In the payment world, the change wrought by the pandemic has been stark. More of us are using technology to make payments in alternative ways. This has happened even amongst demographics that aren’t thought to be technically adept, with ECOMMPAY data showing that one in five (21%) 45 to 54-year-olds have increased their digital wallet usage during the pandemic, while more than half (51%) of over 55s say they have used a digital wallet.

by Paul Marcantonio, Executive Director UK & Western Europe, ECOMMPAY

This new normal is the result of major digital transformation – we’re all used to working remotely, shopping online, and using apps to prove our health stats, and mostly enjoy the flexibility and convenience these changes bring.

However, the change has had the side effect of creating prime opportunities for scammers and fraudsters, with these digital environments exposing us all to fraudulent activity at an increased rate. To give you a sense of scale, the UK National Cyber Security Centre revealed that it had taken down more scams in the past year, than it had the previous three years combined.

The impacts of a scam on a business can be significant, causing great reputational and economic damage. So, how can you protect your business from future payment fraud?

Ensure your staff have the right training

Cybersecurity software has come a long way. Modern programs, if used correctly, now offer protections against most digital attacks. However, fraudsters have realised this and now target people through their machines, using ‘social engineering’ techniques to get them to share confidential information. More than 95% of security breaches can be attributed to  human error, so it’s imperative that your staff have training to minimise fraud risk.

Training should include using relevant examples to teach staff about how scams take place and discussing how to identify fraud. It is also imperative that businesses ensure their staff are well versed on the internal processes in place to deal with fraud. For example, if your business chooses to ask for ID before accepting payment, then you should make sure that your staff are trained to follow that process.

Use the latest data-driven technologies

We are all prone to human error so modern technology goes a long way in helping prevent payment fraud. Machine learning software monitors transactions in real time, using innovative algorithms to help companies spot fraud earlier by scanning for signs of impropriety – such as inconsistencies in payment data. This is backed up by research – security software which applies artificial intelligence scoring to inbound transactions boast an average fraud detection rate of 97%.

In addition, it is worth adding a multi-factor authentication (MFA) process. Studies have shown that using MFA can reduce the chances of an account being compromised by an automated attack by 99.9%. By using MFA, you drastically slash the odds that another individual can gain access to your finances.

Finally, encrypting your transactions and emails will stop individuals manipulating or editing documents. There will be no chance of a recipient altering the information for fraudulent use.

Partner with a trusted payment provider

Partnering with the right payment provider will add an extra layer to your fraud prevention strategy and help to grow your business. Trust and safety factors are key, and will lead to increased sales, as customers are more likely to go through with a transaction if they recognise the payment processor as a trustworthy one. The right data-driven payment solution for you should strike a balance between conversion and security, helping your business to grow without subjecting your customers to undue risk.

Be sure to check if your payment partner has industry-recognised safety and security credentials, and reviews or testimonials. Likewise, check their fraud prevention approach. Do they use the technology listed earlier? Do they include human moderation? This could signal whether anti-fraud is a priority or not.

Payment fraud is a scourge for many businesses, and changes in the way consumers work and spend in the post-Covid world could make it worse. However, there are many things that you can do to prevent your business from becoming a victim. By ensuring that your staff are properly trained, using a reputable payment partner and keeping up to date with technology, you’ll keep your business one step ahead of fraudsters.

Open banking is finally gaining momentum some 3 years after the Second Payments Services Directive (PSD2) came into force. Momentum is building thanks to a combination of trends – technological advancements, maturing bank-FinTech partnerships, and wider acceptance of digital since the onset of the pandemic.

by Andrew Lawson, SVP, EMEA at Zendesk

In February of this year, for the first time in a single calendar month, more than one million open banking payments were processed in the UK – compared to 300,000 for the whole of 2019, and 3.2 million throughout 2020.

However, progress is still slow. It’s slow among consumers: active open banking users in the UK reached 3m in January 2021, far lower than the projected 33m by 2022. And the same is true for businesses – only 2% of financial services firms have met all their open banking requirements to date, while 69% have met half or less. With almost 9 in 10 respondents (88%) believing open banking will increase the number of innovative banking services available to customers in the next 3 years, the future of financial services hinges on this potential being realised.

The two biggest challenges cited were time and effort needed to maintain and preserve the integrity of data as well as limited capability to accelerate the development of quality APIs and API-driven features to market.

The industry tends to point to the consumer or the C-suite within banks to explain the lack of adoption. The ones who are so often overlooked, are the developers within FinTechs. As the creators and integrators of innovative services, they are pivotal in making open banking ‘happen’ but are lacking the support to do so. The most progressive businesses in this space have identified a new financial services customer segment: the developer.

Thinking developer-first

Thankfully, many organisations in the industry are already rising to the challenge and adopting a developer-first approach.

One example is FinTech start-up TrueLayer, whose open banking platform allows engineers, innovators and enterprises to securely and efficiently access users’ bank accounts to share financial data, make instantaneous payments and validate their identity. The company puts developers – the users who actually integrate its solution within its clients’ companies – at the heart of the service it provides.

In practice, this means rethinking a financial services firm’s customer experience strategy.

Digital is critical

Digital transformation means stepping away from legacy tools and channels. But at the same time, financial services firms must adopt the communications styles that most closely fit their users. To that end, TrueLayer’s Head of Client Care, Chris Brogan, said: “It’s developers who are actually going to integrate with our product and by servicing them as best we can, it means the onboarding process is as easy as possible for our client.”

Automate and alleviate

Requests for data, clear documentation and easy access to sandbox environments need to be available in real-time to support accelerated development cycles and iterations.

Artificial intelligence is essential for speeding up response times, reducing operational costs and more easily deriving insight from data in a way that lends itself to the rapid, iterative ways of working developers favour.

Developing the future of financial services

In the open banking era, ‘build and they will come’ can’t be the way we think about developer engagement. Although we’ve made major strides, with more than 300 FinTechs joining the open banking ecosystem and an increasing API call volume, there is still further to go – and what got us here, won’t get us there. It’s not enough to create the APIs and launch a sandbox.

Realising its potential requires true collaboration which can only happen if leadership teams within finance prioritise open and efficient lines of communication with the developer community. FinTech developers need instant and convenient access to the right support if they are to deliver the new services upon which the future of this industry rests. Only then will we move towards the open, integrated future of finance this initiative set out to create.

Implementing a next-generation customer communications management (CCM) platform offers the potential to tackle compliance and CX issues at the same time, enhancing accurate and responsive regulatory change management and empowering optimised customer journeys and omnichannel interactions, irrespective of any limitations in legacy systems.

by Daniel Harden, Financial Services Transformation Director at Paragon Customer Communications

Compliance and CX are two of the most important challenges facing the banking sector today. Though seemingly separate, these trials are not unrelated; regulation is, after all, intended to improve CX. As financial institutions seek to tackle both simultaneously, innovative technology holds the key.

Regulation is a significant challenge for the banking sector. In addition to new and ever more stringent compliance demands, regulators are increasingly taking enforcement action against non-compliant firms. In a clear signal of its determination to ensure compliance, between 2018 and 2020, the Financial Conduct Authority doubled the amount it spent on enforcement and tripled the amount it handed out in financial penalties to over £220 million. In 2019/20 alone, it issued 203 Final Notices and secured a similar number of enforcement outcomes.

Communicating regulatory change

A prominent feature of today’s regulations is about how banks inform customers of changes to their services and the timeliness of this communication. To ensure this is done in a compliant way and that the potential for customer harm is removed, organisations need effective governance and processes in place. Regulatory change management, therefore, must be both accurate and responsive; something that for many banks means rethinking and reengineering how regulatory change is managed.

Besides avoiding enforcement, banks that improve how they notify customers of regulatory change, and the promptness of communications can enhance CX. Today’s customers not only know their regulatory rights; they also expect excellent services. Banks that deliver on both improve the quality of the customer experience. In an era where switching banks is becoming as easy and incentivised as switching energy providers, this can help firms improve customer acquisition and loyalty.

The role of technology

The latest technologies offer banks new and effective ways to improve regulatory change management, with modern systems not merely cataloguing regulatory data, but using regulatory intelligence to streamline and automate processes so they are smarter, speedier and highly efficient.

A modern and intuitive tech stack, when managed correctly, can also form a cohesive eco-system architecture that unlocks the operational efficiencies and agility that make banks faster to market and more responsive to changing market dynamics and customer needs.

Unfortunately, the internal structure of some banking organisations and the legacy IT systems many still use can raise challenges when it comes to implementing these technologies. This is particularly the case where banks have compartmentalised compliance, marketing and operations departments, each with their own siloed systems and data, and individual corporate objectives.

The latest customer communications management (CCM) systems, however, provide a synergy of innovative technologies to overcomes these challenges. Able to unify data across different departmental siloes, they provide a ‘one platform’ approach that automates workflows for sign-off through departments without banks having to experience the disruption of structural change or the internal resistance that would arise from it.

In addition, these CCM platforms enable organisations to centrally manage both inbound and outbound customer interactions, allowing the mapping of customer journeys to ensure seamless interactions and consistent messaging, while helping to prevent vulnerable customers from falling through any gaps.

Modern CCM platforms are also advantageous for banks whose existing legacy systems hinder their adoption of newer, more advanced technologies. Rather than requiring a drawn-out and costly IT infrastructure upgrade, the latest CCM platforms have been designed to seamlessly integrate with legacy systems, making it far more cost-effective and much quicker to deploy digitally transformative solutions. Not only does this accelerate a bank’s ability to improve compliance; it also benefits everyday communications, such as marketing.

Indeed, with regard to both compliance and CX, the ability of the latest CCM platforms to offer personalised and omnichannel communications means messages can be delivered via the customer’s preferred channel. Adopting such a strategy not only provides a better customer experience; it also increases the likelihood that messages containing regulatory information will be read and, where required, acted upon.

Where they are not, for example, if an email isn’t opened, this will be tracked by the CCM platform which can be configured to send a printed letter, automatically, as a backup. The tracking data also enables banks to analyse communications in order to continually optimise processes and make them more effective.

In an era when compliance and customer experience are critical to banks, innovative communications technologies are proving to be highly beneficial. They enable organisations to improve regulatory change management, achieve compliance and deliver better CX without upheaval to internal structure or IT infrastructure. This is particularly true when firms have the support of an expert team with the sector expertise and technological solutions to fully optimise their operations.

In Q2 of 2021, FinTech businesses secured more than $30.8 billion in funding, according to CB Insights. The continued investor interest, ever-rising valuations, and ongoing growth have the FinTech sector buzzing. As we look to the year ahead, investor interest will continue for FinTech but more narrowly focus on one growing niche: addressing the nation’s “bank deserts”.

by Steven Weinstein, CEO, Seismic Capital Company

Many of us have heard of the phrase “food deserts,” but “banking deserts” have not received the same level of attention. Banking deserts are especially prevalent in rural locations, where banks may be hesitant to build a branch due to the possibility of low-profit margins due to the reduced population size. As a result, many people in these areas frequently lack access to both cash and basic financial services – placing them in the “unbanked” or “underbanked” population.

FinTech startups are providing digital-first solutions that address a lack of physical bank locations to give access to financial services and cash to those who would otherwise not have adequate access.

Neobanks rise to the occasion, and FinTech startups embrace new players

The pandemic has made neobanks like Chime a lifeline for the nearly 30 million underbanked households in the country. Operating exclusively online without physical locations, these challenger banks are bringing savings accounts, credit cards, loans, and more to those without a branch bank location nearby. The pandemic has only fueled the growth of neobanks, as consumers were forced to bank online with indoor mandates in place over the last year. Chime’s latest funding round of $750 million, and valuation of $25 billion, only further solidifies the FinTech startups’ star status among investors.

An unlikely competitor to neobanks may be on the horizon, but with just as much focus to solve the lack of bank branch locations. National retailers Walgreens and Walmart recently announced their own plans to enter the banking sector. Each retailer announced efforts to launch a mobile-first banking option to be paired with physical locations in their stores. Partnering with fintech startups, each retailer will ensure a mobile-first solution is in place while their store locations nationwide address any concerns around in-person access. Leaning on their vast loyal customer base, the two brands have an opportunity to further provide options to those in the ‘banking deserts’.

Micro ATM’s bridge the gap to get fast cash

For some communities and areas across the US, access to cash is a constant problem. Many of these towns may even be devoid of ATMs on a fundamental level. Those who do have access to ATMs are frequently confronted with excessively lengthy lines or, even worse, empty machines. The transition to electronic payments is difficult, and tasks like obtaining cash, holding value, and sending remittances are frequently impossible.

We are undoubtedly all aware of the actual cash shortages that occurred in storefronts during the early stages of the nationwide lockdown. Nonetheless, many groups and areas across the country deal with a lack of cash on a daily basis. Many of these towns may even be devoid of ATMs on a fundamental level. Those who do have access to ATMs are frequently confronted with excessively lengthy lineups or, even worse, empty machines. Micro ATMs and digital-first solutions are being used by companies in the area to address this issue. Micro ATMs are a low-cost alternative to costly, stationary ATM services. These portable card-swiping devices, when used in conjunction with local agents, can provide critical cash withdrawal services to individuals who do not have access to a real bank or regular ATM. Beyond geographic considerations, solutions like this assist groups like the elderly who may be confined to their homes. Startups can make banking services more accessible by concentrating on mobile and digital solutions. 

Investors with a keen eye can seek startups that are developing new solutions for places that are in desperate need of these resources. We anticipate seeing a number of nascent FinTech firms in the next year emerge to create additional solutions for banking deserts and the underbanked population, and investors will be keeping a close eye on who is leading the charge.

Since their inception in 2011, mobile wallets have made a significant impression, with the global mobile wallet market size expected to reach over $3 trillion by 2022. What was once a unique technological advancement has now become second nature as the pandemic brought expedited adoption and usage of contactless payments. This offers a unique opportunity to engage and retain customers building lasting, meaningful relationships.

by Dave Dabbah, CMO, CleverTap

Mobile wallets are on the rise. According to a recent eMarketer report, 92.3 million U.S. consumers over the age of 14 used mobile payments at least once in a six-month period in 2020 — that accounts for about 40% of U.S. smartphone users. This spike in usage was largely due to the global pandemic but will remain even after the smoke clears; by 2025, mobile wallet usage is predicted to surpass half of all smartphone users.

This steady upsurge in mobile wallet usage brings a new, opportunistic channel for marketers to reach and deliver value to consumers. Where mobile wallets provide convenience and ease-of-use, they also offer brands the ability to push relevant communication to their customer base beyond their own mobile apps, driving increased engagement, spend, and in-store traffic.

Specifically, mobile wallets can bypass individual mobile apps to push critical real-time updates on loyalty cards, scannable tickets/transit passes, and coupons. Think: a push notification updating the user of a gate change for their upcoming flight. Taking advantage of this new channel provides brands with the opportunity to foster a more value-driven user experience.

Mobile wallet marketing in practice

So what exactly are the benefits for marketers? For one, brands have a great opportunity to localize content and fine-tune personalization for consumers who have opted into location tracking permissions. A consumer could be walking by their favourite shoe store when they receive a push notification that the store is having a buy-one-get-one sneaker sale. Or perhaps during lunch hour, a local burrito joint sends a notification boasting the newest mouth-watering addition to their menu.

Better yet, let’s say a consumer recently attempted to buy a lamp online only to find it was sold out. Determined to purchase the lamp, they sign up to be notified when it would be available again. A mobile wallet notification can tell the consumer when the lamp is back in stock — online or at the store location closest to them. By leveraging location-based marketing, brands are able to meet users where they are, leading to an increase in in-store traffic, customer spending, and brand satisfaction.

Consumers can also access coupons and gift cards in their mobile wallets without having to open the brand’s app. As they partake in their routine daily scrolling, consumers can receive digital offers in real time that can be saved for later use. Once a coupon is saved to a mobile wallet, brands can send notification reminders about expiring deals and other updates, which can lead to higher coupon redemption rates.

Challenges in mobile wallet adoption

Mobile wallet marketing depends on the increased adoption of the technology, and as with any new technology, there are challenges in getting everyone on board. Many consumers are dubious about the security of mobile wallets, unsure if their new and digital nature makes them more susceptible to fraud or hacking. In many ways, however, mobile wallets are actually safer than real ones.

If someone steals your physical wallet, they can pick whichever card they please to make a $1,000 purchase at the nearest Best Buy. But with mobile wallets, users can rest easy knowing their information is fortified with more layers of security. First, a thief would have to be able to gain access into your phone or smartwatch without knowing your passcode. Additionally, many wallets are equipped with a multifactor authentication biometric feature, meaning they require a face scan or fingerprint in order to gain access, making it virtually impossible for someone who isn’t you to use your cards.

Mobile wallets are consistently encrypted and able to receive technological updates quickly. Plus, it’s much easier to pause or cancel all your cards at once on a mobile wallet than it is to individually contact credit card companies. Samsung, Apple Pay, and Google Pay all offer solutions that enable you to suspend your mobile wallet or remotely erase information from your device if lost or stolen. Therefore, the biggest challenge in the realm of safety lies in consumer education.

Because mobile wallet usage is still an up-and-coming phenomenon, not all retailers accept this form of payment. Many brands have shown a reluctance to adopt digital transactions like Apple Pay or Google Pay due to customer concerns with credit and debit card vendors. Plus, some retailers limit mobile wallet payments to just their own app, like Walmart Pay.

Ultimately, the growing popularity of mobile wallets will chip away at these challenges. As more consumers and brands become comfortable with them, marketers will be able to reap further benefits.

The bottom line

Mobile wallets present a fresh opportunity for brands to engage with customers. Capitalizing on mobile wallet marketing can enable more meaningful communication that drives revenue and brand loyalty. If they haven’t already, marketers should start paying attention to ways they can integrate mobile wallets into their mobile marketing strategy.

With the traditional lines between retail and institutional trading blurring, it is fair to say that wealth managers are being faced with an increasingly complex market to navigate. And with the repercussions of the volatility seen in 2020 still looming, they must embrace technological innovation and automation to keep their heads above water.

by Tamsin Hobley, Country Head UK and Ireland, SIX

From the impacts of the pandemic to the aftermath of Brexit, wealth managers have had their fair share of market upheaval. And it is not to say that 2021 has been a smooth ride. With the continuation of hybrid working environments, and the unprecedented events that happened at the beginning of the year – the short squeeze on GameStop and the forced liquidation of Archegos, for example – clearly, risk and workflow management are top priorities across the industry.

The key takeaway from each of these individual events is that modern-day wealth managers need a real-time view of prices to navigate themselves through similar bouts of unexpected stock volatility. Why? Because capitalising on the increase in automation and technology means that wealth managers can keep up with the increasing demands placed on them by second-generation investors.

To improve efficiencies, workflows and manage working remotely with their own clients, wealth managers are increasingly turning to technology to support all aspects of their offering, including front, middle, and back office operational issues. This is where the efficiency and scope of the technology that wealth managers look to adopt has become increasingly important.

Wealth managers are also looking to invest resources in technologies which enable them to continue servicing their own clients to a high standard now more than ever before. These technologies, including investments in digital reporting, are underpinned by high quality data and services, better self-service tools and integrated systems that provide them with a more transparent view into their investment decisions. data and the security of the decisions made are crucial to identifying those all-important key risks.

Firms need data sets that can adapt quickly to any sudden bouts of market volatility. In turn, systems and technologies will need to modernise to accommodate such data and help wealth managers increase their data assets without increasing the associated costs.

Digitisation of client communications is another area in which better quality data and technology systems is required. Some wealth managers have even started to look to artificial intelligence and machine learning, allowing them to better adapt to the current climate and counteract the operational burden caused by remote working.

In this way, data providers can support wealth managers in navigating future events that will undeniably impact the market, supporting the industry and investor-driven need for quality data to combat future stock volatility. And the first step in this process is adopting the right set of technology for your firm that efficiency processes risk reporting and enhances workflow management, all the while maximising investment value.

Technology that integrates a business’s accounting data directly into lending propositions – a practice that we term open accounting – can help mitigate risks for lenders while the demands and stress on borrowers are reduced.

by Kevin Day, CEO, HPD Lendscape

In respect to secured lending, where the lending is based on the accounts receivables of a borrower, open accounting provides accurate and up to date information regarding the collateral that effectively underpins the financing facility. It can help lower costs, reduce the friction in the process and enable more optimised funding, benefitting both parties in the process.

What is open accounting?

Open accounting is the process by which the financial records of a business are purposefully shared with a third party or lender via their accounting software, in order to speed up the lending process by finding all the reliable and up-to-date information transparently and in one place.

It offers an answer to several issues in SME lending. By granting permission to banks and FinTech lenders to the information contained in their accounting platforms, SMEs can receive more optimised lending propositions. Open accounting offers the promise of smoother access to working capital for SMEs and also allows lenders to create better, more flexible products and services.

Fighting fraud and smoothing out the lending process

A crucial issue lenders will face in a period of increased demand for financing is the rising risk of fraud. Indeed, each instance of receivables or supply chain finance fraud contributes to the vast $5 trillion lost to corporate fraud each year – a sum equivalent to the GDPs of Italy and the UK combined! Compounding this issue is the fact that lenders must often make do with out-of-date and incomplete client data that can slow down the process for borrowers and lenders alike.

It is here that open accounting can provide the answer.

Transparency and granularity of operation data available to the lender enables better risk management. For example, a business that traditionally operates during Monday-to-Friday business hours suddenly has invoices issued over a weekend. This circumstance may be due to legitimate reasons, but by being alerted to the fact, the lender can bring more scrutiny to bear should this be an indication of potentially fraudulent activity.

Helping to increase access for SMEs and agile businesses

Traditionally, SMEs might have avoided approaching banks for financing due to the difficulties they faced when dealing with large financial institutions and their often-cumbersome lending processes. It is not uncommon for smaller businesses owners and directors to be required to provide personal guarantees to secure lending. For example, using collateral like their own home is often a deterrent to borrowing due to the personal risks involved.

However, there has been a step-change in the way businesses and institutions embrace digitalisation that has the potential to change the dynamics at play. There is an increasing opportunity for trust and transparency between lenders and borrowers that open accounting can answer. Offering transparency into the day-to-day operations of a business removes the opaqueness that might otherwise exist. Can enhanced data quality provide sufficient security to the lender to enable it to waive protective covenants and securities it may otherwise wish to invoke?

Open accounting could help create a renewed attractive market for lenders to fund businesses that have lower boundaries to borrowing. In addition, this will help encourage better and fairer equity exchanges between borrowers and lenders while streamlining the customer journey by removing cumbersome processes for time-constrained businesses.

Overall, the Covid-19 pandemic has driven more demand for financing among businesses as they look to inject fresh liquidity and stave off the financial cliff edge many are facing now that government lending schemes are drawing to a close. With this change, more companies and financial institutions will look towards digital solutions that incorporate an open accounting approach to inform their lending. Greater visibility of a business’s data helps mitigate fraud risks and enhances lending propositions for those companies that may have been less likely to borrow before the pandemic. With businesses in more need of financing and liquidity than ever before, this can only be a good thing.

Irrespective of where they are in the world FinTech companies are vulnerable to cyberattacks and deploying the kind of encryption and security technology that major banks use is costly and requires technical expertise.

by Eyal Worthalter, Vice President – Global Solution Sales, MYHSM by Utimaco

FinTechs are not just getting more customers and larger investments, but we are seeing new FinTechs founded in sub-Saharan Africa and cities like Tel Aviv, Stockholm and Hangzhou beginning to compete with traditional cities such as New York, London and San Francisco as major hubs of innovation.

Cybercrime is a global problem

Cybercrime cost the world $1 trillion dollars in 2020, more than the combined cost of all natural disasters and the costs of adapting to climate change, and this number is only going to rise. Data breaches can cost companies as much as $3.86 million and take as long as 207 days to discover. Some companies have been the victims of particularly damaging, headline-grabbing hacks: after 147 million people’s personal information was exposed in the Equifax hack the company spent $1.4 billion on security upgrades.

Although the global pandemic helped FinTech companies by showing many people that they could easily administer their financial lives from their phone and pay for goods and services without cash, it also drastically increased the amount and sophistication of cybercrime. At any time when there is a global financial downturn more people will turn to crime of any kind to make ends meet.

FinTech companies may seem like low-hanging fruit to criminals when compared to banks. Both keep and process customer payment data, but banks have extensive security operations – one survey shows that banks spent on average 10.9% of their IT budget on cybersecurity, and this is growing every year. FinTech companies will have the same challenges but significantly lower budgets, which leads to a situation in which criminals perceive them as weak and are more likely to target them, increasing their need for cybersecurity when they are least able to satisfy that need.

This is a particular problem for companies based outside of the traditional tech hubs, and even more so for startups in the developing world. There is already a skills shortage in the cybersecurity industry, and the limited number of experienced professionals know that they are more likely to get high-paying jobs in the world’s major tech hubs than those cities that are still developing their FinTech industries. This leaves the younger companies who need the most support without the critical skills that they need.

Cloud-based encryption can bridge the gap

Encrypting cardholder sensitive data such as PINs during online transactions is hugely important to minimise any fraudulent activity. The use of a Payment HSMs in the financial services industry is mandated by PCI Security Requirements and are a fundamental requirement to become PCI PIN compliant. However, Payment HSMs require significant investment and specialist knowledge to operate and manage. For these reasons, they may be out of reach for small start-ups and companies in the developing world.

Cloud technology has clear advantages for FinTechs and the recent pandemic has accelerated the use of cloud-based systems in the financial world and increased the use of cloud systems by FinTechs, 55% of which say they use multiple clouds. Cloud technology may be deployed quickly without the need for new hardware, it scales to meet surges in demand, backs up all of a company’s data and can often be paid for monthly rather than as a single expensive purchase.

Furthermore, cloud-based services allow smaller companies to deploy the same level of security and compliance that is used by much larger companies at a fraction of the price. This means that startups can focus on their core business knowing that security and compliance is taken care of, which in today’s cybersecurity climate will be a major relief for the company.

When a human being or even an animal faces risk, there can be one of two reactions – fight or flight. Risk is inarguably ubiquitous and something that most of us deal with on a daily basis. However, rather than fight or flight, sometimes the best way to deal with risk is to buy protection. And, this is where the insurance industry plays an integral role.

By Vijay Kasturi, Head of Sales & Business Development – Western Europe at Profinch Solutions 

The insurance industry enables you to protect the downside of unforeseen events and mitigate the impact of risk events. Traders and mariners have been buying insurance for the last 500 years. Inevitably, the insurance industry has significantly evolved over this vast period of time and shape shifted in response to the changing environment. Today, the industry is in the midst of another important transition precipitated by technology and in response to changing consumer needs. It has finally started its delayed, but firm, march towards digitization. While digitization is being embraced across the value chain, its importance in claims management needs to be highlighted.

The digital claims value proposition

For an insurance company, the moment of truth comes at the time of claims processing. An efficient and timely settlement of claims can lead to a positive experience for the customer and help the insurer engender trust. Digitisation can help enable this in several ways. However, in the digital age, a truly robust claims value proposition needs to go beyond the traditional after-the-event claims management exercise. It needs to be holistic and foster an end-to-end partnership with the customer. This means digitizing the entire claims journey starting from digital claims prevention and digital first notification of loss (FNOL) to digital loss assessment and automated settlement, especially for clear and simple cases.

What does digitizing the claims process mean for insurers?

Automated and intelligent interactions can facilitate the faster settlement of claims.  Insurers can leverage Artificial Intelligence (AI) to create chatbots that can act as the first call of support for customers. These chatbots can address basic settlement queries and even commence the claims settlement process. For example, chatbots can easily avoid the need to check the policy number for identification by simply verifying it with the policy documents, photographs, and other documents submitted by the policyholder. Further, they can interact with the customer, assess the requirement, and then suggest the best course of action. A process that would normally take a number of days can be done in just a few minutes with the assistance of chatbots. The best part is that since chatbots are available round the clock, customers can interact with them and have their queries addressed almost as soon as the need arises. This can be invaluable to a customer who is looking to make a claim.

Machine Learning (ML), a subset of AI, can further augment the value being generated by automating a significant part of the claims process. Imagine this scenario – an individual interacts with a chatbot to initiate the claims process. At the back end, ML tools have already converted all the files and information into digital assets and made all the information available to the chatbot via cloud. The chatbot can now point the customer in the right direction. Next, data analytics and drone technology can be leveraged to assess or verify the damage for which the claim is being made. For example, the claimant can take a picture of the damage and share it with the insurer. Digital tools can then be applied to scan the picture, compare it to a repository, and verify the actual damage. Or, unmanned drones can be deployed in case of large-scale damage where individually assessing the damage might not be possible. With assessment done, settlement of small value claims can be automated while large value claims can be referred for further evaluation. With the entire process automated, it becomes more efficient and seamless.

It is important to recognize that automated risk assessment is actually the first step in improving the claims management process. AI can enable insurance companies to improve the risk assessment and underwriting cycle. Insurance companies can leverage AI and predictive analytics to access data related to the risk metrics of individuals rather than groups of people and assess it more efficiently, thereby improving the risk assessment and the claims cycle. According to a report by PWC, the initial impact of AI will primarily relate to improving efficiencies and automating existing customer-facing underwriting and claims processes.

Clearly, digitization of the claims process can be highly value accretive for the insurer as it leads to faster settlement of claims, improves the customer’s claim journey by making it more seamless and efficient, and helps in achieving cost efficiencies.

Today, the average insurance customer is already accustomed to digital interactions and is, in fact, demanding digital journeys in most spheres of their lives. For insurance companies, it has now become essential to holistically embrace digital solutions in order to meet the customer’s needs and thrive in the new normal.

Digital banking has reached such levels of disruption that the disrupted are unaware of disruptors racing ahead.

By Indranil Basu Roy, Chief Business Officer, Modefin

Next to the “new normal,” the most overused term could be digital banking. What’s the tipping point of technology or service delivery that makes a bank truly digital? Net banking? Yes and No, as its entry dates to an earlier era. App-based access? You must be joking. Cashless payments… now we are talking.

Let’s take one step back to understand digital banking. Over time, as fintech progressed from state-of-the-art, to cutting edge, to leading edge, services offered by banks migrated from conventional delivery channels to online.

Banks, in their eagerness to keep pace, ensured they incorporated every facet of digital banking in their ecosystem. Somewhere down the line, the music stopped. After all, customers were not complaining – no branch visits, no staying on hold in the helpline, no relationship manager to deal with – banking was no longer a chore but a breeze.

Not just retail or personal banking, the transformation had encompassed corporate banking as well, and had eased the procedures in document-oriented products such as Trade Finance.

Should we conclude that all is well, and congratulate the fraternity? Can we compliment the far-thinking CTOs and CMDs on their vision for digitization? Can we name the top 10 digital-driven banks and announce such other lists that make the jury glow and winners feel good?

If we do, we are falling into the trap that others have already got into. Let’s get this straight, digital banking has reached such levels of disruption that the disrupted are unaware of disruptors racing ahead.

As a banking institution, how do you gauge or ensure you are not left behind? Here are three test questions (don’t look for synergy, this is a random round):

• How equipped are you to compete with a wholly-digital bank that does not have a single brick and mortar branch?
• To enhance your digital capability, has your bank partnered with, or invested into non-financial players, such as a fintech enterprise, data analytics firm, mortgage-software start up or any other disruptor?
• Here are five terminologies that are the latest in fintech applications: If you have to look up any, you are labeled “behind,” if you have implemented one or more you are “ahead.”

Here we go: Social Banking, Digital Queue, Conversational Banking, Peer to Peer Payment Systems, Facial Recognition Banking.

Assuming that banks cannot endlessly invest in technology (tech is not their domain) the answer is cross-industry collaboration with fintech players who focus on agile solutions. If the engagement process gets further delayed, the next wave will be fintechs playing the role of banks in certain product areas (we already have several online lending platforms which are not backed by a bank). Look closely, lending platforms of today are replicating services that banks pioneered five years ago by offering instant loans based on a review of credit history.

Looking back, IBM, the one-time mainframe behemoth, proved elephants can dance by making a dramatic turnaround in the mid-1990s. Now is the turn of mammoth banks to appreciate that digital transformation calls for more than online banking. If not, they may as well recall the story of a humble ant that troubled the mighty elephant by entering its trunk (can’t think of a better disruptor-disrupted metaphor).

Beyond folklore and stories of yore, here’s a reality check reflected in a research report on ‘Digital Banking in Asia,’ published by Mckinsey & Company:

“The disruption caused by digitization can create or destroy significant value for banks, depending on their starting positions and how well they respond to shifting consumer behavior and other trends. Experience is showing that 30 to 50 percent of net profit is at risk.”

The findings are disquieting. Rather than assuage your anxiety, I end with a call to action. Start with an audit of your bank’s digital platforms and products, benchmark against the best in the industry, get to know where you feature, and get to work on greater transformation.

If the fraternity fails to keep pace, faster adapters, disruptors and other innovators will get ahead. No marks for guessing who could laugh all the way to the bank.