2023

Like many places, Latin America has seen the dramatic rise of e-commerce, accelerated by the pandemic and subsequent lockdown measures. This has been accompanied by the increasing use of alternative payment methods (APMs), such as eCash, digital wallets, and bank transfers. All of this makes Latin America an attractive market for merchants. But a key question is whether these changes in consumer habits will endure in the long term?

by Gustavo Ruiz Moya, CEO of eCash for Latin America and Global Head of Open Banking, Paysafe

With a view to better understanding consumers’ payment habits in the region, Paysafe commissioned a survey of 3,000 consumers across Brazil, Chile, and Peru in April 2022.

Our survey paints a positive picture when it comes to how long-term this opportunity really is, with 74% of respondents in the Lost in Transaction survey saying their payment habits have changed permanently since the start of the pandemic.

This means it’s an exciting time for consumers and merchants. Access to the internet and e-commerce through mobile phones is growing, and different ways to pay are driving greater choice and inclusivity for consumers. Merchants can now look slightly differently at a region that might have seemed prohibitive in the past due to a lack of local knowledge and partnering opportunities, as well as payment hurdles and difficulties of cross-border transactions.

Latin American countries’ increased digitalization its support of instant payments against the backdrop of a population which is keen to adopt APMs (63% had used a digital or mobile wallet, eCash, or crypto in the last month) has made this a market with huge potential.

Driving greater inclusion through e-cash

Although there are many differences between one Latin American country and another, demographics, banking environments and regulations, and payment preferences, to name but a few, there are also some common characteristics. This includes a general tendency toward an informal economy with a large unbanked population – 45% according to the World Bank. Also, a preference for cash over debit or credit cards, largely driven by the turbulent economic climate over the last decade, access to credit, an air of mistrust of the economic system, and high fees and interest rates of debit and credit cards.

In this environment, alternative payment options are drivers of financial inclusion. Consumers avoid high fees, they conveniently pay in their neighbourhood merchants, no need to go through complex application processes, there are no credit checks, and they don’t have to share a load of sensitive information online. It’s just a better overall experience for the cash-preferred customers.

So there’s no surprise that the use of e-cash is on the rise in Latin America. Our findings tell us that 20% of respondents use e-cash more frequently than they did a year ago, with 17% saying they use it about the same amount as a year ago. Our survey also gathered responses from 8,000 consumers across the UK, US, Canada, Germany, Austria, Bulgaria, and Italy, and it highlighted more use of eCash in Latin America with 15% saying they used eCash in the last month compared to 9% across Europe and North America.

Security ranks top for consumer concerns

Alternative payment methods such as e-cash, Pix, and QR-code-based services have been increasingly popular over the last couple of years in Latin America. Although reasons such as convenience, simplicity, and speed are good indications of why we have seen this uptake, it also highlights concerns around the security of financial information.

In our survey, 45% of consumers said security is the most important factor when choosing how to pay for online purchases. Further, 66% don’t feel comfortable entering financial details online and 78% are more comfortable using a payment method that doesn’t require them to share their details with merchants.

Payment methods such as eCash remove the need to enter financial or personal details online, giving people access to e-commerce in a way that makes them feel secure. We can also see that 38% of Latin Americans feel they don’t know enough about e-cash, while 21% would use it in the next 2 years if it becomes more widely available. So the key to wider acceptance and uptake is at least in part about understanding alternative payment options as well as how they work. With greater awareness, combined with increasing smartphone adoption (81% by 2025, as mentioned above), e-cash is likely to become a more everyday payment choice across the region.

Cost of living, credit, and crypto

In terms of more general payment trends, the cost of living has had a significant impact on Latin American consumers’ choice of payment method for online purchases, with 63% saying they’ve changed the way they use certain payment methods, compared to 36% in Europe and 39% in North America.

This indicates a willingness to adapt payment habits to circumstances, whether that’s trying to avoid high fees or interest rates – of those who have said they’ve changed their habits, 63% are avoiding using pay-by-instalment plans. Or opt for a method that doesn’t involve credit – 58% are using their debit cards more often, while 45% are using direct bank transfers more regularly. Digital wallets have also seen fast adoption: 35% of consumers say they use them more often as a result of the rising cost of living. And 27% are using e-cash more often for the same reason.

Finally, crypto is starting to gain traction with 8% using it more frequently as a payment method compared to a year ago.

In summary, what once might have seemed a difficult and complex market to enter now presents a rich opportunity for businesses outside Latin America, especially for online merchants with virtual deliverables. It really can be as simple as choosing the right provider with a well-established presence ‘on the ground’ and the regulatory requirements in place to get instant access to local payment networks.

The overdraft landscape in the US is at a watershed moment, with banks and credit unions alike taking action to lessen customer impact from overdraft and NSF penalty fees. For a long time, overdraft fees have been ‘in the shadows,’ often perceived as a penalty fee disproportionately applied to those who can least afford to pay.

by Jody Bhagat, President of Americas, Personetics

Market forces and regulatory pressure are moving the industry in a positive direction, and it’s encouraging to see the industry’s rapid response to lessen penalty fee impact with a range of customer-friendly approaches to overdraft response.  The range of response thus far can be characterized by the 4P’s:

Policy: Eliminate overdraft fees (Capital One, Ally, Alliant)
Price:  Reducing or eliminating overdraft or NSF fees (B of A, WFC)
Process: Changes to accommodate grace period or negative buffer (PNC Low Cash Mode)
Product: Creative enhancements to address the majority of situations (Truist One, Huntington Stand By Cash)

The next breakthrough in overdrafts for the industry is to address the 5t P: Proactive.  Proactive cash flow management helps anticipate and resolve overdraft situations prior to occurrence and allows for tailored customer treatments.  Rather than determining which fees to reverse, banks can focus on what tailored treatment can help this customer address a future overdraft condition and improve their financial wellbeing in the process. What if overdraft response was something that your institution was excited to promote to customers, in a way that puts the customer at the centre of the conversation?

Rather than simply a defensive move, forward-looking institutions can use this moment as an opportunity to reinforce a customer advocacy approach, where the institution becomes a trusted advisor. With inflation at a 40-year high and many families struggling with cost-of-living pressures, it’s more important than ever for banks to support customers and improve their financial wellbeing.

Here are a few reasons why overdraft response can become a bigger source of differentiation and competitive advantage for financial institutions.

Data is king: A new opportunity to understand your customer

Before you can solve overdraft conditions, it’s important to understand which customers are vulnerable to overdrafts, and what is the root cause. Overdraft conditions can become a moment of opportunity to take a closer look at what is happening in that customer’s life, and engage with the customer in a meaningful, personalized way.

Financial institutions are taking a closer look at which customers are most likely to overdraft, and why. By leveraging advanced data and analytics, banks can proactively engage the 4-6% of customers who overdraft on a monthly basis.

From our analysis, we found four common personas experiencing overdraft situations:

1. Paycheck to Paycheck: Jim is experiencing multiple cash flow crunch situations every quarter and overdrafts repeatedly. Jim’s income may be volatile or barely enough to cover expenses.
2. Hardship: Martha has experienced a recent hardship (e.g. income loss or significant medical expense) that is likely to create a near-term overdraft situation and a running up of credit lines.
3. Mismanaged Timing: Tom has mismanaged the timing of their deposits and payments for a given month, resulting in an overdraft condition.
4. Affluent Mistake: Jen has plenty of deposits with the bank but unwittingly got caught in an overdraft condition with an account.

Identifying your customer profiles and the context of each overdraft situation can help banks provide the right solution and support for each customer’s financial circumstances. By cleansing and analyzing transaction data, banks can readily understand the context of the overdraft situation. With advanced data and analytics, the bank can identify customers who are at risk for overdraft conditions, and proactively provide treatment options to support the customer’s financial needs, such as an overdraft protection solution with a connected savings account, or a short-term line of credit.

Context is queen: providing tailored treatments for overdraft at scale

Instead of just a penalty fee, overdrafts can be a way to better understand the individual customer and improve their financial well-being. By proactively engaging customers on cash flow issues, banks can reduce the number of overdrafts and negative balance situations and build stronger relationships, leading to higher customer satisfaction and loyalty.

By modelling customers’ cash flow patterns and applying a “robust” balance forecasting algorithm, banks can analyze customers’ historical, scheduled, and patterned activity to accurately identify when they are likely to have a low or negative balance prior to their next likely deposit. That way, banks can help anticipate a customer’s liquidity issues, determine why it is occurring, and proactively provide options to address the situation.  Through back testing of our model, we’ve found that we can accurately anticipate approximately 70% of overdraft conditions.  With this kind of knowledge, banks can unleash their creativity in offering treatment conditions based on the customer context and the likelihood of overdraft.

Building deeper customer relationships

Overdraft fees have represented a meaningful amount of net income for banks (6-7%) and some have been reluctant to forego that revenue. However, a customer-centric overdraft program could be an even more sizable opportunity for financial institutions by deepening customer relationships

Over the coming year, we’ll see more banks leaning into their overdraft response and seeking a more proactive solution along with reactive actions. Forward-leaning institutions will look at it not as a defensive move to avoid regulatory scrutiny, but as part of a broader proactive approach where the bank operates as a trusted advisor that helps people with their money management.

The time for banks to act is now. As inflation and the cost-of-living crisis rage on, the institutions that adapt their policies with customers front of mind will not only help to improve financial health, they’ll gain lifelong customers in return.

“UK FinTech is in a great place,” said John Glen; the Economic Secretary to the Treasury as he announced measures last month to make the UK a global hub for crypto.

by Joe Jowett, CEO and Co-founder, StrikeX

But the question is whether the actions promised by the UK Government will match the warm words he delivered to an audience of FinTech experts during the Innovate Finance Global Summit in London earlier this year.

If not, the UK’s leading position in crypto could be lost to more favourable jurisdictions.

Sentiment and perception

The UK is home to around 2,000 fintech companies; and London, a melting pot of entrepreneurial minds, financial expertise, investment capital, technology skills and regulators, is second only to the USA as the highest-ranked fintech ecosystem globally.

As part of that, the crypto sector is growing rapidly. One forecast suggests it will grow by more than 7% a year to be worth $2.2 billion by 2026. So, with a highly-skilled, tech-savvy workforce, attractive business and regulatory environments and a flexible labour market, the UK should be in a strong position to capitalise, with sophisticated jobs such as blockchain engineers and cryptocurrency developers.

But, so often in emerging sectors, sentiment can make an enormous difference in how people perceive things.  Crypto entrepreneurs and investors – and the decisions they make – will be influenced significantly by the policymakers of the countries in which they do business.

Last month, the Governor of the Bank of England said that cryptocurrencies were the new “front line” in criminal scams, saying the technology created an “opportunity for the downright criminal.”

Contrast that with countries which are bending over backwards to welcome crypto entrepreneurs. Switzerland has perhaps gone the furthest passing blockchain laws and licensing two crypto banks, while Dubai is racing to become a haven for the global crypto industry by offering virtual asset licenses.

The US is making surges too, with President Biden recently ordering the most wide-reaching effort by the federal government to study and potentially regulate cryptocurrencies – an initiative that could see regulators closer to permitting spot cryptocurrency ETFs on the US markets.

In this context then, it’s not surprising that some commentators have suggested the Government’s moves to keep the UK as a leading global crypto hub lag behind many other nations.

The UK’s position

To attract companies, entrepreneurs and investors keen on crypto, the UK needs to commit to investment in a regulatory framework that fosters the national crypto economy and safeguards it without hindering innovation.

The most eye-catching of the Government’s announcements last month, at least as far as the headline writers were concerned, was commissioning the Royal Mint to produce an NFT which will be available by the summer. The Government heralded it “an emblem of their forward-looking approach.”

But beyond that, there were actually some positive moves. This month, the first of several meetings between industry leaders and the FCA, called “crypto sprints” will allow the industry to work with regulators to drive the shape of future regulation. They will also work on a project looking at the legal status of decentralized autonomous organisations (DAOs).

There are moves to look at existing laws governing electronic money which will be adapted to include stablecoins, bringing them within the remit of the FCA and thus paving the way for them to be used as a form of payment.

Finally, blockchain technology, a sector growing so rapidly that the UK simply cannot afford to ignore it. The UK government has announced it will explore the use of Distributed Ledger Technologies (DLTs) in financial markets,  create a financial markets infrastructure sandbox and consider using DLTs for sovereign debt instruments.

Welcome steps

From the emergence of Silicon Roundabout in the early noughties to the UK being a global tech powerhouse today – recently valued at more than $1 trillion – entrepreneurs, investors and industry have demonstrated their appetite to use the UK’s attractiveness to international talent and finance to transform it into a hub where nascent technologies and ideas can be transformed into world-class tech businesses.

Crypto is the next step in the UK’s continued growth in digital and technology, it is essential that a world-class infrastructure is built with regulation proportionate to the risk, to boost the modern 21st-century economy and allow crypto to thrive.

International trade is an important engine in driving inclusive economic growth. But the reality is that many small and medium-sized enterprises (SMEs) have trouble accessing affordable trade financing. With ESG at the forefront of everyone’s minds, making a societal impact that prioritises people and ensuring that entrepreneurs in developing countries are not left behind is important in creating a sustainable future for trade.

by Carl Wegner, CEO, Contour

Trade finance facilitates the import and export of goods, a crucial part of how international trade and commerce happens. But for small and medium-sized enterprises (SMEs)—among the major contributors to jobs creation and economic development—this is where it gets complicated.

The biggest challenge to SME growth is access to finance. Addressing this is an important piece of the puzzle when it comes to closing the $1.7 trillion trade finance gap, a gap that is even wider in developing markets. The availability and cost of credit make it hard for SMEs to finance their future, especially for those that are involved in international trade.

Women-led SMEs have an even harder time accessing trade finance. The International Finance Corporation (IFC) estimates a $1.5 trillion finance gap for women-owned businesses in emerging markets. The IFC’s Banking on Women business has deployed scalable solutions with partners to enable the financial sector to better serve women-led SMEs. As of June 2021, it has mobilised and invested over $3 billion in financial institutions specifically to finance women-led businesses.

Larger global banks have traditionally looked past the SME segment, as the economics did not make sense. But this is changing: fintechs are making trade finance easier and more efficient, by simplifying, streamlining, and synchronising the data.

Advancing the digitalisation agenda for SMEs

The following are three ways that fintechs help advance the digitalisation agenda for SMEs.

First, for SMEs which need to import or export raw materials or finished products, there is an advantage in automating this process. Whether it’s the cost of acquisition of a customer or processing of information, fintechs can help consolidate and digitise the data for the bank to decide on risk levels.

As a fintech, we can get data into the bank more efficiently, allowing the bank to execute more transactions. If you think about it, the paper process for a $5 million transaction is almost the same as that of a $5,000 transaction.

For example, the Letter of Credit (LC) is one of the most traditional and complicated parts of the trade process. With four to seven players involved in the transaction, there are stacks of documents involved and a lack of transparency in the way LC transactions are conducted. By automating the process, the barriers to entry are lowered for SMEs and local banks.

Second, the accuracy of data is increased when the entire transaction is electronic. From the financier’s perspective, it provides better clarity on the documentation details. In addition, when this is done on the blockchain, the information can be verified earlier and consistently in the process, thus lowering the risk as well as the cost of processing.

Finally, internet accessibility is a way of democratising the data flow to banks and the financial system. With internet access already a key target for economies to achieve, unbanked SMEs or micro-SMEs can enhance their efficiencies by going online.

Designing a more equitable future

When it comes to the future, fintechs continue to innovate to ensure their ecosystem remains efficient for SMEs. There are existing services that can be digitised, as well as different services like guarantees and standby LCs. In addition, there are opportunities to pioneer new ways of managing data.

Designing the trade finance network of the future is a challenge but ensuring that SMEs are included is a crucial piece of the puzzle to help them be part of a future where they can survive and thrive.

Many view their Customer Relationship Management (CRM) as a kind of digital address book – a place to store commercial data and client information. But to view this valuable piece of technology in such a way is highly limiting, in reality a CRM’s capabilities exceed far beyond that.

by Matthew Harrison, Sales Director (Broker Channel), finova

Your CRM should be a dynamic feature of your business that saves you time and actually makes you money, for example in the retention of clients and by freeing up your diary of manual tasks so you can focus your efforts elsewhere. Ultimately, if you are spending more money on the system than you are earning from it, then you are probably not using it to its full potential.

A source of profitability

So, how can your CRM enhance profitability? Firstly, the way CRM software organises individuals’ records should give you a more accurate understanding of the client relationship, equipping you with important information to improve the productivity of conversations. But it can also work in more advanced ways. CRMs can analyse swathes of data, gathered from a wide range of sources, to give you an insight into how a client is feeling about your company. That can make it easier to anticipate potential issues and solve them before they arise. The data presented to you in digestible reports should help increase customer satisfaction, retention and, ultimately, profits.

Features within the CRM system, like management information, can also offer you more sales opportunities. The software can identify clients who may benefit from remortgaging, for example, or automatically send clients emails when their deals are about to come to an end. CRMs are excellent for spotting cross-sale opportunities too. This is because the technology can sift through client data to highlight those who may require further coverage. Who, for example, has taken out a mortgage but not protection? Who has both a mortgage and protection, but not general insurance? Your CRM can answer these questions for you, and help you improve your marketing and customer outreach. This is just one example of how automated processes within your CRM can open up new business opportunities.

Leads and referrals

CRMs are also a valuable tool for managing leads and referrals. There are tools that make it easier for introducers to refer new clients to you, while automatic commission notifications or updates regarding the status of introducers’ leads can help build a positive relationship. This software makes the referral process smoother and more profitable for introducers, improving general productivity. And better management of introducers equals more leads and higher profits.

Furthermore, CRMs are crucial if you wish to integrate referral programmes into your sales systems. Built-in referral options mean generated leads are sent directly to your CRM for servicing and management, and notifications are automatically sent to both the person referring and the person who has been invited. CRMs can also quote potential clients automatically so that they know how competitive your price is from the start. In this capacity, these tools can assist not only in generating more leads but in capitalising on leads too.

Data protection

Choosing the right CRM, however, is significant. It is especially important that due diligence is adhered to when picking a CRM. After all, it’s your data and your client’s data, so it needs to be secure. It is essential that you ensure the software is GDPR compliant, and that you understand where the data will be stored and how it will be secured. You should also determine how viable the CRM provider is: are they likely to go bust? If they do, what happens to your data? While company longevity is important, these worst-case scenarios should be accommodated.

Furthermore, the CRM should be the hub of your business, so choosing software which is easy to use is crucial. Especially for smaller firms, the CRM should be running much of the business for you and speeding up processes dramatically. Those which offer integrated third-party sourcing, for example, help cut down on re-keying. Automation within certain CRMs can ensure cases progress and prompt the sales team on crucial chase dates or events. Choosing the right CRM – with the automated features most appropriate for your business – will free up more time for you to focus on what matters to your business, such as giving great advice to clients.

CRMs are a vital tool that should be playing a central role in your business. If the right CRM is chosen, and if its features are deployed to maximum effect, then profitability will be demonstrably improved. To only use a CRM as an address book and not utilise its functions across your entire business is an extremely costly mistake to make. When used correctly, a CRM is an investment which not only pays for itself but unlocks additional channels of income for your business.

The acceleration in digital transformation and digital adoption across all industries has raised customer expectations over the last few years. The way customers want to pay for or access services has changed for good, so insurers, just like all those in financial services, have to meet those expectations to stay competitive.

by James Turnbull, Chief Digital Officer at Reassured 

Consumers were already getting used to a smarter, more personalised service thanks to the rise in technology, but the pandemic, with its need for arm’s length interactions, fast-tracked the need for service providers to offer that service.

It’s apparent that greater adoption of fintech and innovation in the insurance industry is needed, both to keep up with changing customer expectations and ensure that the customer always remains the first priority.

How does the insurance sector measure up?

There are plenty of industries where embracing and benefitting from fintech is the norm, but arguably insurance is not yet one of them, having lagged behind its counterparts when it comes to embracing new technologies and adapting to changing customer needs. This includes the way in which we can now buy most products and interact with service providers so quickly and seamlessly online.

The stereotypical view of insurance may well be that of a traditional, paper-heavy industry that’s not known to keep pace with technology, but that doesn’t have to be the case. Figures from PWC demonstrate that almost half of the industry globally claims to have fintech as an integral part of corporate strategy. However, only 28% of industry players look at partnering with fintech organisations, and only around 14% actually participate in fintech ventures or incubator programmes.

But with many insurers beginning to introduce online platforms offering a “buy now” option for their products, it is clear that a shift is beginning to take place. Insurance brokers need technology to maintain their competitive edge, and if they don’t embrace fintech to better meet customer needs, they will lose out to those that do. Moreover, the rise of challenger banks has also put increasing pressure on traditional institutions in the financial services sector, who now need to strategise how they can compete and retain their market share.

Using FinTech to meet customer needs

The goal of insurers is to broaden the pool of people that have access to protection, and fintech is the only way to achieve that in today’s digital world. The way the industry sells insurance should be the result of how the customer wants to access these products, not the other way around.

Some customers are looking for advice to make sure they get the best product, and there is tech out there that can ensure they get directed to this channel, should it be best for them. Other customers just want a simple out-of-the-box policy that they can buy quickly and easily, with at least some elements of self-service.

Technology can help, giving customers, access to a tailored comparison of life insurance products based on their answers to a single set of underwriting questions, and then offering an efficient and straightforward “buy now” capability.

Giving customers the choice that best suits them offers the flexibility that consumers need and gives insurers a real opportunity to increase revenue and even diversify further still.

And that’s just the start. Creating an omnichannel approach using fintech is key to responding to changing customer needs and ensuring these needs are put first. Digital technology makes life easier for consumers, and they often have their own preferred method of dealing with service providers. Access to a basic website is no longer enough, people expect live online help, mobile apps, and more. Moreover, the adoption of fintech at policy level can enable insurers to use app technology to collect data (for example, vehicle or health insurance).

What’s next for fintech and the insurance industry?

The most successful insurers will be those that offer the fastest, most efficient customer journey all the way from the initial quote to full cover. If customers are able to choose and buy their insurance online, they don’t want it to take upwards of 60 clicks to get to the final, fully underwritten decision.

Insurers will need to offer a full omnichannel approach to meet customer demand for a connected experience across multiple channels. Consumers are used to being able to choose their preferred method, or methods, of interaction with retailers and service providers. They’re also used to being able to switch channels and continue the conversation or process seamlessly, without having to start again from the beginning.

There is still a long way to go, but there’s no doubt that the role of fintech in the insurance sector will continue to grow. Fostering a truly omnichannel approach to the way consumers buy insurance provides a vital way forward for the industry, and, ultimately, it will ensure more people are better protected.

As more Covid restrictions lift around the world, there has been an inevitable fresh frenzy of opinions shared over the role the office will play in the future working world. But for wealth managers, another more pressing hybrid working scenario is front of mind: to what extent will client relationships return to direct and in-person interactions, and how do client preferences on this pressing issue differ across the wealth continuum?

by Mark Trousdale, Chief Marketing Officer, InvestCloud

In this business of relationships, the white-glove service traditionally demanded by high-net-worth individuals (HNWIs) might seem like a harbinger of a return to the more traditional routine of face-to-face meetings and phone calls. But don’t be so sure.

After two years of tumultuous change, the expectations and preferences of how the world’s most affluent want to engage with their wealth managers and financial advisors have shifted dramatically – and had been doing so for some time before. Already many HNWIs used online banking and enjoyed the convenience of digital tools in other areas of their lives, across the age spectrum. And the shift to digital accelerated by the pandemic seems only set to increase amid the mind-boggling $68 trillion baby boomers are expected to pass on to younger, more tech-savvy generations. Add to this a greater emphasis on transparency and a desire to play a more active role in their investments – including to invest differently as the ESG movement takes off – and it’s clear HNWIs today want a much more personalized and intuitive digital experience from their wealth manager.

So how can wealth managers and advisors translate the same high-touch offline experience into the digital arena, and what advantages can this bring to their business?

Remodelling the digital experience for HNWIs

The conflation of the broad possibilities of digital advice with the more narrow purview of Robo advice has led some to discount digital for certain segments of the industry. Some try to discount the importance of digital because it is often thought of as only catering to the mass market – for example, pointing out that simple onboarding questionnaires create a one-size-fits-all approach that can never meet the sophisticated needs of HNWIs. But this misses the broader capabilities of digital.

We need a new model for how clients can interact with their wealth digitally – one attuned to their unique needs and preferences. This is critical whether you look at excellence in client communications or planning. And indeed it’s as much about flexibility in the experience and understandability (intuitiveness) as it is about reflecting that you understand and share the feelings of your clients, digitally. This is what is called ‘digital empathy’. The future of wealth management relies on this, particularly because it is true for all levels of wealth and especially so for HNWIs.

To achieve digital empathy for excellence in communication and planning, wealth managers need to recognize and deliver digital solutions to suit a range of unique digital client personas that go far beyond traditional wealth segmentation by age, gender, wealth and the like. They should incorporate characteristics such as financial interests, ESG values, digital savviness, approach to digesting information and appetite to set life goals. This means portfolios and products – and equally digital experiences – are fit around the client and not the other way around.

For instance, many HNWIs are increasingly demonstrating the desire to be increasingly involved in their investments. With deep knowledge and interest in financial markets, they want to play a more hands-on role in their investments – and align them to their values. They may want to sign off on all investment decisions or have a portion of funds to tinker with themselves. Educational tools rather than overly managed or advised solutions will speak best to them, helping them build investment models or recommend different products to try. But chat, video calls and other digital communication channels to their financial advisor should remain open when needed. The key is that they call the shots.

Other HNWIs – though increasingly fewer – may want a more traditional approach. These might still like to receive PDF reports – which can certainly be done more efficiently digitally using publication to a client portal. They may check their investments online but need the reassurance of speaking to their advisor in person or on the phone before making decisions.

It’s about picking the right model for the right client. Equally, it’s not about supplanting human advice outright but supplementing and enhancing it with what’s possible in digital.

End-to-end financial planning

Everybody needs a financial plan. That’s true no matter your level of wealth or life stage – whether that’s saving for a house, your child’s education, buying a second home or managing cash flow. But the fact is that HNWIs have more nuanced financial complexities to contend with – from tax, real estate and cash flow management to business succession planning – that require the specialist know-how of a financial planner armed with the right digital tools for maximum operational efficiency.

The problem is this service to date has been very fragmented. A financial planner would produce a comprehensive and lengthy plan and may recommend a private bank to help implement it, but the burden ultimately fell back on the HNWI (hardly a white-glove service). But in a digital environment, this process can be much more joined-up; an advisor can build a bespoke plan and, in the same stroke, recommend complementary products and solutions to help clients achieve their financial goals. All while communicating effectively about the plan. This is much more seamless, convenient and understandable for end clients.

Increasing client engagement at scale

HNWIs are often considered wealth managers’ most prized and sought-after clients, but increasingly they are not the most lucrative. According to Capgemini, while HNWI wealth is up over 70% since 2008, profitability has decreased for wealth management firms. They may bring in vast sums of wealth to manage, but servicing this is often very labour intensive and squeezes margins. And this means all the best client engagement in the world could still fail to support the business.

Identifying high-friction automatable workflows is the first step to achieving high-quality service at scale – processes like prospecting, onboarding and cashflow forecasting. The second piece of the puzzle is to partner well to benefit from intelligent digital tools to enhance operational efficiency. It’s a decreasing but still fairly commonly held false belief that advisors need to be the best at building technology. Whereas the truth is they need to be the best at advice and wealth management and partner well.

A great example of automation is the operational efficiency that AI-driven Next Best Action recommendations can bring to the industry. Machine learning trained on client data can provide key insights into how clients interact with their wealth online. Marry that with automated research analysis using natural language processing and AI, and advisors can quickly start to generate custom recommendations for products and actions in a client portfolio that are as personalized as clients really expect top-notch wealth managers to be these days. This means that advisors can intervene and engage with clients efficiently by knowing exactly when and how to give the best advice.

We are still just on the cusp of seeing how digital tools like these can help propel the wealth industry forward. Wealth managers should embrace this and not harbour any preconceived notions that their HNWI clients are eager to return to the old ways of interacting. It is about planning, communicating, and implementing the right hybrid mix of advice that best fits the client while always looking for opportunities to harness the greater degrees of personalization now possible in digital. That is the level of service clients expect. And luckily, it doesn’t have to come at the cost of scale.

API (Application Programming Interface) traditionally pertains to the tech interface between software programs. This interfacing ability facilitates a third-party application, to synchronise and connect to a bank’s tools and services.

by S Anand, CEO, PaySprint 

API banking refers to a set of protocols that makes a bank’s services available to other third-party companies via APIs. This helps both banks and third-party companies augment their complementary specialities and offerings more than they can provide to their customers by themselves.

What is Unified open API ?

Interconnection is the essence of this era of information technology. Behind every single interaction in the Internet, the APIs operate as worker bees to ensure that data gets exchanged in an agreeable format between the servers and the users. As organizations opened up and started adopting the internet everywhere, creating a solid integration strategy by choosing the right API became mandatory.

Today, rampant digitization and deep penetration of social networking across industries have pushed several key service providers to devise APIs on their own. So, enterprises are caught between investing in evolving APIs to manage technological disruptions and ensuring that they have operational expenses under control.

Unified API- All under one roof

To address the exponentially increasing complexity of bridging a diverse spectrum of systems and to enable businesses to gain a competitive edge in the market by letting them access every tool of their choice simultaneously, the concept of Unified API was discovered.

Unified API is a customizable layer over the middleware that acts as a point of integration for all the data sources, APIs and services across the market. This mid-level interface enables an enterprise to view the rest of its resources via one giant peephole thereby decreasing operational complexities and empowering them to avail of the best of services within drastically reduced integration expenses.

Unified API for Modernized Digital Architecture

Increased competition, improved tools and integrated methodologies have made DevOps the holy grail of modern project development plans. Continuous Integration, one of the important aspects of the successful adaption of a DevOps lifestyle, mandates the projects to have a shorter turnaround time between code fixes and a version release.

Banks continue to be the custodian of the customers and the various products and services whereas fintechs create Open Unified API’s platform which can lead to larger adoption of banking services and thereby cause larger customer adoption, interface and Delight.

Unified API improvises architecture digitisation for Banking solutions as follows.

• Reducing Time to Market: Unified API allows the project teams to have a greater reflex for technological disruptions as the layer allows easier addition and deletion of APIs. Unified API thus serves as an effective pit stop that accelerates the integration of various banks at the same time and enables faster product releases into the market.

• Ensuring uniformity: Unified APIs bring programs of different styles under one roof by tying them together with a common base. This uniformity promotes code sharing, reduces the compatibility complexities and ensures a uniform layer of security amongst various banks and partners irrespective of the protocols and programs.

• Improving Data Analytics: Unified APIs are designed to allow and process data from and to customer touchpoints into the systems through a single medium irrespective of the Bank. For retailers and enterprises that thrive on user data, this easier collaboration of data streams would ensure better analytics and improved personalization for their users.

• Improving Scalability: The very concept of Unified Banking API promotes greater flexibility to scale as per the needs of the enterprise. This also allows businesses to innovate on the go without having to worry about the increase in integration or maintenance costs. The layer also creates more room for rapid 3^rd party integration to customize and accommodate the growing demands in the market.

The other factors which have a major impact on how Bharat Transacts and is the core are JAM

J – Jan Dhan account – Today 90% of the eligible Indians have a Bank Account

A – Aadhar – More than a Billion Indians have Aadhar cards

M – Mobile or smartphone penetration is close to 450 million and expected to be 800+ million in the next two years

The above three along with good data connectivity have only empowered the greater importance and need for a Unified Open API.

Unified Open API has come as a boon to entrepreneurs, start-up companies, MSMEs, and enterprises by reducing time to market, ensuring uniformity, improved data analytics & improved scalability. They have been able to innovate and create sachet financial products, especially for customers in Bharat. They can spend more time innovating a product and working on GTM (go to Market) plan rather than worrying about the backend connectivity which the Unified Open API offers seamlessly.

The JAM, better data connectivity and Unified Open API is changing how Bharat transacts and these are proved by growing numbers of Digital Banking. By 2025, it’s estimated the volume and value of digital transactions in India will reach 167 billion and INR 238 trillion respectively and here Bharat will drive this growth.

When people talk about mutualisation, minds often jump straight to ideas around cost savings and operational efficiencies, and of course these are core benefits – managed services providers can leverage economies of scale for their clients. This transformation model has become much more enticing for financial services firms operating in today’s landscape of complex and constantly evolving regulation.

by Samir Pandiri, President of Broadridge International

However, the concept of mutualisation has evolved and is no longer simply a case of lifting out the non-differentiating operations of a business. Instead, more firms are realising that mutualisation also means shared access to cutting edge next-generation technologies, including AI, blockchain, the Cloud and digital. Each of these technologies is helping to drive much-needed digital transformation across the financial services industry, and many firms are starting to see the fruits of the innovation they can bring.

In Broadridge’s 2022 Digital Transformation and Next-gen Technology Survey, we asked 750 C-suite executives and their direct reports globally on the sell side and buy side about their firm’s digital transformation. The survey explores the financial, operational and strategic benefits of digital transformation, and charts the digital maturity of firms of different regions, sizes and sectors using Broadridge’s Digital Maturity Framework.

Here are some of our key findings:

APAC is leading the way

Broadridge’s report found that Asia Pacific has a higher percentage of firms categorised as digital transformation Leaders (23%). Reasons for this could include access to digital talent, and less stringent regulations than other regions, particularly around the use of data.

However, a shift may be coming. The report found that a higher percentage of firms in North America (57%) are accelerating the pace of change of their digital transformation and next-gen technology strategy, in comparison to APAC (44%) and EMEA (38%).

Variations in digital maturity by sector

The report also highlights emerging gaps across different financial services industry sectors when it comes to digital transformation. Scoring highest in Broadridge’s Digital Maturity Framework are asset managers, who were found to have the highest percentage of Leaders and the lowest percentage of Beginners.

Universal banks and full-service financial institutions came in at a close second – with two fifths of those surveyed achieving Leader status (40%). There was a strong correlation between firm size and digital maturity, and as full-service firms tend to be larger, it is not surprising that they scored more highly for digital maturity. This could be down to economies of scale and bigger firms having a larger revenue base to spread the cost of innovation across. Regardless of the causes, this finding suggests that smaller and mid-sized firms need a clear strategy in place to keep up with the pace of change set by the Leaders.

Some sectors, such as insurance, were found to be very evenly spread across the different maturity levels. However, at the other end of the spectrum, there were very few digital Leaders among the wealth management firms surveyed (13%), and interestingly the majority of retail banks were found to be digital transformation Beginners (54%).

Improving customer interaction is the top priority

While firms of different sizes, sectors and regions may all be at different stages of digital transformation, it was interesting to learn that the key drivers for adopting next-generation technologies are the same. Nearly three quarters of those surveyed (74%) cited enhancing customer interaction as a priority area for digital transformation, followed by improved operations (64%) and sales and marketing (62%).

When it comes to crafting effective digital communications for clients, both Leaders and Non-leaders said that personalising the experience matters most when it comes to the communications that they send. Most Leaders were found to be in the later stages of offering micro-personalised communications, with 38% at an advanced stage and 53% at a mid-level of implementation.

The pandemic played a role in this acceleration, with customers relying more on the digital communications they receive rather than face-face interactions. Technologies such as AI, predictive analytics and machine learning are also increasingly able to facilitate the hyper-personalised solutions that clients are looking for.

Uncovering the true value of digital transformation

For Non-leaders, there can be a number of obstacles when it comes to accelerating their digital transformation strategy. One example is data management and analysis. Many firms are still grappling with creating centralised data models with access to data across siloes. As a result, more and more firms are turning to external providers to gain access to specialised expertise, resources and data visualisation tools (48%).

Other key challenges firms face include access to digital talent, modernising legacy IT infrastructure and lack of an effective roadmap for innovation. However, firms with insufficient resources for an internal innovation function do not need to be left behind. Instead, they can leverage the benefits of a wider ecosystem through the support of FinTech providers.

This approach offers a reliable source of innovative solutions, expertise, data and platforms built on next-generation technologies. In fact, we find that even firms with mature internal innovation functions frequently benefit from external thinking, and new products and platforms that FinTechs can provide.

In conclusion, while there are many challenges to becoming a digital transformation leader, we know it is well worth the investment. Broadridge’s report found that Leaders are 1.5 times more likely to report increased revenues from digital transformation. This is because it drives significant performance improvements across the entire front- to back-office lifecycle, including better fraud detection, enhanced customer experience, streamlined operations, and improved trade and investment analysis. All these improvements will lead to greater customer loyalty, and so it is vital that all firms evaluate their current digital transformation roadmap, and ensure it is fit for purpose to achieve the results they are aiming for in 2022 and beyond.