Business
The need for simpler cross-border payments must be a priority for all banks
Published
6 months agoon
By
editorial
Mushegh Tovmasyan – Founder of Zenus Bank
Despite the transformative changes we have seen in the banking sector over the last decade, there remains a considerable disparity in accessing financial services from country to country and even vital day-to-day services such as cross-border payments or funds transfers.
A strong emphasis on banking personalization has driven us towards bigger and better digital experiences. Meanwhile, continuous globalization and the requirement to engage across borders means the need for global financial inclusion where individual customers, as well as businesses, have the same sort of access to useful and affordable financial services across transactions, payments, and savings, through digital banking is more apparent than ever.
The rise of challenger and neo banks, as well as fintech providers, has transformed the capabilities of the banking sector, which can now offer a vast array of services to customers. These include new interactive service models, from cryptocurrencies, Buy Now Pay Later products and embedded financial lending services from companies across various sectors – ranging from supermarkets to global sports companies – outside of the banking industry. Meanwhile, the pandemic exacerbated the trend towards completely digital companies that operate remotely and need to be able to provide cross-border services instantly to work with other globally-orientated partners, pay staff anywhere across the world and expand global supply chains into new geographic markets.

Mushegh Tovmasyan
One area that is growing rapidly is Latin America, where fintech investment has accelerated significantly. The region saw growth of nearly four times, rising from $4.1 billion in 2020 to $15.7 billion in 2021. Latin America serves as a perfect breeding ground for fintech start-ups. Primarily because banks across the region have, historically, only served affluent individuals due to a lack of competition and stringent credit requirements. A large portion of the overall population is still underbanked, ranging from 30 percent to 50 percent in major countries. Even for those with credit cards or bank accounts with local banks, the user experience is generally poor, while many banks have failed to invest in technological infrastructure and improve the digital experience.
Clearly, across the region, there is significant demand for access to a global secure bank account for a range of needs. For employees in developing economies working for companies who currently wait weeks to be paid through local banks. For small businesses looking to access and collaborate with new markets, and to provide access to a strong currency – the U.S. dollar – for those in developing countries with less stable economies, transforming the capabilities of international digital banking. This trend has only accelerated as remote working has become the new norm and companies employ staff all over the world. We at Zenus, therefore, believe offering a secure, transparent and scalable international bank will be vital for banks to provide financial inclusion to millions of people, businesses and organizations still without these essential products.
Consequently, the banking sector is now investing heavily in products that can offer secure, transparent and scalable international payment services that will be vital for providing financial inclusion to millions of people, businesses and organizations operating in developing economies. Cross-border banking, for example, and the ability to transfer money across bank accounts from different countries, provide a unique challenge that many banks are looking to address. While money has always been transferred across borders, the increase in cross-border flows of both capital and citizens in today’s world has resulted in more financial organizations looking to provide this service instantaneously.
In response, international banking licenses – the concept of globally-focused banks running on the same technology infrastructure across each country under one global license – are now being repurposed by banks to not just service High Net-worth and ultra wealthy customers but for anybody, anywhere in the world, especially in emerging countries where the need exists the most.
Banking accounts can be opened remotely and accessed from anywhere, providing customers with a global footprint, constant access to their funds and providing access to a global account for those in developing countries with less stable economies.
At Zenus, we believe this growing trend will be one of the defining changes across the global banking sector – helping to address the recurring problem of transferring money overseas from a complex, expensive and time-consuming process to an instant routine task – and is the main area we are investing and working with strategic partners to help scale these services for customers across the globe. By also offering our banking infrastructure via API’s and White Label services, we enable prominent Brands and fintech providers to expand their global reach and explore new revenue verticals. UK fintechs, for example, could service US clients or Latin American clients helping cross-border banking to become accessible everywhere.
These changes will also help complement the rise of embedded finance services such as Banking as a Service (BaaS), providing financial services to any company, no matter the sector, that is looking to adopt and implement these products on a global scale. The concept also has the potential to transform and democratize in developing nations, where it can take a few weeks for people to be paid through local banking channels.
That is our mission at Zenus – to make it easier and safe for clients to access, send, receive and store money in the U.S. from anywhere globally. Our international license gives customers constant access to their funds without requiring U.S. residency or citizenship.
The demand for simple and seamless cross-border payments could help transform the global banking system. Not only by providing new standards for the global banking sector but by ensuring customers can have access to an international bank instantly and no matter where they are based.
Banking
Building towards an inclusive financial future
Published
4 days agoon
September 22, 2023By
editorial
By Catharina Eklof, CCO of IDEX Biometrics
From the visually impaired to displaced migrants, the unbanked, and people living with dementia – a burgeoning financial gap exists across many areas of society. In fact, as of late 2021, almost one-third of adults around the world were reported as unbanked according to the World Bank Group. That’s around 1.7 billion people – with half coming from the poorest 40% of the world’s population. Being financially excluded in this way means not having access to common financial services including savings accounts, loans, a credit rating, or even a bank account. Those who are awaiting clearance to join a country’s financial ecosystem, such as migrants, are also finding themselves left behind by the modern financial infrastructure.
As societies reliance on digital and contactless transactions over cash continues to grow, this financial gap is only set to widen. In less than 10 years, the share of Americans not using cash for payments has increased by double digits, reaching 41%. By 2031, cash payments are expected to make up only 6% of all transactions.
Fortunately, biometric smart cards can bridge this gap for people in the Global South, migrant populations, as well as those with visual or cognitive disabilities worldwide, who deserve to feel secure, included, and independent.
The challenges surrounding passwords
COVID accelerated the transition from cash to contactless payments and the use of digital wallets, creating a challenge for many. By 2024, it is expected that digital wallets and cards will account for 84.5% of all e-commerce spend.
Digital transactions traditionally rely on the use of PINs that can easily be forgotten, as studies have found that we manage 100 passwords on average across various sites and services. In the US alone, consumers report relationships with more than three financial institutions and have more than four accounts per household. The challenge of password recollection is only growing. To counter rising cybersecurity threats, several countries now mandate two-factor authentication for retailers and service providers, creating further complexity.
However, organizations are responding to financial exclusion. Card provider Mastercard introduced its contactless PayPass offering, as well its Touch Card developed alongside Amjan Bank which enables the visually impaired to distinguish between their cards. Both look to provide a better customer experience for people struggling with the digital changeover. For those living with dementia, Mastercard has also partnered with Sibstar and the Alzheimer’s Society to create a specific card where limits, transactions, top-ups and notifications can be viewed and managed via a complementing app. Likewise, Turkish neo bank Papara introduced a Bluetooth debit card that provides visually impaired users with audio prompts when making payments.
Protecting the visually impaired
There are at least 2.2 billion visually impaired people globally. In 2019, it was found that 89% of visually impaired have been victims of fraud or have made errors when paying for goods and services. This figure comes prior to the pandemic, and the proliferation of digital transactions, suggesting an even bigger concern today.
PINs present an obvious security issue for this demographic, with others able to oversee their inputs and then manipulate them. Contactless payments go some way to solving that problem but pose the risk of fraud as there is no PIN verification below the increasing threshold amount, now at £100 in the UK, where the average annual wage is £27,756. In India, where the average annual wage is 9,45,489 rupees (roughly £9000), contactless limits are set to 5000 rupees (£48). Many accounts also require visual-based inputs to prove identity, such as CAPTCHA, proving as a barrier for the visually impaired.
Enhancing awareness on a regulatory level is key for driving change and reassuring vulnerable groups. The EU Accessibility Act is an example of how payment service providers are obliged to comply with accessibility standards. This includes making interfaces perceivable, operable, understandable, and robust, to ensure that individuals with disabilities can effectively navigate payment interfaces.
Paving the way with biometrics
Including braille on cards for easy identification is a crucial step for the visually impaired. This can also be used on biometrics smart cards, with sensor textures to confirm the user has selected the correct method of transacting. Not only do these cards provide convenience and inclusivity, but they also promote ultimate security by linking a person’s identity directly to their fingerprints. This data is encrypted within the card itself, reducing any concerns surrounding fraudulent behaviour or of data being lost via a centralized breach or large-scale hack.
In this context, biometrics can be used to serve the unbanked and those currently unrecognized within national infrastructures. South America is an example of an early adopter of biometrics, turning to the solution to cope with swelling population sizes, and the challenges associated with accessing proof of identity when setting up traditional bank accounts. Meanwhile in India, pension payment fraud has dropped by 47% thanks to bypassing the need for prior credit ratings or credentials.
Liveness detection, however, which ensures the biometric sensor is reading a true biometric source (rather than a false or recreated image of one), is vital to the success of financial aid programs globally. Securing remittances through biometric authentication ensures transparency and better fund control. Directing funds to cold wallets or biometrically authenticated cards can also improve program efficiency, safeguarding the interests of individuals and communities.
Overall, the biometrics market is expected to grow to US$87.4 billion by 2028, at a CAGR of 17%. Whilst its value as a simple and secure method of transacting is growing substantially, you can’t put a price on its impact on those who have so-far fallen through the gaps of finance’s digital revolution.
Business
Euro deep tech M&A deal value expected to reach $20bn+ in the next 15 months
Published
4 days agoon
September 22, 2023By
editorial
Written by Oliver Warren, Associate at DAI Magister
Investment in European deep tech has mirrored the broader decline in the technology sector; it has halved since the peak of 2021’s boom, reflecting investor preferences for ventures with lower capital expenditures and associated risks. Start-ups within the following verticals: Health and Bio, Transportation, Energy, and SaaS and AI experienced the most significant drops.
However, Dealroom data shows stark differences in funding for deep tech start-ups at the early, breakout (Series B & C), and late stages. After experiencing a modest deceleration between 2021 and 2022, early-stage deep-tech fundraisings have been surprisingly healthy, bucking the market trend, due in part to the hype surrounding Generative-AI and in Q1 2023 they received the highest infusion of capital for over a year.
However, this positive trend conceals a sharp decline in B and C round fundraises, which have seen investment activity plummet to $1 billion in Q1 2023 from a peak of $3 billion in Q1 2022. Late-stage rounds (>$100M) have also experienced massive declines, falling almost 70% from $2 billion in Q1 2022 to $634 million in Q1 2023.
$20bn+ worth of deep tech M&A in the next 15 months alone
While venture capital continues to show interest in the sector, the retreat of growth investors and the genuine prospect of a prolonged down cycle ahead has left growth-stage deep tech companies needing to implement stringent cost-cutting strategies to curtail expenses and extend their runways. But even those fortunate enough to have secured inflated funding rounds during the exuberant market conditions of 2021 will soon need additional investment.
Deep tech companies typically have high burn rates due to their heavy focus on research and development, requiring funding approximately every two years on average. With dwindling access to VC cheques, a non-existent IPO market, and practical limits to self-sufficiency, M&A is already emerging as a valid route to realising substantial profits for investors and founders, even if it doesn’t deliver the lofty $1bn+ valuations seen in 2021.
We’re already seeing more companies take this route. European deep tech M&A activity has rebounded to levels not seen for years and across our focus verticals, spanning Advanced Materials, Space, AI & ML, Cybersecurity, and Robotics, European M&A transactions have already rebounded to surpass 2020 levels (183 this year, annualised versus 176 in 2020), with some notable exits such as InstaDeep’s sale to BioNTech and SLM Solutions metal 3D printing business being acquired by Nikon.
In 2024, we forecast 250+ M&A deals in European deep tech, with at least 20 above $100m, making it the strongest M&A year since 2016. A key driver of this resurgence is the substantial increase in established deep tech companies across Europe, with many more companies fielding 100+ employees and sizeable, valuable engineering teams. The funding-driven growth in the size of European deep tech companies now makes many more sizeable, more strategic targets for international acquirers.
Overall, we anticipate the remainder of 2023 and 2024 will be banner years for European deep tech M&A, with potential deal value reaching $20 billion or more in the next 15 months alone.
Magazine
Trending


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...
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...


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...


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...


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...


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


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...


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...


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....


How sound investment research can revive the City of London
Author: Neil Shah, Director at Edison Group A few months ago, leading portfolio manager Nick Train described the modern...


Why Finance should stop leaving inventory to Operations – a guide for CFO’s
Matthew Bardell, Managing Director, nVentic Traditionally, Finance is the only function within a company that really focuses on net...


Vertical thinking: Why banks need to decouple their payments processing value chain
Esther Groen, Head of Payments Centre of Excellence, Icon Solutions The traditional payments processing model for account-based payments is...


Front-door, personalised delivery – why more effective last mile data integration is critical in financial services
by Martijn Groot, VP Marketing and Strategy, Alveo Financial services firms invest significantly in the acquisition and warehousing of many data sets...


Navigating equity markets in a high-interest rate environment
Marios Chailis, CMO, The Libertex Group For over a decade, investors have become used to navigating equity markets in...


How can your office support the collaboration demands of today?
Rob Quickenden, CTO, Cisilion Over the past decade, the office environment has evolved, with online collaboration tools becoming the norm. But...


Improving CX in digital-first banking
By Nina Mack, CX Director at CTI Digital The financial industry has undergone a seismic transformation over the past...


How data engineering can effectively support financial institutions
Adding efficiencies, automating processes and strengthening cybersecurity efforts: data engineering can be crucial in support scaling fintechs, says Krzysztof Michalik,...


Industrial Revolutions – How AI Refactors Finance, Manufacturing & Healthcare
Author: Lori Witzel, Thought Leader Alumnus, Spotfire, a business unit of Cloud Software Group Today, Artificial Intelligence (AI) is...


Beyond money: What private equity needs to bring to ventures on the African continent
By Bryan Turner, Partner, Spear Capital If you ask an entrepreneur or even the leadership team of a larger...


Will AI lead to a better business?
Article by engineer Sara A. Al-Emadi, Research Associate at Qatar Computing Research Institute (QCRI – part of Qatar Foundation), an...

Investing In Bitcoin: What You Need To Understand Before You Buy
How the LEI Can Help Financial Institutions ‘Address’ a Growing Challenge in ISO 20022

Building towards an inclusive financial future

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

Why ESG Investing Is Becoming More Important

Preparing banks for digital transformation

PCI DSS v.4.0 Latest Updates That You Need to Know

RBI’s MASTER DIRECTION ON DIGITAL PAYMENTS SECURITY CONTROLS

EMV® 3-D SECURE: ENABLING STRONG CUSTOMER AUTHENTICATION

HOW TO SIMPLIFY IDENTIFICATION IN THE GLOBAL DIGITAL ECONOMY WITH THE LEI

EXEGER – CHANGING THE PERCEPTION OF POWER

FUTURE FX PROMO
Trending
-
Banking4 days ago
Building towards an inclusive financial future
-
Business4 days ago
Euro deep tech M&A deal value expected to reach $20bn+ in the next 15 months
-
News3 days ago
How the LEI Can Help Financial Institutions ‘Address’ a Growing Challenge in ISO 20022
-
Finance19 hours ago
Investing In Bitcoin: What You Need To Understand Before You Buy