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In 2021, so much of the attention was focused on collectible NFTs, gaming and the metaverse. Their popularity took many by surprise and benefitted tokens that are linked to these powerful trends. In 2020, decentralised finance was the star of the show before NFTs stole the limelight. The DeFi ecosystem continues to expand and new opportunities open up, despite token performance not being on par with some of the newer use cases.

by Martha Reyes, Head of Research, BEQUANT 

There are several compelling protocols that should not be ignored, such as those that bridge the real-world economy to the blockchain. This can include financing for SMEs or facilitating global trade transactions. While perhaps less attention-grabbing than other token-backed protocols, the total addressable market is vast.

Remittances are one of the most widely known applications

One better-known use case that has risen to prominence is the trillion-dollar money transfer industry. Tokens’ ability to on-ramp any global fiat currency and off-ramp it into another at lower rates than the traditional transfer methods, securely and almost instantly, makes them a real disruptor in an archaic corner of finance. Strike, the company using the Lightning Network on Bitcoin rails, is one of the most successful examples, with entities as disparate as Twitter and El Salvador relying on the technology for international payments and remittances.

Global trade is an even larger market ripe for improvement

The technology can extend to other areas of the old economy. Global trade, a $5.6 trillion market and growing, is one such segment and it’s larger than remittances. Buying goods and services across borders is complex, with lengthy processing times and high transaction fees. It also requires financing, creating barriers for small and mid-size companies.

Businesses can utilize smart contracts on the blockchain, storing agreements and documents and guaranteeing traceability. Smart contracts allow the two parties to specify the terms of an agreement and ensure that those are transparent by virtue of being on the blockchain.

Many other possibilities being explored

In the NFT space, applications are not limited to digital objects but also to physical ones, hence the birth of NFT mortgages backed by real assets or tokenized ownership of real estate and expensive artworks.

Blockchain’s potential is by no means limited to these examples. Others include secure sharing of data such as medical data, music royalty tracking, real-time IoT operating systems, personal identity security, anti-money laundering tracking systems, supply chain and logistics monitoring, voting mechanism, advertising insights, original content creation, and real estate processing platforms.

What makes for a successful project?

When evaluating a project, retail and institutional investors sometimes focus on different properties of a project. Key metrics to keep in mind are the strength of the underlying technology, use cases, total addressable market and adoption trends.

One example is the XDC Network, a hybrid, delegated proof of stake consensus network, with developer-friendly architecture. As a third-generation blockchain, the technology is more advanced than some of the more established blockchains. Bitcoin can handle between 3 and 6 transactions per second, Ethereum’s blockchain can handle 12 to 16, while XinFin’s can handle more than 2000.

A use case is reducing friction and expanding access to trade financing for SMEs and creating yield opportunities for investors. Agreements and documents are stored in interoperable smart contracts, and transactions are settled on the blockchain more efficiently than in the legacy systems. There is also higher security as there is clear evidence and traceability of ownership.  The smart contract transactions feature digital tokens, which represent the value of off-chain, the bank originated assets and can generate yield for investors.

This means that when individual purchases and makes an investment into the XDC token, they are investing in the underlying technology which can be used to develop payment solutions and other blockchain apps.

Fees have also greatly reduced over the span of three generations, from $15 to $0.00001 per transaction, with confirmation speeds cut from 1-60 minutes to around 2 seconds. With an increased capacity and lower fees, the barriers to access the technology fall away. Energy consumption has also been reduced from 71.12TWh on Bitcoin to 0.0000074TWh on the XDC Network.

Many alternative Layer 1’s such as XinFin’s XDC Network, have been developed or are in development to challenge those popular in the NFT and DeFi space that have struggled with scalability issues. Developers are working to increase the number of transactions processed and reduce gas fees, as users have been stung by high costs on the Ethereum blockchain.

Now, blockchains are being developed to be cheaper, faster and more energy-efficient, albeit with compromises on decentralization, to address growing demand. Thus, they are generating interest from individual and professional investors alike. Scalability will unlock important avenues of growth in the digital economy as well as the physical one. It will be an important theme in 2022.

Businesses of every kind have been affected by the COVID-19 pandemic. The banking sector has not been immune: for some banks, the economic impact has been notably acute. In response, the move to online financial services has accelerated at a dramatic rate as a plethora of fintechs, so-called “neobanks” and non-traditional financial service companies, continue to expand their activities. As the payments phenomenon became truly global during the pandemic, Africa has emerged as a new FinTech hub.

by Manoj Mistry, Managing Director, IBOS Association

An increase in investment has led to African FinTech companies expanding their services across the continent. The potential is enormous, particularly in sub-Saharan Africa – a region that has traditionally suffered from limited access to financial services. As Africa’s largest economy with a population of nearly 210 million, Nigeria received more than 60% of Africa’s inbound FinTech investment in 2021. But over 50% of Nigerians do not yet have a bank account.

Last year, four African FinTech companies achieved unicorn status with $1bn+ valuations: OPay, a mobile-payments company, which raised funds from investors including SoftBank; Wave, a Senegal-based mobile money network; Chipper Cash, a peer-to-peer payments operator backed by Jeff Bezos; and Flutterwave, which offers payments services to businesses.

If the future of the banking sector in Africa seems promising, then open banking looks set to play a pivotal role, providing third-party financial service providers open access to consumer banking, transaction, and other financial data through application programming interfaces (APIs). As an open-source technology, it allows third-party developers, such as fintechs, to access data held by banks and to develop applications or services based on such data. Through this seamless connection of data, open banking enables customers to access products best suited to their needs, lowering costs, as well as facilitating innovation and inclusion.

Africa’s latent demand for open banking requires the banking sector to adopt fintech solutions. Some of that is already underway. In December 2020, Kenya’s Central Bank released its four-year strategy which highlighted Open Infrastructure as one of its main strategic objectives. In 2019, two large South African banks embraced open banking at the height of the pandemic. The number of South African banks offering open banking services has since grown to six. Meanwhile, South African and Nigerian start-ups TrueID and Okra, respectively, announced they had received significant funding to develop open banking infrastructure.

The UK and EU have already addressed the legislative challenge. At the heart of the Competition & Markets Authority (CMA) Order and the Second Payment Services Directive (PSD2) is customer consent. In Sub-Saharan Africa, the regulatory frameworks that are integral for the operation of open banking in the future, such as data protection laws, have largely yet to materialize.

Meanwhile, a significant part of the population remains unbanked or underbanked across much of the region. Taking South Africa as an example, a great opportunity exists for banks across the continent to become involved in open banking solutions, meeting the needs of the consumers and revolutionising the concept of African banking. African legislators, therefore, need to recognise the enormous potential that open banking creates to facilitate financial inclusion, especially its beneficial impact on access and affordability.

For banks around the world, leveraging an eco-mindset is becoming increasingly crucial as consumers consider their role in environmentally damaging CO2 emissions and climate change. As challenger banks, such as Starling and Monzo, drive up social initiatives and commit to net-zero pledges,  more traditional banks are shifting their public perception of climate change and making investments in greener services.

by Dr Carsten Wengel, Head of Global Sales & Distribution in the Card & Digital Payments Business, Giesecke+Devrient

In fact, the latest research by YouGov finds that 58% of consumers in the USA and 57% in the UK are now willing to spend more on sustainability in the banking sector. Banks are a mirror of the societies they serve, and as a result, they need to decide if they want to be the driver of or driven by the global trend of sustainability. But how best can they achieve this, and which methods can they adopt to win the eco-conscious consumer?

Sustainable banking cards for a sustainable consumer

Over the recent years, more consumers have come to realise their purchasing decisions have the power to impact positive change. As such, they now expect sustainable offerings from any company they engage with. This includes banks too, with consumers increasingly demanding their banks’ support to help them shift to more sustainable payment practices. One way to meet this growing demand is for banks to introduce sustainable banking cards.

Despite a common misconception, banking cards can in fact be environmentally-friendly. They can be made of climate-friendly materials such as renewable plant fibres that are entirely compostable under industrial conditions. Even though the material has similar characteristics and strength to petrol-based plastic, it is nothing like it as no additional greenhouse gases are released during the combustion process. Compared to the production of conventional cards, sustainable banking cards can save up energy and harmful gas emissions of as much as 68%. This can significantly reduce their impact on the planet considering the volumes produced each year.

With 91% of the world’s plastic not yet recycled, sustainable banking cards can also have their bodies made entirely of recycled PVC, driving the circular economy and taking appropriate steps to end planned obsolescence. A smarter use – or re-use – of materials can help reduce waste and pressures on the environment whilst stimulating innovation and boosting economic growth.

It’s not just the physical banking card, however, that should be put through a sustainability check and replacement. Every new card requires a PIN which is often sent to consumers by post, creating more paper waste. Banks should therefore consider an eco-friendlier alternative – a digital way to send PINs. For example, by a text message, QR code or provide secure access to new PIN via the app and multi-factor authentication.

Such a step towards sustainability can not only be life-saving for our planet, but it can also act as a powerful business tool for banks. In the hands of customers, sustainable banking cards can create a successful brand multiplier effect and help reinforce the bank’s mission, purpose and commitment to becoming more environmentally friendly. Customers will naturally become advocates of sustainable lifestyle banking, helping traditional institutions stand out with their eco-offerings amongst fierce competition.

Joint efforts needed to reduce climate impact

The fight against climate change does not have to be a lonely one for financial services institutions. To ensure greater results and a real impact, banks and fintechs should create fruitful partnerships and in a joint effort, satisfy consumer demand for more sustainable means of payments and offerings. Together they could develop and promote new services that calculate how much CO2 a consumer contributes each time they buy something.

Through an API, for example, banks could integrate such calculations into their digital wallets, which would analyse all types of transactions a consumer completes each month and showcase their carbon footprint through a visual dashboard. This could not only help consumers become better informed but also prompt them to make changes. Sweden-based company Doconomy is one fintech that has been making progress in this area, giving its customers more transparency on how their decisions impact the planet, encouraging them to change their behaviour and practices into more sustainable ones.

Taking the learnings and innovations that fintechs are pioneering, traditional commercial banks should follow their footsteps and build a more sustainable financial services ecosystem in which knowledge and best practice are shared regularly. It is apparent that banks need to become partners, or even drivers of change, however, they can only achieve that with the support of other, more experienced financial institutions to create a strong, reliable and transparent environmental initiative. It could be that through introducing concrete, climate-positive policies in the near future, banks and fintechs will be more encouraged to collaborate and form such a crucial ecosystem, meeting consumer needs for sustainable banking practices and ultimately achieving the international environmental and global warming goals.

Achieving a climate-friendly banking future

Fuelled by consumer demand for a green value proposition, traditional banks have started waking up to the need to act positively when it comes to payment sustainability. Through the introduction of sustainable banking cards, leveraging technology to raise greater carbon footprint awareness amongst consumers and joint actions between all financial ecosystem players, the industry can foster a greener future and make a real, positive difference for generations to come. As banks look to become more competitive and innovative, ensuring sustainable products and services could not only be life-saving for the planet, but also a new, profitable avenue worth exploring.

Online auction platforms have accelerated the digital migration of the art market, which has traditionally been slow to embrace innovation. Whilst this may seem unsurprising amid the headlines of NFTs taking the art world by storm, it is all the more interesting that online auctions have driven the continued robust distribution of physical art.

by Garry Jones, CEO, NovaFori

This rapidly growing technology, therefore, gives us a glimpse of the future of fine art and collectibles, not by dispensing with the physical in favour of the digital, but by uniting the two in a more symbiotic ecosystem that better serves both those who collect works of art and those who facilitate their sale.

Online auctions in fine form

Leading auction houses such as Christie’s have now firmly embraced online auctions, with the pandemic accelerating uptake significantly since the early months of 2020. This has enabled auction houses to retain some semblance of business as usual amid the disruption caused by Covid-19, and now, nearly two years later, online auctions are expected to account for 25% of all art sales by the end of 2021.

Auction houses are clearly not looking backwards, not least because this digital migration of art sales has unlocked a much more extensive geographical and demographic customer base. Online auctions hold far more appeal among younger people, for instance, compared to the financial and environmental cost of travelling to an auction in person.

Moreover, the data-driven insights gained from the most innovative auction platforms empower those facilitating sales to make the most of these demographic shifts. Platforms equipped with a machine learning function, for example, can help auctioneers become attuned to the appetites of registered consumers based on their bidding history, enabling them to set pricing estimates more effectively.

NFTs: An auction(ed) token

While online auctions have helped keep the traditional art market relevant for new audiences, they also allow auctioneers to explore a new aspect of their business which is entirely online: Non-Fungible Tokens (NFTs). As a purely digital asset class, NFTs are only bought and sold via online marketplaces – and the burgeoning popularity of these once-obscure assets has thrust them into the limelight.

Indeed, institutional auction houses have now begun to heed the gradual increase in consumer confidence around this new breed of collectible. Following its landmark sale of digital artist Beeple’s ‘The First 5,000 Days’ in March 2021, Christie’s has now sold more than $100 million-worth of NFTs, not including the recent $29.8 million sale of Beeple’s ‘HUMAN ONE’ artwork.

Although some critics have decried the nascent NFT market as a bubble waiting to burst, such a fall in demand may in fact yield a slower, more sustainable level of growth which will facilitate the long-term maturity of the market. Thus, the outlook for NFT sales remains optimistic, and so too does the outlook for the online infrastructure which underlies it.

Growing, growing, gone?

Online auction platforms, therefore, retain considerable scope for growth, far beyond the pandemic which has accelerated the early stages of their development. In fact, a survey conducted in 2020 found that 56% of art buyers foresaw a permanent switch to digital sales. Considering the aforementioned benefits of online auctions for both buyers and facilitators of sales, it is easy to see why this would be so popular.

Moreover, platforms that facilitate online sales, whether the items themselves exist on a physical level or not, will remain viable precisely because of their usefulness for different types of auctions. Their rapid rise is by no means the death knell of the physical art market; it is instead part of the increasing convergence of the physical and digital worlds.

Finally, bridging the gap between the physical and the digital will only grow in importance as in-person auctions return in some form. These will most likely consist of hybrid events, where participants can attend online as well as in-person depending on their preferences. In the uncertain pandemic context, leveraging technology capable of delivering robust buyer and auctioneer experiences will be all the more critical and not just in the art world.

Financial services are increasingly implementing AI technologies in order to help analyse massive volumes of data, identify market trends and prioritise tasks. On top of this, it is being used to identify fraud, personalise the customer journey, as well as cyber security and general risk management.

by Dr Leslie Kanthan, CEO and Co-Founder, TurinTech

The volume of information and data generated by financial institutions is huge, and AI is proving to be a pivotal cog in the sector machine by handling this data more efficiently. 

According to a past Accenture report, banks could increase revenue by 34% by this year if they invest more readily in artificial intelligence. Fortunately, this report also concluded that in general the banking industry and its executives and employees were optimistic and positive about the impact AI could have on their organisation. 

It comes as no surprise that as of February 2022, 56% of financial firms have implemented AI in business domains like risk management and 52% in revenue generation areas.

So where are we today? Is AI just another buzzword or can it really help deliver efficiency and increase productivity in the financial sector? Let’s dive into three important ways AI optimisation can revolutionise the financial sector.

Empowering innovation at speed and scale

Operationalising AI at scale is still a big issue for many companies, with IDC citing only 25% of firms running an AI project having developed an “enterprise-wide” AI strategy and many of these projects are doomed to fail. 

Operating in a highly regulated industry, financial institutions often have to trade-off between model performance and explainability. But this is where AI optimisation can help, which uses AI to optimise model and code, enabling full transparency and explainability, without compromising on the accuracy and running speed of the model.

Unlike other AI automation tools, AI optimisation platforms can help financial firms build custom models with multiple criteria, at scale. What this means for financial services is that these tools can create better and faster algorithms for their unique business problems, optimising business processes efficiently and effectively.

Elevate ESG compliance with greener AI

A Global Data survey reported how the pandemic has pushed ESG executives to increase their focus and action on ESG issues. 

As an industry, it’s time to reconsider our carbon footprint and start to prioritise sustainable change. WWF and Greenpeace report that UK Financial Institutions were responsible for 805 million tonnes of CO2 emissions, almost 1.8 times the UK’s domestically produced emissions.

AI optimisation will be a force for good in meeting sustainability goals, with machine learning models becoming faster, more efficient, and consuming less energy. Green AI ultimately integrates technology and sustainability into a unified ecosystem. 

With more change and uncertainty to come in the year ahead, AI optimisation will be there to support and transform those businesses that are willing to rethink existing processes and agendas. Ultimately every organisation has a responsibility to be contributing positively to the climate crisis, and optimising processes is certainly a step in the right direction.

Accelerate algorithmic trading speed and improve accuracy

According to Coalition Greenwich’s report, 28% of FX executives said they are currently using execution algos, with 51% confirming they intend to increase their use of algos. 

If and when applied correctly, AI can bring impactful benefits to algo trading. Take, for example, a case when a hedge fund’s statistical models are underperforming, unable to take advantage of more complicated patterns in ever-increasing data types and volumes (e.g. Market price and volume data, third party data, proprietary data).

What can the trading team do? 

By leveraging AI optimisation platforms to accelerate the end-to-end trading strategy development process,  they can create dozens of optimal models in days for different prediction needs, such as the price, price percentage change, up/down momentum, on large amounts of data. The fund can then automatically identify the most effective signals among thousands of data features, avoiding spending hours to do so manually. Applying this to the real world can make trading strategy development 25 times faster and increase the annual return rate by 90%. 

The bottom line

Through the use of AI technology, the financial sector is able to significantly improve its performance and revenue in more ways than one. McKinsey estimates that AI could generate up to $1 trillion additional value annually for the banking industry globally.

Furthermore, in today’s constantly evolving landscape, staying innovative and agile is crucial. Having technology that not only empowers this change and innovation at scale but compliments it with ESG  considerations will be of huge importance to the sector moving forward. Vital innovation is required to be implemented at speed and scale in order to keep up with competitors, which can be achieved through the implementation of AI. 

As cryptocurrencies become ever more mainstream, blue-chip names are anxious not to be left behind in the crypto stampede. With Goldman Sachs predicting that bitcoin will increasingly compete with gold as a store of value, banks and major corporates are eagerly seeking to extend their crypto footprint.

by Manoj Mistry, Managing Director, IBOS Association

The most recent big name to join them is the Canadian arm of KPMG, which recently announced that it had added ethereum (ETH) and bitcoin (BTC) to its balance sheet, making it the first of the Big Four to invest in decentralised digital currencies.

By doing so, the accounting giant has joined legions of crypto investors worldwide. According to Statista, the global number of Blockchain wallet users has already surpassed 81 million with some analysts estimating that the total figure now exceeds 200 million. Figures published by the Financial Conduct Authority (FCA) estimate that there are around 2.5 million cryptocurrency owners in the UK.

KPMG’s strategic decision can be interpreted as a reflection of the market’s direction of travel: an explosion of investor interest in crypto and increasing participation in other blockchain technologies, such as NFTs (non-fungible tokens) and decentralised finance (DeFi) technology, that has simply become too big to ignore.

The managing partner at KPMG’s Canada office, Benjie Thomas, was distinctly upbeat when he announced the move. “This investment reflects our belief that institutional adoption of cryptoassets and blockchain technology will continue to grow and become a regular part of the asset mix,” he said.

A few weeks later, KPMG Canada went further: buying a World of Women NFT (Woman #2681) for a reported 25 ETH (US$73,000), acquiring an Ethereum Name Service domain name – a tool that makes cryptocurrency addresses more user-friendly – and minting kpmgca.eth.

KPMG is not alone. Many banks have also recognised cryptocurrencies as a maturing asset class: 55 per cent of the world’s 100 biggest banks by assets under management are now investing directly or indirectly in companies and projects related to cryptocurrencies and blockchain, according to Blockdata.

In allocating bitcoin and ethereum to its corporate treasury, KPMG also follows in the footsteps of major companies such as MicroStrategy, Square and Tesla, which are now holding crypto on their balance sheets. Tesla’s CEO Elon Musk has been a keen advocate of crypto, having publicly stated that his personal portfolio includes bitcoin, ethereum and dogecoin. Meanwhile, Tesla’s most recent accounts reveal that the company held almost $2 billion worth of Bitcoin holdings last year.

The absence of specific regulation is arguably part of crypto’s appeal. But as the combined market value of all cryptocurrencies breached the $2 trillion mark in 2021, financial markets and investors knew that key global regulators were set to respond to what they perceived as high levels of risk.

UK regulators have set the rhetorical pace. The FCA and the Bank of England have both cautioned investors in uncharacteristically strong language to help them appreciate the risks: fraud, hacking, money laundering, sanctions risks, as well as general market and credit risks.

In the US, Treasury Secretary Janet Yellen has repeatedly suggested that fundamental questions exist about the legitimacy and stability of cryptocurrencies and that the US should implement an appropriate regulatory framework.

Despite these siren voices, bespoke regulatory regimes for crypto have not yet been put in place on either side of the Atlantic, although it can only be a matter of time before they are.

Canada also has no crypto-specific regulations. Instead, cryptos are regulated under the country’s securities laws – part of the mandate of Canada’s 13 securities regulatory agencies (SRAs), established by ten provincial and three territorial governments.

Not considered legal tender under the Bank of Canada Act, cryptocurrencies are classified as a commodity rather than money, while Canadian securities laws treat cryptos as tokens, classifying them as securities.

But Canada’s regulatory framework is distinctly more supportive of crypto than the US, which may have been a driver for KPMG’s local move into crypto. Notably, the Canadian Securities Administrators (CSA) allow financial innovations to test the waters for a designated period of time, during which they are exempt from the compliance rules under existing securities regulation.

The CSA is also breaking fresh ground in defining the contractual right to custodied crypto assets as a security, making Canada the first jurisdiction in the world to do so. This potentially puts Canadian crypto players on a path to experience the type of regulation that is not yet seen elsewhere.

Like other cryptos, bitcoin and ethereum are regarded by investors as speculative assets. Beyond their inherent volatility, KPMG’s decision to add digital assets to its balance sheet creates other potential risks including anti-money laundering (AML) and the future of tax reform.

For the partners of KPMG Canada, there are also compliance considerations. These extend to areas for which banks are typically responsible: security and AML checks. Notably, the International Financial Reporting Standards (IFRS) has no specific provisions that detail how to account for cryptocurrencies.

Big corporations’ involvement in crypto is both exciting and welcome. Having crossed that investment Rubicon, however, they will have to implement and maintain effective regulation and supervision in order to prevent white-collar crime, money laundering and cybersecurity breaches, among other issues.

Supported by a payments ecosystem that becomes increasingly more sophisticated each day, and driven by accelerated digital transformations following the pandemic, the payment methods consumers have at their disposal today are myriad. Not only are Alternative Payment Methods (APMs) proliferating across the globe, they are already dominating cards in some countries and consumers are developing specific preferences according to region or country.

by Kristian Gjerding, CEO, CellPoint Digital

Armed with and accustomed to this array of APMs, consumers can spend their money in multiple, digital-first ways almost anywhere in the world from card or cash-based wallets to mobile payments, to paying by instalments.

Merchants who are unable to accept these APMs risk creating customer friction points that interfere with their growth ambitions and prevent them from scaling their businesses to serve a global customer base.

The rise and rise of APMs

Consumer adoption of APMs is growing exponentially and was believed to account for over half of all global e-commerce payments in 2019 – the last year for which results are available. At a more regional level, it is reported that in Europe, upon reaching the Point of Sale (POS), 80% of consumers have an expectation to pay for their goods and services with a digital payment method rather than a typical debit or credit card.

Meanwhile, across the Asia-Pacific (APAC) region, nearly all consumers (94%) report that they would consider using an APM in 2022 and within the Middle East and North Africa (MENA) experts are saying digital wallets are set to be the region’s preferred means of making payments. Owed largely to the pandemic and the necessity for online, digital, and contactless payments, Latin America is also catching up with 55% of the population now banked and the use of APMs on a steady increase.

As we can see, consumers are shifting towards APMs in ever-increasing numbers. For merchants with cross-border growth ambitions, it means that developing an APM strategy is now crucial for penetrating global markets and driving revenues.

Tackling cart abandonment

‘Cart abandonment’ is an inevitable bugbear for online merchants with 70% of shoppers deserting their virtual trolley at the point payment is requested.

As an increasing number of merchants with ambitions of international growth are experiencing, an inability to accept a customers’ preferred payment method is one of the more reliable ways to kill a conversion. Indeed, a recent study in the US found that 42% of American consumers will bring a purchase to a halt if their favourite payment method isn’t available.

The problem for merchants is, with all these different payment methods, some more popular in specific regions than others, and with a gauntlet of contrasting international regulations to navigate, implementing and managing all these methods can be incredibly difficult.

It is partly because of their ability to confront this friction that payment orchestration platforms are growing in prevalence.

Enter the payments orchestration provider

According to PYMNTs, the global market for payment orchestration platforms is also expected to grow 20% every year between 2021 and 2026. With each new merchant implementing the technology, consumers across the globe have a new place to spend their money in whichever way suits them best.

The platforms provide merchants with a single interface through which all transactions between themselves, their customers, and their payment providers are initiated, directed, and validated. The agility this confers to merchants who would otherwise need to manually integrate new APM options – resulting in protracted time-to-market and decreased competitiveness – is considerable.

Moreover, the complexity of monitoring the performance of multiple, manually integrated, and siloed payment methods would add to these obstacles and delays. Here, payment orchestration intercepts by automatically aggregating and processing these crucial data streams and providing merchants with valuable, real-time analytics that save time, prevent human error, and aid decision making.

This speed to market coupled with comprehensive real-time reporting allows merchants to begin increasing revenues in the short-term and make better decisions to facilitate growth in the long-term. However, the opportunities to enhance cash flows don’t stop there.

When a merchant relies on a single acquirer/PSP it is they who have ultimate control over transaction flows. For example, if the PSP succumbs to an outage, the merchant is subsequently and directly impacted. Likewise, if the PSP routes transactions to a specific acquirer, the merchant can do little if the costs they incur from this acquirer are unfavourable to them. A payment orchestration provider redresses this imbalance by transferring control of the transaction flow back to the merchant by allowing them to create real-time rules for switching transactions and offering APMs to consumers. This dynamic routing improves the success of processing rates, gives customers more payment options, and means failed transactions can be re-routed to the next acquirer leading to fewer lost sales.

Collectively, these various payment orchestration features and functionalities both unleash the potential of APMs and provide merchants with the speed and flexibility to drive revenues to ambition-exceeding levels.

Partnership with payment orchestration platform provider is key

By plugging directly into existing core or eCommerce systems, payment orchestration platform providers allow merchants to go straight to market with a growing payment ecosystem where the best-suited partners are easily picked and added. With their online checkouts optimised to accept a full suite of APMs, opportunities for growth quickly begin to multiply.

Merchants can display their products or services across multiple digital channels knowing that consumers can pay using whichever APM they prefer. This reduces cart abandonment rates and allows merchants to target specific regions by demonstrating their ability to accept the most popular APMs consumers in that region use.

Payment orchestration enabled APMs to add agility and dynamism to today’s merchants that allow them – for the first time – to give consumers whatever payment method they want, wherever they are. As the adoption of APMs continues its steep upwards trend, this capability will only become more essential for merchants looking to thrive on a global scale.

Of all the FinTech and banking trends of the past few years, the story of Buy Now, Pay Later (BNPL) stands out as one of the most prominent and memorable. During a period of tumult and uncertainty, BNPL seemed to go from strength to strength, growing exponentially in scale and popularity and swiftly being incorporated into the offerings of some of the world’s largest and most influential companies.

by Ion Fratiloiu, Head of Commercial, Yobota

Breaking financing down into multiple fixed repayments has allowed consumers to increase their short-term spending power, which can be a tremendous advantage to those with regular income that lack saved capital. The benefits aren’t limited to the user, of course. Retailers are reaping the rewards of this heightened spending power, while BNPL providers have grown in tandem with the product’s popularity.

BNPL is not a license to spend with abandon – it is ultimately a credit product, and its misuse can have adverse effects on the consumer’s credit rating and financial wellbeing if repayments are missed. It is a tool that has the power to help consumers reach their immediate goals, but one that must be treated with care and caution.

With Which? estimating in July 2021 that a third of UK consumers reported having used a BNPL product at least once, this convenient lending system has clearly landed in the business to consumer (B2C) sector with aplomb, changing expectations and best practices for lenders and retailers alike. This sea-change, however, is not limited exclusively to B2C – the next destination of the Buy Now, Pay Later revolution is in fact other businesses.

Back to B2B

The next giant leap for BNPL might stem from its usefulness to startups and small-to-medium enterprises (SMEs). Liquidity and financing are common obstacles for businesses in their early stages, and while specialist services do exist to cater to these issues, BNPL can provide a greater degree of control, flexibility and transparency that could prove invaluable to businesses that are in the process of levelling up.

Support for SMEs and startups comes in many forms, but overreliance on incubators and seed funding can stunt the overall development of the sector. Sometimes, businesses need to be able to manage their own finances at speed, needing short-term injections rather than waiting for their next seed round. Traditional lending options are available, and have existed for years, but can be slow to secure and be laden with complex terms and conditions.

This is what makes BNPL for Business such a tempting proposition. The ability to spread repayment for specific purchases over an agreed period suits businesses with predictable revenues but little capital – like a subscription-based startup or a growing company still awaiting funding. BNPL can make borrowing frictionless and consistent in a way existing options cannot.

This isn’t only good news for small businesses – growth in the BNPL for the Business sector could fuel the same growth that B2C did, with all parties involved able to benefit. We could see SMEs experiencing improved cash flow management and spending power, and specialised B2B BNPL providers expanding with the same speed as their B2C counterparts.

Power to pay your own way

The driving force behind the rate of change within BNPL is the strength of modern core banking. Banking as a Service (BaaS) has simplified the process of setting up seamless and scalable lending and payment solutions to the point that any business can create their own financial products with ease. This means that not only can more businesses offer SMEs lending options, but more SMEs can create their own BNPLs and offer split payments through their own platforms.

In the UK alone, BNPL usage almost quadrupled in 2020, totalling an astounding £2.6b in transactions – this sort of opportunity should not be exclusive to major brands and eCommerce retailers. Whether using the services themselves or offering them to their users, SMEs should consider adopting BNPL as part of their approach if they want to stay ahead of the curve.

The year of BPNL for small business

While the world’s largest companies like Amazon and Apple have already embraced BNPL, enjoying banner years of their own, the success of new businesses is a more encouraging metric of our economy rebuilding. Seeing more SMEs and startups turn to Buy Now, Pay Later could be an indication of better things to come, and of different industries and sectors beginning to get back on their feet.

2022 is a year for optimism, for looking forward and having confidence in better things ahead. BNPL is one area with the potential for success, and the opportunity at hand is there for the taking. All small businesses need to do is embrace it for themselves.

From launching his financial career at Deutsche Bank, Ion spent a number of years consulting in the equity capital markets space and leading sales growth for FTSE500 company Fiserv and core banking provider Thought Machine. He joined Yobota in 2021 to launch its commercial operation, leading GTM strategy and building a diverse and multi-faceted team to take the company to the next stage of growth.