2023

Customer-centricity and financial inclusion remain a challenge for the financial services sector. With banking products offered to customers becoming increasingly commoditized, AI-powered analytics can help banks differentiate themselves, provide competitive edge and enable personalised customer experience. The coming of age of such technologies allows banks to develop a strategic and organizational focus in analytics and adopt it as a true business discipline.

by Krish Narayanaswami, President & Global Head – Banking at Azentio Software

The analytics and business intelligence (BI) software market grew by 10.4% to $24.8bn in 2019. The world of banking has encountered unprecedented change over the past few years, and trends show that this will be the norm for a while longer. Modern BI platforms continue to be the fastest-growing segment at 17.9%, followed by data science platforms with a 17.5% growth (Source: Gartner).

Banks have been an early adopter of BI and analytics to drive business growth, reduce risk and optimise cost. With the rapid growth in digital banking, the velocity of transaction data has increased multifold. This data has now unlocked tremendous opportunities for banks in understanding consumer behaviour and tailor make specialised offerings by leveraging analytics as Decision as a Service

How will changes in banking laws and regulations affect profitability? Which stress scenarios should be considered? Who are the current ‘high-value’ customers? Which customers have the highest potential to ensure revenue growth? Can the bank create an early warning system to prevent fraud by identifying patterns? Increasingly, data analytics is seen as the answer that banking leaders are looking to, to successfully navigate this volatile environment.

Present Day Strategy and Key Drivers

According to a recent Deloitte survey, frontrunners benefited from early recognition of the importance of analytics to the overall business success. This recognition has helped them shape a specific analytics implementation plan that considers holistic AI adoption across the enterprise. The survey indicates that many frontrunners launched analytics centres of excellence and established comprehensive, companywide strategies for AI adoption for their internal departments, recognizing the strategic importance of AI.

The following strategies should be taken into consideration while adopting an analytics framework across the organization.

Prioritize the focus areas

Identify key areas where data and analytics can have the greatest impact and obtain leadership engagement from the start (for example, customer, risk, finance). This must reflect in the immediate goals and vision of financial institutions.

Streamline your data

Provide an integrated view of high-quality data vs. siloed pockets across product and business lines (for example, single view of the customer, aggregated risk exposure by product). Setting up a data warehouse/data lake and further creating specialized data marts to make the data more structured and easily accessible to the respective stakeholders.

Integrate with decision management systems

The key is to develop data-driven strategies at every step to arrive at smart decisions. Analytical insights can be plugged directly into decision management systems to arrive at the next best action.

Onboarding the right skillsets

Finding the right talent for statistical modelling little data and big data is one of the biggest challenges. Develop a talent plan that builds on both existing internal talent and external sources.

Leverage the power of cloud

Leading cloud providers like AWS, Azure, OCI and GCP are providing powerful analytical offerings as services and have the power to run heavy compute. The ability to scale up infrastructure to run high loads and to bring it down when not required helps in optimising costs.

What is the way forward?

According to a 2020 McKinsey study involving over 25 use cases, AI technologies can help boost revenues through increased personalization of services to customers (and employees); lower costs through efficiencies generated by higher automation, reduce errors rates and improve resource utilization. It can uncover new and previously unrealized opportunities based on an improved ability to process and generate insights from vast troves of data.

The potential value creation for banks is one of the largest across industries, as AI can potentially unlock approximately $1 trillion of incremental value for them annually.

Realising the need for going mainstream with AI, banks internationally have already started harnessing the power of data to derive utility across various spheres of their functioning, including sentiment analysis, product cross-selling, regulatory compliances management, reputational risk management, and financial crime management.

AI and analytics will eventually become a part of every major initiative, in areas ranging from customers and risk, to finance, workforce, and supply chain.

Personalised experiences and products powered by advanced analytics and machine learning will be key to wooing customers in this era of intense competition. Banks have a chance to overcome the hurdles and join the analytics arms race before the frontrunners extend the gap that would be too far to bridge.

Legacy systems can become a major barrier to progress. By maintaining outdated legacy systems, the UK government risks wasting between £13-£22 billion over the next five years. The figures come from an independent investigation into the government’s Digital, Data and Technology function published by the UK Cabinet Office.

by Andrew Barnett, Global Head of Product Strategy, RIMES

It’s a lesson that investment managers know all too well. Currently, in many legacy systems data is centralised within firms and constrained by costly technology, such as Enterprise Data Management (EDM) platforms, Extract Transform and Load (ETL) tools and data warehouses.

As data volumes explode, firms are finding it more and more difficult to govern, quality assure and distribute data across the organisation with legacy systems. It’s little surprise, therefore, that only 4% of investment managers are happy with their data management systems.

The solution seems clear: make a clean break from the legacy systems of the past and invest in agile and scalable alternatives. However, for many firms this is a case of ‘easier said than done’. Often, asset managers simply lack the people or budget required to overhaul legacy technology and the valuable data trapped inside it. In other cases, firms are wary of potential hidden costs associated with decommissioning legacy systems, or the risk of disruption to business-as-usual, which they worry will negatively affect client service.

The cloud offers an alternative. In addition to cost-savings and the appeal of consumption-based pricing, the cloud provides a range of benefits for firms that makes data management transformation a realistic prospect for all asset managers regardless of their size, existing investments or budget/resource limitations. These benefits include:

• Ease of install. With a cloud-based delivery model, firms can avoid potentially disruptive upgrades of internal systems or being out of compliance with dated versions. Additionally, firms can migrate to the cloud one application or data set at a time due to the cost model and ability to operate over private and public clouds. As a result, they reduce risk by running legacy systems in tandem as they move to the cloud at a pace that suits them best without duplicating costs.
• Access to expertise. With the cloud firms not only access infrastructure and services, in many cases they can also draw on the expertise of a cloud-based partner. At a time when data skills are scarce this is a significant value add, as it allows firms to focus their internal data resources on value-generating data analysis tasks rather than low-value data management.
• Improved lineage and governance. Ensuring data governance, lineage and oversight is critical to compliance and staying in the terms of a licence, but it is often the area that firms struggle with most as legacy systems may not have the quality and governance needed in the modern highly regulated landscape. Cloud-based service providers can accelerate this process through automated services, delivering governed, high-quality data in a system-ready format.
• Adaptability. As operational data management issues arise, such as the need to adapt to emerging data demands, such as ESG, or manage intense market volatility, firms invest in people and technology to find solutions – some of which do not work. Cloud-based models avoid this waste. Relying on their service provider, firms can lean on proven service models, data expertise and scale to solve problems quickly and efficiently.
• Scale. A key reason these technologies have been allocated to the ‘sunsetting’ classification is that they do not have the cost-effective scale or flexibility that the cloud provides. We can’t predict the future but if we have a cloud-based cost model aligned with your revenue growth then we remove an important constraint.

It’s widely acknowledged that data insights will be essential to success in the investment management industry of tomorrow. Firms taking a legacy approach to data management will be at a disadvantage, hampered by uncontrollable cost increases and a dearth of talent needed to process data to then turn it into actionable intelligence. Coupled with the downward pressure on fees that continues to blight the industry, this approach is simply not sustainable.

Cloud-based managed data services offer an alternative by driving quality, efficiency, scale and adaptability across your data landscape, reducing waste and keeping a lid on costs. Make no mistake, firms need to oversee large scale changes to their data management systems. Fortunately, cloud-based managed data services make the case for this change stack up. More than that, they make it imperative.

The Covid-19 pandemic triggered an unprecedented macroeconomic shock that impacted the global financial system. The resulting market turmoil, together with significant spikes in volatility and trading activity, presented particular challenges to the design and the resilience of risk management in Financial Market Infrastructures (FMIs).

by Adrien Vanderlinden, Executive Director, Systemic Risk Office, DTCC

With the benefit of hindsight, FMIs around the world have successfully navigated this real-life test. That said, these events have also highlighted 5 focus areas for FMIs and their participants to proactively manage risk in a post-pandemic environment.

Risk model performance

First, it should be recognised that the market stress that emerged as the pandemic started to spread strained the ability of certain risk models that are based on historical data to produce reliable output. That said, models designed to function in ‘normal’ markets should not be discarded simply because they have limitations in extreme market circumstances. Instead, what this episode illustrates is a well-known fact that is not new by any standard: FMIs should have the requisite model performance monitoring, strategies, and governance in place to identify and address emerging model risk issues on an ongoing basis.

Margin procyclicality

Second, while margin procyclicality was already a topic of debate prior to the pandemic, the extreme market volatility we saw in March and April 2020 will likely make the issue much more prominent going forward. The most important goal for CCPs (central clearing counterparties) is to make sure that they collect enough margin to protect their members, underlying investors, and themselves in times of stress. It is also important to note that risk-based margining methodologies are naturally procyclical, as they tend to generate increased margin requirements during times of market volatility, which in itself is not inherently problematic. A potential mitigant is education so that FMI members are sufficiently prepared to anticipate the impact of volatility spikes and clearing activity changes on their margin requirements. As such, FMIs must further promote margin transparency through the continued availability of tools that allow their members to understand risk models and estimate margin requirements under a wide range of circumstances.

Sector-specific approach to managing credit risk

Third, FMIs need to take a more sector-specific approach to managing credit risk due to the significant divergence of pandemic recovery prospects across corporate sectors, geographies, and other variables. A key consideration is the extent to which banks and other financial institutions are exposed to sectors that have been particularly adversely impacted by the pandemic, such as travel and leisure. As a result, credit risk assessments need to include a sector-specific review, with a focus on firms with the greatest concentration of risk. In the banking sector, additional indicators of risk can be found by analysing stress test results, as well as reviewing macroeconomic and loan delinquency data released by various sources, such as the Federal Reserve and credit reporting agencies.

Continuous assessment of FMI members’ available liquidity

Fourth, given the spikes in volatility, trading volumes and margin calls, FMIs should continue to closely monitor clearing members’ financial resources, in particular available liquidity, on an ongoing basis, as this can change quickly in a crisis. Financial firms face trade-offs between maximizing profitability and ensuring they have access to sufficient financial resources in a crisis. While retaining surplus capital or maintaining sources of liquidity may appear suboptimal from a capital usage and profitability perspective, it can be crucial to surviving a crisis. FMIs must assess how their members balance these trade-offs and whether they have allocated sufficient resources for normal times, mildly stressful circumstances, and extreme events, such as the Covid-19 pandemic.

Impact of remote working on operational risk

Finally, FMIs must consider that remote work can create new operational risks that need to be managed on an ongoing basis. FMIs successfully transitioned their workforces during the early stages of the pandemic without material impact to services thanks to well-planned risk management strategies, as well as significant pre-pandemic investments in business continuity planning and supporting technological capabilities. An extended remote work environment and the development of return-to-office plans that may involve a change in staffing models will require developing and implementing new capabilities that support the identification, monitoring and managing of associated risks. Further, the growth of remote work in the future may create additional cyber security vulnerabilities that must be monitored and integrated into existing cyber risk management frameworks. FMIs will also need to evaluate strategies and controls to mitigate the operational risks created by a potential outage related to a critical third party.

The impact of the pandemic on financial markets created a real-life stress test for risk models as margins surged amid spikes in volatility. FMIs around the world clearly met this challenge, helping to safeguard global financial stability. While their robust financial risk management frameworks and BCP strategies proved effective, FMIs will need to continue to bolster efforts in these five areas to be prepared for the next market disruption or crisis.

Before Covid-19 emerged, the way employees viewed work was limited. With defined working hours and fixed office space, it was hard to imagine the drastic change that was coming. Today, more workplaces have adopted both hybrid and remote working, as employers learnt just how much could be done from home, or at least outside of an office.

by Joshua Bao, Co-founder, SUNRATE

This has resulted in a decrease in full-time workers, with employees taking on more freelance and flexible roles. Beyond remote working, the way the workplace may evolve and change are hard to predict, but what we do know is that it will impact the payments industry.

The changing workforce

Remote working existed prior to the pandemic but was not adopted as widely as it is now. Employers are currently offering remote and flexible working to stay competitive in the market, with studies showing that 70% of the workforce will be working remotely at least five days a month by 2025 – but this is not the only change.

Lockdown gave many a new approach to working. Around the world, many people started their own businesses, left their old roles and most interestingly, more became freelancers. A recent survey by freelancer platform UpWork found that in the U.S, 20% of current employees—10 million people—are considering doing freelance work. Not only are employees becoming more open to freelance work, but employers are, too, with the study also showing that nearly half (47%) of hiring managers are more likely to engage independent talent in the future.

How does this affect the payments industry?

From Bark and Toptal to Upwork and Fiverr, freelance marketplaces play a key role in connecting freelancers with businesses looking to hire. With more organisations based around the world employing freelancers, cross-border payments will be required at a much higher rate. Cross-border payment services will be needed more than ever to collect money from international clients and pay overseas freelancers.

The financial payments space must set itself up for the growing globalisation of the workforce, and as the world embraces flexible working and freelancing, this creates greater opportunities for platforms in the cross-border space to provide their services. This is especially important given the forecasted rise in the value of cross-border payments over the next six years – with research from the BCG predicting that the value of cross-border payments will increase from almost $150 trillion (2017) to over $250 trillion by 2027.

With the reach of freelance marketplaces growing, they must ensure the best processes are in place in order for funds to be transferred successfully – this is where cross-border payments services come in. Freelancing platforms must work with multinational payment service providers to help advise on overseas regulations and also provide fast payment speeds, payment tracking, strong security and transparent pricing. This will ensure the platforms pay and get paid efficiently.

What caused the workforce revolution?

These changes are important to note, but the catalyst of these must be understood too. A key cause of the change in the approach to working is technology. Digital communications platforms such as Zoom and WebEx have meant that staff are able to work collaboratively without being in the same room. Of course, many of these apps existed before, but with the emergence of Covid-19, the public put them to the test and became reliant on keeping in contact with colleagues. This created a “new normal”.

While major events such as a pandemic cannot be predicted, the payments space can now prepare for changes to the workforce. The increase of both remote and freelance work is likely to stay, and businesses should do what they can to prepare themselves for the modern and future ways of working.

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

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

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

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

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

Ensure your staff have the right training

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

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

Use the latest data-driven technologies

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

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

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

Partner with a trusted payment provider

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

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

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

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

by Andrew Lawson, SVP, EMEA at Zendesk

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

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

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

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

Thinking developer-first

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

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

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

Digital is critical

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

Automate and alleviate

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

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

Developing the future of financial services

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

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

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

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

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

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

Communicating regulatory change

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

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

The role of technology

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

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

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

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

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

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

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

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

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

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

by Steven Weinstein, CEO, Seismic Capital Company

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

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

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

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

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

Micro ATM’s bridge the gap to get fast cash

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

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

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

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

by Dave Dabbah, CMO, CleverTap

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

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

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

Mobile wallet marketing in practice

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

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

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

Challenges in mobile wallet adoption

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

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

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

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

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

The bottom line

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

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

by Tamsin Hobley, Country Head UK and Ireland, SIX

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

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

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

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

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

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

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