January

Policymakers and regulators around the world have pointed to cyber threats from criminal and state actors as an increasing threat to financial stability. Last month, US Treasury Secretary Janet Yellen – along with finance ministers and central bank chiefs from the Group of Seven nations – conducted an exercise covering how G7 members will seek to cooperate in the hypothetical event of a significant, cross-border incident affecting the financial sector.

by Fabien Rech, EMEA Vice President, McAfee

Such concerns are widespread, with 80% of UK IT professionals anticipating a moderate or even substantial impact by increased demand for their services or products this holiday season. The extra demand is compounded by the reduced size of teams and greater online activity. With cyber threats to the financial industry front of mind, and organisations across the sector coming under scrutiny as to whether they are doing enough to protect themselves, this year’s peak season – and subsequent rise in online activity – is cause for concern.

While this paints a bleak picture, organisations can be proactive in defending their networks, data, customers, and employees, against the anticipated increase in holiday cybercrime by implementing certain security measures.

Using technology to bolster teams

Demand for cybersecurity is surging, and today there are a number of technologies that can help to bolster security measures, providing additional support for often stretched security teams. Threat intelligence can offer unique visibility into online dangers such as botnets, worms, DNS attacks, and even advanced persistent threats, protecting FS organisations against cyberthreats across all vectors, including file, web, message, and network.

In addition, taking a Zero Trust approach to security enforces granular, adaptive, and context-aware policies for providing secure and seamless Zero Trust access to private applications hosted across clouds and corporate data centres, from any remote location and device. This will be particularly useful as more employees choose to work remotely.

Prioritising employee awareness

Beyond technologies, the adoption of an awareness-first approach is vital. Proactive cybersecurity awareness training for all employees – not just those in the security team – is essential, especially when encountering holiday phishing emails. As the cyber threat is always evolving, so too must organisations – ensuring that their team’s knowledge and ability to identify, avoid and negate those threats also grow in turn.

This awareness-first strategy requires leaders to move away from a ‘breach of the month’ approach, instead of using proactive training measures to build security into the fabric of their organisation, breaking down siloes of threat and information intelligence across the business, so that all employees are aware of how they can contribute to the battle against cyberthreats during the peak period and beyond.

Some banks are already taking a proactive approach to testing employee understanding when it comes to cybersecurity, for example, resistance to spam or phishing emails, and knowing not to plug unknown USB keys into their laptop. If employees don’t appear to have sufficient knowledge of threats and best practices, they will automatically be required to take part in further training.

Other key steps to take in this proactive approach include increasing the frequency (and testing) of software updates, boosting the number of internal IT-related communications to keep everybody informed, and implementing new software solutions with due diligence.

Implementing a response plan

It’s also important to recognise that protective measures might not work 100% of the time. As hackers become ever more sophisticated, it’s vital for FS organisations to design a holistic, clearly communicable plan for if (and when) things do go wrong.

Developing a robust incident response plan could mean the difference between being able to respond and remedy a security breach in minutes rather than hours, ensuring the least amount of downtime possible. When asked, 43% of businesses reported suffering from downtime due to a cyber concern in the last 18 months – for 80% this happened during peak season and lasted more than 12 hours for almost a quarter (23%)

Again here, training forms a big part – making sure employees know what to do and who to inform when an incident does occur is at the heart of any effective response plan, as is encouraging a culture of honesty and transparency. An organisation in which employees are wary of acknowledging a mistake or informing someone of a possible accidental breach is not a secure one.

The year is full of challenging peak periods, from the public holidays at the end of the year to summer vacations and various religious/spiritual holidays. The need for vigilance has never been greater or more constant, and financial services organisations, in particular, have a need to protect the data and money of their customers, as well as the resilience of their own organisations.

By using technology, training, and incident response awareness, leaders in the sector can help to bolster teams against the increasing sophistication of cyberthreats, staying safe while staying connected. The peak season offers unique challenges, but ultimately the goal is to develop a resilient and adaptable organisation that can ensure security year-round, allowing employees to thrive, wherever they choose to work without having to worry about threats.

Financial services firms are seeing rapid growth in data volumes and diversity. Various trends are contributing to this growth of available data across the sector. One of the drivers is that firms need to disclose more to comply with the continuing push towards regulatory transparency.

by Neil Sandle, Head of Product Management, Alveo

In addition, a lot more data is being generated and collected through digitalisation, as a by-product of business activities, often referred to as ‘digital exhaust,’ and through the use of innovative new techniques such as natural language processing (NLP), to gauge market sentiment. These new data sets are used for a range of reasons by finance firms, from regulatory compliance to enhanced insight into potential investments.

The availability of this data and the potential it provides, along with increasingly data-intensive jobs and reporting requirements, means financial firms need to improve their market data access and analytics capabilities.

However, making good use of this data is complex. In order to prevent being inundated, firms need to develop a shopping list of companies or financial products they want to get the data from. They then need to decide what information to collect. Once sourced, they need to expose what data sets are available and highlight to business users, what the sources are, when data was requested, what came back, and what quality checks were taken.

Basically, firms need to be transparent about what is available within the company and what its provenance has been. They also need to know all the contextual information, such as was the data disclosed directly, is it expert opinion or just sentiment from the Internet and who has permission to use it?

With all this information available it becomes much easier for financial firms to decide what data they wish to use.

There are certain key processes data needs to go through before it can be fully trusted. If the data is for operational purposes, firms need a data set that is high-quality and delivered reliably from a provider they can trust. As they are going to put it into an automated, day-to-day recurring process, they need predictability around the availability and quality of the data.

However, if the data is for market exploration or research, the user might only want to use each data set once but are nevertheless likely to be more adventurous in finding new data sets that give them an edge in the market. The quality of the data and the ability to trust it implicitly are nevertheless still critically important.

 Inadequate existing approaches

There is a range of drawbacks with existing approaches to market data management and analytics. IT is typically used to automate processes quickly, but the downside is financial and market analysts are often hardwired to specific datasets and data formats.

With existing approaches, it is often difficult to bring in new data sets because new data comes in various formats. Typically, onboarding and operationalising new data is very costly. If users want to either bring in a new source or connect a new application or financial model, it is not only very expensive but also error-prone.

In addition, it is often hard for firms to ascertain the quality of the data they are dealing with, or even to make an educated guess of how much to rely on it.

Market data collection, preparation and analytics are also historically different disciplines, separately managed and executed. Often when a data set comes in, somebody will work on it to verify, cross-reference and integrate it. That data then has to be copied and put in another database before another analyst can run a risk or investment model against it.

While it is hard to gather data in the first place, to then put it into a shape and form, and place it where an analyst can get to work on it is quite cumbersome. Consequently, the logistics don’t really lend themselves to faster uptime or a quick process.

The benefits of big data tools

The latest big data management tools can help a great deal in this context. They tend to use cloud-native technology, so they are easily scalable up and down depending on the intensity or volume of the data. Using cloud-based platforms can also give firms a more elastic way of paying and of ensuring they only pay for the resources they use.

Also, the latest tools are able to facilitate the integration of data management and analytics, something which has proved to be difficult with legacy approaches. The use of underlying technologies like Cassandra and Spark makes it much easier to bring business logic or financial models to the data, streamlining the whole process and driving operational efficiencies.

Furthermore, in-memory data grids can be used to deliver a fast response time to queries, together with integrated feeds to streamline onboarding and deliver easy distribution. These kinds of feeds can provide last mile integration both to consuming systems and to users, enabling them to gain critical business intelligence that in turn supports faster and more informed decision-making

Maximising Return on Investment

In summary, all firms working in the finance or financial services sector should be looking to maximise their data return on investment (RoI). They need to source the right data and ensure they are getting the most from it. The ‘know your data’ message is important here because finance firms need to know what they have, understand its lineage and track its distribution, which is in essence good data governance.

Equally important, finance firms should also ensure their stakeholders know what data is available and that they can easily access the data they require. Ultimately, the latest big data management tools will make it easier for finance to gain that all important competitive edge.

The last 10 years have seen significant changes in the debate around what the most important channel for business is – brick and mortar or digital channels. But in the shadow of the pandemic, and the accelerated shift towards digital it spurred across the world, that debate has been well and truly put to rest. We’re now in the digital-first era, and this has meant financial organisations such as banks have needed to significantly transform business models.

by Amir Nooriala, Chief Commercial Officer, Callsign

Banks have traditionally relied on branches to drive loyalty and deliver experiences to customers. But with digital channels such as websites and mobile apps now becoming the most important avenues for business, old methods of driving experience and loyalty have been replaced by digital factors, such as app ratings.

So, it’s no surprise that in a digital-first world, businesses must leverage digital-first solutions. But if satisfaction levels are judged by the quality of a digital experience, then businesses not only need to ensure smooth and seamless access to services but also make sure security is a top priority.

However, analogue solutions that many organisations in finance still use for customer authentication – such as one-time passwords (OTPs) – fall short of achieving these goals.

The pressure is on for businesses to find new, truly digital-first solutions that make their customers’ lives easier and differentiate their experience from competitors. But this is a balancing act that needs to also ensure the safety and security of every online interaction because if ease comes at a cost to security, businesses risk losing customers altogether.

Vulnerable systems built on outdated foundations

When it comes to financial institutions, in particular, the ability to adapt to the times has always been part of their success. Some banks are centuries old, and to remain relevant they’ve had to adapt their business models, services, and cultures countless times, all while maintaining the integrity of the sensitive information they hold.

However, over time, that imperative to maintain the safety of their data has led to the accrual of legacy systems for most organisations. While this has been a long-standing problem, in a digital-first world, legacy systems present a particularly glaring vulnerability when it comes to authentication.

Throughout the pandemic, hackers and ransomware attackers took advantage of global uncertainty and thousands of people faced a barrage of text message-based scams over this period. This highlighted the already significant problem with commonly used authentication methods that so many businesses rely on.

In fact, almost a quarter of people questioned for a recent Callsign survey said they received more texts from scammers than their own friends and family.

Organisations’ unwillingness or inability to stop utilising outdated authentication processes such as OTPs are fuelling a worsening crisis in scams and fraud. Businesses developing their digital transformation strategy need to see it as a chance to approach everything they do with a digital-first mindset, and not simply try and recreate digital versions of existing solutions.

And to make this a reality, organisations must rethink their systems in line with how their customers actually behave online and build their solutions accordingly.

The verified path to digital-first innovation

There are a number of technologies that are ideal for financial organisations looking to elevate their authentication methods to digital-first levels that seamlessly and frictionlessly integrate into their customer journeys.

One such solution is passive behavioural biometrics, software capable of taking into consideration millions of data points when verifying the identity of a user. The key difference between behavioural and physical biometrics – and why behavioural biometrics is the superior authentication method – is that it isn’t reliant on a single device (it’s device agnostic).

So, when combined with device and threat intelligence, the solution can circumvent the single point of failure issue that so many other authentication methods fall foul of.

This makes it ideal for our modern, digital-first world where customers want to use a variety of devices and channels to access online services. By making your authentication method device-agnostic, user experience can be ensured in a secure and non-disruptive way, whatever device is being used.

And as this solution can be seamlessly integrated into any point of the customer’s journey, it’s a much more fitting solution for a sector that has always been on the cusp of innovation.

Re-building for a new era of authentication

In order to thrive, organisations in the financial sector need to be prepared to interrogate every aspect of their operations to make sure they are delivering the most convenient and secure service to customers online.

To achieve this, organisations need to be prepared to re-lay their technological foundations. Elevating the importance of digital identity authentication is one such vital change, and businesses need to realise it will only continue to grow as a priority for customers going into the future.

Because the threat from bad actors and cyberattacks is only worsening. So, while innovation is key to attracting customers, security must be at the core if businesses are to retain loyalty. And it will take collaboration both internally and with partners to ensure that customers have the security they deserve.

Adopting digital identities could provide a significant boost to not only the future of open finance, but also across the economy more broadly.

by Brian Costello, VP Data Strategy, Envestnet | Yodlee

One challenge that is evident following the introduction of Open Banking in the UK is consumer hesitancy to share financial data, which is required to access the Open Banking-powered products and services the consumer wants or needs. For the next step beyond Open Banking – open finance – to be a success the industry needs to overcome the data sharing trust challenge to unlock the benefits personalised open finance services can provide.

To show the scale of the challenge, an independent survey of UK adults, commissioned by Envestnet | Yodlee, found that two-thirds of consumers in the UK would find it easier and desirable to view all of their financial information in one place, highlighting the huge demand for open finance. However, when it comes to actually sharing the data, the challenge presents itself. While more than a third of respondents said they would be willing to share their financial data, which would enable these kinds of services, a similar number said they would not be willing to, and a quarter were uncertain.

Open finance stands to benefit everyday users in many ways. The Citizens Advice Bureau noted that in the UK, consumers are overpaying £3.4 billion in key areas including mobile, broadband, home insurance, cash savings and mortgages. A well-managed open finance initiative has the potential to drive innovation in financial wellness platforms, helping users understand their financial behaviours and how they could make improvements. This would also enable accessible financial advice, as advisors are able to gain a view of a person’s overall financial picture in a fraction of the time it currently takes.

Transparency and control are two key principles for any data sharing economy, and therefore essential for an effective and safe open finance environment. As it stands, users are required to grant separate consents to both the recipient and provider of their data, and sometimes to a third party as well. Though these levels of protection are laudable, the current user experience is highly procedural and can confuse the user to the point they abandon the consent experience. The requirement to grant multiple consents is at odds with the user experience of trying to achieve a singular cohesive outcome.

Could digital identities simplify the consent process and align consent with desired outcomes?

The UK’s National Data Strategy found that for data to have the most effective impact, it needs to be appropriately collected, accessible, portable, and re-usable. However, achieving this would likely involve enabling consumers to provide more overarching consent for data-sharing, whilst still maintaining stringent protections and avenues for redress. This is no easy feat, and there is still discussion between regulators and the industry on the best ways to achieve this.

The ideal situation is a single digital identity artifact with consent attributes that provides all parties in the data sharing transaction with enforceable evidence of the user’s explicit instructions. Once a digital ID is verified, data-sharing consents attributable to a person’s digital identity could enable them to assign consent to multiple parties involved in the data sharing process without experiencing the confusion and disruption that the current user journey typically entails.

Beyond simplifying the user journey, standardisation of certain consumer consents could enable users to incorporate ongoing consents to their digital ID, which would enable them to give permission to share their data with organisations in real-time or when they were not active in the user experience.

Another option is to leverage the current system of federated identity management providers by having those data providers become the sole identity provider for the transaction.  The Global Assured Identity Network is proposing just that, with ambitions to open the framework up across all sectors.

While this is a great opportunity with many upsides, there are many things standing in its way encompassing technical infrastructure, regulations, and conflicting points of view.

Provided there was a regulatory framework in place, these ongoing consents could also enable users to automatically share their data with new providers under specific circumstances. These sort of outcome-focused smart consents would enable many consumers to benefit from the data sharing economy and reap enormous benefits, without needing to engage too heavily with the procedural elements of data sharing.

A day in the crypto market is often the equivalent of a week in real life, due to its volatile, unpredictable nature. So what could a whole new year bring to the big table?

by Vlad Faraon, CBO and Co-founder, Coreto

Plenty of changes, we hope, as cryptocurrencies are now becoming mainstream. But their popularity doesn’t come without risks. The crypto market value blew past $3 trillion, according to CoinGecko pricing, but the scams are on the rise as well. In just 6 months, between October 2020 – March 2021, over 7,000 people lost more than $80millions by investing in altcoins according to The Federal Trade Commission (FTC). The amount was 10 times smaller in the previous year.

Despite its rapid growth and severe caveats, the crypto transactions aren’t currently regulated by the Financial Conduct Authority (FCA) or covered by the Financial Services Compensation Scheme. This means that the industry is a minefield, full of unethical players. Under these circumstances, people should never invest more than they’re willing to lose.

This month, regulatory agencies issued a joint statement driven by the concern that ‘the emerging crypto-asset sector presents potential opportunities and risks for banking organisations, their customers, and the overall financial system.’ The Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) analysed various issues regarding crypto assets and are aiming to provide coordinated and timely clarity. They believe that it’s necessary to use a common vocabulary, identify the key risks and analyse the applicability of existing regulations and guidance. This sets expectations for more consumer protection and a standard the whole industry can adhere to.

In addition to this, the OCC published a letter about how national banks and federal savings associations should implement safety measures before undertaking certain cryptocurrency and stablecoin activities. They suggested controls that include engaging with their supervisory office to show written notification of their proposed activities, alongside the criteria that the OCC will use for the evaluation, with a view to providing a supervisory non-objection.

All this progress is welcome, as at a macro level they’re meant to protect the interests of the investor. But the way things developed with the US Securities and Exchange Commission (SEC), which has the same goal, makes us want to take this with a pinch of salt.

On one hand, the SEC is looking after people’s money, but on the other, it wants to make the market more efficient. Catering for both is a challenging job, and some might say that it became too protective as an institution and got in the way of progress. See what happened to Basis, for example, designed to keep its price stable. This would have been an innovative solution for the crypto space, coming from a place of accountability and transparency. The project was however shut down because of strict, old regulations applied to a novel system. In its desire to go after scams, frauds and manipulative activity, it discourages entrepreneurs from launching new projects. This is one of the reasons why London, not New York, is the centre of fintech investments now.

With the industry’s rapid advancement there is a growing need for regulations that are agile and flexible. As the SEC might be directing its enforcement actions against DeFi, NFTs and even stablecoins, revising its modus operandi is required sooner rather than later.

While policy-makers are slowly devising their roadmaps to a healthier ecosystem, the industry could regulate itself by relying on trust and knowledge. The harsh reality is that in the crypto space there are many bad actors. We believe there is little to no chance that there are retail investors out there who didn’t experience scams or at least somebody trying to scam them. For the retail investor to have more confidence in this space, there is a high need for a tracked record system for projects, influencers, and anyone with a voice in this space. We can’t trust someone with our investment decisions just because they have a big following. Retail investors shouldn’t base their confidence on that. It’s important to understand that a tracked record of past performance, immutably stored on the blockchain, is a step forward towards building the trust bridge in 2022.

The same trust and knowledge lie at the heart of Coreto, our reputation-based research hub, which is a secure environment for crypto communities. Here, members have to prove their influencer status by building a history of accurate analysis and market predictions. This will elevate critical thinking, reasoned argument, shared knowledge, and verifiable facts. Only when they’ll have a good enough reputation score will they be able to influence the newcomers, and also monetise their knowledge. This is significantly different from what happens currently online, with some so-called crypto influencers misleading masses into faulty investments and then fleeing the scene. This creates a win-win situation: the goodwill influencers will be able to shine on a digital stage, while the community will be able to make more educated investment decisions.

If we all remain loyal to these guiding principles – trust and performance – the whole crypto community can benefit and evolve from it.

Cryptocurrencies are one of the biggest Ponzi schemes in history. More stringent regulation and the rise of state-backed digital currencies look set to cause the speculative market for cryptocurrencies to crash. Within a few years, all non-state backed cryptocurrencies could reach their true monetary value: zero.

by Bambos Tsiattalou, Partner at Stokoe Partnership Solicitors

Although cryptocurrencies are still involved in white collar crime, the writing is on the wall for them. Dedicated regulatory regimes for cryptocurrencies are now being developed worldwide. The European Commission has launched a proposed regulatory regime for cryptoassets. The US Senate looks set to require cryptocurrency exchanges to report the details of each transaction. This is expected to be in force by 2023. In the meantime, regulators are making greater use of their existing powers to regulate cryptocurrencies. For example, the UK’s the Financial Conduct Authority (FCA) was appointed as the major regulator of the cryptocurrency market in January 2021.

Perhaps the greatest long-term threat to cryptocurrencies is the creation of state-backed digital currencies. China is now trialling its digital Yuan. The EU is considering a digital euro.  The chair of the Federal Reserve calls its proposed digital dollar a “high priority project”. These will have both the security of blockchain and a stable value.

Despite these developments, for now, cryptocurrencies continue to provide opportunities for criminal activity, including white collar crime. The global cryptocurrency market is now worth some US$1.5 trillion annually. New types of cryptoassets and cryptocurrency exchanges launch regularly.

The determination of global leaders to regulate cryptocurrencies should not be underestimated.  Ransomware attacks are now a geopolitical issue, with many linked to Russia. Russia has been accused of involvement in attacks such as the 2020 SolarWinds attack. The 2021 G7 meeting issued a final communique that promised that the G7 nations would collaborate “to urgently address the escalating shared threat” of ransomware attacks. The greater anonymity of cryptocurrencies facilitates ransomware attacks.

Frauds involving cryptocurrencies, such as the PlusToken Ponzi scheme, have cost billions internationally. The PlusToken fraud defrauded investors of an estimated $2.9 billion. Cryptocurrencies have facilitated money laundering on a global scale. Until serious regulatory regimes are put in place globally, the use of cryptocurrencies in white collar crime looks set to continue. In 2020, in the UK alone, around £113 million was lost in fraudulent cryptocurrency investments.

A great deal of white collar crime goes beyond money laundering and relates to the cryptoasset markets themselves. It involves misrepresentations regarding the value, stability and viability of cryptoassets and related financial instruments.

People are lured into investing online in cryptocurrencies or their derivatives. This is despite the clear warnings issued by regulators such as the FCA. The FCA’s clear advice is that “Cryptoassets are considered very high risk, speculative purchases. If you buy cryptoassets, you should be prepared to lose all your money.”

The appetite for cryptocurrencies is rarely dented by their remarkable volatility. Earlier this year, the cryptocurrency Ether dropped 22% in a single day while Bitcoin lost over 40% of its value in a single week. The FCA has thankfully now banned the sale of crypto derivatives to consumers on the basis of its “concerns surrounding the volatility and valuation of the underlying cryptoassets.” Yet UK consumers can still buy them internationally online.

The UK has no regulatory regime dedicated to cryptocurrencies as of yet. However, the FCA has become active in regulating the cryptocurrency market. Firms must now register with the FCA before operating in the UK. Cryptoasset platforms which registered with the FCA in December 2020 were able to continue to offer services in the UK under a Temporary Registrations Regime while the FCA assessed their application. However, many applicants have been abandoning their applications to the FCA, due to difficulties meeting the anti-money laundering requirements.

The FCA has not been sitting on its hands while it assesses applications. In June, it banned the cryptocurrency exchange Binance from conducting regulated activities in the UK. The FCA’s head of enforcement and market oversight, Mark Steward has admitted that 111 unregistered cryptocurrency providers were operating in Britain and that “they are dealing with someone: banks, payment services firm, consumers”. This is a pointed warning to those banks and other white collar service providers involved.

The British legal system has proven itself adaptable to the rise of cryptocurrencies. In 2019, the English High Court considered whether cryptoassets could be legally regarded as property. The case of AA v Persons Unknown [2020] 4 W.L.R. 35 involved an application for a proprietary injunction to recover Bitcoins, which had been extorted during a ransomware attack on a Canadian insurance company. The company’s British insurer paid q ransom of $950,000 in Bitcoin through an expert intermediary. At the time this amounted to 109.25 Bitcoins.

The consultants who had made the payment found the extorted Bitcoins at a cryptocurrency exchange.  They discovered that 96 of the 109.25 Bitcoins were still in an account and asked the High Court to grant a proprietary injunction to recover them. The English High Court held that Bitcoins were “property” under English law and granted the injunction.

The court favourably cited the UK Jurisdiction Task Force’s report entitled “Legal statement on cryptoassets and smart contracts”.  The report concluded that cryptoassets have the legal characteristics of property and that their novel technological features did not prevent them from legally being property. This judgment brings cryptoassets within the purview of the English courts.

Regulators and the courts are actively using existing laws to tackle cryptocurrencies and white collar crime. State-backed digital currencies look set to arrive in tandem with a coming wave of regulation which will tackle the misuse of crypto assets. These developments will create a perfect storm that will sweep away cryptocurrencies as we have known them.

People will be much more likely to place their trust in a digital dollar or a digital euro instead of a cryptocurrency like Dogecoin – which literally started off as a joke. It may well also end up as one.

The overall progress of a region depends on equal opportunities for everyone without any discrimination or preference. When women of a country are empowered, it drives economic growth and development and creates life lessons for young female entrepreneurs to drive their business ideas. Even though the government has come up with many initiatives to promote entrepreneurship in the country, there are a few hurdles for people (especially women) to put their ideas into action.

bu of Abhinav Sinha, Co-Founder, Eko

Lack of finance options is one of the most crucial roadblocks women entrepreneurs face in India. As the role of FinTech companies has expanded significantly in the past few years, one can expect that these firms will drive entrepreneurship among women in the country. There are different ways through which FinTech firms would enable young women entrepreneurs in their entrepreneurship journey.

Understanding the constraints in access to financial institutions

Financial inclusion is crucial for the entrepreneurship journey of any individual. The concept of financial inclusion refers to the accumulation of savings, accessing financial institutions to invest, and availing various services provided by such organizations. In respect of entrepreneurship, it is crucial to understand that having a business idea and executing the same on any level is a key to this process. Rather than thinking about being a start-up or a unicorn, the most crucial aspect is to get the idea going by initiating a business. However, despite having many ideas, women entrepreneurs fail to execute them at the micro-levels.

Besides being discriminated against gender, financial institutions often do not take women entrepreneurs seriously, and they fail to secure adequate funding to sustain their business ventures. This not only puts brakes on their operations but also poses a significant hurdle in their entrepreneurial journey. Here, FinTech companies can play a significant role in reaching the end-users without the need to have a comprehensive infrastructure (physical).

Hence, from availing of finance to getting investment tips, women entrepreneurs can connect with a FinTech company and start their journeys. Aside from motivating more women to jumpstart their entrepreneurial stints, closing the gender gap will increase 35% of GDP (approximately) and benefit the macroeconomics gains of a country in a significant manner.

Integration of FinTech, financial inclusion, and government initiatives

The government’s efforts in promoting entrepreneurship through easing finance availability are often underappreciated. Several initiatives have started with the introduction of UPI (Unified Payment Interface) along with PMJDY and the Direct Benefit Transfer scheme, due to which FinTech firms have reached almost all parts of the country. Apart from them, the government has set up INR 10,000 crore fund (as a VC) for the MSME sector, allocated INR 20,000 crore to launch a specialized bank (Mudra Bank) for the SME sector, and earmarked INR 1000 crore to empower the financial dreams of start-ups.

These initiatives remove the middleman and facilities person-to-merchant transactions (offline & digital), promoting financial inclusion. With the increased volumes of digital payments and easing the due diligence requirements, FinTech companies have ensured that women will be educated about government initiatives, and becoming a beneficiary of such schemes would no longer be a bureaucratic process.

Improved financial inclusion for women entrepreneurs

Different studies have suggested that the overall trend of savings and investments among women in India has improved with increased usage of mobile apps, wallets, and platforms. With a friendly regional interface, FinTech firms work closely with women entrepreneurs to reduce their reliance on text and western iconography.

Voice-based and banking-plus solutions like savings and health insurance allow people without technical competency to operate businesses (like Kirana stores) more effortlessly. In a way, FinTech companies are promoting micro-entrepreneurship by facilitating small and microfinance, more accessible credit, and quick resolution of their financial requirements and queries. The overall time required to avail such services has reduced considerably, and with UIDAI-supported platforms, women entrepreneurs can use mobile banking solutions (MFS) if integrated with microfinance institutions (MFIs).

Summing up

FinTech companies in India have a significant role in promoting women entrepreneurship at micro and macro levels. These firms understand the challenges female business owners face in executing their ideas. Hence, by providing finance and supporting government initiatives, these FinTech companies will ensure better financial inclusion and address the core business issues that women are often deprived of.

The rise of Banking-as-a-Service (BaaS) is a logical next step in fuelling efficiency across existing customer journeys. Rather than diverting buyers to separate channels to complete online purchases, for instance, brands that have already built strong brand recognition can instead cross-sell financial services like credit to already engaged consumers.

by Paddy Vishani, Strategic Partnerships Manager, Yobota

As a result of innovation and growth in embedded finance business models, non-financial brands can now extend credit and other banking services to their customers without having to obtain a regulatory licence – while offering the same protections that come with being a fully regulated bank.

According to PwC, the new revenue potential generated through open banking-enabled SME business and retail customer propositions in the UK was £500 million in 2018. By 2024, Insider Intelligence predicts that this figure will reach £1.9 billion.

Even though the opportunity is compelling, however, there are a few nuances to navigate as banks, BaaS providers and businesses consider forging long-term partnerships.

A winning BaaS partnership

White labelling in financial services is not a new concept; branded credit cards, for instance, have been used by businesses for many years to build customer loyalty. Yet the role of white labelling in the BaaS space is far more involved.

Through flexible plug-and-play application programming interfaces (APIs), banking platform services allow brands to directly tap into the infrastructure of their chosen bank. This means that core elements like risk management, compliance and servicing are all supported.

Importantly, leading BaaS providers will enable businesses to create differentiated offerings, giving businesses the ability not just to implement off-the-shelf banking solutions, but also to curate novel products. Beyond customising the user interface to reflect their brand, the modular architecture of banking platform services empowers businesses to customise, adjust and replace the core components they need at any given point in time. The importance of choosing the right provider thereby becomes apparent.

A BaaS platform must be able to do a number of things. Firstly, it must protect the bank by demonstrating that it can reliably ringfence the clients, their data, and all the processes which will be utilised by different businesses. Core banking vendors should have a proven track record in supporting regulated products, and ideally a leadership team consisting of both technology and banking specialists that are well-versed in regulatory requirements.

The platform must also be designed in a way that offers easy access to all the critical functions provided by the bank: the entry points (usually in the form of an API) must be optimally designed to give businesses the tools they need to realise their vision. The design and flexibility of the architecture are key: BaaS platforms must be extensible and scalable to meet future use cases as customer expectations evolve.

A key component of this is that the representation of financial products should be unbounded. Whether businesses are looking to introduce a variable APR that is dynamically linked to an individual’s credit score, or a savings account that pays interest into an environmental fund, an agile solution is needed to support the long-term evolution of banking products.

Embracing the art of the possible

Embedded banking is increasing the appetite for innovative, tech-driven solutions to solve common pain points across the customer journey. By solving the technical hurdles, BaaS providers like Yobota empower businesses to spin out user-centric offerings that they can run independently.

Sophisticated BaaS solutions should also be able to deliver granular insights into how end customers are interacting with products. Reporting APIs that generate real-time data will enable businesses to continually assess and adapt to industry trends and customer behaviours. Equipped with this knowledge, brands can curate experiences that are truly relevant to their customers’ needs.

The rise of BaaS will no doubt serve to inspire new products and fill unexplored niches in the market. The importance of strategic partnerships, however, cannot be overlooked as banks, providers and businesses set their sights on the new realm of possibilities.

The rise of innovative technologies has made it possible for challenger banks to shake up the market in the last decade. With customer needs changing and expectations increasing, there is a growing trend for smartphone banking; branchless, mobile-only banks with centralised services, ready to compete with established institutions.

by Vince Graziani, CEO, IDEX Biometrics ASA

The term challenger bank is used to describe any banking service provider looking to take on and win customers from the big corporate, or traditional banks. And now banks such as Monzo, Revolut, Chime and Papara, established in 2015, are maturing garnering praise and followers, putting established banks under increased pressure as they battle for the next generation of customers.

US-based start-up Chime is now valued at $14.5 billion and is IPO-ready. In the UK, Revolut— which has more than 14 million customers—is worth more than long-standing high street bank NatWest. Meanwhile Papara, a Turkish banking challenger has grown to eight million users, and is gearing up for European expansion in 2021, with Germany as its first growth market. Also in Europe, Swedish financial service challenger Rocker has received €48 million in equity funding just 18 months after launching. This presents some serious competition to traditional banks around the world.

 Monumental changes in consumer payment habits

Meanwhile, the pandemic has impacted the world’s financial habits. Today consumers are using less cash, making more contactless payments and want to keep a closer eye on spending patterns. As more people move their lives online, digital challengers have been well placed to take advantage of this trend.

According to Ipsos Mori’s personal banking report, challenger banks are cementing their position ahead of some of the biggest financial brands in customer service, showing that innovation and modern ideas are revolutionising the market.

For a new generation of tech-savvy customers, challenger banks also offer something a little more fashionable, with strong branding and messaging, meeting banking needs with a customer-friendly service that fits around them, not the other way round.

Can big banks catch up?

 Big banks have been playing catch up over the past few years. They were late to the game and have retroactively started backfilling their account offerings with spending trackers and notifications. But chasing the features of more agile, mobile-focused competitors isn’t enough to help them thrive in a changing banking world.

In particular, these challengers gain competitive advantage by creating new payment options that reflect customer demand for additional security and convenience. As studies show that payment cards will dominate the banking scene for at least the next decade, bank players need to revolutionise their own payment card offerings to respond to consumer needs.

New and emerging payment options

With consumers concerned about security, convenience and speedy payment options in an increasingly cashless world, big banks must embrace new biometric technology if they are to win their business.

A smart fingerprint authentication payment card already far exceeds the security of PIN authentication. This new generation of on-card fingerprint recognition technology has shown to be more than twice as secure[1] as traditional card payment transactions requiring a four-digit PIN.

Fingerprint data is held securely on the card, not in a shared database, meaning personal biometric data never leaves the card and cannot be hacked, recreated or breached. By linking the user to their card via the unique properties of their fingerprint, banks and retailers can create a payment process that is safe, speedy and highly secure –while demonstrating innovative thinking and future proofing themselves.

Fingerprint authentication is also more inclusive. It removes barriers for those with literacy challenges or memory difficulties because biometric payment cards simply allow consumers to be their own authentication. They can be used in any corner of the world, even in the most remote locations with limited cloud connection.

Biometric cards can also be used to provide direct and unequivocal identification to help the financially excluded open bank accounts and improve their credit scores.

Why embracing new biometric innovation can help gain top-of-wallet status

With the economy slowly bouncing back to pre-Covid levels, fingerprint biometric payment cards offer a safe, secure, hygienic method of payment authentication, providing an additional layer of security and trust in a cashless world. The rising wave of fintech’s and challenger banks is forcing traditional banks to focus on product and service differentiation as they try to compete against more agile entities and retain brand loyalty. Therefore, it’s important now more than ever for banks to embrace new biometric technology to provide their customers with an enhanced customer experience and deliver essential security to their payments.

Biometric payment cards enable challengers as well as incumbents to compete for and gain top-of-wallet status, protect users from fraud and build trust with the consumers of tomorrow. With technology evolving at lightning speed, now is the time for the banking sector to embrace cutting edge innovation and win the fintech play.

[1] Independent field trials commissioned by IDEX Biometrics in 2021 demonstrate the likelihood that a fingerprint biometric payment card incorrectly accepts an unauthorized user was less than one in 20,000, compared to a one in 10,000 chance of correctly guessing a user’s four-digit PIN.

A few years ago, it was fashionable to talk about ’emotional banking’, but this concept seems to have been quietly dropped. Perhaps we need to rethink the idea—the key is embedded payments and their role in ‘emotional finance’. Fintech has made the staid financial services industry infinitely more exciting, at least for those who watch the sector. But has this excitement filtered down to consumers?

By Alex Reddish, MD, Tribe Payments

People are driven by emotions, even when they don’t realise it. As consumers, gut instinct and personal preferences can play a huge part in our purchasing decisions.

The power of a brand can have far more influence on purchasing decisions than many other factors. If people feel warmly towards a brand, they are happier to engage with it. There are many reasons why Apple is one of the most successful companies in the world, but it’s undeniable that the brand is a big part of it. People see the Apple logo as a sign of quality and innovation and are happy to pay a premium for their goods. The iPod was not the first mp3 player, yet it became synonymous with the technology. Consumers (in general) love Apple. Who else could they learn to love?

Can people learn to love financial services?

A few fintech brands have made a particular effort to engage with their customers. Zopa posts regularly to Instagram with easy-to-follow, friendly advice on money matters. Business provider ANNA has developed a range of child-like illustrations and Klarna churns out a combination of zany creativity in its adverts and a steady stream of helpful tips in social media.

For all this, including the slick apps, welcoming graphic design and friendly customer service, financial service providers are still going to struggle to be as beloved as, say, Nintendo or Nike. People need to trust these providers. They need to know that they can have faith in their systems and services. Once this trust is built, can it really be developed into genuine brand affection…?

Embedded payments and the rebirth of emotional finance

Embedding payments means more convenience for customers. By making payments ultra-convenient and invisible, consumers are happier because everything happens with zero fuss or effort, and businesses get to reap the benefits. There’s also the opportunity for businesses to offer financial services that reinforce the relationship between the business and consumer, as well as delivering potential new revenue streams.

Embedded payments link merchants directly with their customers, enabling them to be part of that transaction or moment. These payments allow providers to build customer relationships at that point of need, helping build trust and develop a meaningful relationship.

But we shouldn’t see embedded payments as the endgame. It’s tempting to think that, once the payment is invisible, there is nothing more that can be done. There is the potential to create better links with customers—and perhaps even create the sort of emotional connection that other brands enjoy. This is emotional finance.

Creating better relationships is contingent on having a better understanding of the customer journey… but not the customer journey as we usually mean it. Rather than the customer’s journey through a payments system, we mean their journey through life. Priorities shift and change, and even minor decisions can mean big changes in spending. A new child, a new home, or even a new hobby can mean an abrupt shift in priorities–understanding these changing preferences and reacting to them can open the door to building better loyalty.

Right now, certain music streaming services offer deals for two people at the same address – but consumers have to proactively adopt these and link their accounts. What if a service could do this with a certain level of automation? What about other services that would be helpful to adapt without changing needs? The most common embedded payments example is paying automatically when taking an Uber or another taxi… but what about the other journeys (real and metaphorical) we take in our lives?

The key to this is, of course, data. Data means that we can create better services – more personalised, more convenient. But it’s not just about making sure we tap into the broadest range of data available. Timing is very much a factor, perhaps the most important. Instant access to data is required to make the fairest, most accurate decisions.

When we consider how much change we’ve all gone through in the last year or two, financial data that is 18 months old is likely to be very outdated, and the quality of customer data will degrade quickly over time. We need to work with the freshest data to make sure the end product is one that consumers will want.

Ultimately, consumers will pull us in the direction they want to go, no matter how much we think we can ‘push’ new products and services to them, adoption is down to the customer. Creating emotional finance – a connection through loyalty and context is key – embedding finance to make things convenient is not, on its own, enough.