Increased FX [foreign exchange] volatility and greater complexity in managing cashflow forecasting, is changing the way UK businesses are hedging.

by Richard Eaddy, CEO, Hedgebook

For a start, companies have moved from being hands-off to hands-on in managing their forecasts and FX hedging.  It is seen as a concern across the business, impacting sales, procurement, and the supply chain.  While the C-Suite are aware of the impact, it is often the board that is driving change in wanting to see a far more proactive approach in managing these risks.

The increased volatility in financial markets, is matched by increased uncertainty in business. Once stable supply chains now operate on much shakier terms if they haven’t disappeared altogether.  It means there is no longer certainty around when you will be making a payment or how long you will need to hedge.

Businesses working on low margins can be significantly impacted. A cancelled order or significant swing in foreign exchange that has not been hedged, leaves the business dangerously exposed. All of this has meant UK companies are looking more regularly at their hedging positions and reviewing the risk.

Many businesses are acting responsibly and adding FX Management to their library of risk management policies.  This gives the treasury team some real guidance as to the risk tolerance the business is prepared to work within.  The ability to model FX hedging options against this policy enables faster and better decisions to be made – with minimised risk.

Remote working also removed the expectation of a monthly or quarterly meeting where such matters were generally discussed.  The traditional round-the-table closed door reviews essentially disappeared during lockdown.

Very quickly, companies realised the need to proactively review their FX hedging positions and that players across the company needed to part of that.  Over 80% of surveyed customers using our FX tools now engage with them at least once a month, with 10% checking in on a daily basis.

Working remotely has also seen companies move away from spreadsheets being the default tool for managing FX hedging.  This is largely due to the increased risk around version control and data security when shared across multiple screens and locations.

But it also highlighted the spreadsheet owner as a potential single point of failure in the organisation. In many cases they were the only ones who could successfully run the formulas and manage the complex hedging situations the business was facing.   As a result, companies have proactively started looking for online tools capable of managing this for them.

They want to view data in real time, have secure access to their hedging positions and for everyone involved to be working off a single version of the truth.   Companies now say using online FX hedging reports and modelling saves them half to a full day per month – but the exponential value is in greater accuracy and faster, better decisions.

It is these companies that are driving change.  They expect their banker to be able be onboard with managing foreign exchange hedging online.  They want their broker to see the same information they are and be able to guide them through the options – modelling the different rates and hedging percentages as they go.

Even though cloud technology has driven the access cost right down, online treasury management is new technology for banks to become familiar with. Perennial slow adopters, banks are now realising they need to get onboard fast, or their customers will leave them behind – quite literally.

It really should be a win-win for everyone.  Customers limit their FX risk and banks become even more valuable and responsive to their customers.   It enables much better FX hedging decisions to be made faster and strengthens the banks relationship with its customers.  A definite change for the better.

Increased FX [foreign exchange] volatility and greater complexity in managing cashflow forecasting, is changing the way UK businesses are hedging.

by Richard Eaddy, CEO, Hedgebook

For a start, companies have moved from being hands-off to hands-on in managing their forecasts and FX hedging.  It is seen as a concern across the business, impacting sales, procurement, and the supply chain.  While the C-Suite are aware of the impact, it is often the board that is driving change in wanting to see a far more proactive approach in managing these risks.

The increased volatility in financial markets, is matched by increased uncertainty in business. Once stable supply chains now operate on much shakier terms if they haven’t disappeared altogether.  It means there is no longer certainty around when you will be making a payment or how long you will need to hedge.

Businesses working on low margins can be significantly impacted. A cancelled order or significant swing in foreign exchange that has not been hedged, leaves the business dangerously exposed. All of this has meant UK companies are looking more regularly at their hedging positions and reviewing the risk.

Many businesses are acting responsibly and adding FX Management to their library of risk management policies.  This gives the treasury team some real guidance as to the risk tolerance the business is prepared to work within.  The ability to model FX hedging options against this policy enables faster and better decisions to be made – with minimised risk.

Remote working also removed the expectation of a monthly or quarterly meeting where such matters were generally discussed.  The traditional round-the-table closed door reviews essentially disappeared during lockdown.

Very quickly, companies realised the need to proactively review their FX hedging positions and that players across the company needed to part of that.  Over 80% of surveyed customers using our FX tools now engage with them at least once a month, with 10% checking in on a daily basis.

Working remotely has also seen companies move away from spreadsheets being the default tool for managing FX hedging.  This is largely due to the increased risk around version control and data security when shared across multiple screens and locations.

But it also highlighted the spreadsheet owner as a potential single point of failure in the organisation. In many cases they were the only ones who could successfully run the formulas and manage the complex hedging situations the business was facing.   As a result, companies have proactively started looking for online tools capable of managing this for them.

They want to view data in real time, have secure access to their hedging positions and for everyone involved to be working off a single version of the truth.   Companies now say using online FX hedging reports and modelling saves them half to a full day per month – but the exponential value is in greater accuracy and faster, better decisions.

It is these companies that are driving change.  They expect their banker to be able be onboard with managing foreign exchange hedging online.  They want their broker to see the same information they are and be able to guide them through the options – modelling the different rates and hedging percentages as they go.

Even though cloud technology has driven the access cost right down, online treasury management is new technology for banks to become familiar with. Perennial slow adopters, banks are now realising they need to get onboard fast, or their customers will leave them behind – quite literally.

It really should be a win-win for everyone.  Customers limit their FX risk and banks become even more valuable and responsive to their customers.   It enables much better FX hedging decisions to be made faster and strengthens the bank’s relationship with its customers.  A definite change for the better.

Banks and financial institutions have been hesitant to adopt public cloud technology due to a fear of losing control. What are the psychological barriers facing financial services executives and how may they be overcome?

By Neil Vernon, CTO, Gresham Technologies

Accelerated by the global pandemic, the financial services industry is undergoing a period of intense technological transformation. The impact of Covid-19 is putting incumbent banks and financial institutions under cost, profitability, and operational stresses; regulatory requirements are growing in volume and complexity; and legacy systems are increasingly putting businesses at risk of service failure, loss events, and reputational damage.

In this environment, there’s no doubt that the future of financial services is in the cloud.

Its potential to deliver greater agility, cost effectiveness, efficiency, scalability, and speed to market provides new opportunities for growth and innovation. What’s more, a cloud-first approach offers firms the ability to better control their data and remain connected, freeing up highly stretched resources to focus on other business objectives. Migrating to the public cloud can play a critical role in strengthening operational resilience, too. In the face of increasingly high customer standards and, in the UK, new rules from the FCA coming into effect from March 2022, IT and system failures will simply not be tolerated in future.

So why are we still seeing a hesitancy towards cloud adoption among senior financial services executives?

Outsourcing functionality, not control

For the most part, it is the fear of losing control. Regulatory changes are increasing the pressure to meet a greater number of more complex requirements. In line with that, the risk of more severe non-compliance and the consequences that follow are also increasing. Exacerbating this problem is a pandemic-induced move towards working-from-home or hybrid environments, leaving outdated legacy systems unable to cope with the agility this demands.

Ultimately, the data that banks and financial services firms handle is very sensitive, either regarding customers’ financial information or traders’ operations. If compromised, this could present significant financial and reputational risk. Capital One Bank’s 2019 data breach, for example, which affected 106 million people across the U.S. and Canada, resulted in an $80 million fine. And the reputational consequences were tangible: in the days following the breach, Capital One’s stock plummeted from over $100 to $85 – both a consequence and catalyst of the reputational damage that the bank suffered.

All of this means that data control is more important than ever. But the truth is that moving to the cloud does not mean sacrificing control.

It is critical for business leaders to understand that leaving processes on legacy systems increasingly exposes you to loss and failure events, and that outsourcing your data and processes to third-party cloud providers is actually a more secure alternative. It can significantly increase efficiency and reduce costs by simplifying processes, as well as reducing the risk of non-compliance while simultaneously avoiding expensive in-house IT projects, both in terms of time and money.

Gaining insight through connectivity

In fact, moving to the cloud can put you in more control by facilitating a holistic view of your relationships as your business grows.

Connecting to an ever-changing array of trading partners, venues, clients, and regulators – and ensuring these connections remain valid – is a dynamic process. What’s more, firms must manage, map, and maintain the widely diverse and constantly changing data formats that flow between these parties.

Navigating this complex data landscape can cost millions every year in internal resources or point solutions that become stale. Moving this process to the cloud can give you the scalability your business needs to grow its network with speed and ease.

Work with the cloud, not against it

Despite a reluctance to overhaul existing processes and the temptation to bend cloud software to fit your own objectives, executives must understand that, in order to harness the power of the cloud, you must work with it – not against it.

A flexible approach, whereby firms understand that successful cloud migration might require some upfront work, is key. Integrating cloud with non-cloud, or different cloud services with each other, is often complex. A rigid attitude will likely result in disappointing results and data migration complexities, costing time and money better spent servicing clients.

Part of this flexibility is understanding best practice around how to use the cloud. The Bank of England (BofE) has warned that additional policy measures may be required to mitigate financial stability risks from the growing concentration of power in the hands of global cloud providers, such as Amazon, Google, and Microsoft. In response, firms should be looking at the ways in which cloud service providers are different and playing to those strengths to diversify their cloud portfolio.

It’s vital that firms have the right partner to help them navigate the application of their cloud technology across the major providers with relative ease, flexibility, and portability. What’s more, in addition to new BofE policy, big providers could be dictating cloud terms and conditions to major financial firms in future. Understanding and reporting on these requirements will cost valuable time, money, and resources that are much better outsourced to cloud-native technology experts.

Ultimately, a fear of losing control shouldn’t act as a barrier for cloud adoption. Once properly understood, the power of the cloud and its potential impact on business performance cannot be overstated, offering unparalleled benefits that, in an era where data control, integrity, and connectivity rule, could make or break financial institutions across the globe.

Never in recent history have we seen the convergence of two super trends on the scale of blockchain and cryptocurrencies, and artificial intelligence (AI). The adoption of cryptocurrencies has exploded.  There are now 70 million cryptocurrency wallets, which starts to approach about 1% of the global population.  The massive influx of new users and new money has led to significant interest and support from major financial investors and institutions alike.

By Janet Adams, Consultant, International Compliance Association

Combine the developments in cryptocurrencies with the increasing use of AI and Robotics Process Automation (RPA) and it creates an interesting dynamic.  Forbes predicted: “2021 is the year when AI will go mainstream,” while a report by McKinsey stated: “Banks need to deploy AI at scale, to remain relevant and to become AI-first institutions.”

The impact of the pandemic

Covid-19 has also played its part. Previously, public perception of AI and RPA in the western world was tinged with a concern for robots stealing people’s jobs.  Now, the general public can increasingly see how technology can help keep people safe.  With Covid-19 the unimaginable happened.  Although it has resulted in catastrophic consequences, such a moment of change has also opened the door to the emergence of new technologies and business models.

Put cryptocurrencies and AI together and, as we head into the next decade, the results could be astonishing.  These seismic shifts are underpinned by enablers including cloud computing, big data, payments innovation, plus increased competition from the likes of Amazon, Apple and Google which are all entering the financial services space.  This environment is set against a backdrop of a shift in customer expectation with millennials, disillusioned with old banking structures and open to embracing new ways of managing finance and payment transactions.

Centralised finance will need to find ways to compete and thrive; for example by collaborating with decentralised finance, and working together to evolve a new world economic structure to provide better products for the societies we serve.  It is now an imperative that banks learn how to deploy AI safely and effectively, with appropriate skills and frameworks in place to maximise AI’s benefits while minimising its risks.

Regulation and ethics

However, regulation needs to keep pace and evolve to meet these changing requirements.  In 2020, I reviewed the guidance from around the world from all government and public bodies.  At the time there were in the region of 22 published speeches on the subject of risk management of AI.

My aim was to identify the requirement for safe and ethical implementation of AI in banking and how it could become compliant and ensure fair outcomes for customers, while serving market integrity.  The model I proposed at the 2020 IEEE International Conference on Fuzzy Systems inextricably links accountability and explainability as the key for successful AI implementation in financial services.  These overarching principles need to be underpinned by the right governance and compliance.

To establish risk and governance frameworks effectively, for safe and ethical implementation of AI, transparency of algorithms (and how they are used) is also important.  Human autonomy and respect in the way we ensure we are not using AI to nudge people to limit choices and reduce human self-agency is necessary.

Robustness and operational resilience of technology is critical for success, and AI implementations must be accurate and able to supply reliable results.  Fairness, reliability and accessibility is also important to ensure we are inclusive in our implementations.

From an ethical perspective, our AI implementations must benefit society as a whole and be in-line with organisational and personal principles and values to retain the authenticity of our work.

The education is there.  We all need to learn, change, adapt and grow to be part of this new movement.

The International Compliance Association (ICA) is the leading professional body for the global regulatory and financial crime compliance community, and provides support, training and qualifications to compliance professionals. 

In this article, Rajashekara V. Maiya, Vice President and Head, Business Consulting Group, Infosys Finacle, speaks about four key trends in the era of digital transformation that are changing the nature of loans, borrowers and lenders.

The size of a nation’s lending portfolio is closely linked to its economic growth and development. Take South East Asia as an example where the countries that have high GDP growth also have high loan-to-GDP ratios. All these countries have a robust lending market supplying affordable, hassle-free financing to corporate, SME and retail borrowers, creating consumption-driven growth momentum.

But this was not always the case. China in 1975, Thailand in the 1980s and Malaysia in the 1990s were all struggling to grow their GDP. But then they went through a retail boom, when per capita income crossed a threshold US$ 1000 to stoke the aspirations of the people for a better lifestyle, better housing, better transportation etc., which created a demand for retail financing. Today, the world is in a different yet similar situation, with the pandemic denting economic health globally. One way to reclaim growth is to fuel consumption, and one way of fueling consumption is by boosting retail lending.

Currently, there is ample scope to increase the loan-to-GDP ratio in many parts of the world. This is especially the case in developing countries, which need to bring their substantial underbanked population within the ambit of formal banking. However, that would stress the infrastructure of their banking technology landscape beyond tolerable levels. The only solution is to transform the retail lending landscape, across the formal banking industry as well as the informal, unorganized sector. This includes lending processes and banking workflows, as well as the associated technology infrastructure.

The other important thing to consider are the broad trends that are sweeping retail lending across the globe. We can categorize these as changes in the nature of loans, of borrowers, and of lenders.

A loan that is no longer that

The biggest trend here is that the loan has become incidental, almost invisible, in the consumption journey. Customers don’t want loans per se; they are only a means to fulfil a primary expressed need, for a car, for a college education, for a home and so forth. Therefore, banks’ conversations with customers should be about helping them achieve their primary desires rather than pushing a lending product. The product-centric approach to lending is now outdated, and has been replaced by a customer-centric or even customer-specific mindset of helping customers fulfil their unique desires while offering the best financing option in their particular context.

A customer who is demanding but debt-friendly

Today’s retail borrower is very different from the one of even a few years ago. There is no patience for spending hours in a branch gathering information and filling out forms.  As a product of the digital age, this borrower expects financing to be delivered to him or her, on a digital device of choice. A key expectation is that the loan application and onboarding process will be digital. Another is that the terms of lending will be a balance of borrowers’ rights as well as their obligations.

Many trends have gone into shaping this customer. Ample choice is one of them. For instance, a customer buying a car can get an attractive loan from a non-bank financing company or from the financing arm of the automobile manufacturer itself. The customer embarks on a redefined journey where a bank has no role to play. Another influencing factor is demography: more than 70 percent of the global population is below the age of 30 and almost everyone is digitally connected. Far from being debt-averse like generations past, these young customers demand deferred payment options such as credit card payments, monthly installments and the popular “buy now pay later” facility from Amazon.

A lender who has raised the bar

Some years ago, “lender” usually meant a commercial bank. Today, the definition includes a plethora of providers, from Fintech companies to retail businesses to even social networks, offering financing in different forms and flavors. Amazon is a standout example, with a loan portfolio in excess of US$ 10 billion spread across its gigantic merchant base. Amazon’s lending process is not just completely digital, it takes all of 3 clicks to boot! What’s more, the company offers attractive rates, with full transparency and no hidden costs.

Traditional banks are at serious risk of being left out of the new lending paradigm. To stay relevant, they need to reimagine their customer journeys to match the benchmarks being set by the likes of Amazon. At a minimum that would mean designing a lending process that is digital from end-to-end, where origination, eligibility checks, approval and servicing can be completed within a few clicks. Secondly, banks should rely less on agents and brokers to sell their loans, replacing them with a digital alternative, such as a mobile app.

One more trend that is changing the face of banking – and consequently impacting lending – is the platform business model. The platform is front and center in digital loan processing. It is also enabling lenders to participate in the primary journeys of customers by creating online marketplaces for non-banking products and services. DBS Bank, with its highly successful platforms for used cars, travel, real estate and utilities, is a great example. The bank makes no mention of its banking products in these marketplaces; however, once a customer has fulfilled a primary need, for a new utility connection, for example, the platform offers an option to use a DBS Bank account to set up a standing payment instruction.

A word on the pandemic

By accelerating digitization in every sphere, including lending, the pandemic opened the doors to simpler, transparent, cost-effective loans. In the latest EFMA Infosys Finacle Innovation in Retail Banking Study, financial institutions cited that the highest levels of innovation success were seen in the lending¹. But could it also set off another trend, one where banks participate in improving the health of their customer communities? Just like insurance companies, which tap digital information about customers’ driving habits or lifestyle, to determine premium, could banks link the terms of lending to customers’ vaccination status by accessing their digital records subject to consent? It remains to be seen.

References:

https://www.edgeverve.com/finacle/efma-innovation-in-retail-banking/

The global pandemic has forced many customers to use digital touchpoints and services for the first time. However, a wide gap separates billions of consumers from the solutions stack that digital banking provides.

By Sathish Muthukrishnan, Chief Information, Data & Digital Officer, Ally Financial

Persuading consumers to make the leap takes patience and a personalised approach, but above all, it requires education. Here are three common myths about digital banking – debunked:

Myth #1: There is a lack of customer care in digital banking

Many people perceive in-person communication as the epitome of customer service. In numerous industries, it continues to serve both as a symbol of customer commitment and as a measuring stick by which consumers gauge an organisation’s authenticity and accountability. In banking, however, technology creates more of a bridge than it does a divide. Digital banks often provide 24-hour support and offer their customers a variety of communication channels – including mobile, computer, phone, and chat.

Receiving great customer service from an online-only institution may seem counterintuitive, but in its best form, digital banking can be anticipatory, seamless, and frictionless. The focus on technology that underpins digital banks means the customer experience is more consistent, efficient, and personalised than face-to-face service offers. In an era where bank customers are more transient than ever, the high retention rates of digital banks speak for themselves.

Myth #2: Digital banking creates a language barrier

Consumers who do not consider themselves digitally ‘fluent’ may assume that creating and maintaining an online account for digital banking services is too difficult. However, the fact that digital banks acquire most of their customers via an online-only journey means they are forced to create simple, easily understood processes.

Opening an account with a good digital bank generally takes no more than five minutes and, based on the information provided, customers may receive additional recommendations for personalised services, tools, and investments. Many customers are surprised to learn digital banking also operates on very little ‘fine print’ material – some use none – which provides a stark contrast to the pages full of legal disclaimers most traditional banks require customers to sign.

While digital banking may appear as a series of opaque obstacles, especially for digital non-natives, its functions and services are designed for maximum accessibility – no matter the customer’s background or technological adeptness.

Myth #3: Digital banking is less secure

Digital banks operate under the same regulations as traditional physical banks. Good digital banks also incorporate security into the design of all their operations and processes and continually build on security features to protect customers’ deposits, transactions, and personal data.

At a minimum, digital banking provides the same level of monitoring and safeguarding as traditional banks. But many of them leverage technology to add even more layers of protection to customer data. Executives are aware that trust is a major factor in converting consumers to digital banks and go the extra mile to ensure their organizations offer market-leading security.

The Bottom Line

Digital banks are typically more sustainable and less fragile than traditional banks. The people-first mindset that the best in digital banking embody is exactly why they are so convenient, easy to use, hyper-secure, and available around the clock. The value retained by eliminating physical infrastructure is passed on to customers – and increasingly, those consumers are taking note.

In most ways, digital banking represents smarter business – maximum value is delivered to customers at lower operating costs.

Across Europe, consumers have largely turned cashless during the pandemic, with contactless and online payments increasing exponentially. But with the high streets across Europe slowly entering into the new normal, will consumers demand a return to cash payments?

By Koen Vanpraet, Group CEO, PXP Financial

The COVID-19 Effect on European E-Commerce and Retail from PXP Financial surveyed consumers in six European countries, finding widely varying appetites towards a cashless society. For example, Poland is the most enthusiastic to ditch cash, while The Netherlands the least – and the UK is smack in the middle with its views on the matter.

In the research, 41% of consumers across the six countries – UK, Spain, Germany, The Netherlands, Poland and Italy – indicated that they would feel positive about a cashless society, while 31% would feel negative. Poland topped the tables of going cashless with 54% of respondents indicating positivity towards dropping cash. Italy followed on 49%, Spain next with 42% followed by the UK at 40%. The two least positive countries were Germany on 33% and the Netherlands on 31%.

A culture of cash

Despite the varying attitudes towards a cashless society, consumers across most of the countries showed enthusiastic uptake of cashless payments – contactless payments, e-wallets, mobile payments, and wearables among them. The notable exception was Germany. For most Germans, using cash isn’t just a personal preference; it’s a cultural value that they’ve grown up with and one tied closely to a national value with centuries-old roots.

But even here as the pandemic has pushed what would have been previously low-value cash transactions onto other payment types, a whopping 73% of German consumers said they had to change their favoured payment method – cash – during the pandemic. When asked what payment methods they tried as a result of the pandemic, Germans overwhelmingly favoured PayPal as their preferred non-cash payment form at 58%, followed by contactless at 48% and online banking at nearly 43%.

Looking at combined answers from all respondents, when asked what payment methods they had tried because of the pandemic, 48% of people have tried contactless. The highest uptake was in Poland at 70%, with Spain ranking the lowest at 27%. Respondents are now also more likely to spend money at retailers that offered contactless/contact-free payment options than before Covid-19, with 65% of all respondents saying yes. Again, Polish shoppers (80%) are more predisposed to contactless, given that it was one of the first countries in Europe to trial the technology.

Re-evaluating the value of cash

Other country-specific highlights in the report show some surprising trends. Italy is one of the most cash-heavy societies in Europe, but the arrival of Covid-19 has led to a rapid re-evaluation by consumers of their payment habits. In the PXP Financial survey, Italian respondents are mostly favourable about the prospect of a cashless society, with nearly 50% seeing it as positive, compared to 21% who viewed it negatively.

The irony of heavy cash usage in Italy is that it gave rise to the introduction of prepaid and contactless payment. Italy is one of the most advanced contactless countries in the world. These figures were reflected in the survey, with nearly 44% stating that they had tried contactless because of the pandemic. Over 63% said they had tried PayPal, while 38% had opted for online banking. Those who tried mobile payments for the first time amounted to just over 14%.

Meanwhile in Spain, although Spaniards are traditionally avid cash users, there are positive signs that things are changing in favour of non-cash methods. Compared to their European counterparts, it appears that Spanish shoppers wouldn’t be sad to see the end of cash. Around 42% believe a cashless society is a good thing, whereas 34% view it as a negative. This is evidenced by the fact that the popularity of payment cards in Spain (particularly credit cards) has surged in recent years, and in mid-2020, for the first time, card usage overtook cash.

At the dawn of a contactless society

Even before the pandemic, there were some European countries who were already deep into the development of a contactless society, with the UK already being entrenched in contactless payments.  But that doesn’t mean everyone was and around 52% of respondents said that they had been influenced to try out contactless payments as a result of the pandemic.

Usage of online banking and PayPal was neck and neck at roughly 38% each. Meanwhile, mobile payments had caught the attention of 22% of UK consumers surveyed, while a further 6% said that they had tried wearable payment forms like watches and wristbands during the pandemic.

Poland is a technologically advanced market, with more dynamic payment method usage than in neighbouring Germany. Poland was one of the first European countries to pioneer contactless payments, evidenced by an overwhelming 80% of Polish respondents said they would now be more likely to spend money at a retailer that offered contactless payment options than before Covid.

Polish consumers overall have a positive view on having a cashless society, with 54% seeing it as a welcome prospect. On the other hand, 19% viewed the end of cash as a negative.

As a result of the pandemic, Polish consumers were more willing to try new payment methods compared to the other countries in the survey. Over 70% stated that they had tried contactless, while a significant 81% said they had opted for online banking. PayPal scored highly in Poland too, with 92% of respondents trying it for the first time during the pandemic.

The Netherlands already has one of the highest rates of non-cash payment method usage in Europe but is characterised by a few anomalies compared to other European markets.

Although non-cash payments are extremely popular, online banking and credit transfers, rather than debit cards, are favoured by Dutch consumers. Cards account for a lower proportion of retail sales compared to other European countries. Credit card usage in particular ranks much lower in the Netherlands when compared to the UK, for example.

But when it comes to getting rid of cash altogether, Dutch respondents are reluctant to wave goodbye to bank notes and coins. 38% of those surveyed view a cashless society negatively, compared to 31% who think going completely cashless is a positive thing.

Preparing for the ‘new normal’

The PXP Financial research shows how important having the widest possible choice of payment methods is for retailers.

Retailers and payment organisations need to work together to understand what their customers need in the new normal as the high streets across Europe open up once again. Together, retailers and payment organisations can develop solutions to ensure continued customer loyalty even as the face of retail changes in line with the widening array of payment methods. Added-value services like loyalty schemes, promotions, in-store rewards through QR codes are all valuable tools that retailers can use to offer their customers convenience, speedy footfall and payment security.

The research underscores the need for retailers to understand the direction of consumers’ attitudes towards where they shop, how they pay for the goods they are buying and what they require from retailers going forward. Covid’s new normal has accelerated the speed of direction and retailers must catch up with their customers.

Many banks turned to low-code automation to handle new government-backed lending programmes and the surge in demand that came with them. For the banks and financial institutions involved in processing stimulus loans, the volume of applications and complex administrative effort required has been potentially overwhelming.

By Herbert Schild, Industry Lead, Financial Services, Appian

By simplifying and automating loan processes, low-code can accelerate the time from loan application to disbursement, which could be a lifeline to businesses. Low-code automation technology allows financial institutions to create applications quickly and integrate them seamlessly into existing systems.

If a new lending scheme, regulatory or loan criteria change comes in, applications can be flexibly adapted at any time and at pace. Applications developed on a low-code automation platform can be deployed immediately and used across devices. Whether in the cloud, on-premise or as a hybrid, a low-code automation platform should comply with the highest security standards. This allows bankers and mortgage advisors to work on a loan at any time and from any location with data privacy and information security. The pandemic and associated lockdowns changed work culture as we know it. Enabling employees to work from home with sensitive data in a secure, flexible way has never been more important and it is the way of the future.

Robotic Process Automation (RPA) for routine, repetitive tasks

RPA or even digital loan applications are still relatively underused in the banking industry, despite available options and potential to add value. One can automate rules-based daily routines such as data entry and updates across systems, freeing employees from repetitive tasks so they can take on new and more strategic work. In addition, RPA reduces risk and human errors from manual data entry. Ultimately, data quality improves for faster and more accurate lending assessments.

In practice, banks also take an economic risk every time they add new customers. Complying with regulations like Customer Due Diligence (CDD), Know Your Customer (KYC) and Anti-Money Laundering (AML) screening is expensive and time-consuming. RPA speeds up the customer onboarding and compliance processes by automatically capturing, enhancing, and delivering precise data for faster loan qualification. This speeds up the application process, and leads to faster,more reliable approvals.

Risk management, Artificial Intelligence (AI) and Intelligent Document Processing (IDP)

The promise of AI remains alluring yet still seems out of reach for most practical technology implementations. However, the reality is within grasp. AI can support financial institutions in a variety of ways, including quick loan programmes, from processing applications to issuing funds. Intelligent AI systems can identify multiple applications from the same borrower or from a non-existent company, thus playing an important role in risk and fraud detection and prevention. Based on internal information from credit decisions and customer repayment behavior, as well as external data sources such as credit scores, AI can recognise patterns to assess new loan applications. Such information can help determine the creditworthiness of the potential new or existing customer for faster loan decision.

AI does more than provide value on risk management. Intelligent Document Processing (IDP) technology takes unstructured data in PDFs and other documents, converts them into structured data to help systems process them. Machine learning and AI technologies are combined and supplemented by employees, if necessary. This combination of people, technology and data enables lenders to concentrate on what’s important in issuing stimulus loans without being slowed down by tedious data entry and analysis.

When time is of the essence, low-code automation has the advantage

Governments have introduced various stimulus lending packages but many banks struggle with processing loan applications quickly enough to help keep businesses afloat during the pandemic. Processes that can’t keep up with change or require lots of manual intervention to adapt are substantial barriers. The adoption of a low-code automation platform has enabled credit institutions across the world to react quickly to change and advance digitisation.

RPA, AI, IDP and data integrations on a low-code development platform, empowers change – fast. Banks and financial institutions can adapt to the circumstances and growing demand, as well as automating manual and complex processes to improve effectiveness, manage risk, increase customer and employee satisfaction. These are crucial to succeeding in today’s decentralised work environment.

Like it or not, at some point in your life you will buy an electric vehicle (EV). Perhaps it will be for yourself (a powerful Tesla Model X or a sensible Toyota Prius) or for your company (a Mercedes eSprinter for deliveries or a large Renault DZE for hauling heavy goods) but either way the EV revolution is coming and every watt of power that charges an EV will need to be paid for.

By Anthony Wicks, Key Account Manager, Self-Service GSV – Parking & EVC, Worldline

In the UK, the government is phasing out internal combustion engine (ICE) vehicles starting in 2030 – a deadline that the current administration brought ahead by 10 years. This, combined with a system of grants for electric vehicles and charging points, should drastically reduce vehicle emissions – a source of not just atmospheric CO2 that contributes to climate change, but nitrogen dioxide and fine particulate matter that has been claimed to cause some 40,000 deaths per year in the UK.

Consumers are getting on board too. There are nearly 500,000 EVs on the UK’s roads – a small fraction of the 38.8 million total, but five times what it was in 2015. The current European EV fleet stands at 2.3 million in 2020, however it is estimated to rise to 34 million in 2030. As charging infrastructure grows, as it becomes as common to see EV charging as it is petrol stations (the number of which have fallen by 35% since 2000), more people will buy EVs. Currently, they are a niche, with buyers purchasing them either out of environmental concerns or just for the cool factor, but they will become a standard choice for many drivers over the next decade.

Building a new infrastructure around fuel

Charging an EV is not like refuelling an ICE vehicle, it takes much longer. Currently, there are three categories of EV charger: slow, fast and ultra-fast (also known as rapid and ultra-rapid, and occasionally you may find it broken down into slow, fast, rapid and ultra-rapid). Slow chargers, the most common, use around 7kW and can typically fully charge an average EV car from empty in eight hours – these will typically be overnight chargers that people will have in their homes. A 50kW model can add 100 miles of range in around 35 minutes, and ultra-fast 150kW chargers are available that bring charging times down to a few minutes.

This means that the whole structure of charging a vehicle must change. It may become common to leave your car on charge in your garage overnight rather than ever visiting public charging stations if you are only using your vehicle for commuting and shopping. Drivers who must travel further afield might choose to charge in purpose-built charging areas with cafes and entertainment, much like service stations. We are increasingly finding that businesses that have little to do with fuel offer EV charging as an added extra – you can recharge your vehicle while shopping at a supermarket, or anywhere that there is parking.

It also means that payments must adapt to the way that people will be using chargers. Charging points will mostly be unattended, so ensuring that customers have a positive experience, that customers who need help can access it and that unscrupulous customers cannot commit fraud will be all down to the design and capabilities of charging points.

What EV charging operators need

For the reasons above, charging stations will be unlike any other piece of infrastructure that we use currently, somewhere between petrol pumps and vending machines, but in some ways not like either of these.

Consider the question of when the payment for charging is taken: if we use the model currently used on vending machines, where a customer taps or swipes their card, their details are taken, they make their order and the amount is deducted from their account, then there could be problems. If a customer taps their card, uses £100 of charging but does not have the funds to pay for that amount, what happens? If you use your card after you are done charging what would prevent somebody from simply driving away? If you pay upfront for £100 of electricity but have to abandon the charging process halfway through, how is the refund processed? If a customer pays by smartphone, which currently has a £100 limit, then what happens if they leave their car charging for £110? Will tourists be able to pay in their own currency? Then there are the payment methods that modern consumers have come to expect: app payments, ‘click and collect’, loyalty programmes (which will need to carry over from existing fuel loyalty programmes) and an omnichannel experience that keeps the same interface across multiple devices.

You can see how complicated EV charging can get, and this is before we have considered security protocols like PSD2 and 3D Secure or new banking rules like Open Banking. EV Payments tie together two pieces of what will become everyday life for billions of people: EVs and digital payments. Businesses need to get the payment system right because consumers who find the already long-winded process of charging an EV difficult can always switch to charging at home.

Solutions for the day after tomorrow

New payment solutions, such as Worldline’s Easy EV hardware and software, are designed to be the one-size-fits-all solution to the growing EV charging market, able to adapt to any EV hardware and any client business model across Western Europe. The systems are compatible with a huge range of payment types and should new payment methods emerge they can be rolled out easily.

The solution works with both end-to-end and standalone payment processing, with pre-authorisation and electronic receipts available as standard for users opting for end-to-end processing. What’s more, acquiring on an end-to-end solution is included for both a standalone version as well as the full end to end solution. This means that whichever solution EV charging providers opt for, in any country in Europe, they can be assured that they are getting a service that ensures that customers can pay for their charging.

Security is a major concern for any payment, especially at unattended electric charging stations, and the latest security standards are built in at the point of sale without adding extra steps for the customer. As is standard in modern payments, this security layer is designed to be as frictionless as possible.

We know that EVs are going to become standard soon, probably overtaking ICE vehicles several years before the 2030 deadline. Payment providers, charging station manufacturers and operators should work together to create payment experiences that make something that consumers will have to do several times a week into a joy instead of a burden.

Platformification is a relatively new business model happening in FinTech that is enabling companies to lift-out entire operations and benefit from mutualisation.

By Andrey Yashunsky, CEO and Founder, Prytek

Platformification is arguably the love child of increasing consumer demands, constantly changing industry regulations and the emergence of a range of next-generation technologies. In banking, for example, the never-ending regulatory standards have made it nearly impossible for smaller and medium-sized banks to invest in the technology that larger banks can comfortably (and quickly) afford to build in-house. As a result, platformification has quickly become a lifeboat for many banks that are determined to keep up with the digital transformation taking place in the industry, while also maintaining profitability.

BOPaaS (Business Operating Platform-as-a-Service) describes an advanced style of platformification that combines the standard benefits of managed services, with advanced access to cutting-edge technology and leading industry expert advice. Through its adoption, firms immediately benefit from a vertically integrated ecosystem: new technologies are designed and built at the heart of this ecosystem, which can then be cross-leveraged across all the businesses connected to it. This technological innovation, which is made possible through the mutualised R&D costs, helps to entirely transform business operations and job functions. A recent example is Karbon, a customer lifecycle management (CLM) product that is currently being offered by Delta Capita, a global managed services, technology solutions and consulting provider. The creation of Karbon was made possible through Prytek’s investment in Blackswan.

A hybrid approach to managed services

The integrated nature of BOPaaS is what makes it special: It is a hybrid of technology-based managed services and recommendations, engagement and interactions with industry specialists. Both are equally important. The development of state-of-the-art technology would be wasted if it wasn’t in the hands of an expert that knows how to effectively implement it in a way that can transform operations, and ultimately enhance the end-user experience. It is also important to know that it is not just the financial services industry that can benefit. For example, Prytek also operates BOPaaS in the cyber-education and HR sectors, and has plans this year to expand its reach further. Ultimately any industry that relies on human data input, or expensive centralised models, and is determined to improve client satisfaction could benefit from platformification and BOPaaS.

Driving technological and service innovation

These types of platforms are not only driving technological innovation, but they are also enabling firms to spend more time engaging with clients and strengthening business relationships. They are taking over the responsibility of the businesses’ non-differentiating operations as well as the responsibility to monitor for changing regulations, customer demands and digital transformation opportunities. By freeing up more time and effort of employees, BOPaaS customers can focus on the aspects of their business that makes them truly unique – which is almost entirely the way it delivers its customer service.