Stefano Vaccino, Founder of Yapily
Consumers never owned their financial data. Banks controlled everything from how much money came into an account, to where that money was spent. While technology has already changed some of these processes, like the way we pay or move money around, when it comes to control over our data, the system has remained unchanged for decades. Until now.
Open Banking has disrupted the status quo. A decade on, and thanks to APIs that underpin Open Banking infrastructure, consumers now have more control over their financial data than ever before.
Handing back consumer control
Before Open Banking, consumers were at the mercy of the banks when it came to accessing their own data. There were only two ways to leverage the financial data in personal accounts to get better deals and access fundamental services. The first involved consumers physically printing or downloading a PDF of their bank statement to share with other banks or third party providers (TPPs).
The second saw banks and third parties utilise screen scraping. This meant users had to share their username and password to grant access to their bank account, to, for example, feed into money management tools or to access account information. Both options are long and cumbersome, but option two left consumers at risk of fraud and data breaches unless they remembered to change their passwords.
Reducing account fraud & data breaches
Many organisations have legacy IT systems which utilise screen scraping. This practice easily leaves systems open to data breaches. In fact, the Commonwealth Bank has reported that companies using screen scraping are at least two times more likely to experience account fraud. Not only is this bad for consumers, businesses can also be badly hit by the repercussions.
Thankfully, as of March 14th, a combination of SCA and PSD2 regulations mean that screen scraping has effectively been outlawed – significantly increasing the security of payments. The only secure way of accessing account information is through an API. Now, every individual payment requires a unique authorisation token, which once used, cannot be used again. Even tokens for recurring payments, such as standing orders for mortgage repayments, can be revoked and immediately rendered useless if suspicious activity is detected. This has greatly increased the security for consumers who make payments online.
Breaking down barriers with APIs
While in the UK, Open Banking was given a narrower focus than in the EU – only the nine largest banks were mandated to provide TPPs access to their services and data. However, it did specify a single, pre-defined API (Application Programming Interface) that was set as the standard for integration. While not as immediate as expected, banks did eventually make good progress in opening up these APIs, and it has led to the creation of new services. Moreover, APIs have been instrumental in handing back control of financial data to consumers.
Heading into an Open Finance future
Thanks to these APIs, we are seeing the global growth of Open Banking. Now, consumers can choose when to stay or go, as well as how much information they want to share, with whom and for how long. This is an important move given that as many as 15 million people in the UK could be using the wrong financial services product for them. In fact, around two million people miss out on the best interest rates and four million are denied credit each year.
Further, we’re not only in a world already reaping the benefits of Open Banking. We’re also moving towards a financial services industry powered by Open Finance, where laborious processes such as mortgage applications will be gone. Data that would have historically taken weeks or months to manually compile and send to the bank for review will be collated in minutes. Credit scores to ID verification, property affordability and residential checks will all be securely and seamlessly accessed thanks to open APIs. This will greatly reduce the lag time between application and acceptance or rejection – giving consumers greater control over the whole mortgage process.
In a world powered by Open Banking and Open Finance, consumers now have more control over their financial data than ever before. We can expect to see financial inclusion for the unbanked and a better experience for those with existing products and services.
DIGITAL FINANCE: UNLOCKING NEW CAPITAL IN DISRUPTED MARKETS
Krishnan Raghunathan, Head of Finance & Accounting Services at WNS, explores how a digitally transformed finance department can give enterprises the ability they need to improve cash flow and revenue through better use of data and improved analytics-driven visibility.
Businesses everywhere are scrambling to recover lost revenues and protect cash flow. But as countries globally grapple with a dreaded second wave of the pandemic, imposing far more stringent localised lockdowns and new restrictions, it is set to be the hardest winter in living memory for many sectors.
The likelihood of winter peaks, so often the saviour of sectors such as travel and hospitality, benefitting businesses is diminishing rapidly. While many have pivoted to a greater or lesser degree, few have been able to offset the impact of falling revenues on cash flow. Even retail, riding an e-commerce boom in many regions, is finding itself in choppy waters, with 17 percent of consumers switching brands due to the economic pressures and changing priorities caused by the pandemic.
As one McKinsey article notes, “With some companies losing up to 75 percent of their revenues in a single quarter, cash isn’t just king – it’s now critical for survival”. Where then do businesses find new sources of cash to sustain their operations through the coming months?
Tapping Overlooked Cash Opportunities
For many, the answer could depend on whether they have digitally transformed their finance department. Why? Because many organisations are sitting on unidentified opportunities, funds that could be vital in shoring up businesses over the next few months or plugging the gap between operating costs and government bailouts. Yet those that have been slow to start their digital transformation journey are at a disadvantage;. At the same time, it is possible to identify these hidden seams in an analogue organisation, the process is time-consuming, manually intensive and, without the right digital tools, prone to human error.
Where deploying digital tools helps is by bringing speed, automation and reliable data to the fore. Connecting them with digital finance and accounting systems can give businesses clear insights into how money is being spent, where wastage is occurring, and where opportunities for optimisation exist.
It might be something as simple as automating the accuracy checking, issuing and chasing of invoices and late payments. This could reduce errors and invoice disputes and ultimately lead to faster payments. Accuracy and organisation are also important in billing – better records enable faster billing for work completed, and in turn, should deliver quicker payments.
It could also be around having the ability to review the supply chain and procurement data and identify where a supplier is subsidising a larger customer’s product line through drawn-out payment terms, or where a variety of vendors are on different terms across the business. Using that data and overall knowledge of the business to negotiate better terms that work for both supplier and customer can create new opportunities. It could even be to identify late-paying customers, determine the reason for late payments, and use that intelligence to develop products or financing solutions that continue to support those customers (and improve loyalty) without increasing the burden on the balance sheet.
Generating Reliable Insights for Faster Decision-making
To do any of these manually would take months, generating data slowly that would quickly go out of date. But digital finance departments have evidence they can trust to inform business decision-making. That’s because old, manual processes built around Order-to-Cash lack the flexibility and agility that businesses require in today’s markets. The fact is that even before the global pandemic crisis, the pace of digitisation across all sectors was demanding new approaches to finance and book balance.
The opportunities are significant – from cognitive credit and improved forecasting accuracy to enhanced customer analytics. All use similar tools, based on artificial intelligence and quality, trusted data. Cognitive credit can be deployed to quickly make decisions on whether to advance or restrict credit, based on individual company positions and available data. Doing so enables businesses to either capitalise on opportunities (for instance, agreeing credit for a supplier that has run out but is a supportive and integral partner) or avoid risk (in the cases where a business might be in administration).
With more accurate forecasts, businesses can better manage their currency purchases and deposits, selling currency that is not required or buying more where predictions identify an upcoming demand.
It is the same with customer analytics – with a greater understanding of customer needs, businesses can make decisions based on the right mix of the product (and how it meets demand) and supply chain suitability (such as production costs and location in relation to customers).
In many ways, the events of the past year have accelerated the process. In doing so, the problem is the pandemic has also accelerated the speed at which failure to act can lead to obsolescence. Therefore, it is vital that businesses, and more particularly their finance and accounting departments, kick start their digital transformation. This will enable them to deploy the tools and analytics that is needed to capture data, generate insights and drive fast, accurate decision-making to uncover previously untapped sources of cash and reverse revenue degradation.
The Importance of Digitally Enabled Finance Teams
Forward-thinking CFOs have already begun the process of digitising their departments, but for those that have been slow to start, now is the time to push forward. It is only through digital tools and analytics that finance leaders can identify both the internal and external opportunities to recover revenue and improve cash flow. Whether that’s releasing working capital, minimising revenue loss and accelerating revenue recovery, reducing total cost of ownership or enhancing customer retention – only digitally enabled finance teams will be in a position to capitalise and, ultimately, bolster business performance during what will be a trading period like no other.
About the author: Krishnan Raghunathan
Krishnan Raghunathan is the head of Finance & Accounting (F&A) practice and operations at WNS. He also leads the international delivery locations in China, Costa Rica, Spain, Sri Lanka, Romania, The Philippines, Poland and USA.
Prior to this, Krishnan was Chief Capability Officer for WNS, in that role he headed Horizontal practices across Finance & Accounting, Customer Interaction Services and Research & Analytics, Transformation & Process Excellence, Program Management (Transitions) and Solutions development.
He has more than 27 years of experience across Finance & Accounting, Business Process Management, Sales Solutions and Capability functions including 7 years in Accounting practice.
Before joining WNS in 2013, Krishnan led several challenging roles at Genpact, supporting strategic deals and consultative selling. In addition, Krishnan was also the business leader for a number of industry verticals at Genpact, including hospitality, transportation, logistics, media and professional services
Krishnan is a Chartered Accountant, a Certified Six Sigma Green Belt and a trained Six Sigma Black Belt
NAVIGATING SUDDEN DIGITAL ACCELERATION – HOW MERCHANTS CAN KEEP UP IN A NEW AGE OF PAYMENT INNOVATION
James Booth, VP Head of Partnerships, EMEA at PPRO
Recent months have brought momentous change for businesses across the globe. Needless to say, the pandemic has had a colossal impact on the retail sector in particular. For certain industries, the crisis has catapulted society further into the digital world; technology that was predicted to be adopted over the coming years is now on track to be embraced in mere months.
However, local lockdowns for example in the UK continue to force shoppers away from brick-and-mortar stores and onto online platforms to purchase a range of goods. As a result, we are seeing new user groups embracing e-commerce and digital payment methods at a much faster rate than anyone ever thought possible. These new consumer habits are taking root and are likely to become preferences that persist long after the pandemic.
As we continue to hurtle into a new digital era, there’s an unprecedented urgency for merchants to be proactive – offering a range of new payment offerings. As digital payments increase, offering preferred payment methods can unlock a whole new world of opportunities. The retailers seeing exponential growth are the ones who have tailored and localised their payments offering to a global audience.
The pandemic has propelled demand for Local Payment Methods
Today, consumers have an even greater desire and need for frictionless shopping experiences. Social distancing is facilitating the surge in e-commerce, increasing demand for digital payment methods over traditional cash and card payments.
Before the pandemic, the world was already on route to becoming a digital-first society. Some regions were ahead of others; for instance, from the PPRO Payment Almanac, 56% of online transactions in China were already conducted via e-wallets, compared to 25% in the UK. However, now we are seeing increased demand for these types of payments across the globe.
Catering for a new online customer
Whilst typically the global digital payment revolution had been led by Gen Z and Millennials, elderly consumers are set to drive the e-commerce market post-crisis. In fact, a recent study by Mintel revealed that 43% of those aged 65 and older have shopped more online since the start of the crisis. This is a stark contrast from back in May 2019 when just 16% of the same age group shopped online at least once a week.
Ongoing consumer needs for increased convenience and safety during the pandemic, have sparked a shift towards online shopping and away from brick-and-mortar. For example, groceries have seen a meteoric rise in online ordering; according to PPRO’s cross-border engine, online purchases of food and beverages are up 285% since the start of the pandemic.
With new curbside and buy online pick-up in store (BOPIS) programs, the typical cash and card payment methods will be harder to maintain. Now, merchants must offer e-commerce, and implement digital payment options at checkout. Recent data shows up to 80% of shoppers across Europe’s three largest markets (UK, Germany and France) will now make at least half of their purchases online.
We are also seeing the rise and popularity of pay-later apps like Klarna and Afterpay (Branded ClearPay in the UK) to help offer relief from the economic impacts of the virus. Just last month, Klarna was crowned one of Europe’s biggest private owned financial technology providers – with nine million consumers in Britain having used the service, and 90 million users worldwide.
Shoppers need flexible payment options. For merchants, extending many different payment options that cater to different consumer groups can provide diversification and enable growth.
Get ahead, or get left behind
This sudden digital acceleration puts merchants at a crucial crossroads. Embracing new innovations in payment methods has the power to open brands up to a wealth of new customers, whilst satisfying the changing needs of their existing customer pool. On the other hand, failure to offer a variety of digital payment methods can severely limit brands – therefore impacting future growth and success.
As businesses continue to navigate the ongoing ramifications of the pandemic, merchants will eventually face a digital arms race to create the best possible online experience. Those who understand this and make the checkout experience a top priority will succeed, and those who stick to their guns will be left behind. The failure to meet customer preferences during the payment process means many customers will abandon baskets at the very last hurdle. In fact, a study by PPRO 44% of UK shoppers abandon a purchase if their favorite payment method isn’t available.
While recent events have put huge strain on both global economies and consumers, it has also birthed a new age of payment innovation. New offerings such as the rise of Facebook owned, WhatsApp payment features or PayPal and Venmo enabled QR code checkout are showcasing the acceleration of this trend. Financial technology is helping to keep humans connected and provide access to the goods and services they need. Digital adoption will only proliferate, so merchants must act now to get ahead of the curve.
ONE IN FIVE INSURANCE CUSTOMERS SAW AN IMPROVEMENT IN CUSTOMER SERVICE OVER LOCKDOWN, RESEARCH SHOWS
SAS research reveals that insurers improved their customer experience during lockdown One in five insurance customers noted an improvement...
PASSWORDS, BIOMETRICS AND BEYOND
By: Hicham Bouali, Pre-Sales Director EMEA of One Identity, a specialist in identity and access management At any given...
AVATRADE NOW SUPPORTING DEPOSITS VIA PAYPAL AND RAPID TRANSFER
AvaTrade continues to grow its customer offering by adding PayPal and Rapid Transfer to its supported payment methods. AvaTrade’s customers...
GOING GLOBAL: 7 TIPS TO GET STARTED
The idea of selling your products or services to new markets across the globe is an attractive prospect for any...
KASHFLOW AND YAPILY PARTNER TO SUPPORT SMES WITH DIGITAL BOOKKEEPING AND CASH FLOW MANAGEMENT
KashFlow continues its mission to provide SMEs and accountancy firms with software that keeps bookkeeping easy to understand and even...
WHY HIGH NET WORTHS SHOULD BE LOOKING AT ANGEL INVESTING IN A NEGATIVE INTEREST RATE ENVIRONMENT
By Oliver Woolley, Envestors As England gets through its second lockdown, Bank of England policymakers report the UK we...
VIVA WALLET SUPPORTS E-COMMERCE GROWTH THROUGH ITS MARKETPLACE SOLUTION
Viva Wallet’s PSD2-compliant payment solution for online marketplaces removes the requirement for them to become licensed providers of regulated payment services. Viva Wallet is able to handle the streamlined processing of customer transactions through a PSD2-compliant escrow account...
REDUCING FRICTION ONLINE HAS BECOME BUSINESS CRITICAL
Andrew Shikiar, Executive Director at the FIDO Alliance The global pandemic has pushed the importance of remote access and authentication...
QUICK FIXES TO LOWER YOUR CAR INSURANCE
Car insurance is something we all have to pay for, no matter how much we despise it. However, it’s not...
ALL-SEASON TYRES AND HOW TECHNOLOGY IS CHANGING THE FUTURE OF TRANSPORT
Avid vehicle enthusiasts will likely know that summer and winter tyres are developed from different rubber compounds which work at...
EQUIPPING YOUR TEAM WITH THE SKILLS TO MANAGE THE CHANGING LANDSCAPE
By David Wharram, CEO of Coast Digital For businesses to emerge from the COVID-19 pandemic stronger than ever, companies...
BANKING ON THE FUTURE: WHY PAYMENTS TRANSFORMATION IS THE KEY TO SUCCESS
Simon Wilson, Co-Head, Payments at Icon Solutions Standardisation, regulation and technological innovation means payments are well on the way...
DIGITAL FINANCE: UNLOCKING NEW CAPITAL IN DISRUPTED MARKETS
Krishnan Raghunathan, Head of Finance & Accounting Services at WNS, explores how a digitally transformed finance department can give enterprises...
DATA DILEMMAS IMPACTING ESGS
Mario Mantrisi, Chief Strategy and Knowledge Officer, Kneip It’s been well documented over the past few months that the...
SIX PILLARS FOR A SUCCESSFUL CLOUD
by Giuseppe Paternò, IT Infrastructure Architect, Security Expert, and Cloud Solution Guru COVID-19 pandemic is pushing many companies to...
MARQETA CONTINUES EUROPEAN GROWTH, SIGNING THREE NEW DIGITAL BANKING CUSTOMERS
Marqeta is supporting the development and launch of three new digital banks across the UK and Europe Marqeta, the...
TECHNOLOGY IS OUR FIRST DEFENCE AGAINST MONEY LAUNDERING
Jesse Chenard, CEO of MonetaGo Fraud is an age-old problem that has plagued every industry since businesses began trading. It...
STOCARD BUILDS ON SUCCESS AS IT EXPANDS STOCARD PAY TO FOUR MORE EUROPEAN COUNTRIES
Stocard, the leading European mobile wallet with over 50 million users, launches its payment functionality, Stocard Pay, in Germany, France,...
3 KEY DIGITAL MARKETING TRENDS FOR 2021
– Emma Digital marketing is an industry where the trends are changing on a daily basis, meaning those in the...
SBER ANNOUNCES PARTICIPATION IN A PRIVATE EQUITY FUND
Sber in cooperation with a leading Middle East sovereign wealth fund announces its commitment as a cornerstone investor into an...