Connect with us

Finance

THE MAJOR CHANGES SET TO RESHAPE THE WORLDS OF FINANCE AND FINTECH IN 2021

Published

on

By Michael Magrath, Director of Global Regulations & Standards at OneSpan 

 

2020 was a formative year for the world of finance. Before the impact of the coronavirus, it was relatively standard practice for one provider to be called a ‘fintech’ firm and others an ‘institution’ or ‘traditional’ bank. This definition between the two has steadily eroded over the past 12 months, as every single financial services firm has had to adjust to a socially distanced, predominantly digital model. When it comes to consumers, we have all become used to using digital platforms for the majority of our banking activities, whether we used them before or preferred to manage our finances in branch.

This shift in consumer behaviour has not only increased our familiarity with these digital applications – it has also opened the eyes of governments, regulators, central banks and other international monetary bodies to the incredible potential of a more digital financial ecosystem to provide better security, customer experiences, and remote banking capabilities. The pandemic has been the catalyst that will help many previously ‘pie-in-the-sky’ ideas and concepts evolve into practical applications.

Today, we’re going to do a deeper dive into three particular areas continue to dominate the world of finance: the rise of blockchain as the basis for mainstream financial instrument, the growing trend towards open finance initiatives across Europe, and upcoming standards for digital identities.

 

Blockchain for Central Banks

Over the past weeks and months, newspapers and social media have been awash with news of the Bitcoin boom – and with good reason. Back in 2009 when Satoshi Nakamoto mined the first ever block of Bitcoin, nobody ever could have anticipated that, one day, a single coin would be worth in excess of $40,000 USD, or that you would be able to use it to buy a Tesla. According to the Judge Business School at Cambridge University, Bitcoin mining now accounts for more energy consumption than the whole of country of Argentina.

Michael Magrath

However, the real power of blockchain – the technology that underpins cryptoassets like Bitcoin – is now being realised. Central Bank Digital Currencies (CBDCs) rose to prominence in 2020 with monetary institutions across the world launching consultations and reports about their viability. Some countries, including Sweden and China, launched full-scale prototype currencies and have now began piloting the tech. Most notable, in October the Bahamas launched the world’s first CBDC, the Bahamian Sand Dollar.

The question now is why consider switching the foundations international monetary system in favour of a blockchain solution? First and foremost, the technological framework on which traditional currencies are built is extremely old – much of the code was written in the 70s. As a result, it is slow, inefficient, and expensive. With a CBDC leveraging blockchain, financial entities would be significantly better connected, making the movement of money both cheaper and faster.

There are also benefits associated with preventing money laundering enabling fairer taxation. With a CBDC, regulators are able to track transactions far more effectively, eliminating opportunities for currency to be laundered or tax to be avoided. In addition, if money is stolen or defrauded from a consumer, under a digital currency, it would be extremely easy to track down the stolen revenue, return it to its rightful owner, and hold the criminals to account.

With discussions, consultations and trials underway internationally, it is very likely that we will see the first full-scale implementations of a CBDC before the end of 2021.

 

The Rise of Open Finance

Open finance had always been a long-term ambition for many countries, and the need for a simpler, more accessible way for consumers to view and control their finances has only been accelerated by COVID-19.

In the UK, the Open Banking initiative successfully brought about interbank data sharing to improve competition and openness in the financial sector. One major upshot of this is that now consumers are able to view balances across several different banks all within one application. This has led to the emergence of tools like auto-investment roboadvisors that can round up your purchases and invest the difference into your ISA or a savings account. The UK is now pushing on, with numerous discussions within the regulator and industry to expand the remit of Open Finance and extend it to things like pensions, mortgages, insurance and savings.

The UK set a trend which has now begun to spread across Europe and beyond. In October 2020, the Consumer Financial Protection Board (CFPB) in the United States issued an Advanced Notice of Proposed Rulemaking on consumer authorised access to financial data. This is an indication that 2021 will be the year that the US begins to undertake serious policy discussions and could implement elements of open banking as early as 2022. Similarly, in September last year, the European Union announced their ‘digital finance package’, which sets out general lines on how Europe can support the digital transformation of finance in the coming years. The European Commission will launch a comprehensive review of PSD2 toward the end of 2021 and plans to introduce legislation for a new ‘Open Finance’ framework by mid-2022.  Additionally, Canada’s Department of Finance held consultations on open banking with industry stakeholders at the end of 2020 meaning 2021 could be very interesting for Canadians.

With the cogs now in motion, it is highly likely that there will be significant progress in implementing open finance across the globe in 2021. Its impact on the way that consumers interact with their providers will be significant, and the ways in which it will boost competition and break down international barriers cannot be understated.

 

Digital Identity Standards

With the decline of in-branch interactions between financial institutions and their customers and rise of digital payments, account opening and other applications, the need for simple, secure digital identities has become clear. Across Europe and beyond, regulators and governments have been considering what this means from a legislative perspective.

Last June, the European Telecommunications Standards Institute (ETSI) published new standards regarding electronic signatures and infrastructures. The new standards define types of identity verifiers and other technical information regarding electronic ‘know your client’ (e-KYC) measures and safeguards. Similarly, in March 2020, the Financial Action Task Force (FATF) published its Guidance on Digital Identity, which outlines details on the best way to apply customer due diligence to digital ID systems for remote identity verification during onboarding as well as authentication for financial transactions. In November, the Pan-Canadian Trust Framework (PCTF) v1.0 was launched by the Gigital Identity and Authentication Council of Canada (DIACC) for alpha testing with an expectation of launch in the PCTF in 2022.  In December, Hong Kong launched a new digital identity platform, ‘iAM Smart’.  The platform enables residents of Hong Kong to securely conduct government and commercial transactions online.

As we move further into 2021, the work on digital ID continues to progress. In February this year, the UK Government published a new draft trust framework (alpha version) that lays out a set of rules organizations should follow, including the principles, policies, procedures and standards governing the use of digital identity. This ongoing momentum, underpinned by COVID-19 and social distancing, indicates that this year, we will see a significant uptake in the development and deployment of digital identity tools, spurred by the support and oversight of regulators internationally. Additionally, the United Nations Commission on International Trade Law (UNCITRAL) has been developing a Model Law on Identity Systems for the past several years and it was reported during February’s IdentityNorth Workshop that UNCITRAL is close to finalizing a set of rules to govern identity systems internationally. The Model Law would be available to nations around the work to adopt.

2021 is already proving to be an extremely exciting year for the world of finance, and its set to continue on this trajectory. It is especially reassuring to see financial regulators looking towards new initiatives and technologies to drive the financial ecosystem forwards. Internationally, they have taken a collaborative approach, engaging with the financial services industry to build the best solutions for customers at speed and with great efficiency. It is very likely that, by the end of the year, the way that finance works will have fundamentally changed for the better.

 

Finance

HOW FINANCIAL SERVICES BRANDS CAN TRANSFORM THE MUNDANE INTO MAGIC

Published

on

By

Ben Williams, Global Chief Experience Officer at R/GA London

 

We are living through an era of generational change. The last twelve months have been defined by uncertainty, and as we stepped into uncharted territory we witnessed society shift and consumer behaviour change occur at breakneck speed.

For businesses, the speed and scale of this change has felt at times daunting. There are questions at every corner. How do we navigate working from home? When will we return to normal? How are the lives of our customers changing? How are the lives of our employees changing?  What are the rules of the new normal? How does this affect our proposition? Are we changing fast enough?

But just as uncertainty creates anxiety, change creates opportunity.

To help financial brands and the commodities industry navigate this uncertainty and focus on opportunity, we at R/GA have highlighted five key areas of focus. These pillars allow financial services and commodities brands to transform the mundane into magic, adapting to surpass consumer expectations and rise above the competition.

 

View your brand as an operating system

The core DNA of a brand shouldn’t just be a poster in the cafeteria, or slapped onto a brand’s website and as a message to the world. The brand’s active purpose should truly inform all the different ways a brand shows up, across physical and digital and inform things like service offerings, business decisions, as well as marketing messages. Those words in a mission statement should mean something, and be proven in how a business operates and engages with people. With consumer expectations at an all-time high, people expect it. The world expects it.

 

Understand the power of experience and use it to differentiate 

Don’t underestimate the power of an elevated experience – regardless of industry. By focusing on the needs of your people, customers and employees, challenges quickly open up and become areas of opportunity.

Creating a category defining experience often means looking outside of your own category – just as consumers will do. When a service or experience is elevated in any category, it has a huge impact on expectations of people. This experience sets the bar, and consumers will then expect similar levels of service, innovation and thoughtfulness to be applied to all aspects of their life from any brand they interact with. When people see something better, they want everything to be better. This is the concept we call ‘Service Transference’ – and it is defining how brands are experienced in the modern world.

Commodity based industries have a huge opportunity to differentiate themselves from their competitors through an elevated and differentiated experience when engaging with the brand, product or service.

For years, computers were a commodity, some were a little faster, some had better/minor features, but for the most part the differences were minimal. Apple changed the game by focusing on the experience. It differentiated itself beyond the speed of chips and processors. Insurance and other commodity-based industries should look to do the same. Insurance companies, as an example, could look to understand people dynamically through technology, and respond with services and experiences that can tailor solutions to serve their individual needs.

 

Innovate at all scales and for all people 

Innovation has become a term thrown around as a catch-all for teams or people thinking about what is next. Too often however, teams fall in love with the idea of being credited and becoming famous for the next idea that changes the world.

Instead, brands should focus on elevating some of the smaller things. This means taking a deep-dive into the fundamentals, giving time to the less sexy things, because these are often the factors which have the most impact on people’s experiences with brands and their lives.

Beyond the emotional value, there is a functional value insurance companies can, and should be delivering. The experience of engaging with an insurance brand should go well beyond filling out a form. It should know me, who I am, my goals, my personal or family situation, and adapt accordingly over time. It should respond to the world around me, and to my life as it happens. Enabling your service offering to be tailored and customized will provide real functional value that what they are paying for is exactly what they need and want. Responding to real human needs and events as they happen is the clearest way to show you care.

 

Recognise that life has changed.

Brands that can adapt and be there for people will ultimately win. Insurance is an industry founded on the principles of being there for people when life happens. And life is happening right now.

Insurance brands have to deliver emotional value by supporting customers. To do this, brands need to strike the right balance between being active and present in a customer’s life, and knowing when to get out of the way. Beyond the annual insurance payment reminder, ask yourself, “When are the other moments throughout a year, or in someone’s life that they should feel supported?”

Insurance brands have a huge opportunity to shift what they are famous for and how they show up in the world. Given the changes we have seen in consumer expectations, the industry itself and the technology landscape, insurance brands that want to win should be focusing on delivering peace of mind and offering customers agency over their own solution.

 

Always dream big and act small

For commodities businesses, the opportunity for blue sky thinking is massive. But don’t forget that often the most meaningful change comes from innovating some of the smaller, more foundational pieces of your business and experience. The impact you can have on someone’s life, especially at times when they most need support, should never be underestimated – or mismanaged from an experience perspective. Listen to people, their needs and what they want. Your customers, and the world will thank you.

 

Continue Reading

Finance

TECH TRENDS: THE FUTURE OF FINANCE IS DIGITAL

Published

on

By

Simon Bull, Sales Operations & Business Development Manager, Aqilla

 

Everywhere you look across the modern working environment, there is pressure to ‘digitally transform’ by using technology in areas where manual work and processes have previously been the preferred option. Despite growing momentum in general, progress across the finance function has been somewhat slower than other core areas of business, not least because it is highly regulated and teams must exercise caution to ensure introducing change does not also introduce risk.

One familiar scenario is the approach finance departments take to storing data, particularly any sensitive information, on their own premises and their own hardware. While keeping valuable assets such as this close to hand offers a strong sense of security and control, it illustrates the limitations finance teams face in changing traditional approaches and, as a result, the relatively slow pace of technology-focused innovation overall.

However, the case to embrace tech-led change is becoming irresistible, with businesses everywhere highlighting a huge range of digital transformation benefits, from cost savings and technology performance to IT security and compliance. In the current environment, many finance teams have also experienced first hand the impact of digital transformation, with remote working bringing new technologies and digital services into focus.

Simon Bull

But, where are we heading? As digital transformation gains momentum across the finance function, where should teams be looking for opportunities to update manual processes or to replace outdated technologies? And where might the trends at the heart of this movement – such as cloud computing – have the biggest impact on the day-to-day experience of finance professionals?

The role of cloud computing raises a key point. For finance teams, digital transformation also requires a change of mindset, perhaps best illustrated by a willingness to move away from outdated in-house technology infrastructure and software products to flexible and more financially efficient cloud-based services. In doing so, it becomes possible to focus on opportunities and priorities:

 

Cost savings

One of the most important is the cost of technology. The cloud-based Software-as-a-Service (SaaS) approach that can offer users the convenience of a monthly pay-as-you-go payment model for a range of key technologies, such as accounting software. This is in contrast to traditional IT procurement models where businesses have to invest significant sums in one-off software purchases. What’s more, because SaaS users typically only need access to a laptop and internet connectivity to use cloud-based applications, it also saves money on the server hardware that has previously sat in the corner of the office, and in fact, it may no longer be needed at all. In selecting cloud-based finance software services, organisations should always compare pricing from several providers to make sure they are getting the most competitive deal.

 

Technology Performance

Today’s cloud-based finance software solutions are available with a growing range of options, starting with simple, entry-level functionality to the opposite end of the scale to products offering powerful performance designed to fit the needs of even the biggest and most complex finance departments. Important features and functions to look out for should include: extensive analysis, proper periodic management and business calendars, multi-currency, multilingual and multi-company operation, full VAT handling International coding, tax and language flexibility, automatic reconciliation / bank integration, built-in key performance measurement, advanced search, selection and drill-down, document and image scanning.

 

Stronger security

Many cloud providers now have security at the top of their list of capabilities, but checking their accreditations, policies and security track record should always form part of any selection process. This should include areas such as data protection, backup services and their ability to deal with common security issues, such as ransomware.

 

Service standards

When looking at cloud service providers, finance teams should also focus on the quality of service on offer. At its best, cloud-based customer support and service can deliver an outstanding experience where the provider really feels like an extension of the in-house IT Team. The best way to check on the service capabilities of any cloud provider is to ask for references from existing customers, check online reviews and evaluate their Service Level Agreement (SLA) to understand the small print of any terms and their impact on service levels.

 

Compliance

Compliance is front of mind across the finance function and is an area where the specialisation offered by many cloud software solutions can be of huge benefit. Even for the most niche requirements, there is often a software provider out there who has a solution designed to meet very specific needs, and in embracing these technologies, the efficiency and accuracy benefits can be truly transformational.

The challenges seen across the economy over the past 12 months have significantly accelerated the pace of technology-led change, finance teams included. But, cloud-based finance software services can help teams to widen their approach to innovation, embrace the flexibility offered by remote working on a permanent basis and deliver a range of operational and customer-focused benefits for the long term.

 

Continue Reading

Magazine

Trending

News15 hours ago

ACCESSPAY AND YAPILY PARTNER TO RE-DEFINE CORPORATE CASH MANAGEMENT

FinTech scale-up AccessPay is pioneering a new Treasury solution for corporates, using Open Banking. Enabled by Yapily, a leading Open Banking infrastructure provider,...

Finance15 hours ago

HOW FINANCIAL SERVICES BRANDS CAN TRANSFORM THE MUNDANE INTO MAGIC

Ben Williams, Global Chief Experience Officer at R/GA London   We are living through an era of generational change. The...

Finance16 hours ago

TECH TRENDS: THE FUTURE OF FINANCE IS DIGITAL

Simon Bull, Sales Operations & Business Development Manager, Aqilla   Everywhere you look across the modern working environment, there is...

Technology16 hours ago

THE INSURANCE SECTOR IS BEING DIGITALLY DISRUPTED: BUT IS IT READY?

The insurance sector is being disrupted by innovative technologies that are helping to drive digital transformation within the industry. The...

Top 1016 hours ago

HERE’S HOW INSURANCE IS SET TO CHANGE

By Adam Goldsmith, Insurance Specialist, SAS UK & Ireland   Making predictions about the state of any industry in the coming year...

News16 hours ago

VOLATILITY IS CRYPTO’S BEST FRIEND

Stephen Ehrlich, Co-Founder and CEO at Voyager Digital.   Volatility is good for crypto. It serves multiple purposes as the whole...

Business16 hours ago

HOW WILL DIGITAL TRANSFORMATION EFFECT JOBS SKILLED IN TECH

Maria Paola Resta, HR Manager at Auriga   The world of technology is constantly evolving, and digital skills are also...

Finance17 hours ago

COMMON MONEY SAVING MISTAKES AND HOW TO AVOID THEM

By Nelisiwe Mbara, certified financial planner at Alexander Forbes   With the cost of living increasingly expensive, it is important to...

Banking2 days ago

TO ENABLE BETTER LENDING FOR PEOPLE AND BUSINESSES, WE HAVE TO LOOK TO OPEN BANKING

By Iain McDougall, CCO of Yapily   A recent FCA study found over 14 million people were grappling with financial...

Finance3 days ago

HOW FINANCE AS A SERVICE IS SHAPING THE FUTURE OF FINANCIAL SERVICES

Ivo Gueorguiev, Co-Founder and Executive Chairman, Paynetics   Finance as a Service (FaaS) is revolutionising the financial industry as we...

Finance3 days ago

GREEN AND INCLUSIVE FINANCE THROUGH THE SUSTAINABLE DEVELOPMENT GOALS

By Professor Catherine Karyotis, NEOMA Business School and Joseph Onochie, Zicklin School of Business, Baruch College, City University of New...

Banking3 days ago

BRAND CONFIDENCE: HOW HAS OPEN BANKING EVOLVED AND DO CUSTOMERS TRUST IT?

By Geoff Boudin, Director at Revive Management   The open banking industry is growing by 24% year-on-year, and is expected...

Business4 days ago

WHAT IS SOFTPOS?

By François Drouard, SLM Terminal & Mobile and Erion Sevaj, Pre-Sales Engineer at Fime   The global digital payment market...

Finance7 days ago

CUT THROUGH VOLATILITY AND MAKE BETTER INVESTMENT DECISIONS WITH ALTERNATIVE DATA

Tomas Montvilas, CCO at Oxylabs   Increased speculation, surging trade volume and a rapidly changing economic landscape are causing an...

Banking7 days ago

THE BANK OF 2030: A REVOLUTION FOR CUSTOMERS

By Venkatesh Varadarajan, Partner in Financial Services, Infosys Consulting   We are witnessing an evolution. Banking is changing in so...

Wealth Management7 days ago

TOP WAYS TO EARN FREE CRYPTOCURRENCY IN 2021

Simon Chandler, Writer for CryptoVantage   Cryptocurrency is everywhere these days. Open your favourite tech or finance website, and it’s...

Business7 days ago

THE BENEFITS OF HAVING GAP COVER

By Rachel Janssens, principal consultant at Alexander Forbes Health   Bridges the gap between hospital rates and provider fees Gap cover...

Finance1 week ago

WHY SUBSCRIPTIONS ARE KEY TO THE FUTURE OF THE FINANCIAL SERVICES SECTOR

Michael Mansard, Principal Director – Subscription Strategy at  Zuora   The business world is wondering: what does post-pandemic growth look...

Banking1 week ago

MODERN BANK HEISTS: FINANCIAL INSTITUTIONS ARE BEING HELD HOSTAGE

By Tom Kellermann, Head of Cybersecurity Strategy, VMware Security Business Unit, @TAKellermann   The modern bank heist has escalated to...

Finance1 week ago

FUTURE-PROOFING FOR THE FINTECH INDUSTRY WITH NETWORK INNOVATION

Alan Hayward, Sales & Marketing Manager at SEH Technology   As the years pass, it is becoming far more difficult...

Trending