By Craig Campestre, Chief Revenue Officer, IPC
The Covid-19 pandemic did not just affect our clients. As soon as the virus started to spread around the world and lockdowns started to come into place, it became apparent here at IPC that we would need to implement our own business continuity plan and work from home strategies. All of this had to take place on an incredibly tight timescale and to an unprecedented extent. We had to react and adapt faster than ever before in order to help our clients prepare for lockdown. There was a need to manage supply chains, gather client feedback, and produce updates for our products with increased levels of accuracy, clarity, and efficiency.
During these challenging times, market participants have done an excellent job in moving quickly to make sure that their systems remain stable and resilient. The fact that the markets have remained open throughout this period is a testament to their great work.
Now though, it is time for us all to look ahead and see what the future holds for the trading industry.
How the industry is evolving
Prior to the pandemic, the trading room was starting to change. Regulatory requirements such as MiFID II, a piece of legislative framework designed to regulate financial markets and improve protections for investors, had resulted in the transformation of workflows on the trading floor. There is now a real necessity for telephonic communications to be integrated with trading technology in order to gain actionable insights from conversations.
We have also noticed that a new trend has emerged – traders are now starting to consume multiple applications from just one terminal. As a result of this, data is being shared organically between the applications.
Trading desks are also striving for increased productivity. Using AI-powered natural language processing (NLP) tools, trading firms are able to strive for swifter execution, better communications, and smooth-running reporting processes and settlements. All in all, this leads to an overall increase in efficiency.
Additionally, there are numerous areas across trading floors where NLP will be used in the coming years. It will enable traders to voice populate applications and forms on their desktops, while NLP will also allow for heads of trading desks to search through structured sets of data, enabling them to reconstruct trades instead of having to manually listen to numerous audio files.
With hundreds of millions of voice quotes being generated around the world every day, it is vital that this market data is unlocked, and that future trading floors are equipped with the necessary voice communication tools to allow them to conduct better analysis and automate their workflows.
Global growth and the FX market
Traditional trading hubs, such as the US, the UK, Japan and Hong Kong are still facilitating most of the foreign exchange (FX) market trading. However, in recent years trading hubs from emerging markets are starting to come to the fore. For example, China is making great inroads, evidenced by the country being ranked as the 8th largest FX trading center, per the 2019 BIS triennial survey.
The Asia-Pacific region has long been viewed as a growing market. Even before the pandemic, trading firms operating in this region had already faced a crisis and were impacted by a major geopolitical event – the 2019-20 Hong Kong protests. The protests meant that traders in the region were forced to adjust their trading activities and working practices. As such, these trading firms were able to use the experience gained from having to suddenly pivot and roll out their business continuity plans to help financial companies around the rest of the world when lockdowns came into effect due to the pandemic.
Adding to this, it is important to consider the impact that current geopolitical events may have on global growth over the coming years. Brexit and the increased economic tension between China and the US, as well as Covid-19, all have the potential to have a major impact on global growth. Due to these geopolitical events, we may observe a shift in the location of trading activities, which may begin taking place in locations that are, presently, not thought of as global trading hubs.
How IPC can help
The global markets are continuously changing and evolving. As such, it is vital for market participants to remain on the edge of innovation.
Here at IPC, we are constantly assessing what needs to be done to enable the development of the trading room of the future. This includes bringing voice communication services fully into electronic trading environments. By doing this, it will allow for greater integration with data sources, trading technologies and electronic workflows. In places where we have voice products that function using legacy infrastructure, we are in the process of modernizing the underlying technologies.
It is clear to see that the trading industry was in the midst of an evolution prior to the pandemic. However, this transformation has definitely been accelerated by the events of the past year, with companies having to quickly adapt to the ever-changing circumstances. This process is likely to continue into 2021 and beyond, with new and improved products continuing to enter the marketplace. Looking to the future, it is vital that financial market participants maintain their resilience and maintain their innovative edge.
2022: A FUTURE FOR SIMPLE AND FRICTIONLESS CROSS-BORDER PAYMENTS
Dima Kats, CEO, Clear Junction
Even after 18 months of stuttered lockdowns, businesses are still learning how to navigate the effects of the pandemic. However, in 2022 there is a lot more certainty surrounding how events in the future might unfold compared to the start of the series of lockdowns in 2020-2021 – when businesses had to accommodate ever-changing rules.
Ironically, the coronavirus pandemic may be a catalyst for a more globalised world in the near future, which will directly and quickly affect the world of finance and payments.
Activity in the fintech sector.
Fintech development flourished over the course of the pandemic. Reducing the need for face-to-face interactions was essential for maintaining economic activity during lockdowns. Many of the trends that are driving the increased economic activity in the fintech sector are a direct result of social distancing: the rise of digital payments, increased work-from-home arrangements, retailers diversifying their payment channels, and an increased use of autonomous finance. As a result of these trends, there has been a large number of fintech start-ups emerging.
Due to the growth of the fintech sector in the past year, there has been a significant increase in demand for industry professionals, and the effects of that demand will be playing out into 2022. This is mainly due to employees being re-trained during the pandemic for new roles, creating a more skilled and mobile workforce.
There are currently three trends that are reshaping cross-border payments, and in a sector that is predicted to reach over $156 trillion in 2022, staying ahead of those trends may prove to be a lucrative decision.
The first trend is the changing consumer demands. Customers are less inclined to pay for banking services while still expecting them to be fast and intuitive. Alternative service providers that can offer the customer more of what they want while being faster, cheaper and more transparent will gain a competitive advantage over banks.
The second trend is the increase in trade with emerging markets. As the share of international transactions involving emerging markets grows, cross-border payment solution providers are focusing on these markets. Growth in these emerging markets is bolstered by free trade initiatives, while some countries have established protectionist policies that slow them down. Growth in emerging markets is expected to be at around 11% per year, while the overall growth of cross-border trade is estimated at just 5% per year.
The third trend is that the accessibility of mobile phones has increased. As people gain a larger online presence, there is more opportunity for people to make online payments. The percentage of mobile phones ownership among adults in emerging countries is at 83%, compared with just 62% in 2014. This figure is expected to increase even further, and subsequently increase the number of e-payments being completed.
Cryptocurrency in 2022.
We expect to see cryptocurrency develop even more mainstream appeal as it becomes less speculative and more widely accepted. This will cause banks to increase their investment in fintech, in conjunction with governments introducing new regulations to ensure that transactions that involve both traditional currency and cryptocurrency are safer. One of the most tangible effects of the pandemic was the need to use online payment solutions. In the same way, people are beginning to trust and realise that cryptocurrencies may be a feasible payment solution even in the post-pandemic world.
Consumers are increasingly dependent on digital devices, but over half of them prefer to make online purchases over a computer than a mobile device. Mobile screens on smartphones or tablets are smaller than desktop monitors, which leaves users feeling discouraged and less secure while shopping compared to completing transactions over a desktop.
Mobile shopping or M-commerce has benefitted from several innovations that encourage users to finish payments on their phones: instant checkout solutions like Apple Pay, the use of augmented reality to show consumers the products they are buying, and sites building mobile-friendly user interfaces. Due to these innovations, Insider Intelligence predicts that shoppers will inch closer to using their mobile devices as a preferred channel in the next few years.
Open banking and the need for collaboration.
As the industry grows and becomes more diverse, there will be an increasing need for partnerships and collaboration to take advantage of the emerging opportunities.
One direction we’ll be seeing them in will be in the form of open banking. Traditional firms are beginning to see open banking as something more appealing due to the opportunity for partnerships. The rise of alliances within the finance industry began to take place long before the ongoing pandemic. Currently, over 30 partner banks represent hundreds of fintech relationships and financial services. We think firms who adopt open banking early and secure partnerships will reap the rewards compared to their competitors. firms who adopt open banking early and secure partnerships will see themselves reaping the rewards compared to their competitors.
2022 will likely be the year that open finance starts reshaping financial services and the year that banks savvy up to the opportunities that open finance represents. With regulators in the EU and UK proposing measures to heighten data sharing principles across a broader set of financial products, 2022 will see many banks experimenting and evolving their business models toward a more open, collaborative platform approach.
The multiple challenges to the finance industry over the last year have highlighted the need for fresh thinking, to face the future with strength and confidence. Fintech partnerships can create a significant opportunity for levelling the playing field, streamlining internal processes, adding technological capabilities, and improving the end customer experience.
Companies like Clear Junction offer businesses a mix of these benefits and opportunities at one time. Continued and original collaboration and partnerships between fintech companies and banks are essential for the future of the financial services industry and the finance sector. The digital marketplace is indeed growing, and the future belongs to the financial institutions that can stay ahead of the curve.
I think we need to add some context about the Fintech industry over the last 12 months, and how the pandemic has actually affected the industry. Need for innovation etc etc how much money has been put into it etc. And then lead on the predictions around talents and retraining. Otherwise this byline reads as just a list of predictions, without adding the relevant context.
CHRISTMAS IS COMING: WHAT MAKES A GREAT ECOMMERCE STRATEGY FOR THE FESTIVE SEASON?
By Laura Lough, Director of Ecommerce Operations at Digital River
There is no doubt the year 2020 presented an array of economic and personal challenges worldwide. But, there was a silver lining for the world of ecommerce. By necessity, the pandemic encouraged people to shop online, which grew the ecommerce industry rapidly. The outlook for 2021 is cautiously optimistic. While consumers may react to lifted social distancing restrictions with exuberant spending, they could also continue to hang on to their money over fear COVID variants might cause more economic upheaval during the winter of 2021-22. Experts are predicting another year of growth, but not at the breath-taking rates seen in 2020.
Whether the growth rate surges or stabilises, one thing is certain: new shopping behaviours learned by consumers because of COVID are here to stay. Contactless payments, mobile wallets and social spending all saw new consumer use in 2020, and consumers who appreciate their convenience aren’t likely to abandon those new habits.
There are some fundamentals that eCommerce providers must take onboard now if they want to have a successful holiday season.
Meet your customers’ high expectations
Gone are the days when fulfilment and supply chain were little-known ecommerce topics. Shipping delays due to a surge in ecommerce demand in 2020 as well as the Suez Canal blockage in March of 2021 brought fulfilment issues to the front page, literally.
Adding to the challenges are current lorry driver shortages and supply chain disruptions. The upshot is supply chain issues will continue to challenge ecommerce brands. Those ramping up closer to the holidays are likely to face some headwinds. However, whether you’re ahead of the game or playing catch-up, you can develop fulfilment strategies that will serve you well in the years to come, as supply chain issues are not going away anytime soon.
Businesses can use their data to intelligently predict consumer behaviour, allowing them to be ready for surges in demand for different products and locations. Avoid costly returns by giving the shopper an overload of information such as product images, comparison charts and reviews. To simplify reverse logistics and appeal to your customers, consider partnering with third-party drop-off sites for brands that don’t have physical stores.
Most critically, brands must communicate clearly, effectively and transparently with customers. They cannot expect sympathy from customers if fulfilment issues outside of their control delay delivery. Customers have come to expect shipping that fulfils their needs and desires—not the needs of retailers.
Accessibility for all
Many ecommerce marketing best practices that were true pre-COVID will continue to hold true this season. Retailers must develop unique customer acquisition strategies and marketing collateral for each market they enter — translated content isn’t enough. They should also use local channels, and messaging should remain cohesive across channels.
It’s critical to incorporate social buying into your marketing strategy as more customers are engaging with brands on their preferred platforms, which are increasingly social. Mobile commerce is another critical component to your marketing strategy, and it’s important to develop an optimised and responsive mobile experience for your customers.
Another important consideration is making sure your D2C platform is accessible to those with disabilities. In addition, brands need to pay attention to how COVID has affected various areas of the world, so tailoring your messaging to local realities is critical.
Payment strategies as a tool for business success
Payment systems are so important for brands that they should constitute a strategy in and of themselves, rather than just a back-office tactic. Over the pandemic several payment systems have become business-critical:
- Digital Wallets: Consumer use of digital wallets surged during the pandemic. Chinese shoppers made the bulk of digital wallet purchases. In the US, digital wallet usage was up nearly 24% over 2019 numbers.
- BNPL: Buy now, pay later (BNPL) is another payment method that is quickly rising in popularity. Brands offering BNPL have reported a 45% increase in average order value when customers pay in four instalments.
- Mobile: Consumers will continue to rely more heavily on their smartphones to make purchases in 2021 and beyond. It’s critical for brands to optimise the mobile experience with payment methods that allow shoppers to pay with one touch of a button rather than entering a credit card number.
- Direct Debit: Direct debit is another payment method that brands should consider adding to their online store. In this scenario, which is most popular in Europe, the retailer withdraws money directly from a consumer’s bank account.
Lean on tech
Underpinning every aspect of an eCommerce strategy is data. Businesses must leverage their data by developing a comprehensive customer-centric system that includes the entire customer lifecycle, including search, payment methods, and sales and shopper support data.
eCommerce providers can boost conversion rates, improve customer experience and reduce false declines by using a local payments processor that understands each market you’re in. Ensure that your payments partners are using retry logic to automatically route payments in a way that maximises the likelihood of authorisation.
Retailers simply must prepare well in advance for a surge in traffic to their platforms. If 2020 is any indication, the number of shoppers transacting through your platforms at any given time can vary wildly. That’s why it’s critical to test your system well ahead of time to ensure it can handle the load and make the adjustments early. More than any time of year, a failure to prepare spells trouble.
Finally, companies should select their partners carefully. They should look to work with back-office experts with specific tech and market experience. Appropriate partners can facilitate your brand to deliver tangible results this holiday season, ensuring you finish the year with a bang.
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