IBSi Blogs Archives

October 21, 2023December 18, 2023 byJeet Vasa

Why FinTech M&A in the UK is on the up and up

The UK FinTech sector will experience an upswing in M&A towards the end of 2023, as companies look to consolidate their positions in the market and take advantage of the potential for growth and innovation.

By Konstantin Dzhengozov, Co-Founder and Chief Financial Officer at Payhawk

While headwinds such as the turbulent geopolitical landscape, volatile stock markets, and rising interest rates and inflation have meant both companies and investors have remained cautious throughout Q1 and into Q2, pressure is mounting for them to complete transactions.

According to data from Prequin Pro, this is particularly pertinent to private equity firms that are sitting on a record level of $1.96 trillion (about £1.5 trillion) of dry powder. Thus, we will soon see a switch out of defensive cash strategies and into M&A. Figures from Ernst & Young’s latest CEO Outlook, for example, show that 50% of UK CEOs are planning to make acquisitions in the next 12 months and 67% are considering joint ventures.

VC funds, on the other hand, will not have the same capital reserves and might struggle to fundraise since they are unable to showcase success stories to potential investors in the current macroeconomic environment. This means they will start to pressurise their companies to consolidate, merge and create bigger organisations that will appear more capital efficient and thus have the potential for a more meaningful exit down the line.

Time to focus

Although most of the movement in this space will be motivated by necessity, there are countless advantages to M&A in the current environment. Firstly, it pushes companies to conduct vital internal evaluations to determine which assets are core to their business, allowing them to divest those they consider non-essential. This will ultimately result in a more mature company with a bolstered focus and cash to spend.

Secondly, it allows cash-rich companies to purchase spin-offs at a reduced price and go on to achieve better returns. According to PwC analysis, deals done during a downturn are often the most successful. Data from the 2001 recession, for instance, indicates those that made acquisitions had a 7% higher median shareholder return than their industry counterparts one year later.

M&A for geographical expansion

This concept will also prove useful when it comes to using M&A for geographical expansion. FinTechs that are already successful in the UK will likely look to acquire or merge with strong yet struggling competitors in other countries instead of enduring the rigmarole of setting up there from scratch. We have already seen the number of cross-border M&A announcements increase, with data from Investment Monitor’s Global FDI Annual Report 2022 showing a 45.2% jump in 2021 compared to the previous year – a trend we can expect to continue in 2023.

FinTech trends

Some of the key growth areas for M&A in the FinTech space will be Banking as a Service (BaaS) and Gen AI. As customers become increasingly dissatisfied with existing offerings, BaaS providers are rapidly gaining popularity and new players are entering the market. This is set to change, however, as regulators are beginning to force these organisations to strengthen control and their compliance functions to obtain a license-holding. Naturally, this would limit the number of new entrants in this space, making licence-holding companies extremely attractive and driving appetite for M&A or consolidation.

Gen AI can exponentially boost a company’s productivity and allow greener enterprises to disrupt big industries. Businesses already innovating in this space will become more valuable and there will no doubt be fierce competition to acquire them.

Overall, one can anticipate a flurry of M&A activity in Q3 and Q4. While not all driven by preference, companies positioned with both the financial resources and a thorough strategy will be able to capitalise on the current dubious market to make transformational deals that may contribute to their long-term success.

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October 21, 2023December 18, 2023 byJeet Vasa

Awareness and trust holding consumers back from pursuing Open Banking products

Although the IMF recently reported that the UK economy has once again avoided a recession, the rate of inflation isn’t expected to return to the Bank of England’s target rate of 2% until mid-2025 – later than expected.

By Stefano Vaccino, founder & CEO, Yapily

This means mortgage repayments, bills, credit rates, costs of household items and more will continue to pinch consumers’ finances. Indeed, research from the Nationwide Building Society found that 74% of people were worried about their finances and ability to cover essential costs in April – with the value of spending on essentials rising 9% since earlier this year.

Within this tough environment, however, consumers believe their financial providers are falling short, with our data revealing that 53% don’t feel that their financial needs are being met. The natural conclusion you’d think is to look for a new and, hopefully, better alternative. And yet, only a tiny 2% of consumers say they have started using new products and services – meaning that many of the population could very well be stuck in a financial rut. Not great given the current state of the economy when most people need to manage their finances effectively.

Consumers trust what they know

One of the main reasons consumers don’t feel their financial needs are being met that we identified in our State of Payments report was trust. Many consumers say they only trust products and services they have heard of or that are recommendations for family, friends, and colleagues. There’s a name for this: the familiarity principle (or the exposure effect) and while it generally happens subliminally, it also influences a lot of the decisions we make… from the restaurants we frequent to the financial products and services we use.

Interestingly, though, consumers said they would be open to securely sharing more of their data with financial services organisations, like their bank or with a personal finance app if it improved their financial well-being. This includes saving money more consistently, building their credit score, and reaching financial goals quicker like saving for a mortgage.

Such services are now being provided by many major financial services providers and FinTechs in the UK – and many are powered by Open Banking. But despite these encouraging findings, 76% of consumers said they either don’t care about whether a product uses open banking or would be less likely to use a product if it is enabled by Open Banking. Again, the trust issue creeps in as a quarter say this is down to them not knowing enough about it and being wary of the technology.

An awareness issue

The plot thickens further in the issue of trust. Though consumers say they are willing to share their data, many decision-makers in financial services organisations paint a very different picture. Almost one-third (30%) indicated that trust in data sharing is the biggest barrier they face as a company in driving the adoption of their Open Banking services and products.

So, there is a disconnect here in that fed-up consumers aren’t switching to new products and services to improve their financial well-being, even though the solutions do, exist thanks to Open Banking. This may be a result of a lack of understanding around Open Banking services or the true value they can deliver to their finances, but it undoubtedly presents a missed opportunity.

Conquering the disconnect

Financial organisations must conquer a broader awareness issue so consumers know that they could have access to better and fairer financial products that support their financial well-being. There’s an opportunity to bridge the trust gap and build confidence in Open Banking solutions to get consumers turning to new products that will power better financial experiences. These positive experiences will be key to raising broader awareness of the benefits of and, in turn, increasing demand for Open Banking.

This starts by highlighting the benefits of Open Banking vs traditional banking processes and how they impact financial well-being. For example, by highlighting that it’s easier to track spending and budgets more effectively when bringing all bank account and credit card information into one personal finance app.

Another area that needs more clarity is dispelling some of the myths that have crept in surrounding data privacy and security. Sharing financial information that was once only available to notoriously highly regulated banks, naturally raises questions about privacy. But Pay by Bank is one of the most secure payment methods and there’s a reason why: it was a top priority when PSD2 was drafted, so banks and providers are required to use highly secure and encrypted APIs. To access data in the first place, a service provider needs consumer consent and cannot access without it. Raising awareness of these issues will help ease worries and build trust around Open Banking.

Final thoughts

Now more than ever, people need tailored financial products and services that are right for them, particularly as the UK continues on unsteady economic footing. Building trust and awareness amongst consumers will be vital to drive demand for Open Banking services and importantly, let them know there are products and solutions available that will make managing their finances easier. We hope to also see the right steps taken by industry and government to ensure Open Banking can build on its seven million active users and be a success story in the UK in years to come.

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October 21, 2023December 18, 2023 byJeet Vasa

How to achieve growth and strengthen resilience using automated AR and digital payment

Times are challenging for businesses of all shapes and sizes as we enter the second half of 2023. Market volatility and slowing growth are being driven by high inflation and interest rates, economic instability, and geopolitical pressures, on a micro and macroeconomic level.

By Marco Eeman, Managing Director, Europe, Billtrust

Only resilient companies will flourish, but the IMF warned of the increased risk of a ‘hard landing’ for the global economy just last week. It predicted a 25% chance that the annual global growth rate could fall below 2% this year – double its normal level.

For businesses to rise to these challenges, companies across all industries are taking a good look at their income and expenditure. Those that will ultimately succeed recognise that it is not simply cash flow that businesses should pay attention to, it’s how that cash is flowing.

Drive growth during uncertain times

A well-executed, automated accounts receivable process can positively impact a company’s cash flow, working capital efficiency, customer relationships, risk management, and financial decision-making. By optimising this process, a company can enhance its financial stability, profitability, and long-term success, even in an extremely challenging economic climate. Digital payment systems can also deliver a series of interesting advantages.

Increased efficiency and faster cash flow

Automated AR and digital payment systems streamline financial transactions by automating processes, reducing paperwork, and minimising manual errors. This efficiency leads to cost savings and allows businesses to allocate resources more effectively, contributing to improved profitability.

Timely and efficient invoicing and collections are crucial for maintaining a healthy cash flow, which has never been more important than it is now, as it allows companies to meet their financial obligations such as paying suppliers and employees. Digital payments enable companies to receive funds quickly, accelerating their cash flow. Compared to traditional payment methods like wire transfers, digital payments are processed in real-time or with minimal delay, ensuring faster availability of funds. A robust AR solution also automates collections tasks so any overdue invoices are sorted out faster, freeing up time that can be used in more value-adding spaces.

Expanded customer base and global reach

Streamlining the invoicing process can help foster positive client relationships and prove reputationally beneficial. An automated approach will simplify the invoicing process and minimise errors. Also, by accepting digital payments, companies can tap into a broader customer base. Many consumers prefer the convenience and security offered by digital payment methods such as credit cards, mobile wallets, and online banking. By accommodating these preferences, businesses can attract and retain more customers, leading to increased sales and profitability.

Automated AR solutions and digital payment systems facilitate international transactions and enable businesses to expand their operations across borders. Companies can easily accept payments from customers in different countries, opening up new markets and revenue streams. This global reach enhances business resilience by diversifying customer bases and reducing dependence on specific markets.

Data insights and cost reduction

Digital and automated payment and AR systems, and the added use of AI-powered tools, generate vast amounts of transactional data which enable companies to make data-driven, risk-adjusted decisions that reflect current circumstances and offer more control during a period of significant uncertainty. By leveraging analytics and data mining techniques, companies can gain valuable insights into customer behaviour, spending patterns, and preferences. These insights can inform strategic decisions, such as targeted marketing campaigns, personalised offers, and product/service enhancements. By leveraging data, businesses can optimise their operations, tailor their offerings, and boost profitability.

Automated AR not only allows companies to optimise their way of working, but it also allows companies to save paper, printing, and postage costs and eliminate expenses associated with physical checks, cash handling, and manual reconciliation. Moreover, digital payments can automate recurring billing processes, reducing administrative overhead and improving operational efficiency.

Choosing the right solution

Businesses must focus on compatibility when looking for a modern AR provider and make sure the solution is integrated with the open Business Payment Network (BPN) and interoperable with the larger payments ecosystem. It’s also important to work with an AR partner that has an in-depth understanding of evolving payments legislation. For example, EU laws are currently changing: in December the EU published the VAT in the Digital Age (ViDA) directive which will mandate e-invoices. It’s crucial businesses implement processes that are fully compliant with all relevant trading laws and choose tech solutions that help, not hinder this.

Conclusion

Digital payments offer numerous advantages that can contribute to building resilience and driving profits for companies. By embracing digital AR systems, businesses can improve efficiency, accelerate cash flow, access a larger customer base, expand globally, enhance security, gain valuable data insights, and reduce costs,

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October 21, 2023December 18, 2023 byJeet Vasa

Chargeback fraud is growing – can AI and Big Data stem the tide?

According to our research, 60% of all chargeback claims will be fraudulent in 2023. This means not just that merchants have to consider that chargebacks claims are more likely to be fraudulent than legitimate, but that individual merchants and the anti-fraud industry need to lay the groundwork to collect and analyze data that will show them what fraud looks like in real-time.

By Monica Eaton, Founder of Chargebacks911

While many industries are benefiting from so-called ‘big data’ – the automated collection and analysis of very large amounts of information – chargebacks face a problem. The information that is given to merchants concerning their chargeback claims tends to be very limited, being based on response codes from card schemes (‘Reason 30: Services Not Provided or Merchandise Not Received’), meaning that merchants would have to do a great deal of manual work to reconcile the information that the card schemes supply with the information that they have on hand.

While Visa’s Order Insight, Mastercard’s Consumer Clarity, and the use of chargeback alerts have reduced the number of chargebacks, merchants still have very little data on chargeback attempts. This article will look at how merchants can improve the level of data they receive on chargebacks and how they can use this data to create actionable insights on how to improve their handling of chargebacks.

What is big data?

2023’s big tech story is undoubtedly AI – specifically generative AI. Big data refers to the large and complex data sets that are generated by various sources, including social media, internet searches, sensors, and mobile devices. The data is typically so large and complex that it cannot be processed and analyzed using traditional data processing methods.

In recent years, big data has become a crucial tool for businesses and organizations looking to gain insights into customer behavior, improve decision-making, and enhance operational efficiency. To process and analyze big data, companies are increasingly turning to advanced technologies like artificial intelligence (AI) and machine learning.

One example of a company that is using big data to drive innovation is ChatGPT, a large language model trained by OpenAI. ChatGPT uses big data to learn and understand language patterns, enabling it to engage in natural language conversations with users. To train ChatGPT, OpenAI used a large and diverse data set of text, including books, websites, and social media posts. The data set included over 40 gigabytes of text, which was processed using advanced machine-learning algorithms to create a language model with over 175 billion parameters.

By using big data to train ChatGPT, OpenAI was able to create a language model that is more accurate and effective at understanding and generating responses than previous models. This has enabled ChatGPT to be used in a wide range of applications, including customer service chatbots, language translation services, and virtual assistants. Currently, technology very similar to ChatGPT is being used by Bing to replace traditional web searches, with mixed results, but, like self-driving cars, it is a matter of ‘when’, not ‘if’ this technology will become widespread.

AI and fraud

Chargeback fraud is a growing problem for businesses of all sizes. The National Retail Federation estimates that retailers lose $50 billion annually to fraud, with chargeback fraud making up a significant portion of that total. With the significant rise of online shopping, this type of fraud has become even more prevalent, as it is much easier for fraudsters to make purchases using stolen credit card information, forcing victims of fraud to then dispute the charges with their credit card issuer.

Chargeback fraud occurs when a customer disputes a valid charge made on their credit card, claiming that they did not make the purchase or that the merchandise they received was not as described. If the dispute is upheld, the merchant is forced to refund the money to the customer, along with any associated costs, and is typically charged a penalty fee by their payment processor. This not only results in a financial loss for the merchant but can also damage their reputation and lead to increased scrutiny from payment processors.

Where can machine-learning technology help with fraud? To understand this, we have to first understand its limitations. ChatGPT and Large Language Models (LLMs) like it are not Artificial General Intelligence (AGI) – the sci-fi trope of a thinking computer like HAL 9000. Although they can pass the Turing Test, they do so not by thinking about the given information and answering accordingly, but by matching what looks like an appropriate answer from existing text.

This means that while they can produce perfect text by copying existing text rather than ‘thinking’ about the substance of the question, they are prone to producing errors. This is something that isn’t acceptable when it comes to fields like fraud prevention – nonsense answers with a veneer of truth won’t work in the binary world of whether a particular transaction was fraudulent and unfounded accusations of fraud can damage a merchant’s reputation.

What is needed then are AI solutions built specifically for chargebacks. Companies like Chargebacks911 have been working on this for years now, and their solutions are based on big data models that have been built up over that time. Because of their extensive experience working in that field, they are the ideal partner to work with to bring AI up to speed and address the problem of chargebacks.

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October 21, 2023December 18, 2023 byJeet Vasa

The economic downturn will see greater innovation in FinTech: Three tips to thrive

It’s no secret that FinTech businesses have been fighting an uncertain economic environment over recent years. Landslide economic challenges have put every British business under extreme pressure, but our industry has shown its resilience. It’s the ability to adapt. To evolve. And ultimately, to continue to thrive despite uncertainty.

Hannah Fitzsimons, CEO, Cashflows

In fact, according to the latest CBS Insights report, FinTech companies are still thriving in the marketplace. And bigger businesses are taking note of the industry’s strength. Take Apple and its high-yield savings account for example. The company is actively seeking to increase and establish its fintech presence – and I wouldn’t be surprised if we see other Big Tech companies follow suit.

Why is FinTech maintaining its resilience?

People will always need to spend money, and with online payments being the second most common payment method in the UK, the opportunity for FinTechs is huge. Consider Buy Now Pay Later (BNPL); before the pandemic, BNPL was a term that many consumers likely hadn’t heard of, with a transaction value of just £34 million globally. In 2023, it’s predicted to reach a global transaction value of £300 million – a more than ten-fold increase – supporting consumers to access the products they love in a way that works for their financial situation.

Amongst wider economic challenges, fintechs need to continue this evolution. To consider the needs and wants of British consumers and design and deploy services that do not just meet but exceed expectations. In my experience, diamonds are made under pressure, and FinTech businesses need to harness this opportunity to not only survive but thrive.

Navigating the storm: Why strong leadership is essential

Strong leadership is essential to fostering innovation, especially in challenging economic times. Leaders must be able to navigate uncertainty, quickly identify emerging trends and be able to pivot strategies to stay ahead of the curve. To be able to execute this requires a strong, creative team. People are the most important part of a business, and as such, need to be supported through challenging times by business leaders.

To foster a culture of innovation where every employee feels valued, heard, and appreciated, FinTech leaders need to inspire their employees. They must be bought into the company’s innovation journey and feel passionate about its success.

The leaders who establish these relationships and build agility into the business from the top down can not only weather economic downturns but emerge from them stronger and more innovative than ever before.

The power of understanding consumers

In my opinion, innovation needs to make a real difference to the end user. Whether that’s giving a SMB rapid access to its business payments, or providing real-time spending behavior insights, the ultimate innovation measurement is the end impact.

However, before we can get to impact, businesses first need to identify the opportunity: understanding consumer behaviour and spending trends.

For example, at Cashflows, we’re always looking to innovate in line with our customers’ needs. To understand those needs, we surveyed small and medium businesses to understand their hesitations about switching payment providers. The research found that of the businesses that had switched merchant acquirers in the past, two in five experienced frustrations during the process. Companies cited challenges such as needing to submit significant amounts of documentation (61%) and having to share the same information multiple times (54%).

Using this insight, we created AI-powered fast onboarding to streamline merchant onboarding. Listening to customers influenced our decision-making and in turn, allowed us to create and invest in an innovation that would yield the greatest impact for not only our customers but our business.

From Insight to action: Creating and delivering a winning strategy

In business, you’ll hear how important a well-crafted strategy is almost every other day. Yet, many businesses are still yet to put a truly cohesive strategy in place. With the economic downturn changing customer behaviors and market conditions evolving rapidly, I think every business should have a comprehensive strategy to guide their product roadmap and effectively communicate a route through tough times.

When looking at innovation, particularly in an uncertain economic climate, a sound strategy will help FinTech day-to-day to adapt to changes and prioritize investments in initiatives that align with the company’s long-term goals and missions. In hard economic times, it’s easy to get lost in the day to day running of the business, fighting fires as they arise. However, by investing the time to develop a comprehensive strategy, FinTech businesses can boost productivity, stay ahead of the curve, and emerge stronger from economic downturns.

The key to success is the strategy execution. The strategy plays a crucial role in establishing the business’s direction; however, the execution of that strategy is what brings tangible changes throughout the company. This is where the workforce comes into play. To effectively implement a strategy, it is vital to engage employees and align them with the business’s vision and objectives. By fostering a culture of engagement between employees and the company, the organization will thrive, especially during challenging times.

Strong leaders, customer understanding, and a clear strategy. The points seem so simple yet foster huge opportunities for fintech businesses battling the economic downturn. We’ve already shown the amazing impact fintech innovations can have on supporting people and businesses through times of hardship. By taking stock and prioritizing strategic decision-making, the fintech industry will continue to thrive. I’m excited to see the next innovation that revolutionizes spending.

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October 21, 2023December 18, 2023 byJeet Vasa

Specified user FinTechs are helping lenders ride the AI wave for origination and underwriting

The Indian digital lending industry is undergoing a major transformation due to its unprecedented pace of growth. As per the recent stats – more than 200m people have availed of retail loans in a year and this is growing at 20% CAGR.

By Raman Vig and Sudipta K Ghosh co-founders of Roopya

The significant rise in the disbursement volume not only exhibits the uptick in the number of borrowers but also demonstrates the emergence of digital lending players in the market.

Many FinTech companies are overshadowing brick-and-mortar lending institutions by digitising every aspect of the lending process. This can be attributed to the rapid adoption of Artificial Intelligence (AI) and Machine Learning (ML) models that expedite and enhance the lending process. Given the scenario, the new-age lenders are moving from traditional risk models to a data-backed approach to be more relevant in the market.

A major step towards addressing gaps in the lending ecosystem

Data is the most critical element for any AI / ML model. In lending, credit bureau data and alternate data becomes the base for any propensity model for loan origination, preparing scorecards for underwriting, or even creating early warning signals on existing portfolio.

Hence data becomes the most powerful and significant force that drives the digital lending industry. In the present ambiguous scenario, the Indian lending industry has flagged several concerns on the dynamics of the data distribution of borrowers among lenders.

India has more than 1200 active lenders, out of which, only 1% have access to advanced data and analytics tools. This creates a significant gap on the supply side as small and mid-sized lenders lose out on the data-driven lending race. The new-age loan origination and underwriting tools which are accessible only to large-sized lenders create a huge disparity in data intelligence. Consequently, these lenders have to incur high acquisition and underwriting costs, ultimately leading to high-interest rates for borrowers.

Grappling with an unregulated lending scenario, the Reserve Bank of India (RBI) planned to put a guardrail on the ecosystem. The apex bank announced the appointment of a new set of FinTech companies as ‘Specified Users’ of Credit Information Companies (CICs) under the Credit Information Companies (Amendment) Regulations Act, 2021 based on stringent eligibility criteria. These Specified User FinTechs get access to credit data, run analytics and help digital lenders make data-driven decisions.

The appointment of Specified User FinTech players has not only regulated credit data distribution but also resulted in more streamlined and secure digital loan processing.

AI underwriting models

Every year, over 15 million ‘New to Credit’ borrowers enter the credit ecosystem. This makes loan underwriting a tricky process for lenders under the existing conventional models. Every customer or borrower has unique financial circumstances which bring uncertainty many inches closer to making credit decisions.

If an underwriting practice is not backed by data and analytics, it can lead to economic meltdowns for lenders. And that’s where Specified User FinTechs come to the rescue, providing lenders with the ability to interpret enormous data amounts much faster and more accurately than conventional underwriting practices. It equips lenders with AI and ML-backed underwriting models, adding an extra layer of better oversight on how data sets can be used strategically to come up with personalized solutions for each borrower.

FinTech players are one of the early adopters of technology. The advent of Specified User FinTechs helped lenders to venture into segments that were deemed high-risk by conventional lenders. Simply put, they have been successful in bridging the accessibility gap for underserved lenders, making them ride the wave of AI.

Predictive algorithm to streamline the lending process

In practical terms, AI works intuitively like predicting defaulted or paid loans. Specified User FinTech combines AI algorithms with ML classification mechanisms to create probability models for lenders to have better credit decision ability. The technologies are applied to improve credit approval, and risk analysis and measure the borrowers’ creditworthiness, which further helps small and mid-sized lenders scale with ease.

FinTech companies that are recognized as Specified Users have competencies to store huge amounts of credit data and build AI and ML models on structured and unstructured data sets. This provides more streamlined and better insights for borrower segmentation, predicting loan repayment, and helping in building better collection strategies. Besides this, Specified User FinTechs are helping lenders to be on top of automation whether in loan underwriting or pricing for personalized offerings.

On a similar backdrop, lenders’ ability to recognize early warning signs proves to be highly beneficial for lenders with credit risk management. Recognized by RBI, lenders can be certain of the credibility of Specified User FinTechs in terms of data and analytics.

Specified User FinTechs leverage the intuitive yet data-backed behavior that detects any suspicious borrower and red flags as fraud. Unlike traditional tools of analysis, it can alleviate the possibility of human errors arising from biases, discrimination, or exhaustive processing practices. By utilizing NLP (Natural Language Processing), lenders can accurately generate warning signals instantly.

Final Thoughts

The landscape of digital lending in India is continuing to evolve. Lenders can reap the benefits of data hygiene performed by AI and ML infrastructure established at the Specified User FinTech’s end. By automating and bringing all significant practices to one place, lenders are empowered to improve customer experience, take leverage of predictive analysis, enhance risk assessment, and improve credit decisions and breakthrough sales bottlenecks.

IBSi Blogs Uncategorized

January 13, 2023December 18, 2023 byadmin

Increasing demands on cybersecurity as finance evolves

The rise of Fintech is a challenge for regulators, as outlined by the IMF earlier this year. Yet legislation isn’t the only area which needs to keep pace with the evolution of finance. As digital services and infrastructure expand, cybersecurity has never been more important.

by Simon Eyre, CISO, Drawbridge

Cyberattacks are on the rise – increasing in both frequency and sophistication – and financial players are a prime target. For instance, research from the Anti-Phishing Working Group, shows the financial sector (including banks) was the most frequently victimised by phishing in Q2 2022, accounting for over a quarter of all phishing attacks. A successful attack of any kind can have catastrophic consequences: in February, cryptocurrency platform Wormhole lost $320 million from an attacker exploiting a signature verification vulnerability.

Simon Eyre, CISO, Drawbridge, discusses your cybersecurity needs — Simon Eyre, CISO, Drawbridge

As finance evolves, it’s imperative that institutions of every size are doing all they can to protect themselves from cybercriminals. But what does that look like in practice? Let’s examine some key actions all companies must take.

Strengthening weak links

You may not be looking for weak links in your security infrastructure – but your adversaries definitely are. A single vulnerability is an open door for criminals.

Businesses must continually search for weak links in their cybersecurity armour – such as through vulnerability management and penetration testing – to identify and strengthen these weaknesses before malicious actors do.

This is especially important as working habits also evolve, with remote and hybrid working established as the norm. These offer many benefits but can also greatly increase risk as employees access systems from numerous locations and devices move on and off networks. In fact, Verizon’s Mobile Security Index report found that 79% of mobile security professionals agreed that recent changes to working practices had adversely affected their organisation’s cybersecurity. This isn’t to say that companies should ban remote working but they need to be aware of their heightened risk and be proactive about managing it.

Educating the team

A crucial part of this risk management involves employee education. Many cyberattacks rely on social engineering techniques like typo-squatting (often used in conjunction with targeted phishing attacks) to impersonate trusted parties and fool employees into providing critical access or even direct funds. Therefore, employees at every level need to know the techniques that are being used against them and be trained in the appropriate cybersecurity response.

The way this education is delivered is also important. A one-off PowerPoint presentation won’t cut it – teams need continuous training and engaging exercises, such as attack simulations, tabletop exercises and quizzes, to ensure that crucial information is taken in.

Creating a cast-iron incident response plan

Part of protecting yourself from the damage of a cyberattack is planning what to do in the event of one.

An incident response plan is a critical part of a firm’s cybersecurity infrastructure, structuring the steps to be taken following an incident. Plans should include key contacts and a division of responsibilities, escalation criteria, details of an incident lifecycle, checklists to help in an emergency and guidance on legal and regulatory requirements. Plans can even include template emails to support communications and companies should draw on knowledge from private resources and industry experts, as well as their government’s resources, to help them create a cast-iron plan.

The road ahead for finance and cybersecurity

Over the coming years, the rate of digital change isn’t set to slow. With BigTech’s eyes on banking, traditional banks innovating to keep up with challengers, the rise of ‘superapps’ and cryptocurrency supporting the emerging metaverse – to name just a few – there’s significant change still yet to occur.

The finance sector’s cybersecurity response must also continue to evolve in order to keep up. Part of this will mean relying more heavily on AI, such as in continuously monitoring networks for threats, although this tech will also be leveraged by cybercriminals. Additionally, it will be crucial for the cybersecurity as a whole to close its skills gap: there is currently an estimated global cybersecurity workforce gap of 3.4 million people.

The future is exciting but without the right protections, it can be dangerous too. If firms are to protect their assets and customers, they must build cybersecurity into the heart of their practices. Reaping the rewards of the FinTech boom means keeping firm control of your security risk.

IBSi Blogs Uncategorized

January 13, 2023December 18, 2023 byadmin

Difference between Low Code & No Code development

A low-code application development platform is a visual software development environment that empowers multiple developer personas. It uses visual development tools with drag-and-drop or point-and-click design capabilities, abstracting the code in application design and development, thus providing a simple and intuitive development environment. Low code helps to free up your IT staff to focus on more value-add tasks. It can help enterprises roll out applications with a shorter time to market with high abstraction— Utsav Turray, General Manager – Product Management and Marketing at Newgen Software

What is a low-code platform?

Low code enables enterprises to rapidly develop customized solutions and applications for multiple interfaces like web, mobile, wearable devices, etc., to automate end-to-end customer journeys.

Benefits of low code platform

1. Empower IT, Teams, for Optimum Resource Utilization:

Your IT teams spend long hours maintaining systems with periodic updates, compliance checks, and performance measurements. Low code can help you minimize this burden by automating such recurring tasks, allowing IT experts to focus on other important activities.

Utsav Turray, General Manager - Product Management and Marketing at Newgen Software — Utsav Turray, General Manager – Product Management and Marketing at Newgen Software

2. Fulfill Customer Expectations by Responding Quickly

Today’s tech-savvy customers want you to respond quickly to their needs. With these platforms, you can quickly respond to customers’ needs by developing and deploying applications rapidly. Also, you can deliver a personalized customer experience using customizable applications.

3. Enhance Governance and Reduce Shadow IT

Shadow IT is an area of concern for enterprises as it accrues technical debt and affects its overall risk monitoring. Low code offers a collaborative work environment and reduces dependencies on third-party applications. It helps reduce shadow IT through central governance and visibility.

4. Handle Complex Business Needs with Faster Go-to-market

A low code platform with well-designed functional capabilities like drag-and-drop tools helps developers handle a range of complex business and technological needs. These platforms enable faster development of complex business applications in a short period, fostering quick innovation and rapid go-to-market.

What is no code platform?

No code is a tool for nonprofessional developers. Using a no-code platform, anyone in the organization can build and launch applications without coding languages using a visual “what you see is what you get” (WYSIWYG) interface to build an application and intuitive user interface. A no-code platform often uses drag-and-drop functionality to enable development and make it accessible for organization-wide users. No code platforms are mostly directed to serve the needs of business developers who can develop applications with workflows involving fewer work steps, simpler forms, and basic integrations.

Benefits of no code platform

With no code, organizations can work without IT interference.
Organizations can make applications in less time and with fewer resources.
Compared to conventional coding methods, no-code solutions reduce the development time since developers don’t need to hand-code each line of code.
Functionality and design are more easily changeable than hard coding allows. Developers can also integrate any change easily and enhance functionalities in the applications whenever required; this helps businesses provide a better customer experience.
No code platforms don’t require similar effort as a conventional coding approach to building applications, thus being cost-effective.

Difference between low code and no code

Working with Newgen, you’ll have access to Newgen’s low-code and no-code intelligent automation capabilities. However, both platforms focus on a visual approach to software development and drag-and-drop interfaces to create applications.

Low code is a Next-gen Rapid Application Development tool for multiple developers, whereas no code is a Self-service application for business users. The primary purpose of low code is the speed of development it offers, whereas, for no code, it’s the ease of use.

If the goal is to develop simple applications that require little to no customization and are based on improving the efficiency of a simple workflow, no code platform should be the ideal choice. An example could be order management, employee onboarding, or scheduling to improve employee efficiency.

Low code, on the other hand, is more suited to enterprise use cases. It is directed towards various personas, including business developers. Low code is more flexible than a no-code platform. An example could be Business Process Automation, Application modernization, Internal applications, and portals. Developers can work with stakeholders in all the stages of the development process, and low code can help them address complex integration scenarios, which gives an organization faster time to market.

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January 13, 2023December 18, 2023 byadmin

Partnerships to tackle the SME funding gap

Collaborative partnerships can remove barriers to SME borrowing, in turn boosting the global economy. In an already challenging market for businesses of all sizes, SMEs are facing the additional strain of being unable to access the working capital they need to manage cashflow, take advantage of growth opportunities or help them get through quiet periods.

by Martin McCann, CEO, Trade Ledger

The good news for SMEs – and the banks wanting to provide them with a better solution – is that the technology to resolve these pain points already exists. Companies like Trade Ledger provide the technology that lenders need in order to offer businesses fast, easy access to working capital – worthy of a digital economy. A good example of how that is working in reality is our partnership with HSBC. Working together, we created a digital solution that cuts the approval process for new receivables finance from up to 2 months, down to within 48 hours.

Utilising the interconnected ecosystem

Martin McCann, CEO, Trade Ledger explains how partnerships among banks and FinTechs can help SMEs. — Martin McCann, CEO, Trade Ledger

Even the world’s largest commercial bank cannot do it all in-house, instead seeking agile, enterprise technology partners to fast-track digital transformation strategies and start adding value to customers sooner. We call this collaborative innovation.

Such partnerships are nothing new. Indeed ‘partnership’ seems to be something of a buzzword in the financial services industry today – thanks in part to open banking, but also Covid-19 forcing many to seek alternative solutions quickly in a time of crisis. It is encouraging to see banks, FinTechs and other payment services providers increasingly looking to build partnerships within the financial ecosystem, for the mutual benefit of both organisations as well as their underlying customers. Utilising purpose-built solutions of other providers, financial institutions of all sizes can get new solutions to market more quickly and at lower cost, helping them to remain highly competitive.

Another example of innovative collaboration is the way in which we work with Thought Machine, the cloud-native core banking technology provider. Together, with Trade Ledger’s loan origination and management capabilities, we are able to deliver a fully integrated technology stack for commercial lenders and banks. The API-driven data exchange enables a high level of real-time. Banks can now rapidly configure and launch new digital products such as asset-based-lending, invoice and receivables finance, with ease and control.

SME lending to boost the economy

By leveraging open banking APIs and data modelling to build a real-time view of the customer, banks can get a richness and quality of data that removes traditional blockers to extending credit to the mid-market and SME sectors.

I believe there is also a moral obligation for the industry to provide critical global supply chains with access to liquidity in order to fuel a global economic recovery. SMEs play a vital role in the global economy, so the industry must come together to remove the barriers that hold them back – including the inability to access external capital. Innovation happens where capital flows!

IBSi Blogs Uncategorized

January 13, 2023December 18, 2023 byadmin

Role of FinTech platforms in the trade finance industry

Trade is the engine that powers development and competitiveness in the global economy, thereby encouraging fairness, creativity, and productivity. When trade flows in a rules-based system, jobs, wages, and investment accelerate immensely.

By Swati Babel, a cross-border trade finance business specialist, and VP at Triterras

Trade financing supports trade at every level of the global supply chain. Trade finance makes ensuring that buyers get their products and sellers get their money by supplying liquidity, and cash flows, and reducing risks. Simply expressed, trade finance is necessary for the cross-border movement of products and services.

With the Global Trade Finance Market estimated to reach $85.85 billion by 2027, growing at a CAGR of 7.06%, it becomes an integral part of every country’s economy. The world’s vast domestic market and a large pool of skilled workers make trade finance an attractive destination for foreign investors. However, the complex regulatory environment and lack of access to financing restrict the expansion of business operations across various markets.

However, the emergence of FinTech platforms over the years is paving the way to simplify and seamlessly align the trade finance industry. FinTech platforms are providing much-needed solutions for businesses by offering innovative financing products that are tailored to the needs of enterprises. These platforms are helping businesses to overcome the challenges they face in accessing traditional bank financing, and they are playing a key role in promoting economic growth and development. The platforms provide businesses with the financing they need to grow and expand their operations and also help the businesses manage and improve their financial planning.

The role of FinTech platforms in the trade finance industry is to provide an efficient and cost-effective way for businesses to finance their international trade transactions. The platforms offer several advantages over traditional banking products, including:

Access to capital: Fintech platforms provide businesses with access to capital that they may not be able to obtain through traditional banking channels. This can be particularly helpful for small businesses and startups that may not have the collateral or credit history required by banks. Moreover, Fintech platforms provide businesses with enhanced access to funding, which can be used to finance trade transactions. Another key advantage of fintech platforms is their ability to connect borrowers and lenders from around the world, which gives borrowers greater access to capital. In addition, fintech platforms usually have lower transaction costs than traditional banks.

Flexibility and Cost Effectiveness: Fintech platforms offer more flexible terms than traditional bank loans, which can be important for businesses that have the irregular cash flow or are expanding into new markets. Fintech platforms offer flexible products and services that can be customized to meet the specific needs of businesses. Fintech platforms offer cost-effective solutions that can help businesses save on costs associated with financing trade transactions. Various fintech platforms have relationships with multiple lenders, which gives them the ability to get customers the best possible terms for loans and can often provide more flexible repayment terms than banks. This means that businesses can choose a repayment schedule that works best for them, instead of being tied into a rigid repayment plan from a bank.

Agility and Efficiency: Fintech platforms typically offer a faster and more convenient application process than banks. This can be critical for businesses that need to quickly obtain financing for time-sensitive trade transactions. Fintech platforms for trade financing are a lot faster than going through a bank or other financial institution because the process is often much simpler and there is less paperwork involved. Fintech-led events and activities such as the Singapore Fintech Festival also enable an ecosystem of networking and partnerships. Because of these reasons, banks and financial institutions with sufficient capital often team up and participate with the Fintech platforms for lending/co-lending opportunities. Additionally, they also enable businesses to streamline their trade finance operations and improve overall efficiency. Innovative solutions such as AINOCR or Electronic B/L help in digitizing analog data, such as paper documents, bills, etc. These platforms provide valuable data and analytics to help businesses make informed decisions about their trade finance need and help businesses streamline their operations by automating key processes.
Enhanced security: Fintech platforms often utilize cutting-edge security features, such as blockchain technology, which can provide an additional layer of protection for businesses and their customers. Many platforms use such next-gen technologies to protect borrower information and ensure that transactions are processed securely. This can give borrowers peace of mind when taking out a loan or making a payment.

FinTech platforms are playing an increasingly important role in the trade finance industry. By providing a digital infrastructure for the entire supply chain, from producers to retailers, they are making it easier for businesses to connect and trade with each other. This is particularly important in the current climate, where businesses are under pressure to move faster and be more agile. FinTech platforms can help them do this by streamlining processes and reducing costs. While credit assessment and due diligence should be carried out manually to avoid Trade-based Money Laundering, however for everything else, Fintech platforms are changing the landscape of Global Trade Finance.

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Benefits of low code platform

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Benefits of no code platform

Difference between low code and no code

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