would be made as to whether to allow the transaction to be completed.

This increase in collaboration between banks, would symbolise the first step of building a framework that promotes the sharing of insights and could mean the end of mule accounts as reliable tools for fraudsters.

What future collaboration might look like

While banks play an important role, mule accounts are often created on social media, through the telecom industry, via email or even postal mail. Making APP fraud a cross-industry problem. This requires a next-level, cross-industry collaboration strategy, that sees solutions, techniques and intelligence being shared between banks and vendors, merchants, issuers and acquirers, and even with social media companies and telcos.

Ultimately, it’s about ensuring customers are better educated and protected and that banks perfect their monitoring of the money that comes in, as well as out, all while sharing that information. Building a true cross-industry framework will help deprive scammers of access to one of their main conditions for growth. As a result, we should begin to see the value of APP scam losses, as a proportion of the value of real-time transactions, drop.

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Finance

Demonstrating fintech resilience in 2023

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By

Melba Montague, Head of Financial Services, Genpact 

 

Despite ongoing economic turmoil and a slowdown in investment, the UK has managed to retain the top spot as Europe’s financial centre, and London, as the Silicon Valley for fintechs. While 2023 looks uncertain still, fintechs are known for swift innovation and reinvention. UK fintechs in particular, will ride this wave, capitalising on the $28.2 million in capital invested in the industry in H2 2022.

However, the fintechs that come out on top will be those that focus on, and demonstrate to investors, one word: resilience.

To do this fintechs must remain laser-focused on operational basics to prove their worth. This is even more vital as the world watched the collapse of cryptocurrency exchange FTX and lender BlockFi in 2022. And with growing industry concerns around alternative finance, there is also no doubt that regulatory complexities will increase in the coming year, especially with a greater presence of Buy Now, Pay Later (BNPL) products on the market.

Access to capital will diminish sooner than you think

According to the latest Innovate Finance report, global fintech investment reached £75.6bn ($92bn) in 2022, a decrease of 30% from the previous year. The drop is the result of the macroeconomic and geopolitical disruption, but despite this, the UK fintech industry received £10.5bn ($12.5bn) in investment – only an 8% drop from a record-high 2021. This demonstrates great resilience in this space. Further, the report shows that the UK is still receiving more fintech investment than all the next 10 European countries combined and remains second in the world only to the US.

That said, for rapidly evolving fintechs looking to continue their scaling journeys across the UK and beyond, access to capital and a global slowdown in venture capital (VC) investment will test their durability in the market. Even as the cost-of-living crisis drives demand, inflation has hit BNPL companies, bringing down valuation as Klarna announced that it had closed its major financing round with an 85% decrease of its valuation, down to $6.5bn in the latter half of 2022.

This year, investors will want to see fintechs lower their reputational risks, follow regulatory advice to maintain compliance, keep customers well-protected, and make use of innovative technology to accelerate and scale their processes.

Regulatory complexities will increase

While the UK government cultivates a strong culture of innovation and boasts a strong reputation for financial services, it needs to be more proactive in its regulatory stance. This is especially true for areas of alternative finance, such as BNPL.

BNPL’s resurgence in recent years has made it an attractive alternative to traditional spending, but not without major risks. At present, BNPL is an unregulated, decentralised industry, and presents major risk to consumers borrowing beyond their means without adequate financial advice or safety nets. Arguably, BNPL has made it easier to create debt, with figures showing that 4 in 10 people will even use additional lending to pay off their BNPL debts.

With urgent calls for the FCA to advocate for new government regulations from the UK Treasury and consumer champions alike, this will begin to establish concrete guardrails for both fintechs and for shoppers looking to manage their finances. While waiting, providers must step up and protect customers as more structured regulatory models are finalised.

BNPL providers have also made growth commitments to investors. They will be expected to keep those promises this year, as well as maintain operational stability, all the while customer experience is not adversely impacted. It will be crucial for fintechs to take the high ground and look for innovative ways to both educate and protect their customers whilst preparing for regulations recommended by the FCA come into play this year.

Resilience will be critical

The FCA is expected to introduce new requirements to perform credit checks this year, fintechs, neo banks, and BNPL companies now hold a greater responsibility to identify those at risk and support them with appropriate measures.

This presents growing opportunity for fintechs to promote financial resilience to improve their valued customers’ financial health. For example, with open banking-enabled solutions, they can provide insight to customers looking to monitor and consolidate spending.

As the industry awaits these incoming regulations, the onus will remain with fintechs to ensure their products are not at risk of endangering consumer debts. As such, it is critical that a proactive approach to educate the consumer is taken to avoid exacerbating an already fragile cost-of-living crisis. This could be done in many ways, from improving financial education in schools and boosting financial literacy across the board, to turning the onus of accessibility on banks to ensure that customers can receive tailored, personal support and counsel on their finances.

BNPL providers must also ensure their collection process engages empathetically with its customers navigating through financial hardship. Providers should leverage data-driven insights and segmentation from data, technology, and AI (artificial intelligence) to align with BNPL users’ specific communication preferences and chosen payment methods.

In addition, machine learning, AI, and automation of complex manual processes will enable secure operations with consistent quality and controls, while finding new ways to pre-empt risk and meet compliance and reporting obligations.

Persevering in today’s financial landscape

Not only do fintechs need to demonstrate resilience to their investors this year, but they must encourage and enable financial resilience amongst their customers. Fintechs participating in BNPL schemes must be made aware of the potential pitfalls that come with unregulated short-term lending, as practice shows that it increases individual risk as consumers borrow beyond their means without sufficient financial advice and regulation.

Implementing advanced technologies, such as AI/ML and data analysis into fintech operations also improves efficiency, enhances the user experience, and saves cost, particularly vital during a time when companies are confronted with record-high inflation and a volatile stock market.

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