IBSi Blogs

Many view their Customer Relationship Management (CRM) as a kind of digital address book – a place to store commercial data and client information. But to view this valuable piece of technology in such a way is highly limiting, in reality a CRM’s capabilities exceed far beyond that.

by Matthew Harrison, Sales Director (Broker Channel), finova

Your CRM should be a dynamic feature of your business that saves you time and actually makes you money, for example in the retention of clients and by freeing up your diary of manual tasks so you can focus your efforts elsewhere. Ultimately, if you are spending more money on the system than you are earning from it, then you are probably not using it to its full potential.

A source of profitability

So, how can your CRM enhance profitability? Firstly, the way CRM software organises individuals’ records should give you a more accurate understanding of the client relationship, equipping you with important information to improve the productivity of conversations. But it can also work in more advanced ways. CRMs can analyse swathes of data, gathered from a wide range of sources, to give you an insight into how a client is feeling about your company. That can make it easier to anticipate potential issues and solve them before they arise. The data presented to you in digestible reports should help increase customer satisfaction, retention and, ultimately, profits.

Features within the CRM system, like management information, can also offer you more sales opportunities. The software can identify clients who may benefit from remortgaging, for example, or automatically send clients emails when their deals are about to come to an end. CRMs are excellent for spotting cross-sale opportunities too. This is because the technology can sift through client data to highlight those who may require further coverage. Who, for example, has taken out a mortgage but not protection? Who has both a mortgage and protection, but not general insurance? Your CRM can answer these questions for you, and help you improve your marketing and customer outreach. This is just one example of how automated processes within your CRM can open up new business opportunities.

Leads and referrals

CRMs are also a valuable tool for managing leads and referrals. There are tools that make it easier for introducers to refer new clients to you, while automatic commission notifications or updates regarding the status of introducers’ leads can help build a positive relationship. This software makes the referral process smoother and more profitable for introducers, improving general productivity. And better management of introducers equals more leads and higher profits.

Furthermore, CRMs are crucial if you wish to integrate referral programmes into your sales systems. Built-in referral options mean generated leads are sent directly to your CRM for servicing and management, and notifications are automatically sent to both the person referring and the person who has been invited. CRMs can also quote potential clients automatically so that they know how competitive your price is from the start. In this capacity, these tools can assist not only in generating more leads but in capitalising on leads too.

Data protection

Choosing the right CRM, however, is significant. It is especially important that due diligence is adhered to when picking a CRM. After all, it’s your data and your client’s data, so it needs to be secure. It is essential that you ensure the software is GDPR compliant, and that you understand where the data will be stored and how it will be secured. You should also determine how viable the CRM provider is: are they likely to go bust? If they do, what happens to your data? While company longevity is important, these worst-case scenarios should be accommodated.

Furthermore, the CRM should be the hub of your business, so choosing software which is easy to use is crucial. Especially for smaller firms, the CRM should be running much of the business for you and speeding up processes dramatically. Those which offer integrated third-party sourcing, for example, help cut down on re-keying. Automation within certain CRMs can ensure cases progress and prompt the sales team on crucial chase dates or events. Choosing the right CRM – with the automated features most appropriate for your business – will free up more time for you to focus on what matters to your business, such as giving great advice to clients.

CRMs are a vital tool that should be playing a central role in your business. If the right CRM is chosen, and if its features are deployed to maximum effect, then profitability will be demonstrably improved. To only use a CRM as an address book and not utilise its functions across your entire business is an extremely costly mistake to make. When used correctly, a CRM is an investment which not only pays for itself but unlocks additional channels of income for your business.

International trade is an important engine in driving inclusive economic growth. But the reality is that many small and medium-sized enterprises (SMEs) have trouble accessing affordable trade financing. With ESG at the forefront of everyone’s minds, making a societal impact that prioritises people and ensuring that entrepreneurs in developing countries are not left behind is important in creating a sustainable future for trade.

by Carl Wegner, CEO, Contour

Trade finance facilitates the import and export of goods, a crucial part of how international trade and commerce happens. But for small and medium-sized enterprises (SMEs)—among the major contributors to jobs creation and economic development—this is where it gets complicated.

The biggest challenge to SME growth is access to finance. Addressing this is an important piece of the puzzle when it comes to closing the $1.7 trillion trade finance gap, a gap that is even wider in developing markets. The availability and cost of credit make it hard for SMEs to finance their future, especially for those that are involved in international trade.

Women-led SMEs have an even harder time accessing trade finance. The International Finance Corporation (IFC) estimates a $1.5 trillion finance gap for women-owned businesses in emerging markets. The IFC’s Banking on Women business has deployed scalable solutions with partners to enable the financial sector to better serve women-led SMEs. As of June 2021, it has mobilised and invested over $3 billion in financial institutions specifically to finance women-led businesses.

Larger global banks have traditionally looked past the SME segment, as the economics did not make sense. But this is changing: fintechs are making trade finance easier and more efficient, by simplifying, streamlining, and synchronising the data.

Advancing the digitalisation agenda for SMEs

The following are three ways that fintechs help advance the digitalisation agenda for SMEs.

First, for SMEs which need to import or export raw materials or finished products, there is an advantage in automating this process. Whether it’s the cost of acquisition of a customer or processing of information, fintechs can help consolidate and digitise the data for the bank to decide on risk levels.

As a fintech, we can get data into the bank more efficiently, allowing the bank to execute more transactions. If you think about it, the paper process for a $5 million transaction is almost the same as that of a $5,000 transaction.

For example, the Letter of Credit (LC) is one of the most traditional and complicated parts of the trade process. With four to seven players involved in the transaction, there are stacks of documents involved and a lack of transparency in the way LC transactions are conducted. By automating the process, the barriers to entry are lowered for SMEs and local banks.

Second, the accuracy of data is increased when the entire transaction is electronic. From the financier’s perspective, it provides better clarity on the documentation details. In addition, when this is done on the blockchain, the information can be verified earlier and consistently in the process, thus lowering the risk as well as the cost of processing.

Finally, internet accessibility is a way of democratising the data flow to banks and the financial system. With internet access already a key target for economies to achieve, unbanked SMEs or micro-SMEs can enhance their efficiencies by going online.

Designing a more equitable future

When it comes to the future, fintechs continue to innovate to ensure their ecosystem remains efficient for SMEs. There are existing services that can be digitised, as well as different services like guarantees and standby LCs. In addition, there are opportunities to pioneer new ways of managing data.

Designing the trade finance network of the future is a challenge but ensuring that SMEs are included is a crucial piece of the puzzle to help them be part of a future where they can survive and thrive.

“UK FinTech is in a great place,” said John Glen; the Economic Secretary to the Treasury as he announced measures last month to make the UK a global hub for crypto.

by Joe Jowett, CEO and Co-founder, StrikeX

But the question is whether the actions promised by the UK Government will match the warm words he delivered to an audience of FinTech experts during the Innovate Finance Global Summit in London earlier this year.

If not, the UK’s leading position in crypto could be lost to more favourable jurisdictions.

Sentiment and perception

The UK is home to around 2,000 fintech companies; and London, a melting pot of entrepreneurial minds, financial expertise, investment capital, technology skills and regulators, is second only to the USA as the highest-ranked fintech ecosystem globally.

As part of that, the crypto sector is growing rapidly. One forecast suggests it will grow by more than 7% a year to be worth $2.2 billion by 2026. So, with a highly-skilled, tech-savvy workforce, attractive business and regulatory environments and a flexible labour market, the UK should be in a strong position to capitalise, with sophisticated jobs such as blockchain engineers and cryptocurrency developers.

But, so often in emerging sectors, sentiment can make an enormous difference in how people perceive things.  Crypto entrepreneurs and investors – and the decisions they make – will be influenced significantly by the policymakers of the countries in which they do business.

Last month, the Governor of the Bank of England said that cryptocurrencies were the new “front line” in criminal scams, saying the technology created an “opportunity for the downright criminal.”

Contrast that with countries which are bending over backwards to welcome crypto entrepreneurs. Switzerland has perhaps gone the furthest passing blockchain laws and licensing two crypto banks, while Dubai is racing to become a haven for the global crypto industry by offering virtual asset licenses.

The US is making surges too, with President Biden recently ordering the most wide-reaching effort by the federal government to study and potentially regulate cryptocurrencies – an initiative that could see regulators closer to permitting spot cryptocurrency ETFs on the US markets.

In this context then, it’s not surprising that some commentators have suggested the Government’s moves to keep the UK as a leading global crypto hub lag behind many other nations.

The UK’s position

To attract companies, entrepreneurs and investors keen on crypto, the UK needs to commit to investment in a regulatory framework that fosters the national crypto economy and safeguards it without hindering innovation.

The most eye-catching of the Government’s announcements last month, at least as far as the headline writers were concerned, was commissioning the Royal Mint to produce an NFT which will be available by the summer. The Government heralded it “an emblem of their forward-looking approach.”

But beyond that, there were actually some positive moves. This month, the first of several meetings between industry leaders and the FCA, called “crypto sprints” will allow the industry to work with regulators to drive the shape of future regulation. They will also work on a project looking at the legal status of decentralized autonomous organisations (DAOs).

There are moves to look at existing laws governing electronic money which will be adapted to include stablecoins, bringing them within the remit of the FCA and thus paving the way for them to be used as a form of payment.

Finally, blockchain technology, a sector growing so rapidly that the UK simply cannot afford to ignore it. The UK government has announced it will explore the use of Distributed Ledger Technologies (DLTs) in financial markets,  create a financial markets infrastructure sandbox and consider using DLTs for sovereign debt instruments.

Welcome steps

From the emergence of Silicon Roundabout in the early noughties to the UK being a global tech powerhouse today – recently valued at more than $1 trillion – entrepreneurs, investors and industry have demonstrated their appetite to use the UK’s attractiveness to international talent and finance to transform it into a hub where nascent technologies and ideas can be transformed into world-class tech businesses.

Crypto is the next step in the UK’s continued growth in digital and technology, it is essential that a world-class infrastructure is built with regulation proportionate to the risk, to boost the modern 21st-century economy and allow crypto to thrive.

The overdraft landscape in the US is at a watershed moment, with banks and credit unions alike taking action to lessen customer impact from overdraft and NSF penalty fees. For a long time, overdraft fees have been ‘in the shadows,’ often perceived as a penalty fee disproportionately applied to those who can least afford to pay.

by Jody Bhagat, President of Americas, Personetics

Market forces and regulatory pressure are moving the industry in a positive direction, and it’s encouraging to see the industry’s rapid response to lessen penalty fee impact with a range of customer-friendly approaches to overdraft response.  The range of response thus far can be characterized by the 4P’s:

Policy: Eliminate overdraft fees (Capital One, Ally, Alliant)
Price:  Reducing or eliminating overdraft or NSF fees (B of A, WFC)
Process: Changes to accommodate grace period or negative buffer (PNC Low Cash Mode)
Product: Creative enhancements to address the majority of situations (Truist One, Huntington Stand By Cash)

The next breakthrough in overdrafts for the industry is to address the 5t P: Proactive.  Proactive cash flow management helps anticipate and resolve overdraft situations prior to occurrence and allows for tailored customer treatments.  Rather than determining which fees to reverse, banks can focus on what tailored treatment can help this customer address a future overdraft condition and improve their financial wellbeing in the process. What if overdraft response was something that your institution was excited to promote to customers, in a way that puts the customer at the centre of the conversation?

Rather than simply a defensive move, forward-looking institutions can use this moment as an opportunity to reinforce a customer advocacy approach, where the institution becomes a trusted advisor. With inflation at a 40-year high and many families struggling with cost-of-living pressures, it’s more important than ever for banks to support customers and improve their financial wellbeing.

Here are a few reasons why overdraft response can become a bigger source of differentiation and competitive advantage for financial institutions.

Data is king: A new opportunity to understand your customer

Before you can solve overdraft conditions, it’s important to understand which customers are vulnerable to overdrafts, and what is the root cause. Overdraft conditions can become a moment of opportunity to take a closer look at what is happening in that customer’s life, and engage with the customer in a meaningful, personalized way.

Financial institutions are taking a closer look at which customers are most likely to overdraft, and why. By leveraging advanced data and analytics, banks can proactively engage the 4-6% of customers who overdraft on a monthly basis.

From our analysis, we found four common personas experiencing overdraft situations:

1. Paycheck to Paycheck: Jim is experiencing multiple cash flow crunch situations every quarter and overdrafts repeatedly. Jim’s income may be volatile or barely enough to cover expenses.
2. Hardship: Martha has experienced a recent hardship (e.g. income loss or significant medical expense) that is likely to create a near-term overdraft situation and a running up of credit lines.
3. Mismanaged Timing: Tom has mismanaged the timing of their deposits and payments for a given month, resulting in an overdraft condition.
4. Affluent Mistake: Jen has plenty of deposits with the bank but unwittingly got caught in an overdraft condition with an account.

Identifying your customer profiles and the context of each overdraft situation can help banks provide the right solution and support for each customer’s financial circumstances. By cleansing and analyzing transaction data, banks can readily understand the context of the overdraft situation. With advanced data and analytics, the bank can identify customers who are at risk for overdraft conditions, and proactively provide treatment options to support the customer’s financial needs, such as an overdraft protection solution with a connected savings account, or a short-term line of credit.

Context is queen: providing tailored treatments for overdraft at scale

Instead of just a penalty fee, overdrafts can be a way to better understand the individual customer and improve their financial well-being. By proactively engaging customers on cash flow issues, banks can reduce the number of overdrafts and negative balance situations and build stronger relationships, leading to higher customer satisfaction and loyalty.

By modelling customers’ cash flow patterns and applying a “robust” balance forecasting algorithm, banks can analyze customers’ historical, scheduled, and patterned activity to accurately identify when they are likely to have a low or negative balance prior to their next likely deposit. That way, banks can help anticipate a customer’s liquidity issues, determine why it is occurring, and proactively provide options to address the situation.  Through back testing of our model, we’ve found that we can accurately anticipate approximately 70% of overdraft conditions.  With this kind of knowledge, banks can unleash their creativity in offering treatment conditions based on the customer context and the likelihood of overdraft.

Building deeper customer relationships

Overdraft fees have represented a meaningful amount of net income for banks (6-7%) and some have been reluctant to forego that revenue. However, a customer-centric overdraft program could be an even more sizable opportunity for financial institutions by deepening customer relationships

Over the coming year, we’ll see more banks leaning into their overdraft response and seeking a more proactive solution along with reactive actions. Forward-leaning institutions will look at it not as a defensive move to avoid regulatory scrutiny, but as part of a broader proactive approach where the bank operates as a trusted advisor that helps people with their money management.

The time for banks to act is now. As inflation and the cost-of-living crisis rage on, the institutions that adapt their policies with customers front of mind will not only help to improve financial health, they’ll gain lifelong customers in return.

The World Bank cites financial inclusion as one of the key enablers to reducing extreme poverty and boosting shared prosperity. Unfortunately, many countries still fall way behind on levels of financial inclusion and are unable to offer their citizens equitable access to essential financial services. When this occurs, we get financial exclusion. Sadly, this remains an issue around the world, which is preventing nearly 1.2 billion people from fulfilling their true economic potential.

by Patrick Reily, Co-founder, Uplinq

The knock-on effects of financial exclusion are felt by everyone. Essentially, individuals who are excluded from economies are in turn, unable to make meaningful contributions to them. As a result, economic growth in these areas can be limited, which has created a tremendous incentive to promote levels of financial inclusion across the world. In particular, there’s a real need to boost financial inclusivity in regions, such as Africa and Latin America, where the issue may be leading to diminished growth.

Why is financial exclusion problematic?

There are several ways to assess the economic harm caused by financial exclusion. As mentioned, the phenomena contribute to both microeconomic and macroeconomic problems. On a personal level, financial exclusion inhibits a person’s ability to access mainstream financial services, such as savings and pension schemes. Unfortunately, such limitations increase the likelihood of personal debt and limit opportunities for education, personal development and access to employment.

What’s more, financial exclusion overlaps significantly with issues like poverty, as well as broader challenges, such as social exclusion. To this end, without equitable access to financial services, individuals may begin to feel cut off from society. Simply put, these people don’t have access to the same security frameworks afforded to others. Sadly, this can then manifest into a myriad of further economic and societal problems.

Does financial exclusion hurt businesses?

While some of us may be deeply concerned about the plight of the financially excluded, others may feel less concerned as they deal with problems of their own. However, financial exclusion has a negative economic impact on all of us. On the broader scale, financial exclusion can stymy economic growth, lower educational attainment and limit the development of innovation and intellectual property. Directly or indirectly, we all pay an enormous price.

What’s more, the concept of financial exclusion also extends to businesses. In this instance, it applies to companies who are unable to access traditional financial services in the same manner as market competitors. Primarily, this issue tends to affect small-to-medium-sized businesses (SMBs), many of whom find themselves at a disadvantage to larger counterparts when looking to access essential financial services, such as lending capital. Without equitable access to lending capital, the ability of SMBs to reach new markets is severely limited.

Why do SMBs matter?

With high levels of financial exclusion, businesses, as well as the economies they function within, are unable to reach their maximum economic potential. As such, there is a need for all of us to combat the issue. At Uplinq, we believe the fight to promote financial inclusion begins by tackling the issue within the SMB market. If we do that, we can take the first step towards building a more inclusive world for all.

Ultimately, SMBs are the lifeblood of most Western economies, providing around 63% of new private-sector jobs created in the US alone. To properly scale, many of these businesses need access to lending capital, which isn’t always available. Furthermore, on account of their size, many SMBs lack the requisite financial data to pass traditional credit checks. This is not to say these businesses aren’t worthy of receiving lending capital, but instead, simply struggle to effectively make the case within the context of existing decision-making frameworks.

Building a more inclusive world

So, how do we go about building a more financially inclusive world? At Uplinq, we believe a radical overhaul of traditional decision-making systems is required. Specifically, it’s time to update the antiquated decision-making processes used for SMB lending decisions. For too long, these services have relied on limited data sets to generate results. As such, many existing systems are unable to offer an accurate picture of a businesses’ true financial viability, which limits lending opportunities.

Thankfully, modern technologies now exist, which offer dramatic improvements in this area. Notably, solutions like Uplinq can assess billions of alternative data points to create a more comprehensive picture of a business’ financial viability, regardless of its size or status. By implementing these technologies within their systems, lending companies can begin to serve the SMB market in a far more inclusive manner.

If we can achieve this goal, then we can begin to build a more inclusive world, which will benefit us all. This is the objective we’re working towards every day. Our innovative solution can allow credit lending providers to generate the most accurate lending decisions possible. To this end, our solution can help a greater number of SMBs receive lending when they need it most, helping to close the gap between them and their more established counterparts.

With the European Commission first adopting the PSD2 proposals in 2015, Strong Customer Authentication (SCA) has now officially come into force across the UK. Now that this long-anticipated wait is over, we can start to look at what SCA means in practice and how merchants can do go beyond these regulations.

by Scott Dawson, Director of Operations, Pixxles

How SCA impacts merchants

In simple terms, SCA requires a customer to verify themselves with two of the three following pieces of information, such as a password, mobile device, fingerprints, facial recognition, or even subtle cues like how they type before payments can be processed. Although these regulations introduce increased friction in the payments process, SCA is necessary to prevent fraud.

Overall, the roll-out of SCA across Europe as a whole has been smooth, despite alarming news of a third of all transactions being blocked and losses of €100 billion. This is likely to be down to the flexibility built into SCA from the outset: transactions under €30 were exempt, and many merchants will receive exemptions on transactions up to €30 if their acquirer’s fraud rate is below 13 basis points and €250 if their fraud rate is below 6bps. This flexibility encourages acquirers and merchants to be proactive about fraud, as the lowered friction from a lack of SCA challenges will likely translate into more sales.

Despite offering increased protection, European eCommerce merchants have seen fraud rates rise as much as 350%. However, this does not indicate that SCA is not effective. The sharp influx in fraud, in general, is down to the rise in new eCommerce shoppers during the pandemic. In fact, if SCA was not in place, it is possible that this figure could have been even greater. Therefore, SCA should be seen as one of many systems that a merchant should have in place if they want to reduce fraud on their eCommerce site.

A collaborative approach to reducing fraud

With that said, what then are merchants’ options for going beyond to minimise fraud rates even further than SCA regulation currently allows, whilst maintaining a frictionless payment process for legitimate customers?

First and foremost, it is important to understand the exemptions process and what level of protection is available to your company. For example, if your fraud rate is already very low, you might have the option of exempting customers from SCA. In order to do this, you will need to contact your current acquirer, and if your current payments partner can’t offer you high enough exemptions you may need to consider changing acquirers.

Next is to adopt additional security technology to support SCA. There are a number of systems that use AI and machine learning to spot the signatures of fraud before it gets to the payment stage. Very few fraud attempts are carried out by a human being on a computer – instead, bot networks with increasingly sophisticated and humanlike behaviour are used to carry out hundreds of automated attacks simultaneously. This is a powerful tool, but there are some obvious tell-tale signs when attacks are carried out by machines that AI can spot. Due to the accuracy of AI, even when attacks break through machine learning can be used to prevent them from happening again.

Lastly, attacks are not always malicious in nature. Around 90% of merchants say that ‘cardholder abuse of the chargeback process is a leading concern for their business. While sometimes this abuse can be intentional, it could also be innocent. For example, a customer might not recognise a charge on their card statement and, instead of looking into it, asks their card provider for a chargeback. It is possible to put systems in place that can dramatically reduce both malicious chargebacks and unintentional ‘friendly fraud’. Having robust order-tracking systems in place is one way to cut down on chargeback claims from customers who think that their order has been lost when it is in fact running late.

Continually evolving to fight fraud

When it comes to fraud prevention, collaboration in terms of tools and expertise is key. As we have seen, by itself SCA isn’t the one and only solution for fraud, but when combined with multiple anti-fraud systems and a focus on learning more about current threats it can become part of a multi-factor solution.

Therefore, although SCA is a step in the right direction, in order to keep up with the fraud ecosystem you will need to be continually evolving too.

Like many places, Latin America has seen the dramatic rise of e-commerce, accelerated by the pandemic and subsequent lockdown measures. This has been accompanied by the increasing use of alternative payment methods (APMs), such as eCash, digital wallets, and bank transfers. All of this makes Latin America an attractive market for merchants. But a key question is whether these changes in consumer habits will endure in the long term?

by Gustavo Ruiz Moya, CEO of eCash for Latin America and Global Head of Open Banking, Paysafe

With a view to better understanding consumers’ payment habits in the region, Paysafe commissioned a survey of 3,000 consumers across Brazil, Chile, and Peru in April 2022.

Our survey paints a positive picture when it comes to how long-term this opportunity really is, with 74% of respondents in the Lost in Transaction survey saying their payment habits have changed permanently since the start of the pandemic.

This means it’s an exciting time for consumers and merchants. Access to the internet and e-commerce through mobile phones is growing, and different ways to pay are driving greater choice and inclusivity for consumers. Merchants can now look slightly differently at a region that might have seemed prohibitive in the past due to a lack of local knowledge and partnering opportunities, as well as payment hurdles and difficulties of cross-border transactions.

Latin American countries’ increased digitalization its support of instant payments against the backdrop of a population which is keen to adopt APMs (63% had used a digital or mobile wallet, eCash, or crypto in the last month) has made this a market with huge potential.

Driving greater inclusion through e-cash

Although there are many differences between one Latin American country and another, demographics, banking environments and regulations, and payment preferences, to name but a few, there are also some common characteristics. This includes a general tendency toward an informal economy with a large unbanked population – 45% according to the World Bank. Also, a preference for cash over debit or credit cards, largely driven by the turbulent economic climate over the last decade, access to credit, an air of mistrust of the economic system, and high fees and interest rates of debit and credit cards.

In this environment, alternative payment options are drivers of financial inclusion. Consumers avoid high fees, they conveniently pay in their neighbourhood merchants, no need to go through complex application processes, there are no credit checks, and they don’t have to share a load of sensitive information online. It’s just a better overall experience for the cash-preferred customers.

So there’s no surprise that the use of e-cash is on the rise in Latin America. Our findings tell us that 20% of respondents use e-cash more frequently than they did a year ago, with 17% saying they use it about the same amount as a year ago. Our survey also gathered responses from 8,000 consumers across the UK, US, Canada, Germany, Austria, Bulgaria, and Italy, and it highlighted more use of eCash in Latin America with 15% saying they used eCash in the last month compared to 9% across Europe and North America.

Security ranks top for consumer concerns

Alternative payment methods such as e-cash, Pix, and QR-code-based services have been increasingly popular over the last couple of years in Latin America. Although reasons such as convenience, simplicity, and speed are good indications of why we have seen this uptake, it also highlights concerns around the security of financial information.

In our survey, 45% of consumers said security is the most important factor when choosing how to pay for online purchases. Further, 66% don’t feel comfortable entering financial details online and 78% are more comfortable using a payment method that doesn’t require them to share their details with merchants.

Payment methods such as eCash remove the need to enter financial or personal details online, giving people access to e-commerce in a way that makes them feel secure. We can also see that 38% of Latin Americans feel they don’t know enough about e-cash, while 21% would use it in the next 2 years if it becomes more widely available. So the key to wider acceptance and uptake is at least in part about understanding alternative payment options as well as how they work. With greater awareness, combined with increasing smartphone adoption (81% by 2025, as mentioned above), e-cash is likely to become a more everyday payment choice across the region.

Cost of living, credit, and crypto

In terms of more general payment trends, the cost of living has had a significant impact on Latin American consumers’ choice of payment method for online purchases, with 63% saying they’ve changed the way they use certain payment methods, compared to 36% in Europe and 39% in North America.

This indicates a willingness to adapt payment habits to circumstances, whether that’s trying to avoid high fees or interest rates – of those who have said they’ve changed their habits, 63% are avoiding using pay-by-instalment plans. Or opt for a method that doesn’t involve credit – 58% are using their debit cards more often, while 45% are using direct bank transfers more regularly. Digital wallets have also seen fast adoption: 35% of consumers say they use them more often as a result of the rising cost of living. And 27% are using e-cash more often for the same reason.

Finally, crypto is starting to gain traction with 8% using it more frequently as a payment method compared to a year ago.

In summary, what once might have seemed a difficult and complex market to enter now presents a rich opportunity for businesses outside Latin America, especially for online merchants with virtual deliverables. It really can be as simple as choosing the right provider with a well-established presence ‘on the ground’ and the regulatory requirements in place to get instant access to local payment networks.

Accelerated changes in the lending industry are reshaping the competitive landscape of loan origination. Borrowers have come to expect the same immediacy in applying for a loan as they do when online shopping for goods or entertainment.

by Brandi Hamilton, Director Marketing Communications, Equifax

Financial institutions (FIs) of all sizes are working diligently to adapt to new customer expectations of speedy and efficient transactions, as well as a fair chance in the lending approval process. Incorporating automation and cloud technology into the lending process will allow FIs to gauge loan repayment propensity more efficiently and allow lenders to say “yes” to more loan applicants.

There are four lending trends that will help FIs create a frictionless loan origination experience for borrowers, while also asserting themselves as industry leaders.

The very meaning of having a job is changing

The workforce has become more mobile, embracing the concept of employees working from home — allowing leeway for traditional employees to take on freelance work or start small businesses to earn additional income. Some have left the traditional workforce altogether and are pursuing solopreneurship full-time. People with jobs are quitting them en masse, and for the 30 to 45 age group — the largest cohort of homebuyers — resignation rates were up more than 20 percent from 2020 to 2021. Many workers simply do not want to return to the office. They may also be quitting for various reasons: to look for a new job, join the gig economy, or forge their path as an entrepreneur. The shift was perhaps triggered by the coronavirus pandemic and the resulting move to remote work, but it is here to stay. The unpredictable nature of their income complicates these consumers’ financial capacity and how FIs can measure their ability to repay loans.

With potential borrowers diverting away from multi-year histories of job stability and high credit scores, FIs must expand the scope of creditworthiness. Lenders should consider that changes in the way people work do not always equate to loan affordability issues. Borrowers with complex employment profiles should not be denied financial equality due to outdated methods for an individual’s propensity to repay loans.

Financial inclusion

Many Americans who are entering the workforce for the first time face a Catch-22: they can’t get credit because they don’t already have credit. Others are seeking to recover from damage to their credit records because of an extended period of unemployment, family changes, or other life events. By considering alternative data for determining creditworthiness, lenders can foster greater financial inclusion.

Financial inclusion leads to FIs attracting diverse groups of borrowers across all generations, regardless of their credit file. “Thin file” or “credit invisible” applicants face higher rates of denial amongst underserved demographics.

FIs embracing alternative data will allow expanded access to credit inclusion through tailored digital experiences that better serve marginalized communities and those with unique circumstances. Ensuring underserved consumers aren’t continually left without access to credit and capital can be a critical step to financial inclusion.

Fortunately, there are a few easy ways for lenders to address more financial inclusion for all — while reaping the benefits along the way. And it all starts with data.

Alternative data and APIs

Historically, consumers had less access to credit and data information. But today, collaboration and access technologies enable third-party access to personal account data through application programming interfaces (APIs). This open data exchange allows fintechs, banks, and third-party providers to share financial data through a digital ecosystem that requires little effort. These instant and seamless data transfers enable consumers to get loans faster and more efficiently.

APIs and the use of alternative data also create opportunities for potential borrowers by narrowing the space between traditional banking and lending and the evolving fintech category. For example, FIs can expand their use of data to capture more accurate financial strength indicators, resulting in lenders having the ability to say “yes” to more applicants while reducing risk and default rates and improving operational efficiencies.

This holistic view potentially enables an untapped demographic of quality borrowers to get approved for loans, establishing security and wealth development for underserved communities.

Low friction lending could mean improved customer experience

When it comes to lending, many borrowers demand the same speed when applying for a loan as they do when they make purchases with large online retailers. Automating loan origination tasks and processes allows for a fast, flexible, low friction lending process that feels easy and convenient. In addition, evolving consumer trends and preferences mean lenders should continue to streamline processes and leverage data to meet consumer expectations. Banks leveraging these and other technologies can reduce the number of steps consumers may encounter applying for a loan – filling out a cumbersome application, contacting employers to provide proof of income and employment, or providing sensitive banking log-in or payroll credentials to share data.

Having automated and secure technology solutions integrated during decisioning can reduce the need to request sensitive banking log-in credentials or outdated paper-based processes. As a result, some applicants may walk away from business transactions that inconvenience them. Adopting a digital lending process that attracts diverse borrowers across all generations, regardless of their credit file, and providing exceptional lending experiences is key to surviving the evolving lending landscape.

Keeping up with these consumer trends will better equip FIs to serve their borrowers’ unique circumstances better. A positive and fast borrower interaction without friction is critical to FIs reaping success. Lenders that meet the demands for a digital-first, frictionless experience and incorporate open data will become preferred lenders of the future.

Recently we have seen unprecedented movements in the financial markets. With the crypto crash and the recent stagnation of the stock markets, some have been left scrambling to recoup their losses.

by Roger James Hamilton, Founder and CEO of Genius Group 

Globally, Governments have been spending big on stimulus packages, and inflation has hit record numbers. We are living in unprecedented times, and we are heading into what experts agree is a highly unpredictable future for investors and businesses.

Yet, in times of the greatest crises lie major opportunities. Now is not the time to continue with the same investment strategies you had been doing prior to 2022. Here, we look at 10 key investment trends that every investor should know. 

Dollar destruction

Due to the recent pandemic, 35% of all U.S. Dollars in existence have been printed in the last 10 months. But endlessly printing money does not help economies and creates further divide in the wealth gap.

With inflation soaring and money being worth less and less, banks around the world are predicting a recession towards the end of 2023 and early 2024. This recession is said to be worse than we have previously seen with things getting worse before we start to see any recovery.

To combat inflation there is actually very little a country can do other than printing more to make the physical currency more expensive to store and move. But by doing this interest rates increase, which can then in turn lower growth. These economic trends are currently playing out, with Deutsche Bank recently informing investors that they are expecting the worst recession in history to hit in late 2023.

The Age of Exponentials

At the beginning of Society 5.0, the imagination society is coming into play, where digital transformation and creativity from a diverse population will accelerate technological growth and adoption. Big data harvested by IoT and converted into a new type of intelligence by AI, will impact every corner of society and change our infrastructure for the better. People will see their lives become more comfortable and sustainable as they are provided with the products and services in real-time, as they need them. Investments will be focused on the future with any disruptive or innovative technology being lucrative.

The Meme Generation

As individuals using memes became viral it was then realised this pathway could lead to becoming an influencer which can be a lucrative job with some people becoming multi-millionaires from it. Meme investments using products or brands do a similar thing and are created to attract retail investors to invest in the company stocks and shares. This idea that a simple meme can create huge visibility for a brand is one that takes skill but can be worth the investment as it’s a quick way to get brands in front of a huge audience.

The DeFi economy

Historically we’ve used various different devices for different uses, think video cameras, cameras, CD players and the radio. Now we have just one device – our phones to do everything. The same is happening with services, think taxi ranks that are now being replaced with Uber or Google replacing libraries. Everything is becoming streamlined and minimised. The same is happening with financial services where the decentralised system has fewer transaction points and middlemen. Ethereum could displace many traditional financial services and its native token Ether could compete as global money.

Stocks & Crypto Trading

Traditional currency is being taken away from the individual at source via taxes, bank charges, the rising costs of goods and currency debasement. Investing in stocks and crypto can give you returns of around 5% to even 15% if you just have the strategies to invest wisely. When you then add money each month you may well see your profits grow via the power of compounding.

Marcus De Maria, Founder and Chairman of Investment Mastery, comments: “The recent crypto crash has been difficult for the industry and the death of crypto has been bandied around so many times, but we have never seen it actually fail. Many investors will see this as a huge opportunity if you buy it low; you stand to see a massive % increase as it goes back up. This is the fundamental strategy we use when investing – we invest when prices are low and aim to have a really low average value across our portfolio.”

The Digital Decade

Everything that we do is being digitised and will encompass society 5.0.; in the digital decade, this will be apparent through a digital overlay on your day-to-day experience. The revenue from the virtual world could approach $400 Billion by 2025. Global gaming and AR and VR markets will drive this growth. Investing in these areas or companies that are implementing these technologies is a good idea as they are likely to see huge growth over the next few years.

The Rise of Robots

Automation will empower humans and increase productivity and wage growth. It has the potential to shift unpaid labour to paid labour and Cathie Wood, CEO of Ark Invest believes that automation will add 5% or $1.2 trillion to US GDP over the next 5 years. The metaverse and the gaming industry are driving the change of automation. AI and ML will help this change happen as we will see automation get smarter and take on volumes of information that would take humans much longer. We will see companies using AIs as their CEOs and they will be making better and smarter decisions.

Genius Generation

Entrepreneurship will become a vocation and will be taught in school and as a preferred option for employment by 2025. This is what Genius Group believes and is forecasting for the industry.  Edtech will continue to improve people’s skills, wealth, and life chances with more education available to a wider demographic. The UN sustainable development goals will be met by people and companies who have invested in themselves and in the future.

Wholesale Investing

By teaming up with other like-minded groups or collaborators, investors can access a vast new area of wholesale investing. As with purchasing wholesale, the price is usually cheaper as you are buying in bulk, and you are able to find market opportunities that wouldn’t usually be open to an individual.

If you take the idea of retail or the stock market, you are buying at price, whereas when you team up with others there are new offers that are available to you. Using the power of the crowd you become an insider rather than an outsider.

Time for Impact

Buying property has always been a popular investment and given that the population is growing, and property won’t ever go to zero, banks are happy to lend. When growing a property portfolio, you can make infinite ROI by releasing money as the property increases in value, which leads to a tax-free cash-back to invest in the next property.

Simon Zutshi, CEO of CrowdProperty, says: “For those that can’t afford a whole house, it is still possible to invest in property via a group scheme or crowdfunding. The members of property investors network (pin) have benefitted from this form of investment and have even said that investing in this way can see better returns.”